EDP Energias de Portugal, S.A. Notes to the Consolidated and Company Financial Statements for the periods ended 31 December 2016 and 2015

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1 ANNUA REPORT EDP Financial In 2016, as Debt far as shareholders return is concerned, EDP kept its dividend distribution policy with a dividend distributed of per share. EDP share price closed 2016 year with a decrease of 13%. Considering the dividend paid in the This caption is analysed as follows: year, EDP shares yielded a -7% shareholder return, 5 p.p. below the Euro Stoxx Utilities Index and 2 p.p. above PSI20. Group Company The Thousand following Euros chapter summarizes the status of EDP s commitments, Dec and 2016 specifies Dec the 2015 main objectives Dec 2016and Dec goals 2015 associated Debts and to borrowings the achievement - Non-current of the strategic agenda and aligned with the Principles of Sustainable Development of the Group, demonstrating this way the company s effort to meet its challenges. - EDP, S.A. 350, , , ,115 - EDP Finance B.V. 2,359,360 2,336, EDP Brasil Group 588, , EDP Renováveis Group 686, , EDP Produção 73,688 82, EDP Gás Distribuição - 21, ,058,739 4,555, , ,115 Non-convertible bond loans: - EDP, S.A. 50, ,000 7,900,000 8,150,000 - EDP Finance B.V. 9,394,007 9,202, EDP Brasil Group 696, , ,140,129 9,934,593 7,900,000 8,150,000 Hybrid bond: - EDP, S.A. 739, , , , , , , ,147 - EDP, S.A. 437, , , , , , , ,632 Other loans 21,681 20, ,396,886 15,479,083 9,426,907 9,540,894 Accrued interest - 3, Other liabilities: - Fair value of the issued debt hedged risk 153, , Total Debt and borrowings 15,550,273 15,653,876 9,426,907 9,540,894 Collateral Deposits - Non-current * -31,936-66, ,518,337 15,587,021 9,426,907 9,540,894 Group Company Thousand Euros Dec 2016 Dec 2015 Dec 2016 Dec 2015 Debt and borrowings - Current - EDP, S.A. 65,129 69,770 74,199 69,770 - EDP Finance B.V. 199, , EDP Brasil Group 90,234 83, EDP Renováveis Group 99, , Others 5,696 9, , ,483 74,199 69,770 Non-convertible bond loans: - EDP Finance B.V. 1,062,764 2,248, EDP Brasil Group 178, , ,241,435 2,357, EDP, S.A. 556, ,352 1,575,846 1,633, , ,352 1,575,846 1,633,352 Other loans 7,664 14, ,264,825 3,287,510 1,650,045 1,703,122 Accrued interest 292, , , ,360 Other liabilities: - Fair value of the issued debt hedged risk -80, Total Debt and borrowings 2,476,403 3,616,664 1,766,359 1,803,482 Collateral Deposits - Current * -20,095-13, ,456,308 3,603,604 1,766,359 1,803,482 * Deposits constituted as collateral for financial guarantee

2 Commercial G4-PR5 Paper 105 non-current refers to a Commercial Paper programs with a firm underwriting commitment for a period of over one Marketing Communications year, in the amounts of 250,000 thousand US Dollars and 200,000 thousand Euros. Main G4-PR6 events of the period: Não aplicável. G4-PR7 Não material In Customer March 2016, Privacy EDP issued a Eurobond of 600,000 thousand Euros maturing in March In August 2016, EDP issued a Eurobond of 1,000,000 thousand Euros maturing in February G4-PR8 107 Compliance In November 2016, following a proposal submitted by an investor, EDP, S.A. agreed to purchase Note Entitlements in the amount of 250,000 thousand Euros and 2,500 Make-whole Entitlements EDP issued in 2008 in the entitled "EUR 300,000,000 Floating Rate Notes due 2018". Such titles have been canceled. G4-PR9 107 R Access In December 2016, EDP, S.A. concluded a "Tender Informação Offer" over disponível the issues no Relatório "6,000% de Abordagem NOTES de DUE Gestão FEBRUARY à 2, 2018" and "4,900% NOTES DUE OCTOBER 1, 2019", limited to a total value of 500,000 thousand US Dollars. As a result of the offer, EDP, S.A. acquired 469,462 thousand EU26 US Dollars of the "6,000% NOTES DUE FEBRUARY 2, 2018" and 30,538 thousand US Dollars of the "4,900% NOTES DUE OCTOBER 1, 2019" (see note 20). EU27 75 EU28 74 e 75 EU29 74 e 75 EU30 72 Provision Of Information Cumprimento Total R Reasonable Verification Cumprimento Parcial imited Verification Não disponível * Specific indicator for this sector

3 ANNUA REPORT EDP 2016 The In 2016, nominal as value far as of shareholders outstanding Bond return loans is placed concerned, with external EDP kept counterparts, its dividend as at distribution 31 December policy 2016, with is analysed a dividend as distributed follows: of per share. EDP share price closed 2016 year with a decrease of 13%. Considering the dividend paid in the Nominal year, EDP shares yielded a -7% shareholder return, 5 p.p. below the Euro Stoxx Utilities Index and 2 p.p. above PSI20. Issue Interest Type Conditions/ Value in Issuer date rate of hedge Redemption Million thousand Euros The following chapter summarizes the status of EDP s commitments, and specifies Currency the main objectives Group and Company goals Issued associated by EDP to the S.A. achievement of the strategic agenda and aligned with the Principles of Sustainable Development of the EDP, S.A. (ii) May-08 Variable rate (iii) n.a. May EUR 50,000 50,000 Group, demonstrating this way the company s effort to meet its challenges. 50,000 50,000 Hybrid by EDP S.A. EDP, S.A. (iv) Sep-15 Fixed rate EUR 5.375% (v) n.a. Sep EUR 750, , , ,000 Issued under the Euro Medium Term Notes program EDP Finance B.V.(i) Aug-02 Fixed rate GBP 6.625% Fair Value Aug GBP 320,000 - EDP Finance B.V. Dec-02 Fixed rate EUR (iii) n.a. Dec EUR 93,357 - EDP Finance B.V.(i) Jun-05 Fixed rate EUR 4.125% n.a. Jun EUR 300,000 - EDP Finance B.V.(vi) Nov-07 Fixed rate USD 6.00% Net Investment Feb USD 503,309 - EDP Finance B.V.(i) Nov-08 Fixed rate GBP 8.625% Fair Value Jan GBP 410,314 - EDP Finance B.V. Nov-08 Zero coupon EUR (iii) n.a. Nov EUR 160,000 - EDP Finance B.V.(i) Jun-09 Fixed rate JPY (iii) n.a. Jun-19 10,000 JPY 99,203 - EDP Finance B.V.(vi) Sep-09 Fixed rate USD 4.90% Net Investment Oct USD 919,706 - EDP Finance B.V. Sep-12 Fixed rate EUR 5.75% n.a. Sep EUR 750,000 - Fair Value/ EDP Finance B.V.(i) Nov-12 Fixed rate CHF 4.00% Cash Flow Nov CHF 103,922 - EDP Finance B.V.(i) Sep-13 Fixed rate EUR 4.875% Fair Value Sep EUR 750,000 - EDP Finance B.V.(i) Nov-13 Fixed rate EUR 4.125% Fair Value Jan EUR 600,000 - EDP Finance B.V. Jan-14 Fixed rate USD 5.25% Net Investment Jan USD 711,507 - EDP Finance B.V.(i) Apr-14 Fixed rate EUR 2.625% Fair Value Apr EUR 650,000 - EDP Finance B.V. Jun-14 Variable rate (iii) Net Investment Jun USD 94,868 - EDP Finance B.V.(i) Sep-14 Fixed rate EUR 2.625% Fair Value Jan-22 1,000 EUR 1,000,000 - EDP Finance B.V.(i) Nov-14 Fixed rate USD 4.125% Net Investment Jan USD 711,507 - EDP Finance B.V.(i) Apr-15 Fixed rate EUR 2.00% Fair Value Apr EUR 750,000 - EDP Finance B.V. Mar-16 Fixed rate EUR 2.375% n.a. Mar EUR 600,000 - EDP Finance B.V.(i) Aug-16 Fixed rate EUR 1.125% n.a. Feb-24 1,000 EUR 1,000,000-10,527,693 - Issued by the EDP Energias do Brasil Group in the Brazilian domestic market Energest Apr-12 CDI % n.a. Apr BR 17,490 - ajeado Energia Nov-13 CDI % n.a. Nov BR 131,176 - Bandeirante Apr-14 CDI % n.a. Apr BR 52,470 - Escelsa Aug-14 CDI % n.a. Aug BR 51,538 - Energias do Brasil Oct-15 IPCA % n.a. Sep BR 57,133 - Energias do Brasil Oct-15 CDI % n.a. Sep BR 193,632 - Energias do Brasil Oct-15 IPCA % n.a. Sep BR 15,266 - Bandeirante Feb-16 CDI % n.a. Feb BR 29,150 - Escelsa Feb-16 CDI % n.a. Feb BR 34,980 - Energias do Brasil Apr-16 IPCA % n.a. Apr BR 75,254 - Energest Apr-16 CDI % n.a. Apr BR 15,741 - Energest Apr-16 CDI % n.a. Apr BR 10,494 - Enerpeixe Nov % * CDI n.a. Nov BR 102,026 - Pecém Dec-16 CDI % n.a. Nov BR 96, ,546-12,210, ,000 (i) These issues by EDP Finance B.V. are associated with interest rate swaps and/or currency swaps. (ii) Fixed in each year, varies over the useful life of the loan. (iii) These issues correspond to private placements. (iv) There is a call option exercisable at par by EDP at March 2021, March 2026 and subsequently on each date of interest payment. (v) Fixed rate in the first 5.5 years, subsequently updated every 5 years. (vi) Consolidated nominal value after the repurchase of securities by EDP - Energias de Portugal, S.A. (see note 20). EDP Group has various credit facilities it uses for liquidity management. EDP Group has short-term credit facilities of 231,000 thousand Euros, indexed to Euribor for the agreed period of use with spread conditions agreed in advance, and with a firm underwriting commitment, which as at 31 December 2016 are totally available. Also EDP Group has Commercial Paper programs of 100,000 thousand Euros with guaranteed placement, which as at 31 December 2016 are available in 40,000 thousand Euros. EDP Group has a medium term Revolving Credit Facility (RCF) of 3,150 million Euros, with a firm underwriting commitment and maturing in 2019, which as at 31 December 2016 is totally available, and a RCF of 500,000 thousand Euros, with a firm underwriting commitment and maturing in 2020, which as at 31 December 2016 are available in 300,000 thousand Euros

4 As G4-PR5 at 31 December , future debt and borrowing payments and interest by type of loan and currency are analysed as follows: Marketing Communications Following Thousand G4-PR6 Euros Dec 2017 Não Dec aplicável Dec 2019 Dec 2020 Dec 2021 years Total Bank G4-PR7 loans: Não material Euro Customer Privacy 336, , ,735 1,960,216 94, ,144 3,161,573 Brazilian Real 117,289Informação 144,751 disponível no 164,726 Relatório de Abordagem 71,869 de Gestão à 64, , ,765 US Dollar 6, , ,833 Other G4-PR ,076 20,332 21,954 23,444 25, , ,553 Compliance 481, , ,974 2,055, , ,576 4,540,724 Bond loans: Euro G4-PR ,137, , ,094 1,078, ,951 R 4,093,404 7,727,529 Brazilian Access Real 202, , , , ,773 45, ,405 US Dollar 54,760Informação 502,534 disponível no 1,092,120 Relatório de Abordagem 708,027 de Gestão à 704,715-3,062,156 1,394, ,475 1,920,954 1,889,533 1,404,439 4,138,892 11,688,090 Hybrid EU26 Bond: Euro 32, , ,308 EU , , ,308 EU28 74 e 75 Commercial EU29 paper: 74 e 75 Euro EU , , ,722 US Provision Dollar Of Information 2, , , ,564Informação disponível - no 237,169 Relatório de Abordagem de -Gestão à 200, ,733 Other loans: Euro 1, ,939 Brazilian Real 6,321 2,538 2, ,461 27,882 Cumprimento Total R Reasonable Verification 8,140 2,608 2, ,461 29,821 Cumprimento Parcial imited Verification Não disponível 2,476,403 * Specific 1,401,158 indicator for this 2,785,256 sector 3,946,018 1,789,744 5,628,097 18,026,676 As at 31 December 2015, future debt and borrowing payments and interest by type of loan and currency are analysed as follows: Following Thousand Euros Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 years Total Euro 392, , , ,639 1,614, ,466 3,364,195 Brazilian Real 77, , , ,396 72, , ,796 US Dollar 3, , ,349 Other 43,911 39,451 37,634 38,392 37, , , , , , ,473 1,723,726 1,083,394 5,075,942 Bond loans: Euro 2,462,908 1,031, , ,675 1,078,639 2,828,942 8,471,981 Brazilian Real 124, , ,847 79,275 30,563 21, ,373 US Dollar 64, ,129 1,082, , ,898 3,728,706 2,651,885 1,185,194 1,482,161 1,814,064 1,793,710 3,831,046 12,758,060 Hybrid Bond: Euro 11, , ,932 11, , ,932 Euro 420, ,636 US Dollar , , , , ,268 Other loans: Euro 9,191 1, ,412 Brazilian Real 5,478 2,710 1,985 1, ,382 24,926 14,669 3,931 1,985 1, ,382 35,338 3,616,664 1,678,981 1,994,950 2,795,813 3,518,163 5,665,969 19,270,540 Some of the loans contracted by the EDP Group, mainly debt issued under the EMTN programme, include some usual clauses in this type of operations, namely, "change-of-control", "negative pledge", "pari-passu" and "cross-default" clauses, each one only applicable under a restricted set of circumstances. The Group has project finance loans with the usual guarantees for such loans, namely pledges or promissory pledges over shares, bank accounts and assets relating to the projects. As at 31 December 2016 and 31 December 2015 these loans amounted to 1,100,951 thousand Euros and 1,609,375 thousand Euros, respectively (see note 44)

5 The fair value of EDP Group s debt is analysed as follows: Dec 2016 Dec 2015 Carrying Market Carrying Market Thousand Euros amount value amount value Debt and borrowings - Non-Current 15,550,273 16,355,711 15,653,876 16,291,289 Debt and borrowings - Current 2,476,403 2,242,288 3,616,664 3,397,597 18,026,676 18,597,999 19,270,540 19,688,886 In accordance with accounting policies - note 2 d) and f), the financial liabilities whose risks are being hedged by derivative financial instruments and that comply with hedge accounting requirements of IAS 39, are accounted at fair value. The financial liabilities are booked at amortised cost. For fair value of debt purposes, the Hybrid bond was valued considering the maturity of the first call date (March 2021). 369