Ege haina 1q 2010

Quarterly Quarterly Financial Report Financial Report March 31st, 2010

March 31st, 2010

EGE Haina Reports First Quarter 2010 Net Income of US$10.4 million; Revenues of US$94.1 million

Special points of interest:

Santo Domingo, Dominican Republic, May 11th, 2010 – EGE Haina announced

• EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 1.3:1.0 and 5.0:1.0, respectively, as of March 31st, 2010.

• On January 11, 2010, the Company fully collected the outstanding amount of the accounts receivable under the rescheduling agreement signed with Edeeste in August 2006.

• In April, 2010, the Company entered into a “turn key agreement” with Cobra for the development of the Los Cocos Wind Farm project located in the municipality of Juancho, Pedernales Province, with an installed capacity of 25.20 MW.

Inside this Issue:

today a first quarter 2010 net income of US$10.4 million, compared to a net loss of US$3.3 million in the first quarter 2009, driven by an increase in energy sales price and higher demand. First quarter 2010 revenues were US$94.1 million, showing a 70.0% increase when compared to the same period of the previous year.

Financial and Operational Summary (US$ Thousands, except for Operational data)

Description

1Q'10

1Q'09

Var %

Revenues

94,101

55,358

70%

Operating Costs

78,587

52,382

50%

Variable M argin

35,766

18,890

89%

EBITDA¹

19,490

6,841

185%

Operating Income (loss)

15,514

2,975

421%

Net Income (loss)

10,425

(3,305)

-415%

Operating cash, net

66,786

(1,343)

-5072%

Availability, %

81

82

0%

• Quarter highlights

2

Sales, GWh

483

457

6%

• External factors

2

Generation, GWh

430

346

24%

• MD&A

3

Spot Purchases, GWh

53

111

-53%

• Financial Debt

5

• Collections

6

• Financial results

7

1

EBITDA is a non-GAAP financial measure, which is calculated by adding depreciation and amortization expenses to the Operating income.

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Quarterly Financial Report March 31st, 2010

Quarter Highlights and Recent Developments EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 1.3:1.0 and 5.0:1.0, respectively, as of March 31st, 2010.

On January 11, 2010, the Company fully collected the outstanding amount of the account receivable from the rescheduling agreement signed with Edeeste in August 2006.

On February 16, 2010, a euro forward contract was settled. In accordance with this agreement, the Company received €10,000,000 at a rate of US$1.4764/EUR. As of March 31st, 2010, accounts receivable have decreased from US$163.5 million (as reported in the balance sheet as of December 31st, 2009) to US$ 96.2 million. During the first quarter, cash collections were in the amount of US$ 114.7 million. Additionally, the Company entered into offsetting agreements by US$ 18.3 during the same period.

On March 17, 2010 the Company issued its audited financial statements for 2009. The Company has restated its annual financial statements from amounts previously reported for periods ended through December 31, 2008. During 2009, the Company identified certain inventory adjustments that resulted from the translation of spare parts inventory from Dominican Pesos into US Dollars. The adjustment had no impact on the Company’s cash flow.

In April 2010, the Company entered into a “turn key agreement” with Cobra for the development of the Los Cocos Wind Farm project located in the municipality of Juancho, Pedernales Province, with an installed capacity of 25.20 MW.

External Factors

Coal, Natural Gas and Fuel-Oil #6 Price Evolution (US/MMBtu)

Average price of fuel for the month of March was US$69.90 /Bbl for Platt’s US Gulf Coast HFO #6, 3% Sulfur (fuel used to index the energy price under our PPAs).

Exchange rate as of March 31st, 2010, closed at RD$36.53/USD. Accumulated inflation in DR, as of March 31st, 2010 was 2.33%.

11.19

4.91

5.04

3.78

3.58

Q4'09

Q1'10

8.23 6.37 5.89 6.41

According with the WOE of the FMI, the GDP will grow 2 6.0%.

Q4'08

6.20 6.23 4.48

Q1'09

5.30 4.07 3.81

Q2'09 HFO

2

11.00 10.08

3.44

Q3'09 COAL

NG

http://www.bancentral.gov.do/noticias/avisos/aviso2010-04-13.pdf

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Quarterly Financial Report March 31st, 2010

Consolidated Financial Results3 Revenues (US$ Thousands) Description

1Q'10

1Q'09

Var %

Contracted Energy

82,931

44,138

88%

Contracted Capacity

11,080

10,746

3%

90

474

-81%

94,101

55,358

70%

Others Total Revenues

1Q’10 revenues increased by 70% when compared with the same period of previous year (US$ 94.1 MM Vs. US$ 55.4 MM). This positive variance is essentially driven by a 78.0% increase in the average energy sales price for the period (1Q’10 US$196.5/MWh vs 1Q’09 US$127.4/MWh) as a result of the increase in Fuel Oil prices, which is the main escalator of our PPAs’ pricing formula, and higher demand (1Q’10 482.5 GWh vs 1Q’09 457.2 GWh).

Operating Expenses (US$ Thousands) Description

1Q'10

1Q'09

Var %

Fuel Expense

45,426

23,173

96%

Transmission Tolls

2,129

2,789

-24%

Purchased Power

9,563

10,423

-8%

Frequency Regulation

1,216

83

1370%

Operation & M aintenance

8,177

6,379

28%

General & Administrative

8,099

5,670

43%

Depreciation

3,976

3,866

3%

Total Operating Expenses

78,587

52,382

50%

During 1Q’10 operating expenses were higher than 1Q’09 comparative figures by 50% (US$78.6 MM Vs. US$52.4 MM). This increase is the result of: Fuel costs: 96% or US$22.3 MM increase, as a result of higher fuel consumption (1Q’10 545.0 thousand of BBLS vs 1Q’09 369.2 thousand of BBLS) due to higher energy generation and a negative average price effect for the period (1Q’10 US$75.6 per BBLS vs 1Q’09 US$43.6 per BBLS).

General and administrative expenses: 43% or US$2.4 MM increase mainly due to i) US$1.3 MM higher technical advisory fee expense due to higher energy sales; ii) US$0.6 MM higher office operation costs mainly due to the support provided to Haiti by the Company; iii) US$0.2 MM higher allowance for doubtful accounts expense; iv) US$0.2 MM higher regulatory payment and v) US$0.1 MM higher other minor negative variances.

Operation and maintenance expenses: 28% or US$1.8 MM increase when compared to 1Q’09 mainly as a consequence of the major maintenance performed to the Sultana’s engine #2 and #8 in 1Q’10.

Partially offset by lower transmission tolls expense: 24% or 0.7 MM due to lower energy purchased.

Purchased power: 8% or US$0.9 MM decrease is mainly the result of lower spot energy purchases (1Q’10 54.8 GWh vs 1Q’09 110.4 GWh) as a result of the increase in generation, partially offset by a negative average price effect for the period (1Q’10 US$196.8/MWh vs 1Q’09 US$91.0/MWh).

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The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (USGAAP). These consolidated financial statements include the accounts of EGE Haina, and those of its wholly owned subsidiary EGE Haina Finance Company. Intercompany balances and transactions have been eliminated in consolidation.

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Quarterly Financial Report March 31st, 2010

Net Income Net income was US$10.4 MM in the 1Q’10, compared to a net loss of US$3.3 MM in the same period of prior year. The positive variance of US$13.7 MM is explained by: Higher EBITDA by US$12.6 MM as explained in the above paragraphs.

US$3.2 MM lower income tax.

Partially offset by US$0.8 million higher other expenses mainly due to the loss incurred in the Euro forward.

US$0.8 MM lower interest income, mainly due to a decrease on interest income from commercial receivables as a consequence of an increase in collections from the distribution companies.

US$0.4 lower exchange gain.

US$0.1 higher depreciation expense.

Cash Flow Cash provided by operating activities Net cash provided by operating activities was US$66.8 MM during the 1Q’10, compared to US$1.3 MM used in the same period of 2009. The US$68.1 MM positive variation is explained by: a) US$52.0 MM decrease in accounts receivable; b) US$13.7 MM higher net income; c) US$11.3 MM increase in other liabilities; d) US$5.8 MM decrease in prepaid expenses; e) US$0.8 MM increase in payable to related parties; f) US$0.4 MM lower other assets; partially offset by i) US$10.2 MM lower accounts payable; ii) US$3.4 MM higher inventories; iii) US$2.3 MM of higher negative adjustments reconciling net income to the net cash provided in operating activities.

Cash (used in) provided by investing activities Net cash used in investing activities was US$0.9 MM during the 1Q’10, compared to US$2.5 MM provided by investing activities in the same period of the prior year. The US$3.5 MM decrease is mainly the result of: a) US$3.0 MM recovery of restricted cash in 1Q’09 and b) US$0.5 MM higher additions to property, plant and equipment.

Cash used in financing activities The variance of US$11.1 MM of lower cash used in financing activities in 1Q’10 when compared to the same period of the prior year, is essentially the result of US$20 MM dividend paid during 1Q’09; partially offset by US$9.1 MM of proceeds from short term debt also in the 1Q’09.

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Quarterly Financial Report March 31st, 2010

Financial Debt FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS

Instrument 144 A Bond Local Bond- T1 Local Bond-T2 Local Bond-T3 Local Bond-T4 Local Bond-T5 BHD-sov bond collateral Reservas-sov bond collateral

Outsanding balance in US$ million 164.9 6.0 6.0 6.0 6.0 6.0 5.0 2.5

Weighted av. Interest rate Weighted av. Life (years) Total financial debt

9.25% 5.87 202.4

Interest type fixed fixed fixed fixed fixed fixed variable variable

Current Rate 9.50% 8.00% 8.50% 8.50% 8.75% 7.75% 7.50% 7.50%

Average Life Repayment schedule 6.99 Balloon payment April 2017 0.47 Balloon payment October 2010 1.06 Balloon payment May 2011 1.22 Balloon payment July 2011 1.97 Ballonn payment April 2012 2.63 Ballonn payment December 2012 1.16 Balloon payment June 2011 1.16 Balloon payment June 2011

Debt Amortizations vs Financial Assets 180 160 140 US$ MM

120 100 80 60 40 20 0 2009

2010

2011

2012

cash on hand

2013 Debt

2014

2015

2016

2017

Sovereign bonds

Financial Expenses (US$ Thousands) Description

1Q'10

1Q'09

Financial Expenses Interest on Senior Notes Interest on Short-Term Debt

(4,264) -

(4,627) (36)

Interest on Long-Term Debt

(696)

-

Interest on Payables to Power Vendors

(493)

(2,085)

Amortization of Deferred Charges

(419)

(374)

(57)

(74)

(5,928)

(7,197)

Other Financial Expenses

Financial Income: 1,907

4,401

Interest on Short-Term Investments

Interest on Trade Accounts Receivable

16

30

Interest on Long-Term Investments

444

Other Financial Income

Total Financial Expenses, Net

-

11

13

2,378

4,445

(3,550)

(2,752)

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Quarterly Financial Report March 31st, 2010

Collections Cash Collection rate for 1Q’10 was 152% as compared to the 100% level of last year’s same quarter. The positive variance is mainly the effect of the payment received from the Distribution Companies during the month of March. Such payment supports the commitment made by the Government with the International Monetary Fund (IMF) of maintaining the arrears coated with the generator companies in a maximum of 45 days.

Cash Collections Vs Billings 152%

108% 100% 95% 89%

64%

60%

52% 43% 1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

Operational Statistics Description

1Q'10

1Q'09

Var.%

Heat Rate, Btu/KWh

9,797

9,557

2.5%

Availability, %

81.2

81.6

-0.5%

Forced Outage Rate, %

2.4

1.2

100.0%

Installed Capacity, M W

599

599

0.0%

Effective Capacity, M W

547

547

0.0%

Firm Capacity, M W

247

297

-16.6%

Energy Balance

580 430

GWh

280 130 (20) (170) 1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

(127)

(197)

(238)

(139)

(111)

(149)

(130)

(101)

(53)

GWh - Sales

505

558

588

496

457

478

514

507

483

GWh - Generation

377

361

350

357

346

330

384

406

430

GWh - Spot Purchase

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Quarterly Financial Report March 31st, 2010

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A, S.A. A D SUBSIDIARY U AUDITED CO DE SED CO SOLIDATED BALA CE SHEETS AS OF MARCH 31, 2010 A D DECEMBER 31, 2009 Amounts in thousands of US$ Mar-10 Assets: Current Assets: Cash and cash equivalents Short Term Investment Accounts receivable Inventory Prepaid expenses and other Deferred income tax Total current assets Deposits in banks, restricted Long term investments Long Term Invesment, restricted Property, plant and equipment Intangible assets, net Other assets Total Assets Liabilities and shareholders' equity: Current liabilities: Short-term debt Accounts payable Accounts payable to related parties Derivative financial liabilities Other Liabilities Total current liabilities Long-term debt, Deferred income tax Other non-current liabilities Shareholders' equity: Common stock Legal reserve Retained earnings Accumulated other comprehensive loss: Currency translation adjustment Investments revaluation reserve Total shareholders' equity Total liabilities and shareholders' equity

Dec-09

105,353 12,400 96,188 32,858 18,607 2,251 267,656

39,548 12,328 163,498 30,451 19,432 3,033 268,289

7,831 2,462 8,197 249,514 8,865 6,890 551,416

7,831 10,480 251,703 9,130 6,874 554,308

6,000 10,031 1,020 19,563 36,614

6,000 32,069 1,009 359 10,563 50,001

196,367 15,960 13 248,953

196,367 16,123 13 262,504

289,000 11,365 32,809

289,000 11,365 22,384

(31,032) 321 302,463

(31,032) 87 291,804

551,416

554,308

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Quarterly Financial Report March 31st, 2010

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A, S.A. A D SUBSIDIARY U AUDITED CO DE SED CO SOLIDATED I COME STATEME TS FOR THE THREE MOTH PERIODS E DED MARCH 31, 2010 A D 2009.

Amounts in thousands of US$ Three month period ended March 31, 2010 Revenues Energy Capacity Others

Operating costs Fuel Transmission Purchased power Compensation for frequency regulation Operating and maintenance Administrative and general expenses Depreciation and amortization Operating income Financial expenses, net Foreign exchange (loss) gain Other (expenses) income, net Income before income tax Income tax Net income (loss)

2009

82,931 11,080 90

44,138 10,746 474

94,101

55,358

45,426 2,129 9,563 1,216 8,177 8,099 3,976 78,587

23,173 2,789 10,423 83 6,379 5,670 3,866 52,382

15,514 (3,550) (40) (747) 11,178

2,975 (2,752) 370 48 641

(753)

(3,945)

10,425

(3,305)

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Quarterly Financial Report March 31st, 2010

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A, S.A. A D SUBSIDIARY U AUDITED CO DE SED CO SOLIDATED CASH FLOW STATEME TS FOR THE THREE MOTH PERIODS E DED MARCH 31, 2010 A D 2009.

Amounts in thousands of US$ Three month period ended March 31, 2010 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to the net cash provided by (used in) operating activities: Gain on sale of fixed asset Deferred income tax Depreciation and amortization Financial expenses Forward contracts Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Payable to related parties Other liabilities

2009

10,425

(3,305)

753 3,976 3,860 507

(4) 3,866 7,496 -

48,909 (3,028) 689 (16) (4,448) 11 5,148

(3,131) 384 (5,070) (382) 5,766 (845) (6,119)

66,786

(1,343)

(947) (4) (951)

3,014 4 (435) 2,583

(30) (30)

9,500 (412) (20,003) (170) (11,084)

Net increase (decrease) in cash and cash equivalents

65,805

(9,844)

Cash and cash equivalents at the beginning of period

39,548

22,340

105,353

12,495

18,648 245

18,761 2,095 58

Net cash provided by (used in) operating activities Cash flows from investing activities: Net changes in restricted cash Sale of property, plant and equipment Additions to property, plant and equipment Short-term investments Net cash (used in) provided by investing activities Cash flows from financing activities: Proceeds from short-term debt Repayment of short-term debt Dividends Debt issuance costs paid Net cash used in financing activities

Cash and cash equivalents at the end of period Supplemental cash flow information of non-cash activities Decrease in accounts receivable through offsets with accounts payable Reclassification of accounts receivable from non-current to current Unpaid additions of property, plant and equipment

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Quarterly Financial Report March 31st, 2010

The consolidated financial statements presented herein have not been audited and were prepared in conformity with Generally Accepted Accounting Principles in the United States (USGAAP).

EGE Haina is the largest generator of electricity in the Dominican Republic, based on installed capacity, currently operating 11 electric power generation units at six plants, consisting of San Pedro, Sultana del Este – barge, Haina and Barahona in the southern part of the country, Puerto Plata in the northern and Pedernales in the western part of Santo Domingo. EGE Haina has contracted approximately 96% of its power generation to the three Dominican Republic distributors. For more information, visit the Company's Web site at www.egehaina.com.

Caution Concerning Forward-Looking Statements: This report may contain “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” or “will”. Forward-looking statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of the Company may differ materially from those expressed or implied by such forward-looking statements and assumptions. For us, particular uncertainties that could adversely or positively affect our future results include, but are not limited to: changes in general economic, political, governmental and business conditions; the behavior of financial markets; changes in commercial market regulations. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. EGE Haina assumes no obligation and does not undertake to update forward-looking statements.

Investor Contact: Please address any questions or comments related to this report to our investor’s e-mail: hainainvestors@egehaina.com.

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