GRUPO EPM Financial Statements Fourth Quarter 2010 Disclaimer 2 - PowerPoint PPT Presentation

1 GRUPO EPM Financial Statements Fourth Quarter 2010

Disclaimer 2 This document was prepared by EPM to provide interested parties with information on the company’s financial aspects. This document may include discussions of strategy and statements about the likely development of the EPM business. They include information on the company’s estimates or expectations for its future performance and operations. Potential investors and the market in general should be aware that the information contained herein is not a guarantee of performance or the risks and uncertainties that may occur or materialize. Actual results may vary and differ from those provided herein due to several factors beyond the company’s control. Neither EPM nor its advisors, officers, employees, directors or agents, or representatives assume any responsibility in the company’s performance of actual events if it differs from what is provided herein. In addition, EPM’s advisors, officers, employees, directors or agents shall have no obligation to update, amend, modify or adjust this presentation with facts that may occur after this communication. This presentation is for discussion purposes only, and it should only be referenced considering the verbal information provided by EPM, otherwise it would be incomplete. Neither this presentation nor any of its contents may be used for any other purpose without EPM’s prior written consent.

3 Agenda Significant events during the quarter Financial performance Subsequent events

4 The year 2010 was an opportunity to consolidate several courses of action that we have been developing since 2008, when EPM’s management began its term. The figures, achievements, and times included in this report are the tangible result of this organization’s achievements over the past seven years, with a clear goal expressed as EPM’s main purpose with the word “Sustainability,” defined as the set of economic, social and environmental factors that make the company’s existence in the long term possible.

5 Significant events during the quarter

Significant events during the year 6 On December 20, this power plant’s first generating unit went into production, thus meeting the work schedule and commitments agreed to with the Government. In 2011, it is expected that all three remaining units to Porce III complete the 660 megawatts that will it provide to the country through the national grid. The Institute for the Development of Antioquia, IDEA, and EPM’s parent company signed a binding agreement for the latter to fully develop the Hidroituango project, i.e., to finance, build, Hidroituango operate, maintain and later restore the power plant to the Hidroituango Company.

Significant events during the year 7 In furtherance of its growth strategy, and with an investment of USD$635 million, EPM acquired assets Foreign Investments for the generation, distribution and transmission of electricity in Guatemala through the companies GESA DECA II and Genhidro. In order to leverage its growth strategy, EPM signed loans amounting to approximately USD$790 million in 2010. UNE Telecommunications also issued USD$158 million in 10 years bonds on the Colombian Debts government bond market.

8 Financial performance

EPM Group - Development 9 Figures in million of dollars Revenues 5,000 Over the last four years, EPM 4,500 4,000 Group s revenues shows an 3,500 TACC:14% annual growth rate of 14%. 3,000 2,500 Revenues 2,000 1,500 1,000 500 - 2007 2008 2009 2010 Balance Sheet 18,000 16,000 Over the last four years, EPM 14,000 Group s assets shows an TACC:16% 12,000 annual growth rate of 16%. 10,000 Assets 8,000 Liabilities TACC:12% 6,000 Equity 4,000 TACC:26% 2,000 - 2007 2008 2009 2010

Revenues Over the last four years, EPM Group s revenues 10 shows an annual growth rate of 14%. Figures in million of dollars 1,200 1,000 792 800 Energy 685 705 664 639 589 562 Telco 600 402 Water 400 289 287 244 266 259 232 227 226 200 80 90 81 82 86 87 77 57 0 1 Q 2009 2 Q 2009 3 Q 2009 4 Q 2009 1 Q 2010 2 Q 2010 3 Q 2010 4 Q 2010 Accrued as of December During 4Q10, net income grew to USD$1,168 million, a 35% increase over 4Q09. 26% Energy During the course of the year, revenue rose to US Water $4,257 million, showing an increase of 21% over the Telco 8% previous year. 66%

Costs and Expenses 11 Figures in million of dollars 900 800 700 600 Energy 540 439 500 427 428 Telco 372 400 350 400 236 Water 300 214 200 211 187 189 175 185 149 175 100 49 50 40 37 42 38 45 27 0 1 Q 2009 2 Q 2009 3 Q 2009 4 Q 2009 1 Q 2010 2 Q 2010 3 Q 2010 4 Q 2010 Accrued as of December During 4Q10, costs and expenses rose to USD$804 29% Energy million. Water Telco 6% During the course of the year, costs and expenses 65% rose to USD$2,794 million.

EBITDA Over the last four years, EPM Group s EBITDA 12 shows an annual growth rate of 10%. Figures in million of dollars 400 350 300 278 Energy 267 246 252 237 250 239 Telco 163 200 167 Water 150 60 75 76 100 72 75 58 78 51 50 53 44 40 40 39 37 30 28 0 1 Q 2009 2 Q 2009 3 Q 2009 4 Q 2009 1 Q 2010 2 Q 2010 3 Q 2010 4 Q 2010 Accrued as of December During 4Q10, EBITDA rose to USD$364 million with an EBITDA margin of 31%. 20% Energy Water Accumulated EBITDA was USD$1,463 million, which 11% Telco represents an EBITDA margin of 34%. 69%

Net income Over the last four years, EPM Group s net income 13 shows an annual growth rate of 8%. Figures in million of dollars 250 200 Energy 39 150 199 52 Telco 167 157 160 141 33 10 Water 100 115 91 89 50 18 8 4 10 10 8 26 25 21 21 18 15 0 1 Q 2009 2 Q 2009 3 Q 2009 4 Q 2009 1 Q 2010 2 Q 2010 3 Q 2010 4 Q 2010 During 4Q10, net income was USD$154 million. The Accrued as of December accumulated net income was USD$716 million, and represented a net margin of 17%. 6% During the course of the year, Group EPM did not recorded 22% Energy the non-operating income than the last year, because in Water 2009 those were higher: the exchange difference because Telco the revaluation, interest income was lower in 2010. Likewise, the non-operating expenses were higher, Pension 72% plan increases due to the rise in life expectancy in Colombia.

Balance Sheet Over the last four years, EPM Group s assets 14 shows an annual growth rate of 14%. Figures in million of dollars Non - Current A. 13,362 14,000 Equity 12,000 9,601 10,000 16% 4% 8,000 Non - Current L. 6,000 4,123 Current A. Current L. 2,527 4,000 1,700 Minority 41% 464 12% 2,000 40% 0 Activos Grupo EPM’s assets totaled USD$15,888 million, a 23% increase over December 2009. 16% Energía Liabilities were USD$5,823 million, and represented a 37% debt ratio. Aguas 14% Telcom. The equity was USD$9,601 million, an increase of 70% 11%.

Indicators 15 % Prev. Indicators 2010 2009 Year EBITDA margin 34% 36% -4% Operating margin 21% 24% -13% Net earning margin 17% 21% -20% Liquidity 1.49 1.85 -20% Total indebtedness 37% 30% 22% Financial indebtedness 20% 16% 31% Equity profitability 8% 9% -13% Asset profitability 0.05 0.06 -22% EBITDA/Financial expenses 12.01 8.22 46% Debt/EBITDA 2.15 1.52 42%

16 Events following closure of the quarter

Events following closure of the quarter 17 EPM and AEI signed an agreement on January 19, 2011 to acquire for 100% of two companies in the electricity field in Central America for USD$200 million: Panama Distribution Group (PDG), which owns 51% of the shares in Elektra Noreste S.A. (ENSA), and AEI El Salvador Holdings Ltd., which has an 86.41% ownership stake in Distribuidora de Electricidad del Sur ENSA and DELSUR (DELSUR). The negotiations also included controlling shareholder participation in the following companies formed to provide services to the latter: Electricidad de Centroamérica Ltda. de C.V. PPLG El Salvador II, and Innova Tecnología y Negocios S. A. de C.V.

Events following closure of the quarter 18 In furtherance of its financing plan, on January 24, 2011 EPM issued US $680 million in ten year bonds on the international capital market, at a rate of 8.375% annually. With this operation, EPM consolidated its presence on the international capital market after its successful debut in July 2009. International Bond This issuance, under Rule 144A/Regulation S of Issuances the Securities Act de 1933, was made in Colombian pesos, taking advantage of the advantageous financial conditions offered by the international capital market and, at the same time, to hedge variations in the exchange rate.

Events following closure of the quarter 19 Consistent with the agreement signed with IDEA, EPM established a Establishment of de subsidiary, EPM Ituango S.A. E.S.P., EPM Ituango S.A. through which the Ituango E.S.P. hydroelectric project will be fully performed.