Ege haina 1q 2013

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013

EGE Haina Reports First Quarter 2013 Net Income of US$26.6 million; Revenues of US$174.1 million Special points of interest:  On April 30th, 2013, a dividend payment amounting to US$14MM was approved in the General Shareholders’ Meeting of the Company.

 On April 17th and March 5th, 2013, the Company incurred in short term debt with The Bank of Nova Scotia, in the amount of US$25MM at one (1) month LIBOR plus 3% p.a.

 As of March 31st, 2013, EGE

Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 3.07:1.0, a Consolidated Interest Coverage Ratio of 11.45:1.0 and Minimum Debt Service Coverage ratio of 4.61:1.0.

 In January 2013, the

Company fully disbursed the Senior Syndicated and Secured Loan Agreement with Citibank.

 In January 2013, EGE Haina

inaugurated the expansion of the wind farm Los Cocos with an investment of US$103.4MM. The project consisted of 26 wind turbines with an installed capacity of 52MW.

What’s inside  Quarter highlights

2

 External factors

2

 MD&A

3

 Financial Debt

5

 Collections

6

 Financial Results

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Santo Domingo, Dominican Republic, May 1, 2013 – EGE Haina announced today a Net Income of US$26.6 million for the first quarter of 2013, compared to a Net Income of US$19.1 million in the first quarter of 2012, driven by a higher demand as well as higher wind generation and lower HFO and coal prices. First quarter 2013 revenues amounted to US$174.1 million, showing a 13% increase when compared to the same period of the previous year.

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

1Q'13

1Q'12

Var %

Revenues

174,125

154,566

13%

Operating Costs

142,145

126,626

12%

Variable M argin

59,271

52,720

12%

EBITDA¹

37,182

33,078

12%

Operating Income

31,980

27,940

14%

Net Income

26,649

19,145

39%

(71,144)

5,580

-1375%

Availability, %

98

90

9%

Sales, GWh

658

573

15%

Generation, GWh

498

418

19%

Spot (Sales) Purchases, GWh

(68)

84

-182%

Other Purchases, GWh

229

71

222%

Operating cash, net

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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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013 Quarter Highlights and Recent Developments 

On April 30th, 2013, a dividend payment amounting to US$14MM was approved in the General Shareholders’ Meeting of the Company.



On April 17th, 2013, the Company signed a 180-days promissory note with The Bank of Nova Scotia in the amount of US$13MM, accruing an interest rate equivalent to one (1) month LIBOR plus 3% p.a., calculated over a 360 days base year. This promissory note matures in October 2013.



As of March 31st, 2013, EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 3.07:1.0, a Consolidated Interest Coverage Ratio of 11.45:1.0 and Minimum Debt Service Coverage ratio of 4.61:1.0.



As of March 31st, 2013, Quisqueya II project had a construction progress of approximately 63%.

Key milestones achieved include: 100% of land preparation, 70% of Substation construction, 70% of HFO Pipeline, 86% of foundations and structure and 70% of well water network.



On March 5th, 2013, the Company signed a 180-days promissory note with The Bank of Nova Scotia in the amount of US$12MM, accruing an interest rate equivalent to one (1) month LIBOR plus 3% p.a., calculated over a 360 days base year. This promissory note matures in August 2013.



In January 2013, the Company fully disbursed the Senior Syndicated and Secured Loan Agreement with Citibank.



In January 2013, the Company paid dividends in the amount of $12MM.



In January 2013, EGE Haina inaugurated the expansion of the wind farm Los Cocos with an investment of US$103.4MM. The project consisted of 26 wind turbines with an installed capacity of 52MW.

External Factors Average price of fuel for 1Q’13 was US$97.1 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, 2013, closed at RD$41.13/USD. Accumulated inflation in DR, as of March 31st, 2013 was 1.97%.2

2

http://www.bancentral.gov.do

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013 Consolidated Financial Results3 Revenues (US$ Thousands) Description

1Q'13

Contracted Energy Contracted Capacity

Var %

158,424

139,892

13%

15,148

13,854

9%

553

820

-33%

174,125

154,566

13%

Others Total Revenues

1Q'12

1Q’13 revenues increased 13% when compared with the same period of the previous year (US$174.1MM vs.

US$154.6MM). This positive variance is essentially driven by a higher demand under the PPAs with the Discos in 19% (1Q’13 541GWh vs 1Q’12 453GWh), mainly as a result of the reimplementation of the remaining 50MW under EDE ESTE’s PPA, as well as higher income for SIE compensation due to a higher dispatch of Haina Turbo Gas and Haina 4 units; partially offset by lower sales under CEPM’s PPA, due to a decrease in the supplied capacity and associated energy mainly driven by the major maintenance of Sultana’s engine #2 during March 2013 and a 3.1% decrease in the average energy sales price for the period (1Q’13 US$225.7/MWh vs 1Q’12 US$233/MWh).

Operating Expenses (US$ Thousands)

Description

1Q'13

1Q'12

Var %

Fuel Expense

67,124

61,029

10%

Transmission Tolls

3,013

3,324

-9%

Purchased Power

42,214

35,042

20%

Frequency Regulation

2,503

2,452

2%

Operation & M aintenance

7,201

7,852

-8%

General & Administrative

14,888

11,790

26%

Depreciation

5,202

5,138

1%

142,145

126,626

12%

Total Operating Expenses

During 1Q’13 operating expenses were higher than 1Q’12 comparative figures in 12% or US$15.5MM. This increase is mainly explained by:



Purchased Power: 20% or US$7.2MM higher than 1Q’12, driven by an increment in the average spot energy price (1Q’13 US$204.6/MWh vs 1Q’12 US$189.8/MWh) and b) an increase in energy purchases (both spot and PPA’s) by 5.86 GWh or 3.8%, (YTD’13 160.8 GWh vs YTD’12 154.9 GWh) driven by an increase in demand by 85.1 GWh, which wasn’t fully satisfied with our own generation, as well as the Flow Gate affecting the Company’s injections in the southern part of the country by US$2.6 million during 2013.



General and administrative expenses: 26% or US$3.1MM increase when compared to 1Q’12 mainly due to:, i) US$0.8MM higher technical advisory fee expense, ii) US$0.8MM higher office operation costs related to office rental, donations and the inauguration of the expansion of the Los Cocos wind farm, iii)US$0.5MM higher minimum tax expenses, iv)US$0.4MM higher labor cost, v) US$0.4MM higher insurance expenses and vi) a US$0.2MM increase in regulatory payments.



Fuel Expense: 10% or US$6.1MM higher than 1Q’12, essentially as a consequence of higher HFO and LFO consumption driven by an increase in generation during the period (1Q’13 498 GWh vs 1Q’12 418 GWh).



Operation & Maintenance: 8% or US$0.7MM lower than 1Q’12, due to lower major maintenance expenses performed to Los Cocos wind farm during 1Q’13.

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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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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013

Net Income Net income was US$26.6MM in 1Q’13, compared to a net income of US$19.1MM in the same period of the prior year.

The positive variance of US$7.5 MM is explained by:



Higher EBITDA by US$4.1MM as explained in the paragraphs above.



US$2.3MM lower interest expense, net, mainly due to higher capitalized interest, as a result of i) the projects under construction and ii) an increase in commercial interest income due to the increment in accounts receivable from distribution companies; partially offset by higher financial interests driven by an increase in debt.



US$0.7MM higher exchange gain, mainly due to the devaluation of the Dominican Peso (RD$) affecting positively our net liability exposure in such currency.



US$0.5MM lower income tax.

Partially offset by :



US$0.1MM higher other expenses.

Cash Flow Cash provided by operating activities Net cash used in operating activities was US$71.1MM during the 1Q’13, compared to US$5.6MM provided by operating activities during the same period of 2012. The US$76.7MM variance is explained by: a) US$78.3MM lower accounts payable, b) US$7.2MM decrease in other liabilities and c) US$5.1MM increase in prepaid expenses.

The aforementioned is partially offset by i) US$7.5MM higher net income, ii) US$5.1MM of higher positive adjustments reconciling net income to the net cash provided by operating activities, iii) US$1.2MM lower accounts receivable and iv) US$0.1MM lower inventories.

Cash used in investing activities Net cash used in investing activities was US$34.4MM during 1Q’13, compared to US$54.8MM used in the same period of the prior year. The US$20.4MM variance is mainly due to i) lower additions to property, plant and equipment by $16.1MM during 1Q’13, ii) decrease in restricted cash by US$10.7MM during 1Q’13 as a result of the payments made to Wärtsilä under the construction agreement, ii) US$1.7MM extension of credit to EDE Sur during 1Q’12; partially offset by the collection of restricted investments during 1Q’12 by US$8.3MM. Cash provided by financing activities The positive variance of US$4.4MM in financing activities during 1Q’13, when compared to the same period of the prior year, is due to higher proceeds from short term debt by US$12MM and lower payments of debt issuance costs by US$5.1MM; partially offset by US$10.7 higher dividend payment during 1Q’13 and lower proceeds from long term debt by US$2.0MM.

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013 Financial Debt as of March 31st, 2013 FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS Instrument

Balance

144 A Bond Local Bond (2) - T1/2 Local Bond (2) - T3/4 Local Bond (2) - T5/6 Local Bond (2) - T7/8 Local Bond (2) - T9/10 BPD Panama term loan program BHD DR term loan program BHD Panamรก term loan program Citi Project Facilities Scotiabank Short Term Loan Weighted av. Interest rate Weighted av. Life (Years) Total financial debt (Millions)

Interest type

Interest Rate

164.9 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 7.7 Variable (DR US$) 8.4 Variable (DR US$) 1.3 Variable (DR US$) 200.0 Variable (L3M + 5.75%, 6.25% floor) 42.0 Variable (LIBOR 1M + 3%)

9.70% 7.00% 7.00% 7.00% 6.00% 7.00% 5.91% 5.75% 5.50% 6.25% 3.20%

Repayment schedule Bullet payment April 2017 Bullet payment May 2016 Bullet payment June 2016 Bullet payment June 2016 Bullet payment Oct 2014 Bullet payment Oct 2016 Monthly - ending Nov 2015 Monthly - ending March & May 2016 Monthly - ending May 2016 Quarterly - ending March 2017 Bullet payment June & August 2013

Avg Life

4.08 3.17 3.25 3.25 1.59 3.59 0.92 1.16 1.18 2.86 0.33

7.22% 3.02 474.3

Total Debt vs Financial Assets 240.0 210.0 180.0 150.0 120.0 90.0 60.0 30.0 0.0 2013

2014

2015

Cash on hand

2016

2017

Debt

Financial Expenses (US$ Thousands) Description

1Q'13

1Q'12

Interest on Senior Notes

(4,335)

(4,307)

Interest on Long-Term Debt

(4,708)

(2,821)

Interest on Payables to Power Vendors

(1,671)

(850)

(694)

(428)

Financial Expenses

Amortization of Deferred Charges Capitalized Interest Other Financial Expenses

6,027

1,242

(245)

(201)

(5,626)

(7,365)

4,097

2,535

149

1,129

13

17

Financial Income: Interest on Trade Accounts Receivable Interest on Short-Term Investments Other Financial Income

Total Financial Expenses, Net

4,259

3,681

(1,367)

(3,684)

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013

Collections Collection rate for 1Q’13 (56%) had no material variances for that of last year’s same quarter (54%).

Discos Cash Collections Vs Billings 153% 154% 126%

96% 82% 74%

80%

65%

67%

56%

54%

38%

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

Operational Statistics Description

1Q'13

1Q'12

Var.%

Heat Rate, Btu/KWh

9,970

9,340

6.7%

Availability, %

98

90.2

8.6%

Forced Outage Rate, %

0.3

0.1

200.0%

Installed Capacity, M W

681

624

9.1%

Effective Capacity, M W

547

547

0.0%

Firm Capacity, M W

166

288

-42.3%

Energy Balance 650 500

GWh

350 200

50 (100) (250)

2Q10 3Q10 4Q10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13

GWh - Spot (Sale) Purchase (131) (151) (219) (178) (179) (153) (213) (83.8) (134) (117)

(99)

68.4

GWh - Sales

706

658

GWh - PPA Purchase GWh - Generation

505

609

582

566

613

647

635

-

-

-

-

-

(8)

(2)

375

458

363

387

434

486

420

573

631

(71.2) (97)

418

401

696

(131) (125) (229.1)

448

481

498

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2013 AND DECEMBER 31, 2012 Amounts in thousands of US$ 2013

2012

Assets: Current Assets: Cash and cash equivalents Restricted cash Accounts receivable Inventories Prepaid expenses Deferred income tax Total current assets Restricted cash, long term Long term receivable Property plant and equipment, net Intangible assets Deferred charges, net Deferred tax asset Other assets Total assets Liabilities and Shareholders' Equity Current liabilities Short-term debt Current portion of long-term debt Accounts payable Payable to related parties Diviends payable Income tax payable Derivative financial liability Deferred tax liability Other liabilities Total current liabilities Long term debt Deferred income tax Derivative financial liability Other non-current liabilities Shareholders' equity: Common stock Legal reserve Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity

55,201 27,471 348,974 41,620 1,912 613 475,792

141,661 38,161 276,643 38,793 2,802 461 498,521

11,811 12,548 618,954 108 9,217 248 500 1,129,178

11,811 13,382 604,184 91 9,910 381 504 1,138,784

42,000 25,892 153,186 5,965 4 8,378 1,429 51 10,709 247,615

30,000 15,849 210,060 5,036 10,679 9,398 930 52 8,834 290,839

406,410 12,571 1,151 3 667,751

398,899 12,596 1,717 3 704,055

289,000 21,841 183,352 (32,766) 461,427

289,000 20,509 158,036 (32,815) 434,729

1,129,178

1,138,784

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2013 AND 2012 Amounts in thousands of US$ Three month period ended March 31, 2013

2012

Revenues Energy

158,424

139,892

15,148

13,854

553

820

174,125

154,566

Fuel

67,124

61,029

Purchased power Transmission

42,214 3,013

35,042 3,324

2,503

2,452

7,201 14,888 5,202 142,145

7,852 11,790 5,138 126,626

31,980 (1,367) 1,367 (165) 31,814

27,940 (3,684) 624 (19) 24,861

(4,979) (185)

(6,253) 537

26,649

19,145

Capacity Others

Operating costs

Compensation for frequency regulation Operating and maintenance Administrative and general expenses Depreciation and amortization Operating income Financial expenses, net Foreign exchange gain, net Other income (expenses), net Income before income tax Income tax Current Deferred Net income Other comprehensive loss, net of tax: Cash flow hedge Compehensive income

49 26,698

19,145

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2013 AND 2012 Amounts in thousands of US$ Three month period ended March 31, 2013 Cash flows from operating activities: Net income Adjustments to reconcile net income to the net cash (used in) provided by operating activities: Loss on asset dispossal Deferred income tax Depreciation Infeffectivenness on cash flow hedge Financial expenes Provision for doubful accounts Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Income tax payable Payable to related parties Other liabilities

2012

26,649

19,145

125 185 5,202 (4) 8,472 79

(537) 5,138 4,341 28

(71,814) (2,827) 890 4 (31,867) (1,020) 930 (6,148)

(72,994) (2,928) (1,226) 7,240 37,310 7,425 1,590 1,047

(71,144)

5,580

Cash flows from investing activities: Additions to property, plant and equipment Purchases of intangible asset Net changes in restricted cash Disbursement of notes receivable Collection of notes receivable Collection of restricted investments Net cash used in investing activities

(45,265) (17) 10,689 237 (34,355)

(61,403) (1,700) 8,314 (54,789)

Cash flows from financing activities: Proceeds from short-term debt Proceeds from long-term debt Repayment of long-term debt Dividends Debt issuance costs paid Net cash provided by financing activities

12,000 19,000 (1,286) (10,675) 19,039

21,000 (1,247) (5,090) 14,663

Net decrease in cash and cash equivalents

(86,460)

(34,546)

Cash and cash equivalents at the beginning of the period

141,661

183,879

Cash and cash equivalents at the end of the period

55,201

149,333

Net cash (used in) provided by operating activities

9

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT MARCH 31, 2013 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, the largest generator of electricity in the country, when measured by installed capacity, currently owns and operates seven (7) power plants throughout the country with an installed capacity of 528 MW - San Pedro de Macorís and Sultana del Este in the eastern part of the country, Haina and Barahona in the southern part of the country, Puerto Plata on the northern coast, and Los Cocos and Pedernales in the west. The power plant fleet consists of a number of oil and coal-fired boiler steam-turbine generators, diesel generators, a simple cycle gas turbine, and a 77 MW wind farm. EGE Haina had contracted approximately 84% of its power generation with three State owned distributors, and approximately 16% with a related operating company. 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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