RESULTS RELEASE 4Q16

Transcription

1 RESULTS RELEASE 4Q16 EBITDA of R$ 417 million and Net Income of R$ 36 million Highlights of the year Generation Delivery of Cachoeira Caldeirão HPP 8 months ahead of schedule; São Manoel HPP ends the year with work 83.4% complete; Conclusion of the sale of Pantanal Energética for R$ 355 million (cash). Distribution 7 th EDP Escelsa tariff cycle brought an increase of more than R$ 100 million in Regulatory EBITDA; Control and reduction in the delinquency and Losses. Growth Trajectory Participation in the 2 nd stage of the Transmission Auction 2015 with successful bid for Lot 24; Operations in distributed solar energy. Control of Costs and Financial Discipline Conclusion of capital increase of R$ 1.5 billion with a reduction in financial costs; Pecém prepays financing from IDB (R$ 923 million); Net Debt/Consolidated EBITDA: 1.5X; Increase of 3.2% of PMTO, excluding the Provision for Doubtful Accounts and considering in the same base the consolidation, below inflation (IPCA: 6.3%) see page 8. Main Indicators Indicators (R$ thousand) 4Q16 4Q15 Var Var. Gross Margin 972,879 1,032, ,289,266 3,190, PMTO (327,382) (315,465) 3.8 (1,255,244) (1,115,989) 12.5 EBITDA 417, , ,297,804 2,959, Net Income 35, , ,602 1,265, Adjusted Net Income 39, , , , Capex 228, , , , Financial investiment 323, , ,188,419 1,124, Net debt 3,553,347 5,036, ,553,347 5,036, * Adjusted Net Income for non-cash effects: Pecém's earnings in 2015 and VNR Operational Indicators (GWh) 4Q16 4Q15 Var Var. Energy Distributed 6,118 6, ,425 25, Energy Sold - Hydro Generation 1,861 1, ,546 8, Energy Sold - Thermal Generation 1,357 1, ,402 4, Energy Traded 4,017 2, ,980 10, Aneel Non-Technical Low Voltage Losses - Bandeirante 9.98% 10.60% 9.55% Non-Technical Low Voltage Losses - Escelsa 13.50% 14.89% 11.45% Availability Pecém I TPP 88.47% 88.12% 90.14% TOTAL SHARES: 606,850,394 TREASURY STOCK: 757,336 FREE FLOAT: 48.8% MARKET CAP: R$ 8.1 billion CONFERENCE CALL WITH WEBCAST ON 02/23/2017 Portuguese/English: 12:00 noon Connection details: Brazil: +55 (11) (11) USA: +1 (786) Others: +1 (888) São Paulo, February 22 nd, EDP ENERGIAS DO BRASIL S.A. ( EDP Energias do Brasil or Group ) listed on BM&FBOVESPA s Novo Mercado (ticker symbol: ENBR3) today announces its financial and operating results for the fourth quarter of 2016 (4Q16) and year. The information is shown on a consolidated basis in accordance with accounting practices in Brazil and International Financial Reporting Standards (IFRS) based on revised financial information. The operating information has not been revised by the independent auditors.

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3 For the team at EDP Brasil, 2016 was a year of significant achievement. In a period of political transition and with an economy in recession, we were able successfully to report consistent results and deliver an important series of operating improvements. Our operations continued to address the requirements of all our leading stakeholders with the objective of creating shared value. However, this strategic alignment between the Company s purpose and our operations is now much stronger and more effective. Within the scope of the EDP Culture Project, in 2016, we launched the so-called Goals with a Purpose, which align our financial and operating objectives directly with our corporate purpose, namely to use our energy to increasingly care better. We evaluate the success of our Goals with a Purpose for 2016 in the form of an annual balance sheet. The global results for shareholders, clients, people, the environment and community, business partners, assets and operation, all rank our performance above 100%. We highlight seven key aspects to illustrate the year s good performance: Delivery on investment commitments in Generation Undoubtedly, for us together with our partners CTG, the year s landmark event was the earlier than planned startup in operations at the 219MW Cachoeira Caldeirão plant in the state of Amapá. The first machine began operating 8 months before the end of the regulatory term and the remaining machines entered service up to five months ahead of schedule. This is the second time we have been successful in delivering a plant prior to scheduled startup date and on budget. In 2014, we also anticipated initial operations at the Santo Antônio do Jari operation 3.5 months ahead of time. Additionally, construction is proceeding at our 700MW São Manoel plant in the state of Mato Grosso. In partnership with CTG and Furnas, we ended the year with work on the project more than 83% complete. Improvement in the operating indicators in Distribution At Distribution, besides full compliance with our regulatory commitments to service quality, which ranks us among the best operators in the market, the reduction in commercial losses at both our distributors is worthy of mention. In São Paulo, we recorded losses with low voltage customers of 9.98% or 0.43 p.p. better than the regulatory goal. This is already 49.58% less than we were reporting in 2008 when commercial losses peaked. The trend in the state of Espírito Santo has also been in the same direction with commercial losses ending the year at 13.50% and approximately 2 p.p. better than the goal for losses stipulated by the regulator. In past years, the shortfall in meeting the regulator s goal had been as much as 8 p.p. Expansion in the Energy Services Area We cannot fail to comment on the acquisition of the energy efficiency company, APS, which has allowed us to operate more proactively in the energy services market. This year, we were involved with 15 projects, investing in the region of R$ 20 million, the end result being that we managed to reduce consumption at our clients by 45 GWh. Debut in new businesses In 2016, we began operations in two new business segments. In the first of the two, we took our initial step in the energy transmission segment, bidding successfully for a small 113 kilometer project in the state of Espírito Santo. We see this pioneering advance as opening the door to a new area of business. This was also the year in which we launched our distributed photovoltaic solar energy generation business. We ended the year with 4 installations and an extensive pipeline of projects for Reinforcement of the capital structure On the financial front, the year saw a capital increase of R$ 1.5 billion, fully subscribed by our shareholders. This operation allowed us to reinforce our capital structure and optimize our financial function with the early settlement of third party debt at the holding company as well as Pecém TPP. We ended the year with a net debt/ebitda ratio of 1.5 times, a healthy level of leverage and preparing our balance sheet for eventual growth opportunities. Implementation of a new internal Culture In 2015, we embarked on a collective mission to find a common denominator for the culture that would unite the approximately three thousand employees at EDP Brasil. In 2016, we announced both internally (to all EDP Brasil s employees) and externally (to our service providers) the 12 principles comprising the new EDP Culture. The results were surprising. Our team s level of engagement has continued to rise. In the case of the internal climate survey, the level of engagement surpassed 80% and above the average for the best companies in the sample. More important still, we recorded a zero accident rate both in relation to our own employees as well as those of our service providers. This is the first time in ten years that this has been the case. Investment in the cultural heritage

4 At year-end, we announced our support for the rebuilding of the Portuguese Language Museum with an investment of R$ 20 million spread over three years. This partnership with the state of São Paulo government and the Roberto Marinho Foundation is indicative of the responsibility we are assuming as the largest Portuguese company operating in Brazil. Together with our genetical affinities, the Portuguese language is the most important heritage which Brazil and Portugal share. And the EDP Group is embracing its role as an active agent in preserving this heritage. All this permitted us to end 2016 with reasons to commemorate. Results which also reinforce our commitment with the Principles of the United Nations Global Compact as a proactive company aware of its responsibility to society and its stakeholders. Consequently, we have good reason to extend our thanks to all those that, directly or indirectly, have made this year s good performance possible. We cannot fail to make mention of our three thousand employees comprising our outstanding team at EDP Brasil, a team which engaged with great energy and a desire overcome the challenges and which excelled in delivering on its commitments. A word also for our shareholders that have continued to bestow their confidence in our Company and invest their time and resources in it. To our business partners, our thanks go for their dedication and professionalism which have been instrumental in allowing us to deliver a service of excellence to our clients. And to the latter, we are committed to the same constant effort and dedication which has always driven us to improve the quality of our services. Thank you to all! We will continue to use our energy to increasingly care better and to continue warranting your trust. Miguel Setas, Diretor-presidente 4

5 All explanations relate to the fourth quarter (4Q16) and the year 2016 compared with the same periods in Distribution Both distributors reported a decline in energy volumes in the quarter - due to the migration of clients to the free market, more moderate weather conditions, particularly in the state of Espírito Santo, and the continuing downturn in the Brazilian economy. The average sales tariff fell 11.7% at EDP Bandeirante, a reflection of the Tariff Readjustment in October, and 6.5% in the case of EDP Escelsa due to the August 2016 tariff revision. Generation and Commercialization Lower energy volumes sold in generation reflects the divestment of Pantanal Energética, concluded on January 29, 2016, to the recontracting of agreements with lower volumes and the seasonal effect. The commercialization segment saw increased volume reflecting volatility in the PLD (Price for Settlement of Differences) during the quarter, reflecting greater market liquidity and a larger number of short term operations with the portfolio, besides the increased number of clients. Average GSF (Generation Scaling Factor) in 4Q16 was 87.2% with Average PLD in the SE/CW submarket of R$ 162.8/MWh compared with a GSF of 94.3% and PLD of R$ 177.1/MWh in 4Q15. The impact of GSF levels on energy purchases was R$ 41.6 million. In the light of the renegotiation of the GSF, average GSF was 84.8%: for calculation purposes the National Electric Energy Agency - ANEEL assumes the same constant physical guarantee, ignoring the effective seasonality of the system s hydroelectric generators. The GSF renegotiation insurance cover saw a saving of R$ 10.4 million in the quarter, amortization of the premium being R$ 1.0 million. - Operating data Itens in R$ thousand or % EDP Bandeirante EDP Escelsa 4Q16 4Q15 Var 4Q16 4Q15 Var Volume (MW) 3,700,357 3,703, % 2,417,539 2,679, % Tarriff Base (R$/MWh) % % 1 The Generation volume corresponds to the volume of energy from hydroelectric plants of the group Itens in R$ thousand or % Generation 1 Commercialization 4Q16 4Q15 Var 4Q16 4Q15 Var Volume (MW) 1,860,521 1,936, % 4,016,545 2,606, % Tarriff Base (R$/MWh) % % 1 The Generation volume corresponds to the volume of energy from hydroelectric plants of the group The average energy selling price for hydro generation was R$ 169.8/MWh, 3.1% lower than 4Q15. This was due to a decline of 25.8% in Enerpeixe s prices following new agreements with lower values efective from January Energy Sold and Average Sales Price 1 3,500 3,000 R$ 158 R$ 178 R$ 169 R$ 170 R$ 190 R$ 170 R$ 150 2,500 R$ 130 2,000 1,500 1,861 R$ 110 R$ 90 R$ 70 1, R$ R$ 30 R$ 10 0 Enerpeixe Energest Lajeado Total R$ (10) Energy Sales (GWh) Average Price (R$/MWh) 1 Average Sales Price incorporates PPAs energy volume from the hydro plants / Energest includes Mascarenhas HPP in 4Q16 only. Ignoring volumes from Pecém and considering energy sold by the group s hydroelectric capacity alone on a consolidation criterion basis, energy volume reported a decline of 3.9%. The difference in energy volume sold between periods is due to: (i) the expiry of agreements at Enerpeixe and Energest in early 2016 and the Company s strategy of holding part of its energy on an uncontracted 5

6 basis for hedging purposes (6.8%); (ii) a greater number of short-term buying and selling operations in 4Q15; and (iii) the sale of Pantanal Energética, conclusion of which took place in January Volumes were down by 7.4% for the full year. Consolidated Sales from Generation (GWh) Seasonality of Generation (%) (e) 2,267 1,976 2,014 1,810 1,935 1,899 1,936 1,861 28% 26% 25% 25% 25% 24% 24% 23% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q - Installed Generation Capacity With the conclusion of the divestment of Pantanal Energética and the early entry into commercial operation of Cachoeira Caldeirão HPP s GU01, GU02 and GU03, the Company s installed capacity at the end of 4Q16 was 2.8 GW and 1.8 average GW of physical guarantee. Once São Manoel HPP becomes operational in 2018, installed capacity will rise to 3.0 GW. Installed Capacity in MW pro forma 1 2,996 2, , Sale of Pantanal HPP C. Caldeirão 2016 HPP São Manoel 2018 Energética 1Q16 1 Considers the proportional stakes in Santo Antônio do Jari (50%), Cachoeira Caldeirão (50%) and São Manoel (33%) HPPs; and the sale of the 100% stake in Pantanal Energética (51 MW). Installed capacity disregards the percentage stakes in Costa Rica, Lajeado and Enerpeixe HPPs as the data for these plants is fully consolidated. The Company resubmitted two items in 4Q16 with an impact on the financial statements of 2016 and Restatement of financial assets subject to indemnification The Company has concluded, together with IBRACON, that the restatement of the financial assets subject to indemnification and originally shown under Other operating expenses and income may be better shown in the item Revenues, together with remaining revenues relating to the core business, thus reflecting the model for the energy distribution business more appropriately and providing a better presentation of performance, since that one of the key activities of the Company s business and its management model is based on controlling the construction, maintenance and operation of this infrastructure. This conclusion is supported by the fact that the Company has, such as the others distributors, the unconditional right to receive cash on expiry of the concession agreements for unamortized investments, restated at the New Replacement Value plus the regulatory WACC as established by ANEEL on the occasion of each Tariff Revision. This reclassification has no impact on EBITDA. 6

7 Currency variation on energy purchases from Itaipu The Company has concluded that currency variation arising from Itaipu energy purchase agreements, which are denominated in US dollars, originally booked under the Financial Income or Financial Expenses item, may be better shown under the Cost of production for electricity services", together with other costs related to power purchasing agreements, such reclassification reflecting the model of the Company s electric energy distribution business more appropriately, since that both the cost of energy purchased from Itaipu and also currency variation arising from purchases, are passed on to the consumer in the electric energy tariff, and additionally, the currency variation is derived from the contractual price for energy purchases and not from any variation in financial liabilities. This reclassification has no impact on the result of the period. Items in R$ thousand or % 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 Net Operating Revenue 1 631, ,900 1,580,833 2,067, , ,779 2,593,115 2,981,039 Non-manageable expenditures (283,064) (127,531) (990,070) (1,582,899) (568,826) (464,239) (1,620,236) (1,948,802) Gross Margin 348, , , ,277 32,164 10, ,879 1,032,237 PMTO (57,112) (60,720) (218,238) (219,403) (10,102) (10,260) (327,382) (315,465) EBITDA 292, , , ,897 22, , ,789 EBITDA Margin 46.3% 71.8% 9.0% 10.7% 3.7% 0.1% 16.1% 24.9% Depreciation and amortization (78,463) (76,909) (43,595) (42,191) (996) (118) (137,142) (129,979) Results from Corporate Participations (84,341) 5,989 Minority shareholders (57,603) (64,609) (57,603) (64,609) Proportional Net Income ,895 77, ,475 10,743 (1,915) 35, ,055 1 Do not include construction revenues. 2 Consolidated: considers intragroup elimitations. Generation Distribution Commercialization Consolidated 2 Items in R$ thousand or % Net Operating Revenue 1 2,381,106 2,181,747 5,436,004 6,617,650 1,884,387 2,084,548 8,884,122 9,943,091 Non-manageable expenditures (820,361) (758,039) (3,769,785) (4,935,420) (1,826,502) (2,002,682) (5,594,856) (6,752,620) Gross Margin 1,560,745 1,423,708 1,666,219 1,682,230 57,885 81,866 3,289,266 3,190,471 PMTO (241,098) (182,747) (859,756) (793,150) (42,622) (24,670) (1,255,244) (1,115,989) EBITDA 1,387,108 1,216, , ,343 15,249 57,196 2,297,804 2,959,910 EBITDA Margin 58.3% 55.8% 13.5% 12.8% 0.8% 2.7% 25.9% 29.8% Depreciation and amortization (304,856) (242,414) (176,456) (174,335) (3,630) (380) (540,433) (457,933) Results from Corporate Participations - (84,845) (115,443) (113,774) Minority shareholders (164,353) (140,436) (164,353) (140,436) Proportional Net Income 294, , , ,756 (10,942) 30, ,602 1,265,936 1 Do not include construction revenues. 2 Consolidated: considers intragroup elimitations. Generation Distribution Commercialization Consolidated 2 Net Operating Revenue was R$ 2.6 billion while non-manageable expenditures were R$ 1.6 billion, resulting in a consolidated gross margin of R$ million. Breakdown of Gross Margin (R$ million) 1, Q15 Margin Hydro Generation Pecém Distribution Commercialization +GRID Others/ Eliminations 4Q16 Margin 7

8 Distribution Gross Margin at EDP Bandeirante was R$ million, a reduction of 20.1%, resulting from: (i) the difference of overcontracting (111.9% in 2016 and 109.1% in 2015) causing a negative effect between the quarters reviewed (-R$ 11.6 million); (ii) reclassification of currency variation on Itaipu energy purchases from financial result to the non-manageable costs account (+R$ 49.8 million); and (iii) the difference in the value of the financial asset subject to indemnification, reclassified from the net manageable expenditures account to the net operating revenue account (-R$ 77.6 million), in 2015 resulting in the evaluation of the regulatory fixed assets via Tariff Revision. Gross Margin at EDP Escelsa was R$ million, an increase of 79.4% in relation to the same period in 2015 due to: (i) an increase in Component B in the Tariff Revision in August 2016 (+R$ 21.1 million); (ii) the effect of the reduction in losses between quarters (+R$ 7.3 million), (iii) the difference in overcontracting (106.8% in 2016 and 96.9% in 2015) between quarters under review (-R$ 9.2 million); (iv) the difference in the value of the financial assets subject to indemnification and reclassified from the manageable expenditures account to the net operating revenue account (+R$ million); (v) reclassification of Itaipu currency variation from the financial result to the non-manageable costs account (+R$ 31.2 million); and (vi) recurring effect due to the market decrease influenced mainly by the stoppage of an important client (-R$ 21.9 million). Generation Hydro Generation In hydro generation, the Gross Margin was R$ million, a reduction of 17.8%, reflecting: (i) lower volumes and average selling price (R$ 30.5 million); and (ii) an increase in energy purchased for resale (R$ 20.4 million) due to the worsening in GSF. Thermal Generation In thermal generation the Gross Margin was R$ million, a reduction of 57.1%, reflecting: (i) the increase in the coal transportation (R$ 30.3 million); (ii) an increase in the cost of raw material consumed at Pecém (R$ 22.6 million) resulting from the provision for the emergency water charge due to the prevailing drought conditions in the state of Ceará; and (iii) the positive effect in 4Q15 with respect to the booking of the reimbursement for downtime (R$ 90.2 million) at Pecém, the result of Order 3.878/2015, modifying calculation of the Uptime Generation Factor (FID). The reduction in margin was minimized by the increase in fixed revenue (R $ 12.3 million), updated annually by the IPC-A in November. Commercialization/Services Gross Margin at EDP Comercializadora/Services was R$ 32.2 million, an increase of R$ 21.6 million, reflecting: (i) an increase in commercialized volume together with a growth of 16.8% in unit margin; and (ii) reduction of 8.1% in PLD. There was no activity in the CCEE/CONER reimbursement account in Discounting construction costs, depreciation and amortization and gains/losses from the deactivation/sale of property, Operating Expenditures totaled R$ 1.9 million, a reduction of 14.0%. In 4Q16, Manageable Expenditures increased 36.5%, while PMTO expenditures were 3.8% higher. For the full 12-month period, Manageable Expenses rose 16.9% while PMTO expenditures were 12.5% higher year-on-year. Ignoring the booking of Pecém (consolidated in the Company s results from May 15, 2015), APS Soluções (consolidated as from December 2015), the effect of provision for doubtful accounts and the operational costs of Pantanal s sales, the increase in PMTO would have been 3.2%. In august, 2015, the Company implemented the Zero-Based Budgeting program (OBZ), as part of its efforts to achieve efficiency, covering all PMTO expenditures. The program, which contributed to the culture of continue productivity, already had 100 initiatives implemented in 2016, creating efficiency and redirection of expenses for strategic items, aiming: (i) To mitigate the effects caused by the increase in delinquency, increasing by 35% the expenses with cuts and reconnections (+ R $ 8.0 million), resulting in a reduction of 55.4% in the PDD of the 2º semester compared to the 1 st semester; (ii) Accelerate the recovery of revenue with a 42% increase in expenses with inspections to combat fraud (+ R $ 7.3 million); (iii) Intensify the expenses with the suppression of vegetation (+ R $ 5.0 million), aiming at maintaining the quality indicators, already being verified the increase of 181 thousand pruning s in 2016; and 8

9 (iv) Strengthen the use of individual and collective protection equipment by more than 50%, ensuring our commitment to safety (+ R $ 2.1 million). Pecém In Pecém, after the asset consolidation on May, 2015, the plant also initiated the OBZ with gains already captured in 2016, as table below: PMTO (R$ thousand)* 4Q16 4Q15 Var Var. Personnel (11,001) (11,724) -6.2% (41,800) (39,192) 6.7% Material (1,802) (2,324) -22.5% (17,138) (13,306) 28.8% Third-party services (10,034) (9,115) 10.1% (47,232) (50,879) -7.2% Provisions (84) (12) 600.0% (39) (37) 5.4% Other (1,848) (4,518) -59.1% (22,482) (38,030) -40.9% Total PMTO (24,769) (27,693) -10.6% (128,691) (141,444) -9.0% * Pecém considered 100% in the analyzed periods Considering the plant consolidation in the last 12 months of compared years, the PMTO decreased 9.0% due to the EDP s efforts to reduce the operational costs and implement the efficiency gains. 1 Source: FGV 2 Source: IBGE Financial Result (R$ thousand) 4Q16 4Q15 Chg Chg. Financial Revenue 66,726 73, % 456, , % Revenue from financial investments 71,002 25, % 229,166 91, % Monetary variation 16,468 45, % 180, , % Restatement of sectorial financial assets and liabilities , % 35,393 54, % SELIC on taxes and social contribution 3,145 3, % 25,959 11, % Adjustments to present value (868) 1,916 n.a. 96 5, % (-) PIS/COFINS over financial revenues (28,879) (27,531) 4.9% (42,735) (31,998) 33.6% Other financial income 4,910 5, % 27,803 24, % Financial Expenses (228,465) (219,564) 4.1% (988,701) (855,478) 15.6% Monetary variation and Adds (21,254) 5,631 n.a. (147,200) (129,873) 13.3% Financial charges on debt (182,439) (187,048) -2.5% (692,079) (606,882) 14.0% Interest and fines on taxes (717) (3,534) -79.7% (5,160) (8,345) -38.2% Selic - Free Market (3,165) (2,827) 12.0% (12,231) (10,170) 20.3% Adjustments to present value (3,446) 1,872 n.a. (16,362) (3,832) 327.0% (- ) Interest capitalized 2, % 6,084 2, % Other Expenses (20,241) (34,551) -41.4% (103,035) (98,710) 4.4% Net Foreign Exchange Result (28,170) 4,424 n.a. (120,328) (75,000) 60.4% Total (189,909) (141,780) 33.9% (652,741) (625,517) 4.4% In relation to the quarter, the following impacts were relevant: Reduction of 13.3% in expenditures with Personnel: (i) Reduction in the early retirement program as a result of a non-recurring item booked in 2015 (-R$ 20.9 million) and partial decrease of the provision with program in 2016 (-R$ 4.2 million); (ii) Restitution of medical care expenditure relative to a social security contribution (-R$ 2.0 million); (iii) Increase in compensation and benefits following the collective bargaining agreement in November 2016 (+R$ 9.2 million); and (iv) Consolidation of APS Soluções (+ R$ 0.6 million). Reduction of 9.6% in the costs of Materials: (i) Consolidation of APS Soluções (-R$ 2.2 million); and (ii) Increase in vehicle maintenance and repair expenditures (+R$ 1.7 million). Increase of 23.8% in Third Party Services: (i) Increase in the network maintenance plan and the amount of pruning for improving services rendered and quality indicators (+R$ 15.0 million); (ii) Increase in expenditures in initiatives for combatting losses (+R$ 7.3 million); (iii) Consolidation of APS Soluções (+R$ 2.8 million); and (iv) Increase in the costs with consultants fees related to new projects (+R$ 1.9 million). Increase of 6.5% in the costs of Provisions: (i) Increase in provision for contingencies involving ongoing labor related lawsuits (+R$ 2.7 million); (ii) Increase in the Provision for Doubtful Accounts at EDP Comercializadora (+R$ 1.3 million). (Details in chapter 5.3); and (iii) Reduction in the Provision for Doubtful Accounts at the distributors (-R$ 2.1 million). (Details in chapter 5.2). 9

10 Increase of 4.1% in Others: (i) Non-recurring effect booked in 2015 with respect to the reversal of a provision due to the deactivation of the Pecém provisional transmission line (LT SE CHESF to SE Cauípe), not be used since October 2013 (-R$ 3.3 million); and (ii) Consolidation of APS Soluções (+R$ 2.8 million). The Gains and Losses on Deactivation and Sale of Property account increased by R$ 16.9 million, resulting from the conclusion of orders and deactivation of equipment at different projects pertaining to the Distributors. The increase in the Fair Value of the Financial Asset subject to Indemnification (R$ million) is the result of reclassification of the account from Manageable Expenditures to Net Operating Revenue in 4Q16.The increase in the fair value of the financial asset subject to indemnification in 2016 is a result of the evaluation of EDP Escelsa s regulatory fixed assets for R$ million, producing a gain arising from the increase in the non-recurring financial asset subject to indemnification of R$ million. The Depreciation and Amortization account increased 5.5% due to the reclassification of assets with work in progress to in service at Investco, depreciation of which occurring as from June In 2016, the impact is the result of non-recurring effects in 2015 from the acquisition of the remaining 50% stake in Pecém for R$ million and gains from the sale of the stake in EDP Renováveis Brasil, amounting to R$ 68.9 million. In 2016, Company results were also affected by the accounting gain from the sale of Pantanal Energética for R$ million. EBITDA reached R$ million, a 43.8% reduction, R$ million Generation, R$ million in Distribution and R$ 22.0 million in Commercialization/Services. For the full 12-month period, EBITDA amounted to R$ 2.3 billion, a reduction of 22.4%. Distribution 31% Breakdown of EBITDA 4Q16 EBITDA Breakdown - 4Q16 Commercialization 5% Generation 64% in Generation Distribution Commercialization Breakdown of EBITDA (R$ million) EBITDA 4Q15 Gross Margin PMTO Fair value of financial assets for indemnification (non- recurring) Others 1 2 EBITDA 4Q16 1 Gross Margin has the effect of R$ 41.8 million refers to the fair value of the financial asset subject to indemnification 10

11 2 Gains on the sale of property and others. Breakdown of EBITDA (R$ million) ,960 2,298 EBITDA 2015 Gross Margin PMTO Gain on Asset Sale Others EBITDA 2016 The reduction of 1.5% in the result from corporate stakes in the year is due to the impact of the impairment test conducted at São Manoel HPP. In this case, the Company booked a loss of R$ million, equivalent to its stake of 33.33% in the enterprise, details of which are shown under Significant Events. Financial Result (R$ thousand) 4Q16 4Q15 Chg Chg. Financial Revenue 66,726 73, % 456, , % Revenue from financial investments 71,002 25, % 229,166 91, % Monetary variation 16,468 45, % 180, , % Restatement of sectorial financial assets and liabilities , % (35,393) 54,959 n.a. SELIC on taxes and social contribution 3,145 3, % 25,959 11, % Adjustments to present value (868) 1,916 n.a. 96 5, % (-) PIS/COFINS over financial revenues (28,879) (27,531) 4.9% (42,735) (31,998) 33.6% Other financial income 4,910 5, % 27,803 24, % Financial Expenses (228,465) (219,564) 4.1% (988,701) (855,478) 15.6% Monetary variation and Adds (21,254) 5,631 n.a. (147,200) (129,873) 13.3% Financial charges on debt (182,439) (187,048) -2.5% (692,079) (606,882) 14.0% Interest and fines on taxes (717) (3,534) -79.7% (5,160) (8,345) -38.2% Selic - Free Market (3,165) (2,827) 12.0% (12,231) (10,170) 20.3% Adjustments to present value (3,446) 1,872 n.a. (16,362) (3,832) 327.0% (- ) Interest capitalized 2, % 6,084 2, % Other Expenses (20,241) (34,551) -41.4% (103,035) (98,710) 4.4% Net Foreign Exchange Result (28,170) 4,424 n.a. (120,328) (75,000) 60.4% Total (189,909) (141,780) 33.9% (652,741) (625,517) 4.4% Financial Revenue: reduction of 9.0%, the result of: (i) Increase in income on financial investments (+R$ 45.8 million) due to a larger financial application balance in the period, resulting from the capital increase of (R$ 1.5 billion) and reduction of the current account value, negotiated optimization in the second semester of 2016 and to a higher Interbank Interest Rate - CDI for the year (14.0%) in relation to 2015 (13.2%); (ii) Reduction in income from monetary restatement and late payment additions of energy sold with respect to the positive effect booked in 4Q15 for Pecém when there was a change in the methodology for calculating the Uptime Generation Factor - FID (R$ 10.2 million); (iii) Reduction in income from monetary restatement and late payment additions on energy purchased with respect to the reclassification of the currency variation on purchases from Itaipu to the energy purchased for resale account (R$ 10.9 million); (iv) Reduction in monetary restatement in local currency (R$ 9.0 million) due to accounting reclassification adjustments; (v) Reduction in the restatement of sectorial financial assets/liabilities account (R$ 18.5 million) due to the credit balance constituted in

12 Financial Expenses: an increase of 4.1%, resulting from: (i) Increase in monetary restatement expenses and late payment additions on purchased energy with respect to the reclassification of currency variation on energy purchases from Itaipu to the energy purchased for resale account (R$ 70.4 million); (ii) Reduction in monetary restatement expenses in local currency of R$ 21.6 million, reflecting the reversal in the quarter s accounts with respect to the provision for reimbursement of clients (ANEEL Resolution 223/03) and accounting reclassification adjustments; (iii) Reduction of monetary restatement on the use of public property at Enerpeixe in the amount of R$ 13.3 million due to the variation in the IGPM inflation index between compared periods; (iv) Reduction in the other expenses account (R$ 14.3 million), reflecting the reversal in the accounts of interest in the quarter with respect to the provision for reimbursement of clients (ANEEL Resolution 223/03). Currency Result varied R$ 32.6 million due to the early payment of the IBD (Inter-American Bank for Development) financing in the name of Pecém jointly with the settlement of NDF (Non Deliverable Forward) derivatives and swaps contracted for protection against USD/Real and Libor oscillations. Consolidated Net Income amounted to R$ 35.9 million, a reduction of R$ million in relation to 4Q15. This result was impacted by the factors already mentioned, plus Income Tax and Social Contribution which were a positive R$ 87.8 million due to tax optimization with the payout of Interest on Shareholders Equity, the credit of sectorial liabilities at the distributors and optimization due to the early payment of debt by Pecém to the IBD. For the year as a whole, Net Income was R$ million, a decrease of 47.3%. Breakdown of Net Income (R$ million) Net Income 4Q15 EBITDA Dep & Amort Result from corporate participation Financial Result Income tax and social contribution Attributable to noncontrolling shareholders Net Income 4Q16 Breakdown of Net Income (R$ million) , Net Income 2015 EBITDA Dep & Amort Result from corporate participation Financial Result Income tax and social contribution Attributable to noncontrolling shareholders Net Income

13 Consolidated Gross Debt amounted to R$ 5.6 billion on December 31, 2016, a decline of R$ million compared to 2015 and reflecting the increase in capital stock completed in July in the amount of R$ 1.5 billion. As of December 31, 2016, the Company reported 4.1% in currency-denominated debt, totally protected against currency (USD) and interest rate (Libor) risks by derivative instruments. Consolidated Gross Debt does not include debt held by Santo Antônio do Jari, Cachoeira Caldeirão and São Manoel HPPs. Gross Debt by company (R$ million) 1, , , EDP Bandeirante EDP Escelsa Energest Enerpeixe Investco** Lajeado Holding APS Pecém Santa Fé PCH Loans Debentures Intragroup loan 1 Not inclusing intra-group exclusions of R$ million. 2 Investco preferred shares are classified as debt. 3 Debt at the trading company a due to intragroup loans. Net Debt was R$ 3.6 billion as at December 31, taking into account R$ 2.0 billion in cash and cash equivalents - an increase of R$ million in relation to December 31, 2015 and reflecting the capital increase of R$ 1.5 billion. The increase in capital stock was concluded on July 8, 2016, allowing the Company to pay off the debt held in the name of Pecém with the IBD for million as well as liquidating the Bank Credit Note held by the Holding Company in the amount of R$ million (funding raised for the acquisition of the remaining 50% stake in Pecém in May 2015). With the early repayment of the Pecém loan, further funding of R$ 480 million was required, as mentioned above. Breakdown of Net Debt (R$ million) ,408-2, ,186 5,571 Debt Dec/2015 Funding Monetary variation Interests Amortization Market value adjustment Debt Dec/2016 Principal funding raised in the quarter: (i) Enerpeixe s 1 st debenture issue for R$ million; (ii) 1 st debenture issue by Pecém for R$ million; and (iii) Pecém raised additional funding through a Bank Credit Note under Law in the amount of R$ million. 13

14 The average cost of debt in December 2016 was 14.46% p.a. compared to 12.85% p.a. in December This takes into account the capitalized interest on debt and charges incurred in the past 12 months. The higher average cost reflects the increase in the CDI over the 12 months to December 2016 (14.0% p.a. in relation to 13.2% p.a.), the TJLP of 7.50% p.a. in relation to the 6.21% p.a. rate and the replacement of debt in the name of Pecém. In this context, it is worth pointing out that the prepayment of the Pecém finance to the IBD together with the issue of the debentures and the bank credit note based on Law cut debt costs by about 2 p.p. when factoring in operating costs and the annual carrying costs of the derivatives for hedging the IBD finance. The average term of debt consolidated as of December 2016 was 3.04 years, below the average term recorded for December 2015 (3.39 years). Gross Debt by Index 12/31/ /31/2016 Fixed Rate 5.2% TJLP 24.1% IPCA 13.4% US$ 4.1% CDI 53.3% US$ CDI TJLP Fixed Rate IPCA Note: considering that currency financing is protected from exchange rate risk (USD), the percentage of indexers would be: CDI 57%, the remaining indexers being unchanged. Debt Maturity Schedule 1 (R$ million) 2,018 1,072 1,349 1,135 1, Availabilities After Amounts incorporate principal + charges + results from hedge operations Net Debt/EBITDA 1 Values presented in proportion to EDP Energias do Brasil participation 1 Ratios shown are proportional to EDP Energias do Brasil s stake Consolidated Consolidated & Participations 1 Period ND/EBITDA ND/EBITDA Dec/ x 2.0 x Mar/ x 1.7 x Jun/ x 1.7 x Sep/ x 1.6 x Dec/ x 2.0 x At year-end, the Net Debt/EBITDA ratio was 1.5 times. If we consider EDP Energias do Brasil s percentage stake in Santo Antônio do Jari, Cachoeira Caldeirão and São Manoel HPPs, the Net Debt/EBITDA ratio would be 2.0 times. The average term of debt would be 4.04 years and the average cost, 13.77% annually. Breakdown of debt by indexer would be 46.5% in CDI, 32.0% in TJLP, 14.0% in IPCA, 3.3% in US Dollars and 4.2% in pre-fixed interest rates. 14

15 Variation in fixed assets increased 31.2% based on the consolidation criterion in the Company s balance sheet. Amounts distributed between segments during the quarter was 59% in distribution, 40% in generation and 1% in others. In the distribution segment, investments totaled R$ million (net of special obligations and energy surplus revenue) due to increased investments in the program for combatting losses through new technologies such as the BTZero and Caixa de Medição Blindada network, the installation of remote communication systems and the replacement of obsolete and damaged meters. Out of total gross investment at the distributors in the quarter, 35% was allocated to the installation of metering systems, expansion of power lines, substations and distribution networks for connecting new clients; 43% to improvement in the network, substitution of equipment and obsolete as well as depreciated meters and the reconductoring of networks at the end of their useful life; 20% was invested in telecommunications, information technology and other activities such as infrastructure, commercial projects and the prevention of losses; and a further 2% was dedicated to the Light for All program and to urban and rural universalization for the connection and access of consumers to energy services. In the generation segment, investment amounted to R$ 90.3 million in 4Q16, an increase of 79.4% compared with 4Q15. This increase represents the acquisition of equipment for the transportation of minerals in Pecém and the provision at Enerpeixe with respect to commitments for renewing the Environmental License for Operations. Additionally, further investments were made in plant modernization at Energest during the year. In the others segment, the increase in investment is due to the construction of one steam boiler for steam generation and its sale to a client of EDP Grid. Capex (R$ thousand) 4Q16 4Q15 % % Distribution 134, , % 480, , % EDP Distribuição São Paulo 73,828 73, % 246, , % EDP Distribuição Espírito Santo 60,564 48, % 234, , % Generation 90,325 50, % 144,603 93, % Enerpeixe 26, % 27,822 2, % Energest Consolidated 489 9, % 6,786 15, % EDP PCH (1) 2,628 - n.a. 7,342 - n.a. Lajeado / Investco 4,672 3, % 11,804 13, % Pecém (Consolidation) 55,374 28, % 90,591 50, % Costa Rica 18 - n.a % Pantanal - 7, % - 11, % Santa Fé 180 (17) n.a % Others 3,840 2, % 26,557 6, % Total 228, , % 651, , % Capex - Distribution (R$ thousand) 4Q16 4Q15 % % EDP Bandeirante Total Capex Net of Special Obligations 73,828 73, % 246, , % (+) Special Obligations 2,035 6, % 10,249 35, % Gross Value 75,863 80, % 256, , % (-) Interest Capitalization (1,185) (893) 32.7% (3,150) (1,731) 82.0% Gross Value less Interest Cap. 74,678 79, % 253, , % EDP Escelsa Total Capex Net of Special Obligations 60,564 48, % 234, , % (+) Special Obligations 12,160 11, % 154,527 39, % Gross Value 72,724 59, % 388, , % (-) Interest Capitalization (1,273) - n.a. (2,934) (603) 386.6% Gross Value less Interest Cap. 71,451 59, % 385, , % Distribution 146, , % 639, , % (1) Capex 1 variaton of EDP PCH in 1T15 is considered inside Energest Capex variaton of EDP PCH in 4T15 is considered inside Energest The following table shows investments according to the Company s stake in the hydroelectric projects: 15

16 Capex (R$ thousand) 4Q16 4Q15 % % Distribution 134, , % 480, , % Generation 185, , % 681, , % Genaration Others 90,325 50, % 144,603 43, % Santo Antonio do Jari HPP (1) 4,759 7, % 11,608 61, % Cachoeira Caldeirão HPP (1) , % 64, , % São Manoel HPP (2) 89, , % 460, , % Pecém I TPP - - n.a. - 80, % Others 3,840 2, % 26,557 6, % Total 323, , % 1,188,419 1,124, % (1) 1 Consider EDP participation = 50% Consider EDP participation 50% 2 Consider EDP participation = 33.3% 3 Pecém I TPP consolidation occurred on May 15 th, 2015 Investments in the quarter amounted to R$ million if the Company s stakes in certain hydroelectric projects are taken into account on a proportional basis, namely: 50% in Santo Antônio do Jari (R$ 4.8 million) and Cachoeira Caldeirão (R$ 0.9 million) HPPs, as well as 33.3% in São Manoel HPP (R$ 89.1 million), a decrease of 11%. According to the same criterion, investments would have amounted to R$ 1.2 billion. Items in R$ thousand or % Enerpeixe Energest (1) Consolidated Lajeado (2) Pecém (3) Others (4) Consolidated Generation (5) 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 Chg. Net Operating Revenue 71, ,543 49,376 68, , , , ,500 34,617 28, , , % Non-manageable expenditures (14,741) (15,681) (11,511) (23,196) (38,058) 5,195 (228,773) (95,619) (3,445) 956 (283,064) (127,531) 122.0% Manageable expenditures (6,966) (5,820) (9,900) (11,520) (7,189) (12,680) (24,769) (27,693) (9,484) (2,823) (57,112) (60,720) -5.9% Gain/Loss on the deactivation/asset sale , (149) - 1, % EBITDA 49,746 83,209 29,202 33, , ,581 78, ,188 21,539 26, , , % EBITDA Margin 69.6% 79.6% 59.1% 49.1% 71.4% 94.2% 23.7% 63.4% 62.2% 93.4% 46.3% 71.8% p.p. Resultado financeiro líquido (9,767) (10,559) (5,188) (3,448) (37,436) (37,689) (158,942) (32,640) 1, (210,223) (84,042) 150.1% Minority shareholders (15,809) (11,321) (57,603) (64,609) -10.8% Net Income 35,448 66,651 19,944 30,426 50,026 55,568 (79,486) 130,113 16,599 21, , % (1) Includes Mascarenhas. (2) Includes Investco and Lajeado Energia with the respective intragroup eliminations. (3)' Pecém I TPP it's being considered at EBITDA since May (4)' Consider EDP PCHs, Santa Fé and Costa Rica (5) Consolidated Generation includes Enerpeixe, Consolidated Energest, Lajeado Total, Terra Verde, Enercouto, Omega, Enernova, and HPPs Jari, Cachoeira Caldeirão and São Manoel consolidated using the equity inco Items in R$ thousand or % Enerpeixe Energest (1) Consolidated Lajeado (2) Pecém Others (4) Consolidated Generation (3) Chg. Net Revenue 309, , , , , ,670 1,192,675 1,249, , ,470 2,381,106 2,181, % Non-manageable expenditures (63,471) (147,566) (32,198) (134,474) (110,755) (185,033) (626,061) (585,595) (14,426) (29,183) (820,361) (758,039) 8.2% Manageable expenditures (24,146) (22,534) (35,313) (42,902) (31,776) (32,900) (128,691) (141,444) (20,975) (8,974) (241,098) (182,747) 31.9% EBITDA 222, , , , , , , ,567 78,506 70,025 1,387,108 1,216, % EBITDA Margin 71.7% 61.0% 67.3% 35.0% 75.8% 58.4% 42.3% 41.8% 68.8% 64.0% 58.3% 55.8% 2.5 p.p. Minority shareholders (47,767) (29,039) (164,353) (140,436) 17.0% Net Income 126, , ,230 81, ,716 92,373 (29,573) 22,154 57,556 55, , , % (1) In 9M16 considers Mascarenhas HPP. In 9M15 considers Mascarenhas HPP and SPP's that are in the EDP PCH from february 29, (2) Includes Investco and Lajeado Energia with the respective intra-group elimination. (3) In 9M16 Consolidated Generation includes EDP PCH, Santa Fé and Costa Rica HPP's. In 9M15 considers Santa Fé, Costa Rica and Pantanal HPP's. (4) Considers Enerpeixe, Energest, Lajeado Total, Terra Verde, Enercouto, Omega, Enernova and the consolidation of Jari HPP, Cahoeira Caldeirão and São Manoel in the consolidation criteria. The Pecém I TPP is Net Revenue fell 5.2% because of the decrease of 3.9% and 3.1% in hydro plant volume and average selling price, respectively. Weaker revenue also reflects the reduction of energy sold in the short-term market, particularly the case of Pecém. This reflects changes in the rules for pricing of energy sales in the short-term market enacted by Resolution 719/2016 from PLD to Unit Variable Cost - CVU based. Non-Manageable Expenditures increased by R$ million due to: (i) an increase in purchased energy; (ii) increases in the cost of raw materials; and (iii) the positive effect at Pecém in 4Q15 with respect to the change in methodology for calculating the Uptime Generation Factor - FID. PMTO posted a reduction of 5.9%, reflecting a decrease in the Third Party Services item and the result of capitalizing of expenditures with the renewal of operating licenses at Enerpeixe and Investco. EBITDA reached R$ million, a decrease of 38.9%. For the full fiscal year, EBITDA was R$ 1.4 billion, an increase of R$ million and a reflection of: (i) reduced cost of purchased energy for resale, in turn reflecting the decrease in both GSF and PLD; (ii) the full consolidation of Pecém in the Company s 2016 accounts; and (iii) the booking of R$ 66.7 million in 1Q16 with respect to a payment against an insurance claim at Pecém. The Financial Result was a negative R$ million, an increase of R$ million in relation to 4Q15, the result of the early payment of the IBD line in full as well as the settlement of NDF derivatives and swaps contracted to protect the Company against 16

17 exchange rate and LIBOR variation in addition to the complete reversal of the hedge accounting in December The Financial Result for the year ended at a negative R$ million, an increase of R$ million, also the result of fully consolidating the Pecém operation into the Company s financial statements. Net Income was R$ 0.7 million, a reduction of R$ million in relation to 4Q15, again due to factors already discussed above. For the full 12-month period, Net Income for the segment was R$ million, and a year-on-year decrease of R$ 40.7 million. - Operating Performance The plant posted an average uptime of 93.7% in 4Q16 and 88.5% in the 12-month period. The contractual maintenance work and inspection of equipment in 3Q16 were instrumental in achieving improved uptime during 4Q16. GU01 GU02 Average TPP 90.0% 89.5% 89.7% 92.6% 88.9% 85.2% 85.1% 78.0% 81.6% 91.8% 93.7% 85.8% 89.1% 87.9% 88.5% 1Q16 2Q16 3Q16 4Q Economic-Financial Performance Items in R$ thousand or % Pecém 4Q16 4Q15 % % Net Operating Revenue 332, , % 1,192, , % Non-manageable expenditures (228,773) (95,619) 139.3% (626,061) (261,783) 139.2% Gross Margin 103, , % 566, , % PMTO (64,249) (63,981) 0.4% (220,097) (171,748) 28.2% EBITDA 78, , % 504, , % Financial Result (158,942) (32,640) 387.0% (387,769) (183,521) 111.3% Net Income (79,486) 130,113 n.a. (29,573) 164,486 n.a. Net revenue amounted to R$ million, a 1.3% reduction due to the decline in short-term energy sales. This reduction reflects: (i) reduced generation from the plant; and (ii) changes to the rule published in Resolution 719 of May 2016 for the calculation of short-term energy selling prices, previously at the PLD and now according to the CVU. Gross revenue from transactions through the Power Purchase Agreements in the Regulated Contracting Environment - CCEAR amounted to R$ million, as a result of: (i) gross variable revenue from energy dispatch in the amount of R$ million; (ii) gross revenue from the restoration of commercial capacity and the settlement of the excess energy generated in the short-term market and other services amounting to R$ 27.9 million; and (iii) booking of taxes (ICMS, PIS and COFINS, R&D and the Supervision Fee) and charges incurred amounting to R$ 40.5 million. Non-manageable expenditures amounted to R$ million, an increase of 139.3%, resulting from: (i) an increase of R$ 30.3 million resulting from coal transportation costs ; (ii) an increase of R$ 22.6 million in the cost of raw materials, principally due to the provision for the increase in emergency water charges in the light of drought conditions in the state of Ceará; and (iii) the positive effect in 4Q15 from the booking of the reimbursement for downtime amounting to R$ 90.2 million in the light of Order 3.878/2015, which altered the calculation of the Uptime Generation Factor - FID. PMTO amounted to R$ 24.8 million, a 10.6% decrease due to the reduction and reorganization of the work force, capitalization of materials and receipt of reimbursement for shared expenditures with Pecém II TPP. Plant EBITDA was R$ 78.5 million, a R$ 63.1 million reduction. For the full year, EBITDA was R$ million, a year-on-year increase of 10.3%. The financial result was a negative R$ million, an increase of R$ million in relation to 4Q15, reflecting the early payment of the IBD financing in full and the settlement of the NDFs and swaps contracted to protect the Company from currency and LIBOR oscillations as well as the unwinding of the hedge accounting in December The plant reported a loss of R$ 79.5 million and R$ 29.6 million in the quarter and year, respectively. 17

18 - Economic-Financial Performance 1 JARI Consolidated Income Statement (R$ thousand) 4Q16 4Q15 % 6M16 6M15 % Net Operating Revenue 31,443 28, % 115, , % Non-manageable expenditures (10,248) 4,382 n.d. (29,024) (36,322) -20.1% Gross Margin 21,196 33, % 86,098 69, % Manageable expenditures (8,980) (8,530) 5.3% (33,171) (32,985) 0.6% EBITDA 19,390 31, % 79,071 63, % Net Financial Result (11,834) (15,715) -24.7% (59,775) (55,126) 8.4% Net Income 29,133 6, % 17,667 (16,444) n.d. 1 Amounts correspond to 50% of Consolidated Jari (ECE and CEJA), EDP Energias do Brasil s stake in the business. Jari HPP reported consolidated net revenue of R$ 31.4 million, 9.1% higher than the same period in 2015 due to the readjustment of agreements for inflation. Non-manageable expenditures were R$ 10.2 million, R$ 14.6 million more than the same period in 2015, the effect of renegotiating the hydrological risk, booked in 4Q15 and having a negative impact of R$ 15.2 million. Manageable expenditures were R$ 9.0 million, an increase of 5.3% in relation to the same period in EBITDA was R$ 19.4 million, a reduction of 39.2%. For the full 12-month period, EBITDA was R$ 79.1 million, an increase of R$ 15.9 million, compared to 12M2015. The net financial result was negative at R$ 11.8 million, 24.7% less than 4Q15, due to the increase in the Long-Term Interest Rate in the period. Income Tax and Social Contribution were positive at R$ 28.8 million, an increase of R$ 31.6 million in relation to the same period in 2015, reflecting the recognition of deferred income tax relative to tax losses and the negative base for social contribution in previous fiscal years. Jari HPP recorded a profit of R$ 29.1 million in the quarter and R$ 17.7 million in the full 12-month period. ECE Participações (Plant) posted a Net Income of R$ 8.8 million. Cachoeira Caldeirão HPP began operations in the course of 2016, although CCEAR agreements for sales to the regulated market only became effective as from January 1, In 2016, energy from GU01 was sold through the intermediary of a bilateral agreement with EDP Comercializadora; conversely, energy generated from GU02 and GU03 was sold via auction to the market. - Economic-Financial Performance 1 Cachoeira Caldeirão Consolidated Income Statement (R$ thousand) 4Q16 4Q15 % % Net Operating Revenue 12,642 - n.a. 28,347 - n.a. Non-manageable expenditures (7,842) (188) % (13,147) (188) % Gross Margin 4,801 (188) n.a. 15,200 (188) n.a. Manageable expenditures (9,955) (869) % (23,609) (9,022) 161.7% EBITDA 1,112 (1,056) n.a. 7,544 (9,210) n.a. Net Financial Result (10,958) 21 n.a. (26,249) 203 n.a. Net Income (10,643) (683) % (22,933) (5,944) 285.8% 1 Amounts correspond to 50% of Cachoeira Caldeirão, EDP Energias do Brasil s stake in the business. Net Revenue in 4Q16 was R$ 12.6 million and reflecting energy sales as a result of the Plant s early entry into commercial operations. Non-manageable expenditures were R$ 7.8 million, largely from energy purchases and charges for use of the network. The increase in the cost of energy purchased was due to low rainfall in the North of Brazil and affecting Araguari River inflows. Inherent to the operations of the asset which began commercial operations during 2016, manageable expenditures were R$ 10.0 million. Due to the aforementioned factors, EBITDA was R$ 1.1 million and the financial result, a negative R$ 11.0 million, the operation reporting a loss of R$ 10.6 million for the quarter. 18

19 The São Manoel HPP is located on the middle reaches of the Teles Pires River at the state divide between Mato Grosso and Pará in the municipal districts of Paranaíta in the state of Mato Grosso and Jacareacanga in the state of Pará. With an installed capacity of 700 MW, it will supply the National Interconnected system (SIN) with enough energy to meet the needs of approximately 2.5 million people. Power purchasing agreements come into effect in May 2018 in line with the energy sold at the A-5 auction of Empresa de Energia São Manoel S. A. is a tripartite partnership between EDP Energias do Brasil, CTG and Furnas Centrais Elétrica S.A. By the end of 2016, work on the physical structure was 83.4% complete, one of the principal stages, that of the river diversion, having been concluded. In addition, assembly of all the plant gate hydro-mechanical equipment was concluded. Among key environmental activities was the environmental management plan for construction (PAC) and programs for forestry restoration, reinforcement of infrastructure and social equipment, disease control and prevention, monitoring of fauna, flora, ichthyofauna, fishing and mining activities, climatological aspects and support for reinsertion and fostering of local economic activities. In 4Q16, investments amounted to R$ million (not considering the use of public property, environmental licenses and monetary restatement). Since start on work to the end of 2016, total operating investment was R$ 2.6 billion (94.0% of the initially forecasted investment). On January 13, 2017, Empresa de Energia São Manoel announced the replacement of Epecista, hitherto responsible for the civil works, in order to mitigate possible impacts on the work schedule. With the replacement of Epecista, management has forecasted an estimated increase in total outlay on the project due to the need for additional expenditure to complete construction on time. Items in R$ thousand or % EDP Bandeirante EDP Escelsa Distribution 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 Chg. Net Revenue 780,989 1,177, , ,893 1,580,833 2,067, % Non-manageable expenditures (557,423) (897,632) (432,647) (685,267) (990,070) (1,582,899) -37.5% Gross Margin 223, , , , , , % PMTO (116,245) (116,353) (101,993) (103,050) (218,238) (219,403) -0.5% Gains/losses on decommissioning/sale of go (14,177) (7,339) (16,073) (5,016) (30,250) (12,355) 144.8% Fair value of financial assets for indemnificat (28,836) (9,787) (170,402) (20,835) (199,238) (30,622) 550.6% EBITDA 64, ,172 78,729 75, , , % EBITDA Margin 8.2% 12.4% 9.8% 8.5% 9.0% 10.7% -1.7 p.p. Net Income 37, ,483 39,235 42,992 77, , % Items in R$ thousand or % EDP Bandeirante EDP Escelsa Distribution Chg. Net Revenue 2,893,784 3,778,509 2,542,220 2,839,141 5,436,004 6,617, % Non-manageable expenditures (2,111,680) (2,838,192) (1,658,105) (2,097,228) (3,769,785) (4,935,420) -23.6% Gross Margin 782, , , ,913 1,666,219 1,682, % PMTO (466,473) (421,768) (393,283) (371,382) (859,756) (793,150) 8.4% Gains/losses on decommissioning/sale of go (35,211) (24,800) (34,735) (18,937) (69,946) (43,737) 59.9% Fair value of financial assets for indemnificat n.a. EBITDA 280, , , , , , % EBITDA Margin 9.7% 13.1% 17.9% 12.4% 13.5% 12.8% 0.8 p.p. Net Income 141, , , , , , % Net revenue, excluding construction revenue, was R$ 1.6 billion, 23.5% less than 4Q15, a reflection of electric energy tariff reductions and energy volume sold. The average reduction in electric energy tariffs was 11.7% and 6.5% at EDP Bandeirante and EDP Escelsa, respectively. Combined with lower tariffs, net revenue was also impacted by a decrease in energy volume sold amounting to 0.1% at EDP Bandeirante and 9.8% at EDP Escelsa. The impact of the fair value of the asset subject to indemnification - and reclassified from manageable expenditure to net operating revenue in 4Q16 - was R$ 41.8 million (at EDP Bandeirante -R$ million and EDP Escelsa, +R$ million). Additionally, the following effects also had an impact on revenue: (i) overcontracting above 105% at EDP Bandeirante and EDP Escelsa, with a negative impact of R$ 0.8 million and R$ 9.2 million, respectively. In the 12-month period for 2016, this effect is a negative in R$ 35.3 million at EDP Bandeirante (111.9%) and R$ 9.2 million at EDP Escelsa (106.8%); and (ii) a tariff impact - excluding items of Component A - of R$ 21.1 million at EDP Escelsa and R$ 5.0 million of EDP Bandeirante, reflecting positive results of the tariff processes for 2016, both with growth in Component B. 19

20 Manageable expenditures fell 37.5%, reflecting a: (i) reduction of 52.3% in energy bought from Itaipu which was subject to a tariff readjustment (from US$ 38.07/KW to US$ 25.78/KW); and (ii) reduction of 6.6% in local currency, due to the expiry of existing energy agreements and adjustment and decrease in PLD, impacting availability energy agreements. The reduction of 0.5% in PMTO expenditure is due to higher expenditure booked in 4Q15 with respect to the early retirement program. The reduction in provisions is the result of the increase in actions for combatting delinquency. EBITDA was R$ million, 35.5% lower while for the year, EBITDA posted R$ million, a year-on-year reduction of 12.9%. The Financial Result was a negative R$ 47.5 million, an increase of R$ 50.9 million due to a 79.1% increase in financial expenses following reclassification from currency variation of energy purchased from Itaipu to the manageable expenditures account in the amount of R$ 41.4 million. Net Income was R$ 77.0 million, a reduction of R$ 80.5 million. For the full 12-month period in 2016, Net Income was R$ million, a year-on-year decline of 8.7%. - Provision for Doubtful Accounts (PDD) and Default At the distributors, there was a reduction in PDD of R$ 2.1 million in relation to 4Q15. Compared with 3Q16, the reduction in consolidate distribution was R$ 4.5 million PDD - R$/million PDD - R$/million Q15 1Q16 2Q16 3Q16 4Q16 EDP Bandeirante EDP Escelsa The reduction in relation to the preceding equivalent 12-month period and quarter reflects initiatives for combatting consumer delinquency such as: (i) the increase in protesting delinquent customers for non-payment; (ii) holding fairs for renegotiation of overdue billings; and (iii) an increase in the teams for disconnecting installations and negotiating payment agreements (installments). In addition, from June 2016, the Company intensified negotiations with clients already in the delinquency database, thus avoiding an increase in the balance of the provision for doubtful accounts. In 4Q16, EDP Bandeirante executed 96 thousand disconnections, 50.5% more than 4Q15 (64 thousand) while EDP Escelsa completed a further 77 thousand, 97.4% more than 4Q15 (69 thousand) and employing a more aggressive stance in the case of heavy duty consumers. Provision for Doubtful Accounts/Revenue 1.62% 1.16% 0.98% 1.11% 0.68% 0.66% 0.63% 0.35% 1Q16 2Q16 3Q16 4Q16 EDP Bandeirante EDP Escelsa It is worth pointing out that the calculation of distributors tariffs charged to customers builds in a forecast for reimbursement of costs for billings deemed irrecoverable. Currently this coverage in tariffs levied by EDP Bandeirante is about R$ 27.4 million and EDP Escelsa, R$ 30.9 million. 20

21 - Breakdown of Sectorial Financial Assets and Liabilities (Regulatory Assets and Liabilities) The Sectorial Financial Asset - the sum of Accounts for Variation in Items of Component A - CVA and monetary restatement - was R$ 36.4 million. This breaks down as -R$ 68.8 million in operating revenue, +R$ 0.9 million in financial result and -R$ 33.3 million in the Tariff Flag Resources Centralizing Account (CCRBT). In 2016, EDP Bandeirante ended the year with a regulatory liability and EDP Escelsa with a regulatory asset. In the case of both distributors, the reduction in the regulatory balance compared with 2015 is due to: (i) the amortization of the regulatory asset constituted up to 2015 in EDP Escelsa s Tariff Readjustment and EDP Bandeirante Tariff Revision, both occurring in 2015; and (ii) the reduction in the Energy Development Account - CDE. EDP Bandeirante EDP Escelsa Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Initial balance of Regulatory A/L 548, , ,515 (173,101) (406,194) 280, , ,922 (57,057) (21,844) Cost of CVA - Appropriation and Amortization 32,897 (233,499) (357,086) (226,312) 17,944 57,291 (95,646) (164,964) 17,582 50,837 Monetarily Restated - MR 8,198 15,564 13,372 (6,780) ,261 6,680 (12,022) 17, Tariff Flag Resources Centralizing Account CCRBT (94,487) (63,429) (18,902) (1) (20,026) (85,260) (46,080) (8,993) - (13,263) Exceeding Demand - ED e Surplus Reactive - SR (24,293) Final Balance of Regulatory A/L + Monetarily Restated 470, ,515 (173,101) (406,194) (407,620) 263, ,922 (57,057) (21,844) 16,022 Quaterly Variation - Cost of CVA 32,897 (233,499) (357,086) (226,312) 17,944 (52,515) (95,646) (164,964) 17,582 50,837 Quaterly Variation - Monetarily Restated 8,198 15,564 13,372 (6,780) ,412 6,680 (12,022) 17, Quaterly Variation - Cost of CVA + Monetarily Restated 41,095 (217,935) (343,714) (233,092) 18,600 (34,103) (88,966) (176,986) 35,213 51,129 Quaterly Variation - Cost of CVA 32,897 (233,499) (357,086) (226,312) 17,944 (52,515) (95,646) (164,964) 17,582 50,837 Variation of CCRBT + ACR Acount+ED/SR (94,487) (63,429) (18,902) (1) (20,026) (19,038) (46,080) (8,993) - (13,263) Quaterly Variation - Monetarily Restated 8,198 15,564 13,372 (6,780) ,412 6,680 (12,022) 17, Quaterly Variation (53,392) (281,364) (362,616) (233,093) (1,426) (53,141) (135,046) (185,979) 35,213 37,866 Note: In the case of EDP Bandeirante, the difference between the R$ 18.2 million constituted in the Revenue from sectorial financial assets in the NOR and the R$ 17.9 million constituted in the Cost of CVA - Appropriation and Amortization relates to the reimbursement of R&D on the flag tariff as from January 2015 (1% of the NOR), pursuant to Resolution 245/2016. In the case of EDP Escelsa, the difference of R$ 51.0 million in the NOR and the R$ 50.8 million is due to the same aforementioned reason. - Consolidated Energy Balance Energy Balance - EDP Bandeirante 2016 (MWh) Itaipu + Proinfa Transmission Losses 2,676, ,031 Required Auction Losses from Itaipu 8,878,760 ( - ) 133,536 = Energy Others Short Term Sales 126,711-1,269,557 15,916,384 Energy in Transit Short Term Adjustments 5,855,492-19,519 Energy Balance - EDP Escelsa 2016 (MWh) Wholesale Supply 43,200 Retail Supply 8,602,861 Losses and Diferences 1,414,831 Energy in Transit 5,855,492 Itaipu + Proinfa Transmission Losses 1,689, ,739 Required Auction Losses from Itaipu 7,008,664 ( - ) 83,482 = Energy Others Short Term Sales 475, ,111 11,664,703 Energy in Transit Short Term Adjustments 3,224, ,037 Wholesale Supply 573,263 Retail Supply 6,240,783 Losses and Diferences 1,626,564 Energy in Transit 3,224,093 Energy volume demanded by the distribution system totaled 27,581 GWh. Of this total, 58% was allocated to EDP Bandeirante and 42% to EDP Escelsa. Retail supply to final consumers, for proprietary consumption and wholesale deliveries accounted for 18,502 GWh and energy in transit distributed to free customers, 9,080 GWh. - Losses Technical losses remained stable in the quarter despite an increase during the year. At EDP Bandeirante, the increase in technical losses is due to the reconfiguration of load distribution in the system for the purpose of work on improvements and expansion in the network. At EDP Escelsa, the increase reflects the reduction in load at a key client and lower generation in the state of Espírito Santo, 21

22 a situation which persisted through September. For the quarter, EDP Escelsa reported a reduction due to the return of generation to the state and the conclusion of work on expanding and upgrading the distribution grid. Low voltage non-technical losses fell at both distributors in 2016 thanks to the plan for combatting losses with a focus on the billing database and preventing the irregular use of energy on the part of new customers. In the quarter, the increase in losses at EDP Bandeirante is due to higher consumption in the final week of the year, which due to billing schedules will only be metered in the following quarter. For the full year, distributors spent R$ 100 million on programs for combatting losses. Out of the total, R$ 78.0 million was dedicated to operating investments (substitution of meters, installation of a special grid and telemetering) and R$ 22.0 million to manageable expenses (inspections and dismantling irregular connections). The distributors completed thousand inspections, substituting thousand obsolete meters and regularizing thousand clandestine/irregular connections. Accumulated losses in last 12 months (GWh or %) Input of Energy in Network (A) Technical (B) Non-technical (C) Total (B + C) Technical (B / A) Non-technical (C / A) Total (B+C / A) Low Tension Accumulated losses in last 12 months (GWh or %) Low Tension Demand (D) Low Tension Commercial Losses (C/D) Total (C /D ) EDP Distribution São Paulo Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 ANEEL Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 ANEEL 16,063 15,937 15,921 15,901 15,916 12,821 12,449 12,253 11,874 11, ,054 1,025 1,043 1, ,441 1,490 1,458 1,395 1,415 1,730 1,691 1,716 1,688 1, % 5.54% 5.50% 5.48% 5.51% 4.59% 8.22% 8.24% 8.51% 8.68% 8.60% 7.14% 3.55% 3.81% 3.66% 3.29% 3.37% 3.27% 5.28% 5.35% 5.49% 5.53% 5.28% 4.61% 8.97% 9.35% 9.16% 8.77% 8.89% 7.86% 13.50% 13.58% 14.00% 14.21% 13.88% 11.75% EDP Bandeirante EDP Escelsa Dec-15 Mar Sep-16 Dec-16 ANEEL Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 ANEEL 5,384 5,333 5,362 5,389 5,384-4,542 4,533 4,607 4,606 4, % 11.37% 10.85% 9.71% 9.98% 9.55% 14.89% 14.69% 14.59% 14.27% 13.50% 11.45% 10.60% 11.37% 10.85% 9.71% 9.98% 9.55% 14.89% 14.69% 14.59% 14.27% 13.50% 11.45% Invoiced Losses/GWh, BT Losses and ANEEL Target EDP Distribution Espírito Santo % 10.60% 10.85% 9.96% 9.96% 9.96% 9.71% 9.98% 9.96% 9.55% % 14.69% 14.59% 14.27% 11.45% 13.50% 11.45% % 7.87% 7.87% Dec-15 Mar-16 Jun-16 Sep-16 Dec Dec-15 Mar-16 Jun-16 Sep-16 Dec Billed losses GWh Billed losses GWh ANEEL Target Low Tension % of losses Low Tension % of losses - ANEEL Targe Billed losses GWh Billed losses GWh ANEEL Target Low Tension % of losses Low Tension % of losses - ANEEL Target Billed losses GWh Billed losses GWh ANEEL Target Low Tension % of losses Low Tension % of losses - ANEEL Target - Quality Indicators Service quality indicators remained within the regulator s parameters. The deterioration in EDP Bandeirante s indicators is due to heavier rainfall more especially in early Again, one-off events involving the internal subtransmission system contributed to the increase in FEC at EDP Escelsa. DEC (hours) FEC (times) Band 4Q15 Band 3Q16 Band 4Q16 Esce 4Q15 Esce 3Q16 Esce 4Q16 Band 4Q15 Band 3Q16 Band 4Q16 Esce 4Q15 Esce 3Q16 Esce 4Q16 Note: DEC and FEC of the distribution companies disclosed in the quarter are provisional, since the final indicator is disclosed within 30 days after the end of the month. 22

23 ANEEL s Annual Regulatory Target for 2016 EDP Bandeirante: DEC 8.61 / FEC: 7.15 EDP Escelsa: DEC: 9.93 / FEC: 7.65 Items in R$ thousand or % EDP Comercializadora EDP Grid EDP C + Grid 4Q16 4Q15 4Q16 4Q15 4Q16 4Q15 Var. Net Revenue 589, ,941 11,373 12, , , % Non-manageable expenditures (568,071) (464,239) (755) - (568,826) (464,239) 22.5% Gross Margin 21,546 (2,298) 10,618 12,838 32,164 10, % PMTO (5,619) (4,465) (4,483) (5,795) (10,102) (10,260) -1.5% Gain/Loss on the deactivation/asset sale (24) (24) - n.a. EBITDA 15,903 (6,763) 6,135 7,043 22, % EBITDA Margin 2.7% -1.5% 53.9% 54.9% 3.7% 0.1% 3.6 p.p. Net Income 7,650 (5,801) 3,093 3,886 10,743 (1,915) n.a. EDP Comercializadora The increase of 27.6% in Net Revenue at EDP Comercializadora reflects the improvement in energy trading in the period (54.1%). Non-manageable expenditures rose 22.4%, the result of higher energy volume purchased, particularly in November, when we reported the highest level of purchasing for the period. PMTO reached R$ 5.6 million, an increase of 25.8% compared with 4Q15. This reflected increased delinquency due to a worsening in the economic scenario, affecting a small group of clients in the Comercializadora s portfolio. EBITDA was a positive R$15.9 million, the company reporting a profit of R$ 7.7 million. Commercialized Energy Volume 4Q16 (GWh) Commercialized Energy Volume 2016 (GWh) 2, , % +48.9% 4,017 4, ,256 3, , ,815-28,1% +26,5% 12,980 12, ,359 12,416 8,621 4Q15 Sales 4Q16 Sales 4Q16 Purchases Other EDP Energias do Brasil s companies 2015 Sales 2016 Sales 2016 Purchases Other EDP Energias do Brasil s companies Total EDP Grid Net Revenue at EDP GRID was R$ 11.4 million, a decline of 11.4%, reflecting the economic downturn in Brazil with falling energy prices and consumption as well as a reduction in the number of concluded contracts. Non-manageable expenditures and PMTO were R$ 0.8 million and R$ 4.5 million, respectively, due to the consolidation of EDP Soluções em Energia (EDPSE). A total of R$ 2.4 million relates to the installation of projects. In the light of the above factors, EBITDA ended 4Q16 at R$ 6.1 million while the financial result was a negative R$ 0.7 million due to expenses relating to the acquisition of EDPSE together with its respective outstanding debt. Net income amounted to R$ 3.1 million in the quarter. EDP s commitment to sustainable development is shown through the transparent manner in which it communicates with stakeholders and the implementation of best environmental, social and economic practice inhouse. EDP is a component of BM&FBovespa s Corporate Sustainability Stock Index, for more than ten years, indicative of the soundness of the Group s sustainability strategy and reinforces the alignment to the Sustainable Development Goals (ODS) of United Nations. 23

24 In 2016, EDP embraced a series of commitments to sustainability through 2020 based on the Company s vision of being a global energy company, a leader in value creation, innovation and sustainability: Strategic pillars Generate economic value Manage environment al and climatic issues Develop our people Improve level of trust Commitments for 2020 Status 2016 Limit the weighting of coal-fired technology in the energy generation portfolio to 25% in 2020 and promote projects for the reduction of CO2 emissions Supply energy-efficient products and services to reduce the energy consumption of 100 GWh at the client by 2020 Invest R$ 100 million by 2020 in expanding the telemetering of low voltage customers Invest R$ 100 million in innovative projects by 2020 Achieve 100% environmental certification and ensure the implementation of a management system at critical suppliers Inculcate the circular economy concept in the Company and foster energy efficiency in buildings Enhance the value of environmental externalities at EDP relating to priority eco-systemic services Maintain levels of employee engagement > 75% by 2020 Promote diversity, ensuring equality of access in hiring processes Reach 100% in health and safety certification and ensure the implementation of a management system at critical suppliers Maintain EDP as one of the most Ethical Companies in Brazil (Pro-Ethics Seal) Reach > 80% in customer satisfaction Implement periodic consultation mechanisms with stakeholders Invest R$ 50 million by 2020 to promote social businesses and sustainable life style initiatives With the early entry into operation of the Cachoeira Caldeirão HPP, EDP reached 74% of renewable energy. Consolidation of the Energy Solutions business (45 GWh of energy economy), and entry into the solar distributed generation market. Investment plan for smart metering and BTZero as planned, including related P&D. In the year were invested about R$ 20 million in P&D projects. Highlight for the certification of Corporate Headquarters and Pecém I TPP; environmental issues in the Supplier Performance Index (IDF). EDP distributors have plans to recover and reuse transformers (22% and 45% of transformers recovered in SP and ES); in the construction of the São Manoel HPP, about 3.8 thousand m 3 of wood were reused. Energy efficiency actions in administrative buildings (ex: change of lightening). An evaluation study of the ecosystem service for water supply in the Pecém Wastewater Treatment Plant was started. EDP Brasil is a highlight in the EDP Group and reached 81% of engage; It was listed for the first time in the 150 Best Companies to Work for Você S/A Magazine. Review of internal hiring processes. Highlight for the certification of Corporate Headquarters and Pecém I TPP ; Enhancement of security issues in the Supplier Performance Index (IDF). EDP was recognized again as a Pro-Ethics Company by the Federal Comptroller General's Office. Comercializadora obtained 91.5% satisfaction and EDP Distributors obtained 73,60 and 80,80 in São Paulo and Espírito Santo, respectively. First cycle of interviews (# 185) with external stakeholders EDP. More than R $ 14 million invested in the year, highlighting the support for culture and education through investment in the reconstruction of the Museum of the Portuguese Language. 24

25 Performance of the principal socio-environmental indicators and aspects: Indicator Unit Water consumption m³ 10,618,596 13,061,572 Electric energy consumption GJ 164, ,614 Hazardous waste Ton 678 1,073 Non-hazardous waste CO2 180, ,092 CO2 emissions (scope 1) CO2 4,529,463 5,218,273 CO2 emissions (scope 2) Ton 441, , NOX emissions Ton 5, , SO2 emissions Ton 9,917,749 9,917,749 Emissions of particulate material Ton Environmental accidents Qty 0 0 Certified net power (ISO14001) Distribution MVA Certified net power (ISO14001) - Generation MW 1, , Proportion of women on the payroll % Hours of training per employee Hours Frequency rate Proprietary Rate Frequency rate - Third parties Rate Severity rate Proprietary Rate Severity rate - Third parties Rate 1, Suppliers Performance Index (IDF) Index ND Private social investment R$ thousand 3, , EDP follows the best market practices for sustainability management and reporting, adopting the Global Reporting Initiative (GRI G4) Guidelines and the International Integrated Reporting Council (IIRC) Standard. For more information on the EDP report in the GRI format, see the Investor Relations website of EDP in the Annual Reports section. The first report in the Integrated Report template will be released in April On December 29, 2016, EDP Energias do Brasil s shares (ENBR3) recorded a closing price of R$ (adjusted for earnings payouts). ENBR3 posted a depreciation of 3.0% in the quarter and underperforming Ibovespa (3.2%) and the Electric Energy Stock Index - IEE (-0.5%). For the full year, ENBR3 appreciated by 23.4%, but again underperforming Ibovespa (38.9%) and the IEE (45.6%). The Company s shares were traded on all the days the stock exchange was open for business totaling million of shares in 4Q16 and million shares for 12M2016. The average daily trading volume for the year was 2.3 million shares, financial volume amounting to R$ 7.5 billion with an average daily volume of R$ 30.3 million in The market capitalization of the Company on December 29, 2016 was R$ 8.1 billion. 25

26 Shares Evolution (R$) Daily Average Volume (R$ million) % Mar, 16 Jun, 16 Sep, 16 Dec, 16 1Q16 2Q16 3Q16 4Q ENBR3 x Indexes Performance (Base 100: 12/30/2013) ENBR3 IBOV IEE (+47.1%) (+37.6%) (+16.9%) On December 29, 2016, the Company s capital stock was exclusively in the form of 606,850,394 common nominative shares. Consonant with BM&FBovespa s Novo Mercado Listing Regulations, of the total shares, 295,295,122 represented the free float and a further 757,336 shares were held as treasury. Shareholding base Base acionária 11% 1% 89% 99% National International Individual Investors Institutional Investors The following chart shows the geographic distribution of the shares making up EDP Energias do Brasil free float as at December 29, 2016: 26

27 1% 12% 12% 1% 26% 48% Asia Latin America North America Europe Oceania Brazil On April 12, 2017, the Company s Board of Directors will submit a proposal to distribute earnings totaling R$ 330 million, corresponding to R$ per share for approval of the Annual General Meeting. ANEEL ratifies EDP Bandeirante s annual tariff readjustment for 2016 On October 18, 2016, ANEEL approved EDP Bandeirante s annual tariff readjustment for 2016, effective October 23. The average effect on consumer bills was %, % for high and medium voltage consumers and % for low voltage customers. The regulator adjusted component B by 9.54%, producing additional revenue of R$ million. 2 nd Drawdown of the Long-Term Loan from the BNDES to Cachoeira Caldeirão HPP On October 20, Empresa de Energia Cachoeira Caldeirão drew the 2 nd tranche of R$ 83.4 million with respect to the Financing Agreement with the BNDES. Drawdown of the first tranche of R$ 300 million took place on December 26, The facility is for a total amount of R$ million at cost of TJLP % p.a.. Interest on the disbursed amount is to be capitalized on a quarterly basis until October 15, 2017 and payable monthly from November 15, Amortization of principal will carry the same grace period as interest payments and will be payable monthly until expiry on October 15, nd Drawdown of the Long-Term Loan from the BNDES to São Manoel HPP On October 26, São Manoel HPP drew the 2 nd tranche of R$ million with respect to the Financing Agreement with the BNDES. Drawdown of the first tranche of R$ million took place on September 15, The facility is for a total amount of R$ 1.3 billion at a cost of TJLP % p.a.. Interest on the disbursed amount is to be capitalized on a quarterly basis until December 15, 2018 and payable monthly from January 15, Amortization of principal will carry the same grace period as interest payments and will be payable monthly until expiry on December 15, EDP Energias do Brasil wins Lot 24 in the 2 nd Stage of the 013/2015 Transmission Auction On October 28, 2016, EDP Energias do Brasil successfully bid for Lot 24 of the 2 nd Stage of ANEEL s Electric Energy Public Service Transmission Concession 013/2015. The Lot consists of a 113 km transmission line with one substation in the state of Espírito Santo. Annual Allowed Revenue (RAP) is R$ 20.7 million, restated at the IPCA inflation index with a term until startup of 32 months at an estimated total investment of R$ million. On February 10, 2017, EDP Energias do Brasil signed the concession contract, with a term of 30 years. Authorization of the proposal for renegotiating the Hydrological Risk of Cachoeira Caldeirão HPP On November 21, in Order 3.013/16, ANEEL approved the proposal for renegotiating the hydrological risk of Cachoeira Caldeirão HPP. EDP opted to renegotiate the hydrological risk for contracts in the regulated contracting market (ACR) through the SP89 product wherein 89% of the exposure to the GSF is protected. Authorization of the proposal for renegotiating the Hydrological Risk of ECE Participações On November 29, in Order 3.013/16, ANEEL approved the proposal for renegotiating the hydrological risk of ECE Participações. EDP opted to renegotiate the hydrological risk for contracts in the regulated contracting market (ACR) through the SP89 product wherein 89% of the exposure to the GSF is protected. 27