Ege haina 2q 2011

Quarterly Quarterly Financial Report Financial Report JUNE 30TH, 2011

June 30th, 2011

EGE Haina Reports Second Quarter 2011 Net Income of US$16.3 million; Revenues of US$156.5 million Special points of interest:

Santo Domingo, Dominican Republic, August 4st, 2011 – EGE Haina announced

 In April 2011, the

Superintendence of Securities of the Dominican Republic authorized a US$50.0MM bond issuance.

 In May 2011, the Company paid a dividend of US$10.0MM, net of taxes.

today second quarter 2011 net income of US$16.3 million, compared to a net income of US$6.9 million in the second quarter 2010, driven by an increase in energy sales price and higher demand. Second quarter 2011 revenues were US$156.5 million, showing a 65% increase when compared to the same period of the previous year.

 In May 2011, the Company

entered into two 5-year amortizing loan agreements with BHD International Bank (Panama), S.A. and Banco BHD by US$2.0MM and US$8.0MM, respectively.

Financial and Operational Summary

 In May 2011, the Company

(US$ Thousands, except for Operational data)

repaid US$6.0MM of the tranche No.2 of the $30MM local bond.

 In June 2011, the Company collected US$10.5MM corresponding to tranche No. 2 of the investment in sovereign bonds.

 In July 2011, the Company

repaid US$6.0MM of the tranche No.3 of the $30MM local bond.

Description

2Q'11

2Q'10

Var %

YTD'11

YTD'10

Var %

Revenues

156,542

94,928

65%

281,090

189,029

49%

Operating Costs

131,640

81,121

62%

233,788

159,707

46%

Variable M argin

45,873

34,850

32%

88,281

70,616

25%

EBITDA¹

28,975

17,853

62%

55,449

37,344

48%

Operating Income

24,902

13,807

80%

47,302

29,321

61%

Net Income

16,342

6,953

135%

33,499

17,378

93%

(23,800)

12,653

-288%

(59,595)

79,439

-175%

Availability, %

97

88

11%

98

85

15%

Sales, GWh

613

505

21%

1,178

988

19%

434

375

16%

821

804

2%

179

131

37%

357

184

95%

Operating cash, net

What’s inside  Quarter highlights

2

Generation, GWh

 External factors

2

Spot Purchases, GWh

 MD&A

3

 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.

1

Quarterly Financial Report JUNE 30TH, 2011

Quarter Highlights and Recent Developments EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 1.62:1.0 and 10.6:1.0, respectively, as of June 30th, 2011.

In April 2011, the Superintendence of Securities (Superintendencia de Valores), the Dominican securities authority, approved the issuance of local corporate bonds up to the amount of US$50MM. $30MM of those corporate bonds were placed from May through July of 2011.

In May 2011, the Company paid a dividend in the amount of US$10.0MM, net of taxes.

In May 2011, the Company entered into a variable rate 5-year amortizing loan agreement with Banco BHD of US$8.0MM. US$5.0MM out of the proceeds of this loan were used to refinance a short term line of credit with the same financial institution due in June 2011.

In May 2011, the Company entered into a variable rate 5-year amortizing loan agreement with BHD International Bank of US$2.0MM. In May 2011, the Company repaid US$6.0MM of the tranche No.2 of the $30MM local bond.

In June 2011, the Company collected $10.5MM corresponding to tranche No. 2 of the investment in sovereign bonds.

In July 2011, the Company repaid US$6.0MM of the tranche No.3 of the $30 million local bond.

External Factors Average price of fuel for 2Q’11 was US$98.5 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 June 30th, 2011, closed at RD$38.15/USD. Accumulated inflation in DR, as of June 30th, 2011 was 5.85%.2 According to the IMF, the DR GDP is estimated to grow from 5% to 5.5% in 2011.3 In July 2011, the DR Government reopened its 7.5% amortizing notes due 2021. The notes price yielded 6.95%, marking the lowest yield for a DR international bond.

2 3

http://www.bancentral.gov.do http://www.bancentral.gov.do/noticias/avisos/aviso2011-06-07.pdf

2

Quarterly Financial Report JUNE 30TH, 2011

Consolidated Financial Results4 Revenues (US$ Thousands) Description Contracted Energy Contracted Capacity Others Total Revenues

2Q'11

2Q'10

Var %

YTD'11

YTD'10

Var %

143,107

84,210

70%

254,779

167,141

52%

13,283

10,631

25%

25,344

21,711

17%

152

87

75%

968

176

449%

156,542

94,928

65%

281,090

189,029

49%

2Q’11 revenues increased by 65% when compared with the same period of previous year (US$ 156.5 MM Vs. US$ 94.9 MM).

This positive variance is essentially driven by a 6.0% increment in the average energy sales price for the period (2Q’11 US$241.8/MWh vs 1Q’10 US$178.4/MWh) as a result of the increase in Fuel Oil #6 prices, which is the main escalator of our PPAs’ pricing formula, and higher demand by 17.2% (2Q’11 612.9 GWh vs 2Q’10 504.9 GWh), mainly driven by the reimplementation of the EDE Este PPA and the increase in the contracted capacity with CEPM to 64MW.

Operating Expenses (US$ Thousands) Description

2Q'11

2Q'10

Var %

YTD'11

YTD'10

Var %

Fuel Expense

63,899

34,690

84%

109,985

80,116

37%

Transmission Tolls

3,339

2,360

41%

5,707

4,489

27%

Purchased Power

40,892

22,073

85%

73,012

31,637

131%

Frequency Regulation

2,539

955

166%

4,104

2,171

89%

Operation & M aintenance

6,086

9,085

-33%

13,200

17,262

-24%

General & Administrative

10,812

7,912

37%

19,632

16,011

23%

Depreciation

4,073

4,046

1%

8,147

8,022

2%

131,640

81,121

62%

233,788

159,707

46%

Total Operating Expenses

During 2Q’11 operating expenses were higher than 2Q’10 comparative figures by 62% or 50.5 MM (US$131.6 MM Vs. US$81.1 MM).

This increase is mainly explained by: Purchased power: 85% or US$18.8 MM increase is the result of higher spot energy purchases (2Q’11 180.7 GWh vs 2Q’10 132.5 GWh), and an increase in the average purchase price for the period (2Q’11 US$221.3MWh vs 2Q’10 US$167.2/MWh).

General and administrative expenses: 37% or US$2.9 MM increase when compared to 2Q’10 mainly due to: i) US$2.3 MM higher technical advisory fee expense as a result of the increase in sales during 2Q’11; ii) US$0.3 MM higher office operation costs; iii) US$0.2 MM higher regulatory payment; iv) US$0.2 MM higher professional services; partially offset by v) US$0.1 lower insurance expenses.

Fuel costs: 84% or US$29.2 million increase in fuel cost, essentially as a consequence of: a) higher LFO consumption in 55.3 thousand of BBLS at a higher price (2Q’11 55.3 thousand of BBLS at US$124.8/BBLS vs 2Q’10 4.9 thousand of BBLS at US$89.6/BBLS); b) higher Coal price (2Q’11 US$150.6/MT vs 2Q’10 US$88.0/MT); and c) US$25.2/BBLS increase in HFO price (2Q’11 US$100.7/BBLS vs 2Q’10 US$75.5/BBLS).

Transmission Tolls: 41% or US$0.9 million higher than 2Q’10.

Operation & Maintenance: 33% or US$3.3 million lower than 2Q’10 due to: a) the major maintenance performed to the Sultana’s engines #2 and #8 and Haina’s engine #4 and Barahona Plant during 2010; b) the dredging carried out in the vessel reception area during 2010; partially offset by c) the major maintenance performed to the Sultana’s engine #1, #5 and #7 during 2011.

4

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 o f its wholly owned subsidiary EGE Haina Finance Company. Intercompany balances and transactions have been eliminated in consolidation.

3

Quarterly Financial Report JUNE 30TH, 2011

Net Income Net income was US$16.3 MM in 2Q’11, compared to a net income of US$6.9 MM in the same period of the prior year. The positive variance of US$9.4 MM is explained by: Higher EBITDA by US$11.1 MM as explained in the above paragraphs.

US$2.0 MM lower exchange loss as a result of the reduction in our exposure to the Euro in 2011.

US$0.3 MM higher other income mainly due to US$0.7 million insurance reimbursement of 48 the MVA transformer received during 2011, and the Euro forward loss recorded in 2010.

Partially offset by : US$3.1 MM higher income tax.

US$0.2 MM higher interest expense, net.

Cash Flow Cash (used in) provided by operating activities Net cash used by operating activities was US$23.8 MM during the 2Q’11, compared to US$12.7 MM provided by operating activities in the same period of 2010. The US$36.5MM variance is explained by: a) US$34.6MM increase in accounts receivable; b) US$11.2MM of higher negative adjustments reconciling net income to the net cash used in operating activities c) US$10.6MM lower accounts payable; and d) US$1.2MM higher inventories. The aforementioned is partially offset by: i) US$9.4MM higher net income; ii) US$8.4MM increase in other liabilities and iii) US$3.3MM lower prepaid expenses and other assets.

Cash provided in investing activities Net cash provided by investing activities was US$6.9MM during 2Q’11, compared to US$4.1 MM provided in the same period of the prior year. The US$2.8 variance is mainly due to lower additions to property, plant and equipment during 2Q’11, partially offset by lower proceeds from investments.

Cash provided by (used in) financing activities The positive variance of US$21.4MM in financing activities during 2Q’11, when compared to the same period of the prior year, is due to higher proceeds from long term debt by US$33.8MM; partially offset by US$7.1 MM higher repayment of long term debt and lower proceeds from line of credit by $5MM during 2Q’11.

4

Quarterly Financial Report JUNE 30TH, 2011

Financial Debt as of June 30, 2011 FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS Instrument Balance Interest type Interest Rate Repayment schedule 144 A Bond 164.9 fixed 9.50% Balloon payment April 2017 Local Bond-T3 6.0 fixed 8.50% Balloon payment July 2011 Local Bond-T4 6.0 fixed 8.75% Balloon payment April 2012 Local Bond-T5 6.0 fixed 7.75% Balloon payment December 2012 Local Bond (2) - T1/2 10.0 fixed 7.00% Balloon payment May 2016 Local Bond (2) - T3/4 10.0 fixed 7.00% Balloon payment June 2016 Local Bond (2) - T5/6 3.9 fixed 7.00% Balloon payment June 2016 Popular 1 4.3 Variable 5.75% Monthly - ending December 2015 Popular 2 7.1 Variable 5.75% Monthly - ending November 2015 BHD1 4.8 Variable 5.50% Monthly - ending March 2016 BHD2 7.8 Variable 5.50% Monthly - ending March 2016 BHD Panama 1.9 Variable 5.50% Monthly - ending March 2016 Weighted av. Interest rate Weighted av. Life (years) Total financial debt

8.72% 4.97 232.6

Total Debt vs Financial Assets 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0

2011

2012

2013

2014

cash on hand

2015

2016

2017

Debt

Financial Expenses (US$ Thousands) Description

2Q'11

2Q'10

YTD'11

YTD'10

(4,307)

(4,307)

(8,614)

(8,571)

(941)

(821)

(1,680)

(1,558)

Financial Expenses Interest on Senior Notes Interest on Long-Term Debt Interest on Payables to Power Vendors Amortization of Deferred Charges Capitalized Interest Other Financial Expenses

(5) (391) 1,284

40

50

(453)

(414)

(769)

(833)

901

2,466

901

(64)

(12)

(134)

(27)

(4,424)

(4,612)

(8,681)

(10,540)

Financial Income: Interest on Trade Accounts Receivable

2,187

1,299

3,950

3,206

Interest on Short-Term Investments

289

124

451

139

Interest on Long-Term Investments

197

447

447

892

8

1,230

20

1,241

Other Financial Income

Total Financial Expenses, Net

2,681

3,100

4,868

5,478

(1,744)

(1,513)

(3,813)

(5,062)

5

Quarterly Financial Report JUNE 30TH, 2011

Collections Cash Collection rate for 2Q’11 was 83% as compared to the 96% level of last year’s same quarter. The reduction in the collection rate is mainly driven by the increase in revenues during the 2Q’11 attributed to the increments in fuel price as well as energy demand.

Discos Cash Collections Vs Billings 152% 126% 96% 82%

64%

67%

60%

43%

2Q09

3Q09

39%

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

Operational Statistics Description

2Q'11

2Q'10

Var.%

YTD'11

YTD'10

Var.%

Heat Rate, Btu/KWh

9,694

9,064

7.0%

9,486

9,456

0.3%

Availability, %

97.2

87.7

10.8%

97.9

84.9

15.3%

Forced Outage Rate, %

1.3

0.5

160.0%

0.9

4.4

-79.5%

Installed Capacity, M W

599

599

0.0%

599

599

0.0%

Effective Capacity, M W

547

547

0.0%

547

547

0.0%

Firm Capacity, M W

322

290

11.2%

312

292

7.1%

Energy Balance

580 430

GWh

280 130 (20) (170)

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q'11

2Q'11

(112)

(149)

(130)

(101)

(53)

(131)

(151)

(219)

(178)

(179)

GWh - Sales

457

478

514

507

483

505

609

582

566

613

GWh - Generation

346

330

384

406

430

375

458

363

387

434

GWh - Spot Purchase

6

Quarterly Financial Report JUNE 30TH, 2011

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2011 AND DECEMBER 31, 2010 Amounts in thousands of US$ Jun-11 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 Property, plant and equipment Intangible assets, net Other assets Total Assets Liabilities and shareholders' equity: Current liabilities: Line of credit Current portion of long-term debt Accounts payable Accounts payable to related parties Income tax payable 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-10

67,500 483 212,729 39,928 12,849 532 334,021

110,924 11,479 110,230 31,643 18,651 540 283,467

7,831 282,187 7,130 11,060 642,229

7,831 276,659 7,512 7,916 583,385

17,600 26,856 1,690 10,850 7,857 64,853

5,000 14,600 23,351 1,150 5,701 6,912 56,714

215,047 15,121 19 295,040

186,967 15,504 19 259,204

289,000 15,139 74,082

289,000 13,464 52,258

(31,032) 347,189

(31,032) 491 324,181

642,229

583,385 7

Quarterly Financial Report JUNE 30TH, 2011

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010 Amounts in thousands of US$ Three month periods ended June 30, 2011 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 gain (loss) Other (expenses) income, net Income before income tax Income tax Current Deferred Net income

2010

Six month periods ended June 30, 2011

2010

143,107 13,283

84,210 10,631

254,779 25,344

167,141 21,711

152

87

968

176

156,542

94,928

281,090

189,029

63,899 3,339 40,892 2,539 6,086 10,812 4,073 131,640

34,690 2,360 22,073 955 9,085 7,912 4,046 81,121

109,985 5,707 73,012 4,104 13,200 19,632 8,147 233,788

80,116 4,489 31,637 2,171 17,262 16,011 8,022 159,707

24,902 (1,744) 27 (71) 23,114

13,807 (1,513) (1,948) 194 10,540

47,302 (3,813) 52 691 44,232

29,321 (5,062) (1,989) (553) 21,718

(6,875) 103

(2,844) (743)

(10,906) 173

(2,844) (1,496)

16,342

6,953

33,499

17,378

8

Quarterly Financial Report JUNE 30TH, 2011

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2011 AND 2010 Amounts in thousands of US$ Three month periods ended June 30, 2011 Net income Adjustments to reconcile net income to the net cash (used in) provided by operating activities: Gain on sale of fixed asset Net foreign exchange loss Deferred income tax Depreciation and amortization Transfer from OCI to P&L Financial expenses Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Payable to related parties Other liabilities Other non-current liabilities

2010

Six month periods ended June 30, 2011

2010

16,343

6,953

33,499

17,378

(9) (103) 4,073 41 (4,711)

1,304 743 4,046 4,382

(44)

1,304 1,496 8,022 8,242

(31,607) (4,042) 7,600 (1,943) (7,450) 282 (2,273) -

3,040 (2,871) 2,318 (10) 3,544 (76) (10,726) 6

(104,624) (9,487) (3,142) 10,868 539 (1,764) -

51,949 (5,899) 3,007 (26) (904) (65) (5,578) 6

(23,800)

12,653

(59,595)

79,439

Sale of property, plant and equipment Advance payments of property, plant and equipment Additions to property, plant and equipment Proceeds from available-for-sale securities Net cash provided in investing activities

12 (3,632) 10,535 6,915

(3,427) (3,766) 11,324 4,131

58 (10,124) 10,535 470

(3,427) (4,713) 11,320 3,181

Proceeds from long-term debt Proceeds from line of credit Repayment of long-term debt Dividends Debt issuance costs paid Net cash provided by (used in) financing activities

33,890 (12,160) (9,999) (355) 11,376

5,000 (5,000) (10,000) (10,000)

38,890 (12,810) (9,999) (380) 15,701

5,000 (5,000) (10,000) (30) (10,030)

Net (decrease) increase in cash and cash equivalents

(5,509)

6,784

(43,424)

72,589

Cash and cash equivalents at the beginning of the period

73,009

105,353

110,924

39,548

Net cash (used in) provided by operating activities

Effects of exchange rate change on the balance of cash Cash and cash equivalents at the end of the period

Decrease in accounts receivable through offsets with accounts payable Unpaid additions of property, plant and equipment

67,500

892 306

(1,304) 110,833

26 (191)

0

(173) 8,147 41 (1,689)

8,233

-

(1,304)

67,500

110,833

2,514 398

18,675 53

9

Quarterly Financial Report JUNE 30TH, 2011

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 had contracted approximately 86% of its power generation with three State owned distributors, and approximately 14% 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.

10