Edgar Filing: EDP ENERGIAS DE PORTUGAL SA

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO

RULE 13a-16 OR 15d-16 UNDER THE SECURITIES

EXCHANGE ACT OF 1934

For the Month of March 2006

EDP- Energias de Portugal, S.A.

Praça Marquês de Pombal, 12

1250-162 Lisbon, Portugal

(Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x Form 40-F ¨

(Indicate by check mark whether the registrant by

furnishing the information contained in this form

is also thereby furnishing the information to the

Commission pursuant to Rule 12g3-2(b) under the

Securities Exchange Act of 1934.)

Yes ¨ No x

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Financial Results

2005

Investor Relations Department

Pedro Pires, Head of IR Gonçalo Santos Elisabete Ferreira Cristina Requicha Rui Antunes Catarina Mello Phone: +351 21 001 2834 Fax: +351 21 001 2899 Email: ir@edp.pt Site: www.edp.pt

Reuters: EDPP.IN / EDP.N Bloomberg: EDP PL / EDP US

Lisbon, 7 March 2006

EDP—Energias de Portugal, S.A. Headquarters: Praça Marquês de Pombal,12 1250-162 Lisboa Portugal

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Table of Contents

2005 Performance 3

Income Statement and Balance Sheet 4

EBITDA Overview 5

Capex 6

Cash Flow 7

Financial Debt and Provisions for Social Benefits 8

Financial Income/(Expense) and Amortization of Rights and Concessions 9

Business Areas

EDP Produção 11

EDP Comercial 14

Enernova & EDP Bioeléctrica 15

EDP Distribuição 16

Portgás 19

HC Energia 20

Energias do Brasil 24

Telecoms 27

Income Statement and Cash Flow by Business Areas 30

Annex (1. Iberian Installed Capacity and Generation; 2. Wind Capacity in Iberia) 34

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2005 Performance

Results Summary (€m) 2005 2004 < %

Gross Profit 3,863.8 3,367.2 14.7%

Operating Costs 1,382.3 1,975.1 -30.0%

EBITDA 2,481.5 1,392.1 78.3%

EBIT 1,620.2 686.7 135.9%

Net Profit 1,071.1 271.6 294.3%

Net Debt 9,463.2 8,534.7 10.9%

Operating Data 2005 2004 <

Electricity:

Installed Capacity (MW) 12,334 11,770 +564 MW

Generation (GWh) 44,474 43,048 3.3%

Distribution (GWh) 76,093 72,733 4.6%

Retail (GWh) 70,277 68,507 2.6%

Clients (thousand) 9,462 9,292 +170 th

Gas:

Distribution (GWh) 23,495 22,059 6.5%

Retail (GWh) 20,736 17,080 21.4%

Clients (thousand) 700 566 +134 th

Employees (Group) 14,235 16,243 -2,008

In 2005, EDP Group’s EBITDA went up 78%, reflecting the full integration of HC Energia, which benefited from the high pool prices, a strong contribution of Energias do Brasil and a €397m capital gain on the sale of a 14.3% stake in GalpEnergia.

The full integration of HC Energia allowed EDP to balance its short generation position in Portugal with HC Energia’s long generation position in Spain

• The context of high pool prices benefited EDP Group’s liberalised generation and supply activities in Iberia, given that HC Energia’s long generation position in the Spanish market enabled EDP Group to more than compensate its short generation position in the Portuguese liberalised market.

• The increase in Spanish pool prices was reflected in EDP’s results, given that the tariff deficit that resulted from higher generation costs was approved by Decree Law to be recovered through the tariffs in the future.

Domestic distribution activity was affected by the 2005 tariff revision and the hike in fuel costs

• Despite the 6% strong increase in electricity demand, allowed revenues were affected by a 4% decrease in the use of distribution grid tariffs and by a 50bps reduction in regulated rate of return of the supply activities.

• Electricity gross profit was penalised by an increase in electricity purchase costs, namely high fuel costs, which will be passed through to tariffs in the subsequent years.

Brazilian activities delivered a sound contribution to EDP Group operating performance

• Strong operating performance following tariff adjustments and a 3% consumption growth.

• EDP benefited from the improvement of the Brazilian macroeconomic environment which resulted in the 20% appreciation of the Real and a reduction of the country risk.

Progress on efficiency: completion of the Human Resources Restructuring Programme

• In 2005 EDP Group completed the implementation of the HR Restructuring started in 2003. As a result of this programme, EDP was able to reduce 1,731 employees in the core business.

A robust Net Profit reflects the strong operating performance but also the disposal of non-core assets

• Capital gains on the disposal of non-core assets: 14.3% of GalpEnergia (€397m), Comunitel (€31m), 60% of Edinfor (€15m), 3% of REE (€9m) and transfer of 2.01% of BCP to EDP’s pension fund (€12m).

• Lower effective tax rate explained by the capital gain on GalpEnergia, which is tax free, and by tax savings achieved with the corporate restructuring of our Brazilian activities.

Development of the strategic plan in Iberia through acquisitions and organic growth

• Acquisitions: i) 1,728 MW of wind farms, of which 272 MW in operation and 1,456 MW in the pipeline; ii) strengthening of EDP’s position in the Portuguese gas business through a 60% stake in Portgás, the second DisCo. in Portugal; iii) increase of EDP’s stake in Turbogás CCGT (990 MW) from 20% to 40%.

• Organic growth: i) conclusion of the construction of the 1,200 MW Ribatejo CCGT and 192 MW Venda Nova II hydro plant; and ii) beginning of the construction works at Castejón 2 CCGT (400 MW) and start of the project of Baixo Sabor hydro plant (170 MW).

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Income Statement and Balance Sheet

The financial statements presented in this document are non-audited. 2004 figures are pro-forma.

Consolidated Income Statement (€m) 2005 2004 <%

Electricity Sales 8,584.4 6,555.5 30.9%

Other Sales 664.3 232.9 185.2%

Services Provided 428.3 522.3 -18.0%

Operating Revenues 9,677.0 7,310.7 32.4%

Electricity & Gas 4,222.0 3,335.8 26.6%

Fuel 1,103.7 551.6 100.1%

Materials and goods for resale 487.5 56.1 768.8%

Direct Activity Costs 5,813.2 3,943.5 47.4%

Gross Profit 3,863.8 3,367.2 14.7%

Gross Profit/Revenues 39.9% 46.1% -6.1%

Supplies and services 816.8 660.9 23.6% (1)

Personnel costs 546.0 527.7 3.5%

Costs with social benefits 200.3 440.1 -54.5% (2)

Concession fees 209.0 190.2 9.9%

Other operating costs (or revenues) (389.8) 156.2 —(3)

Operating costs 1,382.3 1,975.1 -30.0%

EBITDA 2,481.5 1,392.1 78.3%

EBITDA/Revenues 25.6% 19.0% 6.6%

Depreciation and amortisation 952.0 784.3 21.4%

Comp.of subsidised assets’ depreciation (90.7) (78.9) -14.9%

EBIT 1,620.2 686.7 135.9%

EBIT/Revenues 16.7% 9.4% 7.3%

Financial income/(expense) (364.0) (264.7) -37.5%

Amortisation of rights and concessions (37.6) (44.0) 14.4%

Discontinued Activities 45.5 ——(4)

Pre-tax profit 1,264.2 378.1 234.4%

Income taxes and deferred taxes 152.2 103.2 47.5%

Minority interests 40.9 3.3 1,147.1%

Net Profit 1,071.1 271.6 294.3% (5)

Assets (€m) 2005 2004

Fixed assets 18,500.5 17,116.7

Intangible assets, net 3,655.6 2,987.5

Tangible assets, net 13,898.0 12,628.0

Financial Investments, net 946.9 1,501.2

Other assets 5,006.2 2,968.4

Inventories 219.2 168.6

Accounts receivable—trade, net 1,463.5 1,184.9

Accounts receivable—other, net 2,462.4 1,324.6

Cash and cash equivalents 861.1 290.4

Deferred Tax 892.7 867.4

Total assets 24,399.4 20,952.5

Shareholders’ equity ( m) 2005 2004

Share capital 3,656.5 3,656.5

Own shares (38.1) (31.7)

Earnings and other reserves 1,205.0 413.0

Minority interest 1,287.8 743.9

Shareholders’ equity 6,111.2 4,781.8

Liabilities (€m) 2005 2004

Provisions 2,112.5 2,290.3

Hydrological correction account 170.0 364.2

Financial Debt 10,584.3 9,161.1

Short-term debt & current portion of long-term debt 1,983.6 1,975.1

Long-term debt 8,600.7 7,186.0

Other liabilities 5,051.7 4,068.8

Accounts payable - trade, net 4,914.0 3,860.4

Accounts payable - other, net 137.8 208.3

Deferred Tax 369.7 286.4

Total liabilities 18,288.2 16,170.7

Total liabilities and shareholders’ equity 24,399.4 20,952.5

Notes:

(1) The 2005 S&S include the IT outsourcing contract with Edinfor in the amount of €89.8m. Following the sale of 60% of Edinfor in January 2005 (previously 100% owned by EDP) we started booking the services provided by that company as a non-group S&S. (2) 2004 includes a €317m cost (NPV) related to the Human Resources Restructuring negotiated with ERSE (€87m for the 2003 HRRP and €230m for the 2004 HRRP), and €20m of incentives related to the anticipation to the retirement age programme. The year 2005 includes a 64m cost (NPV) related to the Human Resources Restructuring (€30m at EDPD and €34m at HC). In addition, there is a €44m increase in pension premiums and provisions for pension liabilities following the 2005 actuarial study. (3) Other operating costs or revenues include a €397m capital gain from the sale of EDP’s 14.3% stake in GalpEnergia, a capital gain from the sale of REE of €9m and a €12m capital gain on the transfer of a 2.01% stake in BCP to EDP’s pension fund. (4) 2005 includes a €31m capital gain, at EDP Group level, relative to the sale of Comunitel and a €15m capital gain on the sale of 60% of Edinfor.

(5) The 2004 reported Net Profit was adjusted for the exclusion of a €316m provision, with an impact of €229M at Net Profit, accounted in December 2004, against the asset booked as of January 2004 related to the hydro correction account. Please see page 31 for our 2004 reported accounts.

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EBITDA Overview: Group’s EBITDA up 78.3%

EBITDA (€m) 2005 2004 <%

EDP Produção 802.4 835.6 -4.0%

EDP Comercial (80.8) (6.1) -

Enernova & EDP Bioeléctrica 19.5 17.4 12.2%

EDP Distribuição 424.0 282.5 50.1%

Portgás (60%) 19.0 — -

HC Energia (1) 564.9 160.5 251.9%

Energias do Brasil 413.1 210.8 96.0%

Oni 19.3 (33.0) -

Other & Adjustments 300.3 (75.5) -

Consolidated 2,481.5 1,392.1 78.3%

EBITDA 2005 *

Generation & Supply (Iberia)

Telecoms

Brazil

Gas (Iberia)

Renewables (Iberia)

Distribution (Iberia)

50%

19%

21%

Contributions to the year-on-year EBITDA U by Business Areas ( m)

1,392

-111

+164

+241

HC Energia

+141

+19

+202

+52

+397

-25

Other & Adjustments

2,482

78,3%

EBITDA EDPP & HC HC Renew. EDPD Portgás Brazil Oni Sale of Edinfor Other EBITDA YE2004 EDPC Business Consolid. 14.3% of 2004 YE2005 Growth Effect Galp

(1) 40% in the YE2004

• Regardless of the positive evolution of the binding generation gross profit following an increase in the PPA capacity charge and the efficient fuel procurement, EDP Produção’s EBITDA fell 4.0%. The output of EDPP’s power plants operating in the non-binding system amounted to 5,252 GWh while EDP Comercial, the Group’s arm that targets electricity clients in the liberalized segment, sold 6,314 GWh. The Group’s short position in the Portuguese liberalized market is covered by electricity acquisitions made by EDPP in the Spanish pool. The performance of the liberalised activities during the period reflects the combined impact of the high pool prices experienced in 2005 (with an impact of -€54m in 2005 vs. 2004) and the nature of some of the contracts entered into by EDPC with its clients that do not allow for the full adjustment of final prices to sudden hikes in the electricity cost. EDPC is undergoing a process of renegotiation of contracts with its clients in light of the current and expected evolution of electricity pool prices. This effect is also being mitigated with the start of operations of the third 392 MW unit of the Ribatejo CCGT that operates in the non-binding system.

• In contrast HC Energia is long in generation and the Group’s “Iberian Hedge” becomes evident. HC Energia generated 15,198 GWh and provided 5,926 GWh of electricity to its clients in the liberalised segment. Given this long position on generation, the company’s EBITDA was propelled by the hike of pool prices (with an impact of +€215m in 2005 vs. 2004). EDP also benefited from the full consolidating HC Energia’s P&L for the first time in 2005.

• Despite the strong increase in demand, EDP Distribuição’s gross profit was penalised by the fuel prices’ increase that affected the energy acquisition activity. Operating costs decreased 26.3%, due to the accounting in 2004 of cost with 2003/04 HR Programme from which EDPD started to bear fruits. All in all, EDP Distribuição’s EBITDA improved almost 50%.

• Energias do Brasil continued to provide strong growth. All Brazilian activities presented strong EBITDA increases in 2005, following higher electricity sales in the distribution and supply activities, higher tariffs following the positive impacts of the annual tariff adjustments and lower non-controllable costs than those established by regulation. In addition, the Group benefited from a 20% appreciation of the Real vs the Euro in 2005 (+€69m) and from the reversion of the provision made in 2003 to cover the potential asset devaluation of Lajeado project (+€30m).

• Oni’s EBITDA reflects an improvement of the gross profit and a strict control of personnel costs and supplies & services - other than those related to client’s acquisition and retention costs. In 2004, Oni’s financials were negatively impacted by the reversal of a 40m tax credit booked in 2002 from the sale of Oni Way to Vodafone. In September 2005, Oni sold Comunitel, and in accordance EDP only consolidate it 9 months in 2005.

• Other and adjustments include a €397m capital gain on the sale of the 14.27% stake on Galp for €720.5m, €-23m related to the adjustment of the capital gain from the sale of REE (reflecting the difference between EDP accounts – sale price against market value –and HC Energia accounts – sale price against book value) and a €12.4m capital gain on the transfer of a 2.01% stake in BCP to EDP’s pension fund.

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Capex

CAPEX (€m) 2005 2004 <U%

EDP Produção 202.2 200.2 1.0%

EDP Comercial 5.7 5.6 1.6%

Enernova & EDP Bioeléctrica 46.0 54.5 -15.6%

EDP Distribuição 338.0 302.8 11.6%

Portgás (60%) 9.0 — n.a.

HC Energia (1) 347.3 117.7 n.a.

Iberian Energy 948.3 680.7 39.3%

Energias do Brasil 419.4 284.9 47.2%

Telecoms 34.1 32.4 5.2%

Other 27.6 30.7 -10.4%

Total 1,429.2 1,028.8 38.9%

Return on Invested Capital (ROIC)

6.3%

6.8%

2004

2005

Return on Equity (ROE)

13.5%

44.4%

2004

2005

Return on Assets (ROA)

4.8%

9.6%

2004 2005

Capex / Depreciation

1.5

1.7

2004

2005

• The EDP Group’s capital expenditures amounted to €1,429.2m in 2005, an increase of 38.9% year-on-year, mainly due to i) investments in the Portuguese distribution grid to improve the quality of service; ii) the construction of the Peixe Angical power plant in Brazil; iii) investments related to the mandatory universal connection programme of all low voltage consumers in Brazil, and iv) the full consolidation of HC Energia’s operating investment in 2005.

• At EDPP, the operating investment remained stable following the end of the construction of both the second (2004) and third (2005) units of the Ribatejo CCGT. In 2005, EDPP also acquired from REN the thermal power plants sites (Setúbal, Carregado and Tunes) for €40.6m. In addition, EDPP concluded the construction of Venda Nova II hydro power plant in August 2005 (€6.0m), continued works to reduce SO2 and NOx emissions at Sines power plant (€17.2m), and started the project for the 170 MW of Baixo Sabor hydro power plant (€4.7m). EDPP expects to invest €220m in environmental works between 2005 and 2008, and €360m in the construction of Baixo Sabor, which should start operations in 2011.

• In 2005, 90% of EDPD’s capex was allocated to the distribution network in order to improve the quality of service. Investment in the distribution grid rose 5.6% year-on-year, which along with favourable weather conditions enabled an 14.4% improvement of Equivalent Interruption Time (from 215 min. in 2004 to 184 min. in 2005).

• Almost 50% of HC Energia’s capex was allocated to special regime projects, more specifically to wind farms. In 2005 the wind farms Las Lomillas (50 MW – 50% held by Genesa) and La Sotonera (19 MW) entered into service. The wind farms Boquerón (22 MW) and Belchite (50 MW) started operations in the beginning of 2006 while the Brujula wind farm (73 MW) should start operations in May. In 2005, HC Energia started the construction of the second 400 MW unit at Castejón CCGT (25m), which is forecasted to start operations by the end of 2007. Total investment in this project should amount to 200m. Additionally in 2005, HC Energia continued the environmental investments ( 14.6m in 2005) to reduce the SO2 and NOx emissions at Aboño and Soto, in order to comply with EU directives until the end of 2007. Total estimated investment in relation to this project for the 2005-2007 period amounts to approximately 140m.

• Investment in Peixe Angical hydro power plant (452 MW) totalled to R$638.6m (€232.7m) in 2005 and represented 55% of Brazil capex in the period. EDP expects to invest a further R$170m in 2006, when this power plant should start operations. Note that this figure corresponds to 100% of the project, of which Energias do Brasil owns 60%. The project is also being financed through a R$670m loan from BNDES. Capex in Brazil also includes a total of R$119.4m (€43.5m) related to the mandatory universal connection programme – “Universalização” – to all low voltage consumers, in the concession areas of Bandeirante, Escelsa and Enersul.

(1) 40% in the YE2004

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Cash Flow

Operating Cash Flow by Business Area (€m) 2005 2004 <%

EDP Produção 656.1 775.8 -15.4%

EDP Comercial (45.1) (40.1) -12.4%

Enernova & EDP Bioeléctrica 23.4 0.9 -

EDP Distribuição 392.7 526.0 -25.3%

HC Energia 485.9 174.6 178.3%

Energias do Brasil 381.7 239.1 59.6%

Oni 23.9 15.3 55.7%

Hydro Correction (200.2) (17.8) -

Other (65.6) (9.7) -

EDP Group Operating Cash Flow 1,652.8 1,664.0 -0.7%

Consolidated Cash Flow (€m) 2005

Net Profit 1,071.1

Depreciation 952.0

Compensation of subsidised assets’ depreciation (90.7)

Concession rights’ amortisation 37.6

Net provisions 40.8

Interest hydro account 6.0

Forex differences (68.7)

Income fequity method (35.3)

Deferred taxes 41.1

Minority interests 40.9

Other adjustments (incl. capital gain on GalpEnergia) (342.1)

Net financial interest and other financial costs 296.5

Operating Cash Flow before Working Capital 1,949.2

Change in operating working capital (96.2)

Hydro correction (200.2)

Operating Cash Flow 1,652.8

Capex (1,429.2)

Net Operating Cash Flow 223.6

Divestments of fixed assets 540.4

Net financial investments (775.7)

Financing of 6.08% of 2005 Spanish Tariff Deficit (224.3)

Net financial interest and other financial costs (296.5)

Dividends paid (336.0)

Other non-operating changes (60.0)

Decrease/(Increase) in Net Debt (928.4)

Operating Cash Flow per Business Area (€m)

656

-45

393

486

382

-200

-66

1,653

EDPP EDPC Renew. EDPD HC Brazil Oni Hydro Other EDP

Correct. Group

FFO + Net Interests / Net Interests

5.5

4.9

2004 2005

FFO / Net Debt

16.0%

14.3%

2004 2005

EBITDA / Net Interests

4.6

7.1

2004 2005

6.1

Net Debt / EBITDA

3.8

2004 2005

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Financial Debt and Provisions for Social Benefits

Financial Debt (€m) 2005 2004

EDP S.A. and EDP Finance BV 7,844.8 5,553.0

EDP Produção 29.0 33.9

EDP Comercial — -

Enernova & EDP Bioeléctrica 26.5 17.0

EDP Distribuição — -

Portgás (60%) 70.7 -

HC Energia 701.8 1,621.1

Energias do Brasil 1,006.6 731.4

Oni 315.7 622.5

Other 17.6 42.4

Sub-Total 10,012.6 8,621.3

OPTEP Derivative (Liability) 315.0 315.0

Fair Value on Hedged Debt 92.2 107.6

Accrued Interests on Debt 164.5 117.3

Total Financial Debt 10,584.3 9,161.1

Cash and cash equivalents 861.1 290.4

OPTEP Derivative (Asset) 260.0 336.0

EDP Consolidated Net Debt 9,463.2 8,534.7

Net Debt Allocation (€m) 2005 2004

Internal + External Debt

EDP Produção 1,506.7 2,168.5

EDP Comercial 150.8 89.1

Enernova & EDP Bioeléctrica 220.2 127.9

EDP Distribuição 1,586.5 1,339.5

Portgás (60%) 90.3 -

HC Energia 2,379.2 1,711.3

Energias do Brasil 896.8 912.0

Oni 274.4 703.9

EDP SA & adjustments 2,358.3 1,482.4

EDP Consolidated Net Debt 9,463.2 8,534.7

Provisions for Social Benefits ( m) 2005 2004

Pensions 1,099.6 1,267.1

Medical Care 743.6 728.4

Total 1,843.2 1,995.4

Debt Ratings

S&P Moody’s Fitch

SA & BV A/Stab/A-1 A2/Stab/P-1 A+/Stab/F1

HC A3/Stab/P-2 BBB+/Stab/F2

Bandeir. Ba3/Stab

Escelsa B+/Pos B2/Stab

Investco Ba1/Stab

Net Debt / Total Capital

60.7%

56.1%

2004 2005

Medium/Long term Debt (1)

Variable Hedged

Fixed

25%

69%

Variable Un-hedged

Debt by Currency (1)

Euro

90%

USD

BRL

Debt Maturity (€m) (1)

3,200 2,800 2,400 2,000 1,600 1,200 800 400 0

2006 2007 2008 2009 2010 2011 2012 >2012

Other

EDP SA & EDP Finance BV

• The EDP Group’s total net debt increased by €928.4m, vis-à-vis 2004, to €9,463.2m, following: i) a stable operating cash flow vs. a higher capex level - operating cash flow was affected by the €200.2m hydro correction payment to REN following a very dry period; ii) the financing by HC of €224.3m regarding the Spanish tariff deficit; iii) financial investments of €775.7m: a) acquisition of wind farms, namely Desa in Spain (€478m share capital +€83m shareholders loans) with 224 MW in operation and 1,186 in the pipeline, Ider in Spain (€15m) with 114 MW under development, Ortiga and Safra in Portugal (€21m) with 53 MW in the pipeline, Tecneira in Portugal (€36m related to the first payment) with 48 MW in operation and 73 MW in the pipeline, and Weom in France (€4m) with 30 MW under development; b) purchase of 46.625% of Portgás (€85m) (EDP already signed an agreement to increase its stake in the company from 60% to 72%); and c) acquisition of a 20% stake in Turbogás (€52m) (increasing EDP’s stake to 40%); iv) the consolidation of the net debt of Desa (€159m) and Portgás (€69m); v) the payment of the 2004 annual dividend of €336.0m; vi) the forex effect on the net debt of our Brazilian subsidiary following the strong valuation of the Real (an increase of approximately €227m in net debt);

Offset by: i) the proceeds from the IPO of Energias do Brasil (R$500m or €182m); ii) the sale of non-core assets (€540m), namely 14.27% of GalpEnergia (EDP received in December 20% of 720m), 3% of REE (€76m), 60% of Edinfor (€81m), 99.93% of Comunitel (€204m) and an office building to REN (€21m); and iii) a private placement of a 2.2% stake of Energias do Brasil (EDP received €6m in 2005 out of a total of €23m).

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Financial Income/(Expense) and Amortization of Rights and Concessions

Financial Results (m) 2005 2004 <%

Income from group&associated cos. 35.3 3.7 -

Investment income 36.1 30.5 18.3%

Financial Investments Gains/(Losses) 71.4 34.2 108.5%

Net financial interest paid (349.8) (301.1) -16.2%

Net foreign exchange differences 68.7 13.9 394.8%

Other (154.3) (11.8) -

Financing Gains/(Losses) (435.3) (299.0) -45.6%

Financial results (364.0) (264.7) -37.5%

Income from Equity Method (m) 2005 2004 <%

REN (30%) (0.4) (18.3) 97.7%

Edinfor (40%) 1.3 (0.0) -

Setgás (19.8%) 0.6 — -

CEM (22%) 9.0 9.3 -3.3%

Turbogás (40% in 2005/20% in 2004) 12.2 4.9 148.3%

DECA II (EEGSA (21%)) 8.2 5.9 37.4%

HC’s subsidiaries 2.8 1.2 124.9%

Other 1.6 0.7 134.6%

Total 35.3 3.7 -

Note 1: The 2004 equity contribution from REN, now presented, changed from last years reported figure, as the consequence of the application of the IFRS to REN accounts. In accordance with the IFRS conceptual framework, regulatory assets or liabilities, among other, are not recognized, resulting in an adjustment of—37.2m to the equity contribution of REN.

Amort. of rights and concession (m) 2005 2004 <%

EBE 8.2 8.1 1.0%

IVEN (Escelsa/Enersul) 22.8 22.3 2.2%

Comunitel 3.3 5.5 -41.1%

Oni 3.3 3.3 -

Edinfor (goodwill impairment) — 4.7 -

Total 37.6 44.0 -14.4%

Note 2: Under IAS, goodwill ceases to be amortised in the P&L, and the underlying assets become subject to an impairment test .

(m)

Equity Investment Net Interest Net Forex Fair value on

2004 Method Income Paid Differences derivatives Other 2005

(1)

-264.7

31.5

5.6

-48.7

-1.7

-105.7

19.7

-364.0

Financial results were influenced by:

Higher contribution from “Income from group and associated cos.”, up 31.5m on the back of the following positive impacts: i) the increase in EDP’s stake in Turbogás from 20% to 40% (+€7.3m); ii) REN’s equity contribution in 2005 (+€17.9m) includes dividends it received from GalpEnergia (18.3% owned by REN) and; iii) EEGSA (+€2.2m), Hidrocantábrico’s equity affiliates (+€1.6m) and Edinfor (+€1.3m), that started to be equity consolidated as from January 2005 after the sale of 60% of the company to LogicaCMG.

Additional “Investment Income” of 5.6m due to i) the distribution of dividends received from GalpEnergia (previously to the sale in December 2005 of the 14.27% then owned by EDP), which amounted to €23.7m in 2005, whereas in 2004 the company only distributed 13.3m in dividends; ii) lower dividends received from MillenniumBCP ( €7.5m 2005 vs. €12.8m 2004), following the transfer of a 2.01% stake to EDP’s Pension Fund in June 2005. Currently EDP owns 2.35% of MillenniumBCP’s share capital.

“Net financial interest paid” went up 16.2% reflecting i) the full consolidation of Hidrocantábrico debt in 2005 (previously 40% consolidated) (+€66.7m), ii) mitigated by the decrease in the average cost of consolidated debt from 4.34% to 4.18% (-€13.7m).

“Net foreign exchange differences” in 2005 were driven by the effect of the 13% appreciation of the Brazilian Real against the US Dollar on the dollar denominated debt in Brazil versus a 9% appreciation in 2004.

The “Other” financial gains and losses in 2005 include: i) a €118.0m financial provision relating to the fair value of a derivative contracted by EDP to hedge the effect of interest rate changes on the NPV calculation of the value of the CMEC. This provision will be reverted at the time of the start of MIBEL when the CMECs come into effectiveness; ii) the fair value of forex hedge instruments in Brazil (-€56.6m).

(1) Net Forex Differences in chart were adjusted for hedge instruments accounted in “Other”

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Business Areas

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Electricity Generation in Portugal

Electricity

Generation (GWh) 2005 2004 <%

Hydroelectric

(PES) (1) 4,279 8,718 -50.9%

Thermoelectric

(PES) (1) 14,545 11,756 23.7%

Binding

Generation 18,824 20,475 -8.1%

Hydroelectric

(NBES) (2) 164 398 -58.9%

TER

CCGT (NBES) (2) 5,088 3,419 48.8%

Non-Binding

Generation 5,252 3,817 37.6%

Small

hydro 90 141 -35.9%

Cogeneration

670 656 2.2%

Wind

farms 348 237 46.9%

Biomass

51 49 4.5%

Special

Regime Producers 1,160 1,083 7.2%

Total

EDP generation 25,236 25,374 -0.5%

Pego

thermal power station (PES) (1) 4,701 4,422 6.3%

Tapada

thermal power station (PES) (1) 6,287 6,153 2.2%

Alqueva

hydroelectric power station 81 100 -19.0%

Auto-producers

(IES) (3) 5,662 3,858 46.8%

Import

/ (Export) net 6,824 6,481 5.3%

Direct

sales to ind. clients (incl. in Cogen.) (251) (461) 45.7%

Pumping

(564) (408) -38.2%

Gross

demand 47,977 45,519 5.4%

Synchronous

compensation (29) (35) 17.4%

Own

consumption - generation (6) (8) 32.1%

Own

consumption - transmission grid (9) (10) 4.5%

Transmission

losses (665) (657) -1.3%

Energy

delivered to distribution 47,267 44,809 5.5%

Hydro

Coeficient 0.41 0.81 -49.4%

Hydro coefficient

2.0 1.0 0.0

0,81

2004

0,41

2005

(1) PES - Public Electricity System (2) NBES - Non-binding Electricity System (3) IES - Independent Electricity System (4) In April 2004, Units 1 and 2 (32MW) at Tunes were decomissioned from service in the PES

Thermal

generation (GWh) 2005 2004 <% Fuel MW

Sines

9,590 9,530 0.6% Coal 1,192.0

Setúbal

3,556 1,689 110.5% Fuel oil 946.4

Carregado

1,162 327 255.4% Fuel oil/Nat. Gas 710.2

Barreiro

220 200 9.8% Fuel oil 56.0

Tunes

(4) & Tapada do Outeiro 17 10 70.6% Gas Oil 165.0

Thermal

emission (PES) 14,545 11,756 23.7%

EDP Produção - Fuel Cost Diagram

€/MWh

60 50 40 30 20 10 0

25,374 GWh

25%

91%

85%

13%

0% 20% 40% 60% 80% 100%

2004

Hydro

Coal

- CCGT

€/MWh

60 50 40 30 20 10 0

25,236 GWh

12%

92%

68%

30%

0% 20% 40% 60% 80% 100%

2005

Fuel/Diesel

Load Factor (5)

Electricity demanded by the distribution grid in Portugal continued to grow strongly, up 5.5% from 2004 to 47.3 TWh.

EDP Group’s electricity generation output remained stable at 25.2 TWh and accounted for 52% of the total energy supplied to the system (55% in 2004). During the period EDP benefited from the start of operations of the second and third 392 MW groups of the Ribatejo CCGT (in the 4Q2004 and 4Q2005) and from a higher utilization of its fuel oil thermal plants due to the dry year (load factor: 30% in 2005 vs. 13% in 2004). On the other hand, owing also to the driest period of the last 15 years (hydro coefficient of 0.41 vs. 0.81 in 2004), EDP Produção experienced a lower utilisation of its hydroelectric power stations which represent 49% of EDP’s installed capacity in Portugal. The contribution of the hydro plants to the EDP Group total generation in Portugal fell from 36% in 2004 to 18% in 2005.

During 2005 EDP did not fully benefit from the Ribatejo CCGT new capacity as stoppages at Units I and II occurred from August 2005 due to repair works. Unit I became operational in September and Unit II restarted in late November. The repair works on both units were covered by the manufacturer’s guarantee.

EDP’s gross profit is only marginally affected by generation output swings or fuel costs hikes (see in next page) since 80% of its installed capacity in Portugal is bounded to long-term Power Purchase Agreements (PPAs) in the Public Electricity System (PES).

(5) Load Factor: number of equivalent hours to the output of a power plant relative to the total number of hours in the period 11

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EDP Produção

PES

(€m) 2005 2004 <%

PPA

Capacity Charge 909.3 892.0 1.9%

PPA

Energy Charge 495.2 301.2 64.4%

Steam

(Barreiro) & Ashes 6.5 6.5 -1.1%

(-)

Coal 207.5 184.6 12.4%

(-)

Fuel oil 248.3 86.3 187.6%

(-)

Natural Gas 8.0 11.9 -32.3%

(-)

Gas Oil 2.2 0.6 274.7%

(-)

Electricity Autoconsumption & Materials 8.2 6.5 27.7%

PPA

Gross Profit 936.6 909.9 2.9%

NBES

(€m) 2005 2004 <%

Electricity

Sales 469.5 217.1 116.2%

(-)

Direct costs (fuel + purchases + trading) 454.2 126.3 259.6%

NBES

Gross Profit 15.2 90.8 -83.3%

SRP

(€m) 2005 2004 <%

Cogeneration

68.0 54.6 24.4%

Small

hydro (<10 MW) 7.4 10.8 -31.2%

(-)

Natural Gas (Cogeneration) 44.6 36.9 20.9%

(-)

Electricity Purchases 0.9 1.9 -50.2%

SRP

Gross Profit 29.9 26.6 12.1%

EDPP Gross Profit (€m)

1,041.4

2004

+26.8

PES

-75.6

NBES

+3.2

SRP

+0.2

Other

995.9

2005

*Km = 12 months average verified available capacity / 12 months average contracted available capacity.

Gross Profit in the Public Electricity System (PES) increased 2.9% in virtue of the stable return profile of the PPA Capacity Charge and the pass-through of fuel costs by means of the PPA Energy Charge. According to the PPAs, CO2 emissions and licences for the PES power stations are managed by REN, thus do not impact EDPP’s Gross Profit. The slight increase in the PPA Capacity Charge in the period reflects inflation, mitigated by both i) the lower availability factors (km) at the hydro power stations (hydro km: 1.037 in 2005 vs. 1.044 in 2004) and ii) the decommissioning in December 2004 of the 47 MW Tapada do Outeiro plant (€4.9m contribution in 2004). The fuel procurement margin (Energy Charge minus Fuel Costs) increased from €17.8m in 2004 to €29.1m in 2005 mainly as a result of i) the higher spreads between EDPP’s acquisition costs and the international fuel prices’ indices (used as benchmark to calculate the PPA Energy Charge) experienced in the 2H2005 and ii) the negative impact in 2004’s fuel procurement margin from the revaluation of EDPP’s coal stocks (€5.6m).

Gross Profit in the Non-Binding Electricity System (NBES) decreased to 15.2m following i) an approximately 63% reduction in the energy delivered to EDPD (“parcela livre”) and ii) the negative impact of high pool prices in 2005 on the electricity purchase service provided by EDPP to EDP Comercial (EDPC). EDPP guarantees EDPC’s electricity purchase price, shielding EDPC’s commercial activity from short-term pool price volatility. Despite the lower energy volumes produced by the hydro plants operating in the NBES, this year, the non-binding generation activity benefited from the extra output provided by the second (1.9 TWh) and third units (0,8 TWh) of the Ribatejo CCGT, the later started industrial operations ahead of schedule in October 2005. Regarding green house gas emissions, the repair works of the Ribatejo CCGT’s group I and II resulted in a lower load factor during 2005 (68%) than that anticipated in the CO2 licensing process: CO2 emissions amounted to 1.8 million tons while attributed licenses, this year, were 2.0 million tons. As a consequence EDPP was able to account for a €4.4m positive effect at the gross profit level in 2005.

Gross Profit from Special Regime Producers (SRP) increased to €29.9m despite a €3.4m negative impact to the gross margin in 2005 due to a 51 GWh fall in output from the small hydro power stations (facilities with installed capacity of less than 10 MW) as a result of the dry period. The 12.1% increase in SRPs’ gross profit is justified by the fact that EDP’s cogenerators switched their output from the industries they usually provide energy to, to the Portuguese Electricity System at a higher tariff. In addition the cogenerators also benefited from higher industrial clients’ tariffs, which are indexed to natural gas prices.

EDPP NBES Gross Profit (1) (€m)

Non-Binding Generation

90.8

2004

+24.3

Volume

+50.1

Selling Price

-36.9

Fuel

-113.1

Energy Management Service provided to EDPC

15.2

2005

(1) In the 4Q2005, the price agreed between EDPP and EDPC was revised up, with retroactive effects back to July 2005 as a result the figure reported and presented for the nine months ending September 2005 is higher than the one reported for the full year and presented in the chart. Note that the costs incurred by EDP Comercial related with electricity purchases increased accordingly (page 14).

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EDP Produção

Operating

Income Statement (€m) 2005 2004 <%

Energy

sales 1,931.7 1,461.1 32.2%

Services

provided (59.2) 38.4 -

Other

sales 24.1 21.2 13.6%

Operating

Revenues 1,896.6 1,520.7 24.7%

Electricity

188.5 51.4 266.6%

Fuel

for electricity generation 707.8 422.7 67.5%

Materials

and goods for resale 4.3 5.2 -17.4%

Direct

Activity Costs 900.7 479.3 87.9%

Gross

Profit 995.9 1,041.4 -4.4%

Gross

Profit/Revenues 52.5% 68.5% -16.0 p.p.

Supplies

and services - Group 32.1 26.9 19.2%

Supplies

and services - Non-Group 64.7 62.1 4.1%

Personnel

costs 74.1 82.2 -9.9%

Costs

with social benefits 27.0 22.4 20.6%

Generation

centre rentals 3.8 3.6 5.2%

Other

operating costs (or revenues) (8.0) 8.8 -

Operating

Costs 193.5 205.8 -6.0%

EBITDA

802.4 835.6 -4.0%

EBITDA

/ Revenues 42.3% 54.9% -12.6 p.p.

Depreciation

and amortisation 200.7 206.1 -2.6%

Compensation

of subsidised assets’ depr. (1.1) (4.3) 73.3%

EBIT

602.8 633.7 -4.9%

EBIT

/ Revenues 31.8% 41.7% -9.9 p.p.

Number

of employees 2005 2004 U

Number

of employees 1,672 1,792 - 120

Generation

activity 1,527 1,301 + 226

Maintenance

and engineering activity 116 463—347

Energy

management activity 29 28 + 1

MW/Employee

5.19 4.56 13.8%

Operating

investment (€m) 2005 2004 <U%

Binding

generation 55.3 49.8 11.1%

Non-Binding

generation 83.3 128.6 -35.2%

Other

investments 48.4 8.3 482.5%

Financial

costs (capitalised) and invest. 15.2 13.5 12.8%

Total

operating investment 202.2 200.2 1.0%

Recurring

investment 30.6 24.0 27.6%

Non-recurring

investment 171.6 176.2 -2.6%

EDP Produção EBITDA (€m)

835.6

2004

+26.8

PES Gross Profit

-75.6

NBES Gross Profit

+3.2

SRP Gross Profit

-7.7

Supplies and Services

+8.1

Personnel

-4.6

Social Benefits

+16.7

Other

802.4

2005

• EDPP’s EBITDA fell 4.0% mostly due to the fall in Gross Profit in the non-binding activity of EDPP, as explained in the previous page. EDPP was able to cut operating costs in 6.0% as presented below.

• Supplies and services increased €7.7m as a whole: i) the increase in S&S provided by group companies is the result of higher charges from EDP Valor (+€4.2m); ii) the increase in S&S provided by companies outside of the EDP Group are associated with higher maintenance costs (+€3.5m) following a higher utilisation of fuel-oil power stations and the start of operations of Ribatejo’s second 392MW unit.

• Personnel costs decreased 9.9% (or 4.1% if we exclude severance payments and personnel costs capitalization) reflecting i) the reduction of 120 employees; and ii) fewer negotiated dismissals in 2005, which resulted in a €2.0m reduction in severance payments (€3.2m in 2004 with 12 negotiated dismissals). The reduction in the number of employees in 2005 includes the transfer of 79 employees to EDP Valor.

• The 20.6% increase in Costs with social benefits in 2005 is mostly related with a €7.7m provision for pension benefits that include the cost with the curtailment of 22 employees that were early retired. The 2004 figure was influenced by premiums paid under the flexible retirement program (€3.6m) in respect to 91 employees that accepted to be enrolled in this program.

• Operating investment remained stable at €202m, following the end of the construction of the second unit of the Ribatejo CCGT and the conclusion of the 192 MW Venda Nova II (Frades) hydro plant that was commissioned in August 2005. The third unit of the Ribatejo CCGT represented approximately 40% of the total capex in the period. The increase in operating investments in binding generation is related to the beginning, in the 2Q2005, of both i) the works to reduce SO2 and NOx emissions at Sines power plant (€17.2m) and ii) the start of the Baixo Sabor hydro power station project (€4.7m). The 2005 figure also includes the acquisition from REN of the thermal power plants sites (Setúbal, Carregado and Tunes) for €40.6m.

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EDP Comercial

Operating

Income Statement (€m) 2005 2004 <%

Operating

Revenues 525.0 322.3 62.9%

Direct

Activity Costs 581.0 311.3 86.6%

Gross

Profit (56.0) 11.0 -

Gross

Profit/Revenues -10.7% 3.4% -14.1 p.p.

Supplies

and services 12.4 10.6 17.6%

Personnel

costs 4.0 3.3 20.9%

Costs

with social benefits 0.4 0.4 -6.1%

Other

operating costs (or revenues) 8.0 2.8 181.7%

Operating

Costs 24.8 17.1 44.9%

EBITDA

(80.8) (6.1) -

EBITDA

/ Revenues -15.4% -1.9% -13.5 p.p.

Depreciation

and amortisation 4.4 3.7 19.2%

Compensation

subsidised assets' deprec.——

EBIT

(85.2) (9.8) -

EBIT

/ Revenues -16.2% -3.1% -13.2 p.p.

EDPC

Operating data 2005 2004 U%

EDPC

Electricity sales (GWh) 6,314 4,381 44.1%

Market

Share (GWh) 66% 65% 0.8%

Number

of Clients 9,212 3,616 x 2.5

Market

Share (# of Clients) 70% 75% -5.1%

Number

of Employees 91 77 18.2%

Operating

Investment (€m) 5.7 5.6 1.6%

EDPC Market Share - GWh: 66%

6,763

4,381

2004

42%

44%

9,621

6,314

2005

EDPC Sales

- Market Sales

EDPC Market Share - # Clients: 70%

4,838

3,616

2004

2.7 x

2.5 x

13,226

9,212

2005

EDPC Clients

Market Clients

EDPC Gross Profit (€m)

Supply Activity

11.0

2004

+4.2

Volume

Net Selling Price

-25.3

Variable Cost

-38.1

Deviation REN

-11.3

Services Provided

-0.8

Other

+4.3

2005

-56.0

Note: Net Selling Price = Selling price - TPA tarrifs

• Total energy supplied in the NBES grew 42% YoY to 9,621 GWh in 2005, now representing 22% of the total consumption in Portugal (16% in 2004). EDPC retains two thirds of the market, similarly to 2004.

• EDPC has a fixed price contract with EDPP’s energy management department which procures electricity (namely from the Spanish pool) on behalf of EDPC. This price was reviewed up in the 4Q2005, with retroactive effects back to July 2005, in order to reflect the updated expectations regarding electricity wholesale prices.

• The negative gross margin booked at EDPC stems from the sudden and sharp increases in electricity wholesale prices which EDPC has not been able to immediately pass-through to its clients something that is more evident on the older contract.

EBITDA—EDPP

& EDPC (€m) 2005 2004 U%

Operating

Revenues 2,150.0 1,709.9 25.7%

Electricity

500.8 229.7 118.0%

Fuel

for electricity generation 707.8 422.7 67.5%

Materials

and goods for resale 4.3 4.8 -10.5%

Direct

Activity Costs 1,213.0 657.2 84.6%

Gross

Profit 937.1 1,052.6 -11.0%

Supplies

and services 106.3 96.9 9.7%

Personnel

costs 78.1 85.5 -8.7%

Costs

with social benefits 27.3 22.8 20.1%

Other

operating costs (or revenues) 3.8 18.0 -79.0%

EBITDA

721.6 829.4 -13.0%

EBITDA

/ Revenues 33.6% 48.5% -14.9 p.p.

Note: In order to illustrate the effect of the elimination of the intra-group transactions between EDPC and EDPP, we present above the consolidated EBITDA of the two companies.

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Enernova & EDP Bioeléctrica

Installed

Capacity - MW 2005 2004 <MW

Wind

151 136 +15

Biomass

9 9 -

Total

160 145 +15

Generation

- GWh 2005 2004 <%

Wind

349 237 47%

Biomass

51 49 5%

Total

400 286 40%

Operating

Income Statement (€m) 2005 2004 <%

Wind

30.0 20.1 48.8%

Biomass

3.8 3.6 6.8%

Electricity

Sales 33.8 23.7 42.5%

Direct

Activity Costs 3.0 2.4 25.9%

Gross

Profit 30.7 21.3 44.4%

Gross

Profit/Revenues 91.0% 89.8% 1.2 p.p.

Supplies

and services 8.6 3.4 154.3%

Personnel

costs & with social benefits 1.4 1.1 26.8%

Generation

centre rentals 0.7 0.5 44.2%

Other

operating costs (or revenues) 0.6 (1.0) -

Operating

Costs 11.3 3.9 186.4%

EBITDA

19.5 17.4 12.2%

EBITDA

/ Revenues 57.7% 73.2% -15.6 p.p.

Depreciation

8.9 7.0 27.1%

Compensation

subsidised assets' deprec. (0.3) (0.2) -69.7%

EBIT

10.9 10.6 3.4%

EBIT

/ Revenues 32.4% 44.6% -12.2 p.p.

Number

of Employees 2005 2004 <

Number

of Employees 18 15 +3

Investments

(€m) 2005 2004 <%

Operating

Investment 46.0 54.5 -15.6%

Financial

Investments 56.7—-

Total

Investments 102.7 54.5 88.4%

Change in EBITDA (€m)

17.4

EBITDA 2004

+9.4

Gross Profit

-5.2

Supplies and Services

-0.2

Generation Centre Rentals

-1.9

Other operating costs

19.5

EBITDA 2005

• By the end of 2005 EDP Group’s renewable installed capacity in Portugal amounted to 160 MW. The repowering of Vila Nova I (+6 MW – Apr05), Fonte da Quelha/Alto Talefe (+3 MW – Sep05) and Pena Suar (+6 MW – Dec05) wind farms allowed EDP to increase its wind installed capacity by 15 MW during the year.

• EDP has been investing substantially in renewable energies. Acquisitions made within this activity amounted to €57m of which €21m relate to the acquisition of the Ortiga (11.7 MW – Mar.’06) and the Safra (41.8 MW –Dec.’06) wind farms, and 36m is linked to the first disbursement regarding the acquisition of five wind farms to Tecneira. This transaction, totalling €188.7m, was approved by the Portuguese Competition Authority towards the end of 2005 and comprises some 121 MW of wind capacity of which 48.3 MW are already operational and 34.4 MW will come in operation during 2006. EDP will start to consolidate these wind farms from January 2006. Regarding operational investment, the amount committed in 2005 totals €46m. Approximately 50% of this investment is connected to investments made in wind farms that started operations during the year. The balance relate to projects that are expected to entry into service throughout 2006: Madrinha wind farm (+10 MW –Mar.’06), Serra del-Rei (22MW – Sep.’06), Abogalheira (+3.3MW – Sep.’06), Pedras Lavradas (+14 MW –Nov.’06) and Serra da Alvoaça (+20MW – Dec.’06).

• At year end, electricity emissions from renewable sources in Portugal (excluding hydro) amounted to 400GWh, 50% more than in 2004. This was due to the additional capacity that was brought on stream but also to an increase in the number of equivalent service hours of Enernova’s wind farms to 2,460 hours from 2,350 hours in 2004 (the equivalent to an increase in the load factor to 28,1% from 26,4%).

• Gross Profit increased almost 45% on the back of the new capacity and the increase in the load factor but EBITDA grew only 12.2% to €19.5m. This is mainly the result of the following non-recurring effects: – a €0.9m increase in charges (S&S) from EDP S.A. following the new group policy of allocating to business units the costs of services rendered by the holding; and – a €3.4m increase in S&S as a result of non-recurring costs incurred in 2005 by Enernova related to research made on new technologies, namely solar thermal, and to wind measuring tests that were made in an effort to evaluate the potential of some sites for new wind farms.

Beside these, the following recurrent effects have occurred:

– an increase of €0.5m in O&M costs on wind farms with more than two years of operation (prior to these two years, the wind farm is within its warranty period); – an increase of €0.2m in “Generation Centre Rentals” as a result of higher energy output, as it is a variable charge, the equivalent to 2.5% of the energy sold, that each wind farm has to pay both to municipalities and to landowners.

Load Factor: number of equivalent hours to the output of a wind farm relative to the total number of hours in the period, considering the date of entry into industrial service of each wind farm.

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EDP Distribuição

Electricity

Distributed (GWh) 2005 2004 <%

Energy

Delivered to Distribution 47,268 44,808 5.5%

Sales

to EDP power plants (22) (13) -73.3%

Own

consumption - distribution (25) (29) 12.0%

Distribution

losses (3,437) (3,451) 0.4%

Total

Electricity Sales(1) 43,784 41,315 6.0%

Electricity

Sales - BES(2) 34,164 34,552 -1.1%

VHV

(Very high voltage) 1,265 1,222 3.5%

(High voltage) 5,148 4,340 18.6%

(Medium voltage) 5,091 6,506 -21.8%

SLV

(Special low voltage) 2,347 3,155 -25.6%

(Low voltage) 19,013 18,112 5.0%

(Public lighting) 1,299 1,218 6.7%

Electricity

Sales - NBES(3) 9,621 6,763 42.3%

EDP

6,314 4,381 44.1%

VHV

(Very high voltage) 37—-

(High voltage) 98 25 288.6%

(Medium voltage) 5,488 4,337 26.5%

SLV

(Special low voltage) 691 19 -

Non-EDP

3,306 2,381 38.8%

(High voltage) 46 24 92.8%

(Medium voltage) 3,000 2,343 28.0%

SLV

(Special low voltage) 260 14 -

Electricity

Consumers (4) 2005 2004 U

Electricity

Sales—BES(2) 5,894,139 5,818,504 75,635

VHV

(Very high voltage) 16 20 (4)

(High voltage) 157 154 3

(Medium voltage) 16,600 18,184 (1,584)

SLV

(Special low voltage) 22,036 27,306 (5,270)

(Low voltage) 5,809,699 5,728,865 80,834

(Public lighting) 45,631 43,975 1,656

Electricity

Sales—NBES(3) 13,226 4,838 8,388

EDP

9,212 3,616 5,596

VHV

(Very high voltage) 5—5

(High voltage) 11 1 10

(Medium voltage) 3,426 2,248 1,178

SLV

(Special low voltage) 5,770 1,367 4,403

Non-EDP

4,014 1,222 2,792

(High voltage) 2 2 -

(Medium voltage) 1,698 887 811

SLV

(Special low voltage) 2,314 333 1,981

Total

Electricity Consumers 5,907,365 5,823,342 84,023

Change YoY 1.4%

BES & NBES Consumption—2005

Full Liberalisation

100%

NBES Consumption

BES Consumption

22%

78%

BES & NBES Consumption—2004

Clients Eligible for NBES

53%

NBES Consumption

BES Consumption

16%

84%

• Demand for electricity increased 6.0% year-on-year, to 43.8 TWh. Demand was driven by a cold winter and a warm summer (0.7 p.p.) and by the co-generators’ consumption from the BES (3.4 p.p.) that opted to sell to the system the energy they produced at special regime’s prices, thus benefiting from the tariff differential between the two regimes. In addition, consumption growth in Portugal is benefiting from the fact that electricity consumption per capita is 34% below the European average, thus some convergence effect is expected.

• Electricity sales in the binding system, which accounted for 78% of the electricity distributed in Portugal, decreased by a mere 1.1% year-on-year to 34.2 TWh. The transfer of some MV and SLV clients to the liberalised market – reflected in a decrease of electricity sales to these segments of 21.8% and 25.6%, respectively – was almost compensated by the healthy consumption growth of the other segments.

• The decrease in the number of VHV clients in the binding electricity system did not reflect in a decrease of electricity consumption in that segment (up 3.5% year-on-year), as the VHV industrial clients that opted to purchase energy in the liberalized market switched only in the 3Q2005.

(1)Figures presented include sales to EDP Group for final consumption (2)BES—Binding Electricity System (3)NBES—Non-Binding Electricity System (4)Figures presented include EDP Group companies

LOGO

EDP Distribuição

• EDPD’s allowed revenues decreased 3.0% year-on-year:

a) The Use of the Distribution Grid (UDGr) revenues increased 1.4%, on the back of higher electricity-flow at EDPD’s network, which more than offset the 4% average reduction in unit revenues for this activity. In addition, EDPD’s efforts to decrease the level of distribution losses brought an additional 3.2m of “Incentives To Loss Reductions” – distribution losses were reduced from 8.6% in 2004 to 8.1% in 2005; b) Allowed revenues for the Network Supply (NS) and the Supply in the Public System (SPS) activities fell 20.0% following: i) a 50bps reduction in these activities’ regulated rate of return to 8.5%; ii) a 13.8% decrease in their structural commercial costs; and iii) a smaller regulated asset base for NS activity (investment subsidies allocated to the UDGr in prior years were re-allocated to the NS activity during the 2005 regulatory review, thus with no impact on the combined asset value of the three activities); c) 2005 allowed revenues also include a €37.7m recovery (through tariffs) of costs incurred within the scope of EDPD’s HRRP*.

• Costs with electricity purchases rose 11.0% year-on-year mostly due to: i) a 6.0% increase in electricity distributed; and ii) a 44% average increase in the Global Use of the System Tariff (mainly higher costs from Special Regime Generation) that resulted into an additional €127m charge; and iii) a 146m year-on-year increase in fuel costs adjustments. Regarding the later, fuel costs adjustments in 2005 totalled

Electricity

Sales & Gross Profit (€m) 2005 2004 <%

VHV

(Very high voltage) 57.5 51.7 11.3%

(High voltage) 265.0 205.7 28.8%

(Medium voltage) 419.2 490.3 -14.5%

SLV

(Special low voltage) 228.5 304.0 -24.8%

(Low voltage) 2,490.0 2,360.8 5.5%

(Public lighting) 93.0 102.0 -8.9%

Interruptibility

Discounts (36.0) (30.4) -18.6%

Tariff

correction Discounts 0.0 (0.5) -

Invoiced

Sales—BES 3,517.1 3,483.5 1.0%

Invoiced

Sales—NBES 220.5 126.6 74.1%

Electricity

Revenues 3,737.6 3,610.2 3.5%

Electricity

Purchases 2,580.2 2,324.1 11.0%

Electricity

Gross Profit 1,157.4 1,286.1 -10.0%

Tariff

Difference to Recover/(Return) (€m) 2005 2004 <%

Total

Allowed Revenues 1,234.5 1,272.9 -3.0%

Electricity

Gross Profit 1,157.4 1,286.1 -10.0%

Tariff

Difference to Recover/(Return) 77.1 (13.2) -

HRRP—Human Resources Restruturing Program.

Regulated

Revenues (€m) 2005 2004 <%

Unit

revenue for the UDGr: HV and MV ( / MWh) 8.3 9.5 -12.8%

Electricity

delivered to BES/NBES: HV and MV (GWh) 43,998 41,613 5.7%

Unit

revenue for the UDGr: LV ( / MWh) 24.5 23.9 2.6%

Electricity

delivered to BES/NBES: LV (GWh) 23,610 22,518 4.9%

Incentive

to Losses Reduction 3.2—

UDGr

allowed revenues 944.8 931.8 1.4%

Average

assets of the NS activity (net of amortisations) 277.7 336.1 -17.4%

Return

on average assets of NS activity (%) 8.5 9.0 -5.6%

Assets'

amortisation of NS activity 47.6 70.4 -32.3%

Annual

structural commercial costs of NS activity 58.6 60.6 -3.4%

Network

Supply allowed revenues 129.8 161.2 -19.5%

Average

assets of SPS activity (net of amortisations) 49.0 47.2 3.9%

Return

on average assets of SPS activity (%) 8.5 9.0 -5.6%

Assets'

amortisation of SPS activity 6.5 8.8 -25.8%

Annual

structural commercial costs of SPS activity 67.5 85.6 -21.1%

Supply

in Public System allowed revenues 78.2 98.7 -20.7%

t-2

tariff adjustment for UDGr activity 13.5 (7.3) -

t-2

tariff adjustment for NS activity 1.4 0.7 95.8%

t-2

tariff adjustment for SPS activity 1.4 0.4 -

t-2

tariff adjust. for UDGr, SPS and NS 16.3 (6.2) -

t-2

tariff adjustment for Energy Acquisition Activity 34.6 66.1 -47.7%

t-1

tariff adjustment for Energy Acquisition Activity (7.0) 21.3 -

t-1

& t-2 tariff adjust. for Energy Aquisition activity 27.6 87.4 -68.4%

Restructuring Costs Recovery 37.7—-

Total

Allowed Revenues 1,234.5 1,272.9 -3.0%

150m (€4m in 2004) of which 43m, related to HV/MV, were recovered through the tariffs during the year and 107m, related to LV, were included in the 2006 allowed revenues. This, along with the inflation cap to residential consumers’ tariffs, contributed to the €369m system deficit of which 115m was attributed to EDPD. This deficit, acknowledged by ERSE and already included in EDPD’s 2006 allowed revenues, will be recovered with interest between 2007 and 2011 through the tariffs.

• Electricity gross profit fell 10% year-on-year. The difference between the electricity gross profit and the allowed revenues in 2004 amounted to €13.2m, of which 7.0m were returned to the tariffs in 2005, while the remaining is being returned in 2006. Regarding 2005, the electricity gross profit came €77.1m below the allowed revenues for the period due to higher fuel costs, than ERSE’s estimates, that will only be reflected in subsequent year’s tariffs (reflected in the €107m LV fuel costs adjustment mentioned previously). This was partly offset by the fact that real consumption in the BES during 2005 came out 4.6% above ERSE’s forecast and, as such, EDPD will have to return to the tariffs, in two years time, the fixed component of the electricity purchases that the company received in excess through the tariffs.

LOGO

EDP Distribuição

Operating

Income Statement (€m) 2005 2004 %

Electricity

sales 3,737.6 3,610.2 3.5%

Services

provided 26.8 24.6 9.0%

Other

sales 3.2 2.7 16.2%

Operating

Revenues 3,767.6 3,637.5 3.6%

Electricity

Purchases 2,580.2 2,324.1 11.0%

Materials

and goods for resale 14.0 14.2 -0.9%

Direct

Activity Costs 2,594.2 2,338.3 10.9%

Gross

Profit 1,173.4 1,299.3 -9.7%

Gross

Profit/Revenues 31.1% 35.7% -4.6p.p.

Supplies

and services—Group 120.9 102.4 18.2%

Supplies

and services—Non-group 134.1 122.2 9.7%

Personnel

costs 181.1 195.5 -7.3%

Costs

with social benefits 128.9 419.2 -69.3%

Concession

fees 201.4 186.1 8.2%

Other

operating costs (or revenues) (17.1) (8.6) -98.3%

Operating

Costs 749.4 1,016.8 -26.3%

EBITDA

424.0 282.5 50.1%

EBITDA

/ Revenues 11.3% 7.8% 3.5p.p.

Depreciation

and amortisation 330.9 326.8 1.3%

Comp.

of subsidised assets' amortis. (78.2) (72.4) -8.0%

EBIT

171.3 28.1 509.0%

EBIT

/ Revenues 4.5% 0.8% 3.8p.p.

Number

of Employees 2005 2004

Number

of Employees 5,322 5,532—210

GWh

Distributed / Employee 8.2 7.5 10.2%

Equivalent

Interruption Time (min.) 2005 2004 %

Equivalent

Interruption Time 184 215 -14.4%

Operating

Investment 2005 2004 %

Distribution

grid 438.2 414.8 5.6%

Other

investments 39.5 36.5 8.3%

Financial

charges capitalised 10.8 9.9 9.3%

Operating

Investment 488.5 461.2 5.9%

Investment

subsidies - Cash 79.3 88.0 -9.9%

Investment

subsidies - Kinds 71.2 70.4 1.1%

(-)

Total Investment Subsidies 150.5 158.4 -5.0%

Operating

Invest. Excl. Subsidies 338.0 302.8 11.6%

EBITDA (€m)

283

EBITDA 2004

-13

Tariff diff. to pay back

+52

GWh distributed

-39

UDGr Tariff

-52

NS & SPS

+38

Costs rec.

(HRRP)

-37

Rec. Prior tariff diff.

+77

Tariff diff. to recover

+305

Personnel Costs

-35

S&S and Other

424

EBITDA 2005

Electricity Gross Profit (-€129m)

• Group supplies and services rose 18.2% year-on-year on the back of an increase in management fees invoiced by EDP S.A. (+€13.7m) – following the new group policy of allocating to the business units the costs of services rendered by the holding company – and EDP Valor (+€7.7m) for new services rendered. Non-group supplies and services increased 9.7% following: i) the accounting of supplies and services provided by Edinfor as "non-group" (€6.9m) after the sale of 60% of this company to LogicaCMG; ii) a €1.4m increase in O&M costs due to both a higher recourse to external services following the reduction of the number of employees and a higher need for repairs in consequence of this summer fires; iii) a €2.4 m increase of commercial costs (mostly publicity and meter readings); and iv) a €1.2m increase in fuel costs.

• Personnel costs decreased 7.3% (or 2% if we exclude personnel costs capitalization and severance payments) mostly explained by: i) a 18m decrease in severance payments ( 20m in 2004 representing 86 mutual agreements); and ii) a reduction in the number of employees achieved both through the 2004 HRRP* (86 mutual agreements and 705 early retirements – most of which achieved during the second half of 2004) and through the transfer to EDP Valor of 91 employees (of which 81 up to June 2005).

• Costs with social benefits fell by some €290m year-on-year due to the accounting in 2004 of: i) an €87m cost (NPV) related to the 2003 HRRP*; ii) a €230m cost (NPV) related to the 2004 HRRP*; and iii) a €20m cost related to incentives paid to 731 early retirees that anticipated retirement age; which were partly offset by iv) a 21m increase in pension premiums and provisions for pension liabilities following the 2005 actuarial study, and v) the accounting in 2005 of a €29m cost (NPV) related to the reduction of 119 employees (8 negotiated dismissals and 111 early retirements) that left the company in December 2005 and therefore did not yet translate in personnel cost savings for the company.

• Operating Investment in the distribution grid increased 5.6% year-on-year, which along with favourable weather conditions enabled a 14.4% improvement of Equivalent Interruption Time.

HRRP—Human Resources Restruturing Program.

LOGO

Portgás (100%) (1)

Gas

Distributed (GWh) 2005 2004 (1) %

Residential

557 443 25.8%

Services

302 271 11.3%

Industrial

1,089 1,125 -3.2%

Total

1,948 1,839 5.9%

Number

of Gas Clients 2005 2004 (1) U%

Residential

146,132 136,672 6.9%

Services

2,729 2,351 16.1%

Industrial

335 305 9.8%

Total

149,196 139,328 7.1%

Operating

Income Statement (€m) - 100% 2005 2004 (1) %

Gas

Sales 80.3 65.4 22.9%

Services

Provided 2.0 2.6 -24.4%

Gas

Revenues 82.3 68.0 21.1%

Direct

Activity Costs 40.3 32.6 23.5%

Gross

Profit 42.1 35.4 18.8%

Gross

Profit/Revenues 51.1% 52.1% -1.0 p.p.

Supplies

and services 6.3 6.7 -5.9%

Personnel

costs & costs with social benefits 4.6 4.2 10.4%

Other

operating costs (or revenues) (0.7) (1.0) 26.3%

Operating

Costs 10.2 9.9 2.9%

EBITDA

31.8 25.5 25.1%

EBITDA

/ Revenues 38.7% 37.4% 1.2 p.p.

Depreciation

5.3 7.6 -29.9%

Compensation

subsidised assets' deprec. ——

EBIT

26.5 17.9 48.5%

EBIT

/ Revenues 32.2% 26.3% 5.9 p.p.

Number

of Employees 2005 2004 (1) U

Number

of Employees 110 98 +12

Investments

( m) 2005 2004 (1) U%

Gas

distribution network 12.0 12.2 -1.9%

Other

3.2 3.2 -1.0%

Total

Investments 15.1 15.4 -1.7%

Change in EBITDA (€m)

25.5

EBITDA 2004

+6.7

Gross Profit

-0.4

Supplies and Services

+0.4

Personnel costs & costs with social benefits

-0.3

Other operating costs

31.8

EBITDA 2005

• EDP’s year-end 2005 financials include, for the first time, the 12 months proportional consolidation (59.6%) of Portgás. This company is the second largest distributor of natural gas in Portugal, operating in a concession area which includes 29 municipalities within the Oporto, Braga and Viana do Castelo municipalities. Already in September 2005, EDP signed a contract with Endesa to reinforce its shareholding to 72%. This operation is still subject to the non-opposition by the Portuguese Competition Authority.

• The volume of gas distributed by Portgás increased 5.9% to 1,948 GWh at the end of 2005 from 1,839 GWh in 2004. The residential and services segments that contributed the most to this increase continue to provide clear evidence of healthy growth. Regarding the industrial segment, the economic slowdown experienced during 2005 took its toll and gas consumption decreased 36 GWh.

• Gas sales amounted to €80.3m – of which €74.8m relate to natural gas (NG) and €5.6m to liquefied petroleum gas (LPG) – an increase of 23% from the 2004 sales figure. Similarly, gross profit increased 18.8% to €42.1m and EBITDA grew 27.1% to €31.8m by the end of 2005.

• The bulk of Portgás operational investment was dedicated to developing its gas distribution network, with 79% of total investment in the period. The “other” investments are related to sales campaigns (8.3%), meter reading for new consumption places (7.5%) and adapting facilities from LPG to NG.

(1) In 2004, Portgás was not consolidated on EDP accounts. The 2004 figures are a pro-forma and should only be used in order to have a growth perspective

LOGO

HC Energia—Generation & Supply

Spain

Energy Balance (GWh) 2005 2004 %

Hydro

19,528 29,777 -34.4%

Nuclear

57,544 63,606 -9.5%

Thermal

(classic) 87,674 84,055 4.3%

CCGT

48,022 28,974 65.7%

(-)

Consumptions in generation and pumping (15,900) (13,303) -19.5%

Conventional

Generation 196,868 193,109 1.9%

Special

Regime Generation 49,909 45,329 10.1%

Imports

/ (Exports) (1,360) (3,027) 55.1%

Gross

Demand 245,417 235,411 4.3%

Source:

REE

HC's Fuel Costs (€/MWh)

60 50 40 30 20 10 0

14,407 GWh

Avg. Selling Price

23% 3

91%

78%

58%

20% 40% 60% 80% 100%

2004

Hydro

Nuclear

Coal

60 50 40 30 20 10 0

23% 3

92%

84%

62%

20% 40% 60% 80% 100%

2005

CCGT

Load Factor (3)

HC's

Net Electricity Generation (GWh) 2005 2004 %

Hydroelectric

847 854 -0.8%

Nuclear

1,252 1,237 1.3%

Aboño

6,819 6,644 2.6%

Soto

de Ribera 4,345 3,712 17.1%

Coal

11,164 10,356 7.8%

Castejón

CCGT 2,109 1,961 7.5%

Total

Generation 15,373 14,407 6.7%

Pumping

(175) (109) -60.3%

Energy

delivered to the Pool 15,198 14,298 6.3%

HC's

market share in wholesale market 7.1% 7.4% -0.2p.p.

Generation—Selling Price & Fuel Costs 2005 2004 %

Avg.

HC Selling Price to the Pool (€/MWh) (1) 60.1 34.6 73.9%

Avg.

HC Fuel Cost (€/MWh) (2) 22.2 20.7 7.7%

Supply—Electricity Sales to Clients 2005 2004 %

Electricity

Supplied (GWh) 5,926 4,647 27.5%

Sales

of Electricity Supplied (€m) 316.0 255.3 23.8%

Number

of Clients 21,446 6,094 251.9%

Gross Profit (Generation + Supply) 2005 2004 %

Revenues

1,335.6 806.1 65.7%

Direct

Activity Costs 922.4 546.6 68.7%

Gross

Profit 413.2 259.5 59.2%

• In 2005, the Spanish electricity market experienced a strong growth in electricity consumption: an increase of 4.3% versus 2004 or 3.1% when corrected for temperature effects and working days. Electricity generation at HC was up 6.7% as thermal output increased more than 7% in a very dry period (hydro coefficient of 0.46 vs. 0.79 in 2004) despite (i) a lower utilisation of Aboño II (536 MW) due to repair works in the 1Q2005 and (ii) a programmed stoppage in Soto II (236 MW) in the 2Q2005 due to triennial maintenance works.

• The sound increase of the gross profit at the Generation and Supply activities in 2005 is explained by: i) the hike in pool prices with a 393m positive impact on gross profit; ii) the higher generation output with a positive impact of €15m; iii) a marginal increase in average fuel cost per MWh with a negative impact of €24m; iv) a €28m provision related to the consumption in excess of CO2 allowances following the very dry period; v) the increase in the supply activity’s costs as a result of the hike in wholesale prices (-€178m in the gross profit); and vi) the fact that in the 2004 HC was able to recover 10m worth of CTCs by differences.

• Spanish pool price reach the highest value in 2005 (average of 62.4/MWh in the period) following the very dry period, higher generation costs and a strong increase in peak demand. However, the revenues from the regulated electricity tariff were not enough to cover the strong increase in the system’s generation costs, therefore causing a tariff deficit for the system. According to Spanish law HC has to finance 6.08% of the tariff deficit (€224m estimated for 2005). This was not deducted from revenues and was accounted as a financial investment given that the Royal Decree 1556/2005 that established the tariffs for 2006 recognised the right to recover the 2005 tariff deficit in future years through tariffs.

•

HC's average fuel costs per MWh increased 7.7% versus 2004 mainly due to higher natural gas costs since the beginning of 2005, on the back of the hike in oil prices.

Notwithstanding, between December 2004 and December 2005, HC managed to reduce the average unit cost of its coal power plants by 7.5%.

• CO2 emissions at HC’s thermal power plants reached €12.9m tons in 2005. Due to the very dry period, which resulted in higher utilisation of thermal power plants, CO2 emissions were €1.4m tons above the estimated emission allowances to be consumed in the period. For this purpose HC booked a 28m provision as a direct activity cost.

(1) Includes wholesale market, ancillary services and capacity payment. (2) Excluding hydroelectric emission to calculate the average. (3) Load Factor: number of equivalent hours to the output of a power plant relative to the total number of hours in the period.

LOGO

HC Energia—Electricity Distribution & Gas Activity

Elect. Distribution (GWh) 2005 2004 % Elect. Distribution (€ m) 2005 2004 %

Consumers in Elec. Distribution

Low Voltage 2,343 2,288 2.4% Transmission 7.8 7.6 2.4%

574,560

Medium Voltage 1,116 1,043 7.0% Distribution 98.7 93.4 5.7% 2004

High Voltage 5,788 5,692 1.7% Commercialisation 7.4 7.4 0.2%

Electricity Distributed 9,247 9,023 2.5%

584,922

of which: access clients 1,562 1,387 12.6% Elect. Regulated Revenues 113.9 108.4 5.1% 2005

Regulated revenues from Electricity Distribution rose 5.1% following the increase in the remuneration for the regulated activities recognised in the 2005 tariff. For 2006, according to the Decree Law that sets the revenues for the Spanish regulated electricity activities, of the €3,016.7m attributed to the electricity distribution activity, €96.1m or 3.2% were allocated to HC.

Consumers in Gas Distribution

Gas Distribution (GWh) (1) 2005 2004 % Gas Distribution (€ m) (1) 2005 2004 %

577,802

Pressure <4 Bar 5,833 5,618 3.8% Transmission 11.7 10.5 11.5% 2004

Pressure > 4 Bar 15,714 16,441 -4.4% Distribution 109.1 96.5 13.1%

Commercialisation 10.7 11.1 -3.9%

599,904

Total Gas Distributed 21,547 22,059 -2.3% 2005

Gas Regulated Revenues 131.4 118.0 11.3%

Clients in Gas Supply

2004 1,447

Gas Supply (GWh) 2005 2004 % Gas Supply (€ m) 2005 2004 %

Gas Supplied 11,791 9,853 19.7% Gas Sales 195.4 129.6 50.7% 2005 94,493

Gas Consumption in the Spanish system was up 18% in 2005 mainly due to higher demand of the electricity sector, which accounted for 79% of this increase, following the higher electricity generation based on CCGT technology during this dry period. Excluding the electricity sector, the conventional demand of gas increased 4.7% in the period following the increase in the number of clients, particularly in the liberalised segment.

Gas Distributed by HC through Naturgas decreased 2.3% while the number of consumers increased 3.8% (+22,102 consumers versus 2004). The decrease in distribution volumes is mainly explained by a lower activity in the corporate segment and a peak in gas demand during the 3Q2004, related to the electricity sector, which was not felt to the same extent in 2005. The regulated revenues for the distribution activity increased 13.1% in 2005, reflecting the forecasts regarding demand (for pressure < 60 bar) and number of clients’ growth for the year. The difference between the regulated revenues calculated based on these forecasts and those resulting from the use of the actual 2005 figures amounted to 1.3m and have already been adjusted to this activity’s regulated revenues for 2006. According to the “Ministerial Order” that sets the revenues for the Spanish regulated gas activities, of the €1,251.2m attributed to the gas distribution activity in 2006, €124.1m were allocated to Naturgas and its subsidiaries (€111.5m considering the consolidation method of its subsidiaries)

Gas Supplied to liberalised clients rose 20% driven by the sound increase in the number of clients (65 times vs. 2004), which is the result of the success attained by Naturgas on a dual-fuel offer (electricity+gas) launched in the 2Q2005. Presently, Naturgas has more than 24,000 dual clients. This strategy, besides increasing Naturgas’s client base, is allowing Naturgas to secure clients that are switching from regulated market to the non-regulated market. Naturgas increased its market share in the liberalised market (excluding supply to the electricity sector) from 4.9% in 2004 to 5.5% in 2005.

Naturgas’s sales in both the regulated and liberalised gas market to final consumers amounted to 18,788 GWh, up 10% in volume versus 2004. Consequently, Naturgas’s retail market share increased to 7.1% in 2005 from 6.8% in the 2004 (excluding the electricity sector).

(1) Operating data considers 100% of Naturgas’ gas distribution subsidiaries’ figures, while all financial data considers the consolidation method.

LOGO

HC Energia

Business Areas Generation & Supply Electricity Distribution Gas Special Regime

Breakdown 2005 2004 U% 2005 2004 U% 2005 2004 U% 2005 2004 U%

Revenues 1,335.6 806.1 65.7% 152.9 146.5 4.4% 668.4 635.4 5.2% 206.5 67.8 204.4%

Direct Costs 922.4 546.6 68.7% 29.7 26.1 13.7% 504.8 483.3 4.5% 126.1 20.7 509.8%

Gross Profit 413.2 259.5 59.2% 123.2 120.4 2.4% 163.6 152.1 7.5% 80.5 47.2 70.6%

Gross Profit/Revenues 30.9% 32.2% -1.3 p.p. 80.6% 82.2% -1.6 p.p. 24.5% 23.9% 0.5 p.p. 39.0% 69.5% -31 p.p.

Personnel Costs 43.3 35.7 21.2% 35.2 23.8 47.9% 22.0 17.0 29.4% 5.4 4.1 30.3%

Other (net) 32.1 41.1 -21.7% 56.9 32.8 73.3% 35.7 22.1 61.6% 23.4 13.4 73.8%

Operating Costs 75.4 76.8 -1.8% 92.1 56.6 62.7% 57.7 39.1 47.6% 28.7 17.6 63.6%

EBITDA 337.8 182.7 84.9% 31.2 63.8 -51.1% 105.9 113.0 -6.3% 51.7 29.6 74.7%

EBITDA/Revenues 25.3% 22.7% 2.6 p.p. 20.4% 43.5% -23 p.p. 15.8% 17.8% -1.9 p.p. 25.1% 43.7% -18.6 p.p.

Depreciation 99.8 90.9 9.8% 32.1 30.6 4.8% 32.4 30.7 5.5% 25.2 14.1 78.9%

Comp. of subsidised assets’ dep. (0.2) (0.1) -2.2% (2.0) (1.8) -14.5% (1.7) (1.5) -15.1% (0.2) (0.2) -24.4%

EBIT 238.1 91.9 159.0% 1.1 34.9 -97.0% 75.3 83.8 -10.2% 26.8 15.7 70.3%

EBIT/Revenues 17.8% 11.4% 6.4 p.p. 0.7% 23.8% -23.1 p.p. 11.3% 13.2% -1.9 p.p. 13.0% 23.2% -10.2 p.p.

Capex 60.4 34.9 73.0% 49.5 38.7 27.8% 52.9 56.6 -6.6% 179.8 168.0 7.0%

# of employees 707 704 0.4% 401 393 2.0% 334 309 8.1% 129 107 20.6%

YoY million

EBITDA 2004 401.3

Generation & Supply +155.0

Electricity Distribution -32.6

Gas -7.1

Special Regime +22.1

+26.1 Holding & Other

[Graphic Appears Here]

Generation & Supply: The EBITDA of the electricity generation and supply activities increased 85% following the strong increase in gross profit as explained on page 20. Operating costs were mainly influenced by i) personnel restructuring costs ( 9m); ii) 40m as an extraordinary revenue related to the full recognition of the 2002 tariff deficit recovery that was in the balance sheet; iii) administrative and structure costs, previously booked at the holding level, that now are allocated to each of the activities (+ 16m in Generation and Supply); iv) 13m of generic provisions to cover sunk costs (capitalised as assets) on new generation projects and possible deviations in liquidations with OMEL; v) higher commercial costs related to marketing promotions and improvement of the call centre services ( 3m); and vi) higher O&M costs following the repair works at Aboño II and the programmed stoppage at Soto II ( 2m). Regarding capex, HC started the construction of second 400 MW unit at Castejón CCGT ( 25m), which is forecasted to start operations by the end of 2007. HC will start the construction works on other 400 MW CCGT in 2006, which will be located at Soto, to start operations in 2008.

Electricity Distribution: The increase in regulated revenues, recognised in the 2005 tariff, attributable to HC, contributed to the 2.4% growth of this activity’s gross profit. Operating costs were mainly influenced by one-off items: i) 10m of personnel restructuring costs; ii) higher administrative and structure costs (+ 7m in Distribution) allocated to this activity; iii) higher costs (+ 7m) associated with commercial management services rendered by the Supply to the Distribution activity, which started to be provided during 2004; iv) prior year’s costs related to the change in the cost allocation criteria within HC Group, which was not completely reflected in 2004 (+ 6m); and v) creation of generic provisions ( 3m).

Gas: In 2005, gross profit increased 7.5% following an 11.3% increase in regulated revenues. It is important to note that approximately 80% of Naturgas’ gross profit comes from the regulated activity, thus providing stable operating cash-flows. During 2005, Naturgas changed its commercial image and launched a successful marketing campaign to promote its dual-fuel offer to liberalised clients, which had an impact of 4m on operating costs. Costs were also influenced by i) personnel restructuring costs ( 3.5m); and ii) the increase of local taxes following higher gas sales ( 2m).

Special Regime: The financial and operating figures of this division only include the activities carried out by Genesa, i.e., it does not represent all the activities performed by NEO Energia, the new company created by EDP to operate as a generator of electricity from renewable sources in Iberia and Europe. Please see page 35 for a detail on the operating figures of NEO regarding wind farms. Regarding Genesa, the output from renewables and cogeneration went up 79% to 1,124 GWh, mainly as a result of the capacity increase in wind farms. Wind generation almost doubled from the 272 GWh generated in 2004 to 529 GWh in 2005, following the entry into service of: Campollano (124 MW) in the 4Q2004, and Las Lomillas (50 MW – 50% held by Genesa) and La Sotonera (19 MW) in the 3Q2005. As a result, gross profit and EBITDA increased more than 70% in 2005. Regarding capital expenditures, total investment in the period amounted to 180m, as a result of the capacity increase and the construction of the wind farms Boquerón (22 MW) and Belchite (50 MW) that started in the beginning of 2006 and Brujula (73 MW) to start in May 2006.

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HC Energia

Income Statement ( m) 2005 2004 U%

Revenues 2,172.6 1,780.7 22.0%

Direct Costs 1,389.7 1,201.2 15.7%

Gross Profit 782.9 579.6 35.1%

Gross Profit/Revenues 36.0% 32.5% 3.5 p.p.

Supplies and services 106.9 89.1 20.1%

Personnel costs & Social benefits 142.2 98.7 44.0%

Other operating costs (or revenues) (31.1) (9.6) -225.3%

Operating Costs 218.0 178.2 22.3%

EBITDA 564.9 401.3 40.8%

EBITDA/Revenues 26.0% 22.5% 3.5 p.p.

Depreciation 199.4 173.4 15.0%

Compensation of subsidised assets’ depr. (4.2) (3.9) -6.0%

EBIT 369.6 231.9 59.4%

EBIT/Revenues 17.0% 13.0% 4.0 p.p.

Financial income/(expense) (67.0) (85.1) 21.2%

Income Before Taxes 302.6 146.8 106.1%

Income Taxes 102.5 42.2 143.0%

Minorities interests 26.8 27.3 -2.1%

Net Profit 173.3 77.3 124.3%

Capex ( m) 2005 2004 U%

Recurring investment 174.0 155.3 12.0%

Non-recurring investment 191.9 152.0 26.2%

(-) Subsidies (18.5) (13.2) -40.5%

Capex 347.3 294.1 18.1%

Number of employees 2005 2004 U

Number of employees 1,687 1,555 +132

Main impacts at the EBITDA ( million)

401

EBITDA 2004

-10

CTC Recovery in 2004

+393

Pool price Generation

-24

Fuel costs Generation

-28

Provision for CO2 Emissions

-178

Pool price Supply

+19

Regulated Revenues Elect. & Gas

+24

Increase Wind Farms

-32

Other (incl.

OPEX)

565

EBITDA 2005

• As previously detailed, 76% of the strong gross profit growth – that increased 203m—was driven by the Generation and Supply activities. As for the other activities, Special Regime contributed with 17%, Gas with 6% and Electricity Distribution with 1%.

• Operating costs increased 22%, or 40m, vs. 2004 mostly due to non-recurring items, expansion of the activity and marketing expenses:

- Supplies and services (+ 18m): i) increase of the installed capacity in the special regime activity (+ 11m); ii) increase of marketing and commercial costs (+ 7m) in the liberalised electricity and gas activities related to the change of the commercial image, the launch of new marketing offers and publicity.

- Personnel costs (+ 43m): i) 33m related with an early-retirement programme for 84 employees; ii) 5m of severance payments related to the reduction of 30 employees through negotiated dismissals; iii) + 6m of costs with active workers following the increase in the number of employees and the annual salary adjustments.

- Other operating costs (or revenues) (- 22m): i) 40m as an extraordinary revenue related to the full recognition of the 2002 tariff deficit recovery that was in the balance sheet; ii) a 32m capital gain from the sale of HC’s 3% stake in REE in April 2005 (vs. a 25m capital gain in 2004 from the sale of Retecal); iii) creation of generic provisions ( 16m) to cover sunk costs (capitalised as assets) on new generation projects, possible deviations in liquidations with OMEL and to cover contingencies in the distribution activity.

• Financial results improved 21% mainly due to the 25% reduction in net interest payable to 64.6m, following the replacement of HC’s external debt with cheaper inter-company loans from EDP ( 1,240m as of December 2005).

• Net Profit more than doubled in comparison with 2004, reaching 173.3m, following the strong operating performance.

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Energias do Brasil

Energy Sales & Gross Profit

Electricity delivered to distribution

Distribution losses

Residential customers

Industrial customers

Distribution (GWh)

Commercial customers

Other customers

Distribution companies

Electricity sales

Third-party access

Total Electricity Distributed

Residential customers

Industrial customers

Commercial customers

m) Other customers

Distribution companies

Electricity sales (1)

Third-party access revenues

Electricity revenues

Other Revenues

Total Revenues

Gross Profit (R (-) Direct activity costs

Gross Profit (R$ m)

Average tariff to customers (R$/MWh)

Bandeirante

2005 2004 <%

13,764 13,442 2.4%

(1,449) (1,254) 15.6%

2,307 2,283 1.1%

3,544 4,355 -18.6%

1,318 1,235 6.7%

840 941 -10.8%

- — -

8,009 8,814 -9.1%

4,306 3,375 27.6%

12,315 12,189 1.0%

744 718 3.6%

688 728 -5.5%

365 332 9.8%

176 179 -2.0%

- — -

1,973 1,957 0.8%

231 122 89.6%

2,204 2,079 6.0%

(94)

(137) 31.1%

2,110 1,943 8.6%

1,350 1,310 3.1%

759 633 20.0%

246.3 222.1 10.9%

Escelsa

2005 2004 <%

8,815 8,254 6.8%

(1,176) (1,076) 9.3%

1,321 1,192 10.9%

2,096 2,498 -16.1%

842 775 8.6%

883 856 3.2%

299 305 -1.9%

5,441 5,626 -3.3%

2,198 1,552 41.6%

7,639 7,178 6.4%

376 329 14.3%

354 343 3.1%

230 197 16.6%

163 148 9.9%

31 29 7.4%

1,153 1,046 10.2%

150 90 66.4%

1,303 1,136 14.7%

9 (56) -

1,312 1,080 21.5%

825 740 11.5%

487 340 43.4%

211.9 185.9 14.0%

Enersul

2005 2004 <%

3,958 3,606 9.8%

(850) (578) 47.0%

925 912 1.4%

472 580 -18.6%

598 585 2.4%

739 762 -3.1%

12 -71.9%

2,737 2,850 -4.0%

371 178 108.6%

3,108 3,028 2.6%

326 269 21.3%

115 113 2.0%

211 169 25.1%

177 141 25.8%

0 2 -94.3%

830 694 19.6%

34 11 205.2%

864 705 22.5%

(36)

(36) -0.2%

828 669 23.7%

424 375 13.2%

404 294 37.2%

303.2 243.4 24.6%

Total Electricity distributed by Brazilian Subsidiaries (GWh)

22,395

795 2,629 2,755

11,829

4,386

2004

3.0%

23,061 691 2,697 2,942 12,177 4,553 2005 Industrial Other

Residential Commercial Distribution cos.

Industrial Other

• Total electricity distributed by Energias do Brasil increased 3.0%, propelled by consumption growth at Escelsa’s region, which is explained by the stronger economic growth and an increase in the number of clients. Bandeirante showed a mild consumption increase of 1%, a reflection of weakness in the residential segment, while Enersul’s presented a 2.6% growth, following mild temperatures and a wet period.

• Bandeirante: Gross profit rose 20.0%, reflecting the average 15.95% tariff increase granted in the October 2004 tariff adjustment and non-controllable costs below the amount recognised in the tariffs (a R$41m difference). In October 2005, ANEEL granted an -8.86% change in the annual tariff adjustment process, which reflects: i) -7.66% relative to the annual change of non-controllable costs (Part A) and the adjustment of controllable costs (Part B) to inflation; ii) -5.56% reflecting the impact of the conclusion on the 2003 tariff revision process (-R$102m to be reflected in tariffs from October 2005 to October 2006). ANEEL amended the initial tariff increase of 18.08% to a final 9.67% (it was provisionally amended to 10.51% in October 2004), as a result of the definitive calculation of the Regulated Asset Base (set at R$998 million) for the period from October 2003 to October 2007; and iii) +4.36% regarding the recovery of past costs which were not covered by the tariff (R$83m to be recovered until October 2006).

• Escelsa: Gross profit soared 43.4% following: i) consumption growth of 6.4%; ii) the August 2004 revision process, where ANEEL granted a 4.96% tariff increase; iii) the amendment, in August 2005, of the 2004 tariff revision to a 8.58% increase (impact of +R$17m on the tariff base), to take into account the final Regulated Asset Base (R$928m) for the period from August 2004 to August 2007; iv) a 4.93% tariff increase granted in the August 2005 adjustment process (of which +6.56% are related to the recovery of past costs, in the amount of R$75m, until August 2006); and v) lower non-controllable costs than those recognised in the tariffs (R$18m difference).

• Enersul: Gross profit increased 37.2%, reflecting a consumption growth of 2.6% and the 20.69% average tariff increase granted in April 2005 tariff adjustment. It is important to note that this adjustment includes the benefit of the correction of April 2003’s tariff revision, from 42.26% to 50.81%, to take into account the final Regulated Asset Base (R$782m) for the period from April 2003 to April 2008 (impact: +R$20m as an increase to the tariff base and +R$20m as a retroactive effect, which is only valid for 12 months).

(1) Includes invoices from the extraordinary tariff granted by ANNEL to recover the 2001/2002 rationing losses and recovery of non-controlable costs (“Parcela A”) prior to Oct. 2001; Values deducted of VAT.

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Energias do Brasil

P&L Bandeirante Escelsa Enersul Generation & Trading

R$ million 2005 2004 U% 2005 2004 U% 2005 2004 U% 2005 2004 U%

Revenues 2,109.5 1,942.7 8.6% 1,312.2 1,080.1 21.5% 827.7 668.9 23.7% 555.2 374.6 48.2%

Direct Activity Costs 1,350.2 1,309.7 3.1% 825.2 740.4 11.5% 424.0 374.6 13.2% 296.7 204.9 44.8%

Gross Profit 759.3 632.9 20.0% 487.0 339.7 43.4% 403.7 294.3 37.2% 258.5 169.7 52.3%

Gross Profit/Revenues 36.0% 32.6% 3.4 p.p. 37.1% 31.4% 5.7 p.p. 48.8% 44.0% 4.8 p.p. 46.6% 45.3% 1 p.p.

Supplies and services 114.9 107.5 6.9% 82.5 60.1 37.2% 64.8 45.9 41.1% 72.3 57.0 26.8%

Personnel costs & Social benefits 97.4 94.9 2.6% 86.1 83.8 2.7% 62.5 60.7 3.1% 12.6 13.5 -7.2%

Other operating costs (revenues) 56.0 43.7 28.2% (11.4) 20.6 — 31.0 22.6 37.2% (72.7) 4.9 -

Operating Costs 268.2 246.1 9.0% 157.1 164.6 -4.5% 158.3 129.2 22.5% 12.2 75.5 -83.8%

EBITDA 491.1 386.9 26.9% 329.8 175.1 88.4% 245.4 165.1 48.6% 246.3 94.2 161.4%

EBITDA/Revenues 23.3% 19.9% 3.4 p.p. 25.1% 16.2% 8.9 p.p. 29.7% 24.7% 5.0 p.p. 44.4% 25.1% 19.2 p.p.

Depreciation 81.9 75.1 9.1% 58.6 55.4 5.8% 48.8 48.6 0.6% 15.7 9.4 67.8%

EBIT 409.2 311.8 31.2% 271.2 119.7 126.6% 196.6 116.6 68.6% 230.5 84.8 171.7%

Other Indicatores:

Capex 117.2 119.9 -2.2% 139.4 89.9 55.2% 191.7 93.4 105.2% 700.8 725.4 -3.4%

# employees 1,203 1,207 -0.3% 1,162 1,238 -6.1% 866 899 -3.7% 297 226 31.4%

U YoY R$ million

EBITDA 2004 765.0

Bandeirante +104.2

Escelsa +154.7

Enersul +80.3

Generation & Trading +152.0

Holding & Other -7.1

EBITDA 2005 1,249.2

• Bandeirante: EBITDA increased 26.9% in 2005 thanks to the performance at the gross profit level. Operating costs rose 9.0% following: i) higher supplies and services costs which were affected by the increase of network inspections, meter readings and billing services (R$3m), and also by higher consulting costs (R$2m), higher software fees to upgrade commercial and technical information systems, and improvements of the call centre; and ii) the accounting of a R$26m provision against a receivable account from the company Piratininga, which is related to the split of the asset to recover, between Bandeirante and Piratininga, that resulted from the rationing losses, in the scope of the de-merger process of the former Bandeirante in 2001 (other operating costs).

• Escelsa: EBITDA was up 88.4%, propelled by the healthy gross profit growth. Supplies and services rose 37% mainly due to: i) an increase of the maintenance services provided by external companies and a legal requirement to double the shift of the maintenance teams (R$7m); ii) the intensification of the programme to reduce the distribution losses

(R$4m); iii) increase of the services related to electricity cuts and re-connections (R$2m); and iv) higher consulting costs (R$3m). The other costs line was influenced by the reversion of a R$23m provision that was made to cover fiscal contingencies, which were waiting for a judicial decision and now were ruled in favour to the company.

• Enersul: Gross profit was the main driver behind the 48.6% rise in EBITDA. Operating costs rose 22.5% mainly due to: i) higher maintenance costs following the network enlargement (R$3m); ii) higher network inspections, meter reading services and electricity cuts and re-connections services (R$4m); iii) an updating of the CRM systems (R$2m); iv) higher costs for billing; v) higher consulting costs; vi) higher IT services; and vii) higher provisions for doubtful debtors (+R$6m in other operating costs).

• Presently, Energias do Brasil manages 531 MW of installed generation capacity (97% is hydroelectric), which generated 2,756 GWh in 2005. In the middle of 2005, Energias do Brasil unbundled the distribution and generation activities embedded in its distribution subsidiaries, in order to comply with the new regulatory framework for the Brazilian electricity sector. As a consequence, the power plants formerly embedded in the distribution companies (280 MW) were incorporated in the electricity generation division. This change was the main driver of the gross profit performance at the Generation & Trading division, contributing with R$68m in period. In addition, the tariff update at Lajeado 903 MW hydro power plant (EDP Lajeado has the right to sell 27.65% of the energy) and the 31.6% increase of the trading and supply activity to 6,379 GWh, also contributed to the gross profit growth. At the EBITDA level, these activities also benefited from the reversion of a R$90m provision created in 2003, which was related with the possible asset devaluation of Lajeado project. Regarding the expansion of the generation capacity, Energias do Brasil expects to increase its installed capacity by an additional 527 MW (100% hydroelectric) until the end of 2006 at: Peixe Angical (452 MW), São João (25 MW) and a new unit at Mascarenhas (50 MW). Construction capex at the Peixe Angical hydroelectric power plant was R$639m in the period and is expected a further R$170m in 2006.

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Energias do Brasil

R$ million million

Income Statement

2005 2004 % 2005 2004 %

Revenues 4,547.0 3,899.6 16.6% 1,503.7 1,074.3 40.0%

Direct Activity Costs 2,636.4 2,455.6 7.4% 871.8 676.5 28.9%

Gross Profit 1,910.6 1,444.0 32.3% 631.8 397.8 58.8%

Gross Profit/Revenues 42.0% 37.0% 5.0p.p. 42.0% 37.0% 5.0p.p.

Supplies and services 358.4 299.0 19.9% 118.5 82.4 43.9%

Personnel costs & Social benefits 277.9 269.5 3.1% 91.9 74.2 23.8%

Other operating costs (or revenues) 25.0 110.5 -77.3% 8.3 30.4 -72.8%

Operating Costs 661.4 678.9 -2.6% 218.7 187.0 16.9%

EBITDA 1,249.2 765.0 63.3% 413.1 210.8 96.0%

EBITDA/Revenues 27.5% 19.6% 7.9p.p. 27.5% 19.6% 7.9p.p.

Depreciation 206.0 196.5 4.9% 68.1 54.1 25.9%

EBIT 1,043.2 568.6 83.5% 345.0 156.6 120.2%

EBIT/Revenues 22.9% 14.6% 8.4p.p. 22.9% 14.6% 8.4p.p.

Financial Results (306.8) (340.4) 9.9% (101.5) (93.8) -8.2%

Income Before Taxes 736.3 228.1 222.8% 243.5 62.9 287.4%

Income taxes 184.1 1.8 — 60.9 0.5 -

Minority Interests 5.2 60.6 -91.4% 1.7 16.7 -89.7%

Net Profit 547.0 165.7 230.1% 180.9 45.6 296.3%

Change in EBITDA (R$ million)

765

EBITDA 2004

+467

Gross Profit

-59

Supplies & Services

-8

Personnel Costs

+85

Other

1,249

EBITDA 2005

Change in Net Debt

3,297

Net Debt 2004

-670

Capitalization Senior Notes

-500

Proceeds from IPO

+334

Net Funding

2,461

Net Debt 2005

• In 2005, gross profit at Energias do Brasil increased 32.3%, on which the distribution activity contributed approximately with 80%, while generation and trading contributed with 20%. The sound increase was mainly driven by i) a 3.0% growth in the electricity distributed; ii) the positive amendments of Escelsa and Enersul’s Regulated Asset Base; iii) lower electricity purchase costs than those recognised in the tariffs (R$67m), specially at Bandeirante; iv) higher electricity sales in the supply activity (+31.6%); and v) the unbundling of the distribution and generation activities embedded in the distribution subsidiaries.

• Operating costs decreased 2.6% mainly due to the reversion of the R$90m provision that was made in 2003 to cover the potential asset devaluation of Lajeado project. Regarding supplies and services, the 20% increase is mainly explained by the distribution activity following annual adjustments to the supply contracts, higher maintenance related to the network enlargement as a consequence of the universal connection programme to all low voltage clients, intensification of the programme to reduce technical and commercial losses and higher consulting expenses following the corporate reorganisation. During 2005, Energias do Brasil launched “Vanguarda Project” which has the mission to identify and capture synergies within the companies of Energias do Brasil following its restructuring. This programme is expected to be fully implemented by 2007

• The Initial Public Offering of Energias do Brasil, in July 2005, allowed the company to strengthen substantially its capital structure with the proceeds of R$500m and the conversion of R$670m of Escelsa Senior Notes, held by EDP, into Energias do Brasil share capital and enhance the company’s ability to take advantage of new opportunities in the Brazilian electricity sector. In September 2005, EDP concluded a private placement of 2.2% of Energias do Brasil share capital at R$18 per share, reducing EDP’s stake from 64.5% to 62.4% (note: Energias do Brasil has 165,016,221 common shares).

• In Euro terms, EDP benefited from the appreciation of the Real, which in 2005 the average BRL/Euro rate was 3.02 versus 3.63 in 2004. At the EBITDA level this had a positive impact of €69m.

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Telecoms

Operating Income Statement (€ m) 2005

ONI Telecom Comunitel ONI Group

Voice 63.8 103.9 164.5

Voice Value Added Services — 0.9 0.9

Data & Internet 62.0 19.5 77.4

Other 23.9 2.6 29.2

Telecommunication services 149.7 126.9 272.0

Equipment sales 2.9 0.8 6.4

Operating Revenues 152.5 127.7 278.4

Telecommunication services 69.0 67.1 132.4

Equipment sales 2.7 0.5 5.8

Direct Activity Costs 71.7 67.6 138.2

Gross Profit 80.9 60.1 140.2

Gross Profit/Revenues 53.0% 47.0% 50.4%

Supplies and services 49.4 34.6 78.7

Personnel costs & costs with social benefits 23.0 15.7 43.2

Other operating costs/(revenues) 1.3 3.5 (1.0)

Operating Costs 73.7 53.8 120.9

EBITDA 7.2 6.2 19.3

EBITDA/Revenues 4.7% 4.9% 6.9%

Depreciation and amortisation 43.4 12.7 81.1

EBIT (36.3) (6.5) (61.8)

EBIT/Revenues -23.8% -5.1% -22.2%

Number of Employees 2005 2004

ONI Telecom 471 579 —108

Comunitel — 446 —446

Other 21 71 —50

ONI Group 492 1,096 —604

Operating Investment (€ m) 2005 2004 (1) %

ONI Telecom 17.3 12.9 34.1%

Comunitel 16.7 12.6 33.3%

Others 0.03 0.1 -55.4%

ONI Group 34.1 25.5 33.4%

Clients—Gross Adds (th)

62.3

27.7

34.6

2004 Pro-forma (1)

+ 30.5%

81.3

38.4

42.9

2005

ONI Telecom

Comunitel

Voice Traffic (million min.)

2,160.0

1,097.2 220.3 842.4

2004 Pro-forma (1)

+ 7.1%

2,313.3

1,136.0 152.6 1,024.7

2005

Carriers

Residential

Corporate

• Gross adds increased 30.5% year-on-year, following the company’s strategic focus on direct access clients and broadband internet (marketed under the brandname Oni Duo).

• Voice traffic increased 7.1% year-on-year, mostly due to a 21.6% growth in the carriers segment, out of which 10.9% came from Oni Telecom. The residential segment’s voice traffic (Oni Telecom) decreased 30.7% year-on-year mostly due to the erosion of indirect access clients, which was not yet compensated by the growth in voice traffic from direct access clients (which more than doubled versus the year 2004). At the corporate segment, voice traffic increased 3.5% year-on-year, following: i) a 7.4% decrease at Oni Telecom explained by a reduction of voice traffic from indirect access clients; which was more than compensated by ii) a 9.3% growth at Comunitel.

• Operating revenues increased 3.5% year-on-year – excluding the proceeds from voice value added services, a business that was terminated due to regulatory changes in Spain – on the back of an increase in revenues from both data & internet and other telecommunication services (e-services and infra-structure services provided to corporate clients).

• Operating investment totaled €34.1m in 2005, up 33.4% year-on-year, due to the investments made at the ADSL network (namely broadband central offices) and the acquisition of equipments for corporate clients’ solutions. These items are related to an increased focus on broadband Internet services and to the increase in the number of clients.

(1)2004 operational and financial figures here presented are pro-forma, excluding Comunitel’s contribution for the 4Q2004. In 2005, following the sale of Comunitel (September), this company was only consolidated from January to September.

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Telecoms

Operating Income Statement ( m) ONI Group

Pro-forma

2005

2004 (1) U%

Voice 164.5 159.4 3.2%

Voice Value Added Services 0.9 11.9 -92.1%

Data & Internet 77.4 74.3 4.1%

Other 29.2 26.6 9.8%

Telecommunication services 272.0 272.2 -0.1%

Equipment sales 6.4 7.7 -17.4%

Operating Revenues 278.4 280.0 -0.6%

Telecommunication services 132.4 135.2 -2.1%

Equipment sales 5.8 7.1 -17.6%

Direct Activity Costs 138.2 142.2 -2.8%

Telecommunication services 139.6 137.1 1.9%

Equipment sales 0.6 0.7 -16.0%

Gross Profit 140.2 137.7 1.8%

Gross Profit/Revenues 50.4% 49.2% 1.2p.p.

Supplies and services 78.7 80.5 -2.3%

Personnel costs & costs with social benefits 43.2 48.9 -11.6%

Other operating costs (or revenues) (1.0) 49.3 -

Operating Costs 120.9 178.7 -32.3%

EBITDA 19.3 (40.9) -

EBITDA/Revenues 6.9% -14.6% 21.5p.p.

Depreciation and amort. (net of subsidies) 81.1 43.8 85.3%

EBIT (61.8) (84.7) 27.0%

EBIT/Revenues -22.2% -30.3% 8.0p.p.

EBITDA ( m)

6.6

EBITDA 2004

(2)

+ 2.5

Gross Profit

+ 5.7

Personnel Costs

- 5.2

Aquisition & Retention Costs

+ 7.1

Other Supplies and Services

+ 2.7

Other Operating Costs

19.3

EBITDA 2005

• Proceeds from voice telecommunication services, excluding voice value added services, were up 3.2% year-on-year, affected by: i) a decrease in residential voice services from indirect access clients at Oni Telecom, following Oni’s strategic decision to focus on direct access clients; which was more than compensated by ii) an increase in corporate and carrier voice services.

• Revenues from data & internet services were up 4.1% year-on-year, on the back of: i) a 9.6m increase in revenues from broadband Internet, out of which Oni Telecom contributed with 4.6m; and ii) an improved offer of direct access through ULL (Unbundling of the Local Loop).

• Gross profit at the Oni Group increased 1.8% year-on-year, or 1.2 p.p., on the back of a positive evolution of the mix of services provided by Comunitel. Oni Telecom’s gross margin remained stable at 53%.

• Operating costs decreased 32.3% year-on-year due to a great extent to the accounting, in 2004 of a 47,5m non-recurring provision. Most of it reflects the reversal of a 40m tax credit booked in 2002 from the sale of Oni Way to Vodafone. Excluding this impact, operating costs would have decreased 7.8% as a result of: i) a 5.2m increase in clients’ acquisition and retention costs; and ii) a 1.5m increase in severance payments, which were more than compensated by the positive impacts of iii) a 14.8%, or 7.1m, decrease in personnel costs –excluding severance payments – on the back of both lower bonuses and a decrease in the number of employees; and iv) a 13.0%, or 7.1m, decrease in supplies and services – other than clients’ acquisition and retention costs.

• The Oni Group’s Gross Profit improvement together with tight control of personnel costs and supplies and services, other than those related to clients’ acquisition and retention costs, enabled the company to achieve a 19.3m EBITDA in 2005, which represents an EBITDA margin of 6.9%.

• Depreciations and amortizations in 2005 include a 30m cost related to an impairment made to the value of the contract with Transgás for the use of its fibre optic network by Oni.

• In September 2005, the Spanish competition authority approved the Oni Group Sale and Purchase Agreement signed in July 2005 for the sale of its 99.93% stake in the share capital of Comunitel. With the completion of this operation, Oni booked – under the “gains on discontinued operations” item – a net capital gain of 33m.

• In December 2005 Oni Telecom completed a 210m capital increase through the conversion of shareholder loans into Equity, which together with the proceeds from the sale of Comunitel ( 204m) and the de-consolidation of Comunitel’s financial debt ( 50m) enabled the Oni Group to reduce its net financial debt by some 430m (including shareholders’ loans). As a consequence, the company is currently renegotiating the maturity profile of its financial debt to adjust it in accordance with the cash-flow generation forecasted in the company’s business plan.

(1)2004 finantial figures here presented are pro-forma, excluding Comunitel’s contribution for the 4Q2004. In 2005, following the sale of Comunitel (September), this company was only consolidated from January to September. (2)Excluding a 47.5m non-recurring provision, most of which reflects the reversal of a 40m tax credit booked in 2002 from the sale of Oni Way to Vodafone.

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Financial Statements

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Income Statement by Business Areas

Enernova &

2005 EDP Portgás EDP

EDP Produção EDP Comercial EDP HC Energia Brazil ONI

Distribuição 60% Consolidated

(€ m) Bioeléctrica

Electricity Sales 1,931.7 524.9 33.6 3,737.6 - 1,518.3 1,468.4 - 8,584.4

Other Sales 24.1 - - 3.2 47.9 582.8 - 6.4 664.3

Services Provided (59.2) 0.2 0.2 26.8 1.2 71.5 35.2 272.0 428.3

Operating Revenues 1,896.6 525.0 33.8 3,767.6 49.0 2,172.6 1,503.7 278.4 9,677.0

Electricity & Gas 188.5 581.0 - 2,580.2 - 563.0 858.6 - 4,222.0

Fuel 707.8 - 2.7 - 24.0 376.9 - - 1,103.7

Materials and goods for resale 4.3 - 0.3 14.0 0.0 449.7 13.2 138.2 487.5

Direct Activity Costs 900.7 581.0 3.0 2,594.2 24.0 1,389.7 871.8 138.2 5,813.2

Gross Profit 995.9 (56.0) 30.7 1,173.4 25.0 782.9 631.8 140.2 3,863.8

Gross Profit/Revenues 52.5% (10.7%) 91.0% 31.1% 51.1% 36.0% 42.0% 50.4% 39.9%

Supplies and services 96.7 12.4 8.6 255.0 3.8 106.9 118.5 78.7 816.8

Personnel costs 74.1 4.0 1.2 181.1 2.7 138.4 89.0 42.4 546.0

Costs with social benefits 27.0 0.4 0.2 128.9 0.0 3.8 2.9 0.8 200.3

Concession fees 3.8 0.0 0.7 201.4 - - 3.1 - 209.0

Other operating costs (or revenues) (8.0) 8.0 0.6 (17.1) (0.4) (31.1) 5.2 (1.0) (389.8)

Operating costs 193.5 24.8 11.3 749.4 6.1 218.0 218.7 120.9 1,382.3

EBITDA 802.4 (80.8) 19.5 424.0 19.0 564.9 413.1 19.3 2,481.5

EBITDA/Revenues 42.3% (15.4%) 57.7% 11.3% 38.7% 26.0% 27.5% 6.9% 25.6%

Depreciation and amortisation 200.7 4.4 8.9 330.9 3.2 199.4 74.9 81.1 952.0

Comp.of subsidised assets’ depreciation (1.1) — (0.3) (78.2) — (4.2) (6.8) — (90.7)

EBIT 602.8 (85.2) 10.9 171.3 15.8 369.6 345.0 (61.8) 1,620.2

EBIT/Revenues 31.8% (16.2%) 32.4% 4.5% 32.2% 17.0% 22.9% (22.2%) 16.7%

Financial income/(expense) (65.6) (7.8) (4.4) (26.1) (3.7) (67.0) (97.1) (33.2) (364.0)

Amortisation of concession rights —————— (4.4) (6.5) (37.6)

Discontinuing Activities ——————— 32.6 45.5

Pre-tax profit 537.2 (93.0) 6.6 145.2 12.1 302.6 243.5 (69.0) 1,264.2

Income Taxes & Deferred Taxes 156.8 (21.8) 2.7 16.5 3.3 102.5 60.9 49.1 152.2

Minority interests 1.1 ———— 26.8 1.7 (0.0) 40.9

Net Profit 379.4 (71.3) 3.9 128.7 8.8 173.3 180.9 (118.1) 1,071.1

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Income Statement by Business Areas

2004 Enernova & EDP HC Energia EDP

EDP Produção EDP Comercial Brazil ONI

EDP Bioelect. Distribuição 40% Consolidated

(m)

Electricity Sales 1,461.1 327.4 23.7 3,610.2 498.5 989.4 — 6,555.5

Other Sales 21.2 —— 2.7 191.5 — 8.1 232.9

Services Provided 38.4 (5.1) — 24.6 22.3 84.9 317.0 522.3

Operating Revenues 1,520.7 322.3 23.7 3,637.5 712.3 1,074.3 325.1 7,310.7

Electricity & Gas 51.4 311.7 — 2,324.1 230.8 663.6 — 3,335.8

Fuel 422.7 — 2.4 — 122.7 2.3 — 551.6

Materials and goods for resale 5.2 (0.4) (0.0) 14.2 126.9 10.6 167.9 56.1

Direct Activity Costs 479.3 311.3 2.4 2,338.3 480.5 676.5 167.9 3,943.5

Gross Profit 1,041.4 11.0 21.3 1,299.3 231.8 397.8 157.2 3,367.2

Gross Profit/Revenues 68.5% 3.4% 89.8% 35.7% 32.5% 37.0% 48.4% 46.1%

Supplies and services 89.0 10.6 3.4 224.5 35.6 82.4 82.2 660.9

Personnel costs 82.2 3.3 1.0 195.5 38.3 68.8 53.8 527.7

Costs with social benefits 22.4 0.4 0.1 419.2 1.2 5.4 0.8 440.1

Concession fees 3.6 0.0 0.5 186.1 —— — 190.2

Other operating costs (or revenues) 8.8 2.8 (1.0) (8.6) (3.8) 30.4 53.3 471.8

Operating costs 205.8 17.1 3.9 1,016.8 71.3 187.0 190.2 2,290.6

EBITDA 835.6 (6.1) 17.4 282.5 160.5 210.8 (33.0) 1,076.5

EBITDA/Revenues 54.9% (1.9%) 73.2% 7.8% 22.5% 19.6% (10.1%) 14.7%

Depreciation and amortisation 206.1 3.7 7.0 326.8 69.3 54.1 52.2 784.3

Comp.of subsidised assets’ depreciation (4.3) — (0.2) (72.4) (1.6) — — (78.9)

EBIT 633.7 (9.8) 10.6 28.1 92.8 156.6 (85.1) 371.2

EBIT/Revenues 41.7% (3.1%) 44.6% 0.8% 13.0% 14.6% (26.2%) 5.1%

Financial income/(expense) (82.5) (1.4) (1.9) (25.1) (34.0) (89.4) (35.8) (264.7)

Amortisation of concession rights ————— (4.4) (8.8) (44.0)

Discontinuing Activities —————— — -

Pre-tax profit 551.2 (11.3) 8.7 3.0 58.7 62.9 (129.7) 62.5

Income Taxes & Deferred Taxes 148.7 (2.7) 2.3 (19.7) 16.9 0.5 6.2 16.4

Minority interests 0.2 ——— 10.9 16.7 0.1 3.3

Net Profit 402.3 (8.6) 6.4 22.7 30.9 45.6 (136.0) 42.8

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Cash Flow by Business Area

Enernova &

2005 EDP EDP

EDP Produção EDP Comercial EDP HC Energia Brazil ONI

Distribuição Consolidated

(€ m) Bioeléctrica

Net Profit 379.4 (71.3) 3.9 128.7 173.3 180.9 (118.1) 1,071.1

Depreciations 200.7 4.4 8.9 330.9 199.4 74.9 81.1 952.0

Compensation of subsidised assets depreciation (1.1) — (0.3) (78.2) (4.2) (6.8) — (90.7)

Concession Rights Amortization ————— 4.4 6.5 37.6

Net Provisions 0.2 10.4 0.3 (8.1) 7.8 4.9 0.1 40.8

Interests Hydraulicity Account ——————— 6.0

Forex Differences (1.1) —— 0.0 0.1 (63.4) 0.1 (68.7)

Income From Equity Method 23.8 ——— (3.3) 0.0 — (35.3)

Deferred Taxes (3.8) (1.5) (0.0) (24.1) 28.9 (4.8) 48.9 41.1

Minority Interests 1.1 ——— 26.8 1.7 (0.0) 40.9

Provision for the Spanish tariff deficit

Other Adjustments 8.5 0.0 (0.1) 2.8 (35.8) 58.7 (29.1) (342.1)

Net Financial Interests and other financial costs 73.7 9.8 7.0 63.6 67.7 125.9 30.1 296.5

Operating Cash Flow before Working Capital 681.4 (48.1) 19.7 415.6 460.7 376.4 19.6 1,949.2

Change in Operating Working Capital (25.3) 3.0 3.8 (22.9) 25.1 5.4 4.3 (296.4)

Operating Cash Flow 656.1 (45.1) 23.4 392.7 485.9 381.7 23.9 1,652.8

Capex (202.2) (5.7) (46.0) (338.0) (347.3) (419.4) (34.1) (1,429.2)

Net Operating Cash Flow 453.8 (50.8) (22.6) 54.7 138.6 (37.6) (10.2) 223.6

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ANNEX

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EDP Iberian installed capacity & electricity generation

Installed Capacity - MW 2005 2004 ¨ MW

PORTUGAL 8,921 8,402 520

Conventional Regime 8,584 8,079 505

Binding Generation 7,164 7,052 113

Hydroelectric (PES) 4,095 3,903 192

Thermoelectric (PES) 3,070 3,149 -79

Coal

Sines 1,192 1,192 -

Fuel oil / Natural Gas

Tapada do Outeiro — 47 -47

Setúbal 946 946 -

Carregado 710 710 -

Barreiro 56 56 -

Diesel

Tunes 165 197 -32

Non-Binding Generation 1,420 1,028 392

Small-Hydro (NBES) 244 244 -

CCGT

Ribatejo 1,176 784 392

Special Regime 337 322 15

Small-Hydro 66 66 -

Cogeneration 111 111 -

Wind (1) 151 136 15

Biomass 9 9 -

SPAIN 2,882 2,837 45

Conventional Regime 2,492 2,492 -

Hydroelectric 426 426 -

Thermoelectric 1,910 1,910 -

Coal

Aboño 878 878 -

Soto de Ribera 645 645 -

CCGT

Castejón 387 387 -

Nuclear

Trillo 156 156 -

Special Regime 390 346 45

Small-Hydro 3 3 -

Cogeneration 41 41 -

Wind (1) 266 223 44

Waste 73 72 1

Biomass 7 7 -

Electricity Generation—GWh 2005 2004 ¨ GWh

PORTUGAL 25,236 25,374 -138

Conventional Regime 24,076 24,291 -215

Binding Generation 18,824 20,475 -1,651

Hydroelectric (PES) 4,279 8,718 -4,439

Thermoelectric (PES) 14,545 11,756 2,789

Coal

Sines 9,590 9,530 61

Fuel oil / Natural Gas

Tapada do Outeiro — 5 -5

Setúbal 3,556 1,689 1,867

Carregado 1,162 327 835

Barreiro 220 200 20

Diesel

Tunes 17 5 12

Non-Binding Generation 5,252 3,817 1,435

Small-Hydro (NBES) 164 398 -234

CCGT

Ribatejo 5,088 3,419 1,669

Special Regime 1,160 1,083 77

Small-Hydro 90 141 -51

Cogeneration 670 656 15

Wind 348 237 111

Biomass 51 49 2

SPAIN 16,482 15,031 1,452

Conventional Regime 15,373 14,407 965

Hydroelectric 847 854 -6

Thermoelectric 13,273 12,317 956

Coal

Aboño 6,819 6,644 176

Soto de Ribera 4,345 3,712 633

CCGT

Castejón 2,109 1,961 147

Nuclear

Trillo 1,252 1,237 16

Special Regime 1,110 623 486

Small-Hydro 5 12 -7

Cogeneration 178 129 49

Wind 529 272 256

Waste 393 198 195

Biomass 5 12 -7

(1) Installed capacity that contributed to the revenues in the period. For the total installed capacity please see next page.

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EDP Wind Capacity in Iberia (NEO Energía)

Wind Farms in 2005 % NEO Installed Capacity Consolidation Method

100% % held Contrib. to revenues

PORTUGAL

Fonte da Mesa 100% 10 10 10 Full

Pena Suar (inclui ref. potência) 100% 16 16 16 Full

Cabeço da Rainha 100% 16 16 16 Full

Cadafaz 100% 10 10 10 Full

Serra do Barroso 70% 18 13 18 Full

Padrela 80% 8 6 8 Full

Fonte da Quelha (inclui ampliação) 100% 14 14 14 Full

Alto do Talefe (inclui ampliação) 100% 14 14 14 Full

Vila Nova (inclui ref. potência) 100% 26 26 26 Full

Açor 100% 20 20 20 Full

Alagoa de Cima 40% 14 5 — Equity

Bolores 100% 5 5 — Full / Acquisition agreement in 2005

Mosteiro 100% 9 9 — Full / Acquisition agreement in 2005

Amaral 1 100% 8 8 — Full / Acquisition agreement in 2005

Amaral 1—2ª fase 100% 2 2 — Full / Acquisition agreement in 2005

Caldas 1 100% 10 10 — Full / Acquisition agreement in 2005

Fanhões 1 100% 12 12 — Full / Acquisition agreement in 2005

Fanhões 2—1ª fase 100% 2 2 — Full / Acquisition agreement in 2005

Fanhões 2—2ª fase 100% 2 2 — Full / Acquisition agreement in 2005

215 200 151

SPAIN

Enix 5% 13 1 — Equity

Altos del Voltoya 31% 62 19 — Equity

Monte de las Navas 5% 49 3 — Equity

Arlanzón 78% 34 26 34 Full

Sierra del Madero 42% 29 12 — Equity

Cantábrico 100% 65 65 65 Full

Sierra del Cortado 42% 20 8 — Equity

Campollano 75% 124 93 124 Full

Las Lomillas 50% 50 25 25 Proportional

La Sotonera 68% 19 13 19 Full

Zas 97% 24 23 — Full / Acquired in Dec. 2005

Corme 95% 18 17 — Full / Acquired in Dec. 2005

Monseivane 100% 41 41 — Full / Acquired in Dec. 2005

La Celaya 100% 29 29 — Full / Acquired in Dec. 2005

Santa Quiteria 58% 36 21 — Full / Acquired in Dec. 2005

Rabosera 100% 31 31 — Full / Acquired in Dec. 2005

Buena Vista 100% 8 8 — Full / Acquired in Dec. 2005

Tahivilla 100% 30 30 — Full / Acquired in Dec. 2005

Sur 17% 20 3 — Equity / Acquired in Dec. 2005

Estrecho 17% 10 2 — Equity / Acquired in Dec. 2005

Juan Grande 45% 20 9 — Equity / Acquired in Dec. 2005

Llanos del a Esquina 100% 6 6 — Full / Acquired in Dec. 2005

738 485 266

IBERIA 952 685 418

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 7, 2006


EDP- Energias de Portugal, S.A.

By:		/s/ João Ramalho Talone
Name:		João Ramalho Talone
Title:		Chief Executive Officer