Ege haina 2q 2012

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012

EGE Haina Reports Second Quarter 2012 Net Income of US$23.1 million; Revenues of US$168.3 million Special points of interest: • As of June 30th, 2012,

EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 1.31:1.0, a Consolidated Interest Coverage Ratio of 14.74:1.0 and Minimum Debt Service Coverage ratio of 3.41:1.0.

Santo Domingo, Dominican Republic, July 19, 2012 – EGE Haina announced today Net Income of US$23.1 million for the second quarter of 2012, compared to a net income of US$16.3 million in the second quarter of 2011, driven by an increase in energy sales price and higher demand. Second quarter 2012 revenues amounted to US$168.3 million, showing an 8% increase when compared to the same period of the previous year.

• In May, 2012, the Company

entered into an Interest Rate Swap Agreement with Citibank N.A. By means of this agreement, the Company will fix at 1.12 per annum the variable component (LIBOR 3months) of its interest rate under its $200MM senior syndicated loan. The effective date of the contract is June 28, 2013 and expires on March 15, 2017.

• In July 2012, the Company

received a second disbursement of $49MM of the Senior Syndicated and Secured Loan Agreement with Citibank.

• In July 2012, the Barahona power plant had a forced outage for 72.06 hours.

What’s inside • Quarter highlights

2

• External factors

2

• MD&A

3

• Financial Debt

5

• Collections

6

• Financial Results

7

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

2Q'12

2Q'11

Var %

YTD'12

YTD'11

Var %

Revenues

168,324

156,542

8%

322,890

281,090

15%

Operating Costs

134,522

131,641

2%

261,149

233,789

12%

Variable M argin

60,322

45,874

31%

113,041

88,282

28%

EBITDA¹

38,958

28,973

34%

72,035

55,448

30%

Operating Income

33,802

24,901

36%

61,741

47,301

31%

Net Income

23,104

16,343

41%

42,248

33,499

26%

Operating cash, net

(4,417)

(23,800)

-81%

1,161

(59,595)

-102%

Availability, %

89

97

-9%

92

98

-6%

Sales, GWh

631

613

3%

1,204

1,178

2%

Generation, GWh

403

434

-7%

829

821

1%

Spot Purchases, GWh

149

179

-17%

233

357

-35%

PPA Purchases, GWh

79

100%

142

-

-

100%

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

1

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012 Quarter Highlights and Recent Developments •

In May 2012, the Company entered into an Interest Rate Swap Agreement with Citibank N.A. By means of this agreement, the Company will fix at 1.12 per annum the variable component (LIBOR 3-months) of its interest rate under its $200MM senior syndicated loan. The effective date of the contract is June 28, 2013 and expires on March 15, 2017.

•

As of June 30th, 2012, EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 1.31:1.0, a Consolidated Interest Coverage Ratio of 14.74:1.0 and Minimum Debt Service Coverage ratio of 3.41:1.0.

•

As of June 30th, 2012, Los Cocos II project had a construction progress of approximately 51%. Key milestones achieved include: 100% of land preparation and approximately 75% of the parts of wind turbines are at the site; installation works will be initiated by the end of July.

•

As of June 30th, 2012, Quisqueya II project had a construction progress of approximately 17%. Key milestones archived include: 100% of land preparation and initial stage of construction of the Substation and HFO Pipeline.

•

In July 2012, the Company received a second disbursement of $49MM under the Senior Syndicated and Secured Loan Agreement with Citibank.

•

In July 2012, the Barahona power plant had a forced outage that lasted 72.06 hours, due to the spill of thousands of gallons of molasses by a third party mill that’s next to our facilities.

External Factors

Average price of fuel for 2Q’12 was US$98.04 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, 2012, closed at RD$39.15/USD. Accumulated inflation in DR, as of June 30th, 2012 was 2.71%.2

2

http://www.bancentral.gov.do

2

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012 Consolidated Financial Results3 Revenues (US$ Thousands) Description Contracted Energy Contracted Capacity Others Total Revenues

2Q'12

2Q'11

Var %

YTD'12

YTD'11

Var %

155,382

143,107

9%

295,274

254,779

16%

12,744

13,283

-4%

26,598

25,343

5%

198

152

30%

1,018

968

5%

168,324

156,542

8%

322,890

281,090

15%

2Q’12 revenues increased by 8% when compared with the same period of the previous year (US$155.6 MM vs.

US$143.1MM). This positive variance is essentially driven by a 6.4% increment in the average energy sales price for the period (2Q’12 US$241.2/MWh vs 2Q’11 US$226.7/MWh) as a result of the increase in Fuel Oil #6 prices, which is the main escalator of our PPAs’ pricing formula, and a higher demand by 3% (2Q’12 631.2 GWh vs 2Q’11 612.8 GWh), mainly driven by an increase in the contracted capacity under CEPM PPA.

Operating Expenses (US$ Thousands) Description

2Q'12

2Q'11

Var %

YTD'12

YTD'11

Var %

Fuel Expense

51,886

63,899

-19%

112,915

109,985

3%

Transmission Tolls

2,231

3,339

-33%

5,555

5,707

-3%

Purchased Power

51,904

40,891

27%

86,946

73,012

19%

Frequency Regulation

1,981

2,539

-22%

4,433

4,104

8%

Operation & M aintenance

8,071

6,087

33%

15,923

13,201

21%

General & Administrative

13,293

10,814

23%

25,083

19,633

28%

Depreciation

5,156

4,072

27%

10,294

8,147

26%

134,522

131,641

2%

261,149

233,789

12%

Total Operating Expenses

During 2Q’12 operating expenses were higher than 2Q’11 comparative figures by 2% or US$2.9MM. This increase is mainly explained by:

•

Operation & Maintenance: 33% or US$2.0MM higher than 2Q’11, due to the maintenance performed to Los Cocos wind farm during 2012 and higher maintenance expenses in Pedernales, Haina Turbo Gas and San Pedro de Macorís Plants.

•

Purchased Power: 27% or US$11.0MM higher than 2Q’11, essentially due to a lower generation by 31.4 GWh, or 7%. Generation during 2Q’12 was affected by a lower dispatch of our units.

•

General and administrative expenses: 23% or US$2.5MM increase when compared to 2Q’11 mainly due to: i) US$1.2MM higher technical advisory fee expense as a result of the increase in sales during 2Q’12; ii) US$0.7MM higher labor cost, due to the personnel relocation performed in June 2011 and the reversal of the excess of the 2010 performance bonus accrual made in May’11, iii) US$0.3MM higher insurance expenses, iv) US$0.1MM higher office operation costs; v) US$0.1MM higher minimum tax expenses and; vi) US$0.1MM higher regulatory payment.

•

Depreciation: 27% or US$1.1MM higher than 2Q’11, due to the depreciation of the Los Cocos I Wind Farm, inaugurated in December 2011.

•

Fuel Expense: 19% or US$12.0MM lower than 2Q’11, essentially as a consequence of a decrease in generation during the period (2Q’12 397 GWh vs 2Q’11 432 GWh).

3

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.

3

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012

Net Income Net income was US$23.1MM in 2Q’12, compared to a net income of US$16.3MM in the same period of the prior year.

The positive variance of US$6.8MM is explained by:

•

Higher EBITDA by US$10.0MM as explained in the paragraphs above.

•

US$0.2MM higher exchange gain.

Partially offset by :

•

US$0.5MM higher income tax.

•

US$1.8MM higher interest expense, net, mainly due to higher financial interests driven by an increase in debt.

•

US$1.1MM higher depreciation expense.

Cash Flow Cash provided by operating activities Net cash used by operating activities was US$4.4MM during the 2Q’12, compared to US$23.8MM used in the same period of 2011. The US$19.4MM variance is explained by: a) US$11.2MM higher accounts payable, b) US$8.0MM decrease in prepaid expenses and other assets, c) US$7.3MM lower inventories, d) US$6.8MM higher net income, e) US$2.7MM of higher positive adjustments reconciling net income to the net cash used in operating activities.

The aforementioned is partially offset by US$15.3MM higher accounts receivable and US$1.3MM lower other liabilities.

Cash used in investing activities Net cash used in investing activities was US$12.5MM during 2Q’12, compared to US$6.9MM provided in the same period of the prior year. The US$19.4MM variance is mainly due to an increase in restricted cash by US$8.6MM during 2Q’12 in order to fund the escrow account under the construction agreement with Wärtsilä, and the collection of US$10.6MM short-term investments during 2Q’11.

Cash provided by financing activities The negative variance of US$19.1MM in financing activities during 2Q’12, when compared to the same period of the prior year, is due to the net result of lower proceeds from long term debt by US$33.9 MM in 2Q’12; partially offset by i) US$4.8MM lower repayment of long term debt; and ii) US$10.0MM lower dividend payments in 2Q’12.

4

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012 Financial Debt as of June 30th, 2012 FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS Instrument

144 A Bond Local Bond-T5 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 Popular term loan program BHD DR term loan program BHD Panamรก term loan program Syndicated loan Scotiabank Short Term Loan Weighted av. Interest rate Weighted av. Life (Years) Total financial debt (Millions)

Balance

Interest type

Interest Rate

164.9 Fixed 6.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 9.9 Variable (DR US$) 10.2 Variable (DR US$) 1.6 Variable (DR US$) 21.0 Variable (L3M + 5.75%, 6.25% floor) 30.0 Variable (LIBOR 1M + 3%)

Repayment schedule Bullet payment April 2017

9.50% 7.75% 7.00% 7.00% 7.00% 6.00% 7.00% 5.91% 6.50% 5.50% 6.25% 3.24%

Bullet payment Dec 2012 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 December 2012

7.88% 3.81 293.6

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 2012

2013

2014

2015

Cash on hand

2016

2017

Debt

Financial Expenses (US$ Thousands) Description

2Q'12

2Q'11

2012

2011

Financial Expenses Interest on Senior Notes

(4,307)

(4,307)

(8,614)

(8,614)

Interest on Long-Term Debt

(2,916)

(941)

(5,737)

(1,680)

Interest on Payables to Power Vendors

(1,694)

(6)

(2,544)

50

(692)

(391)

(1,120)

(773)

Amortization of Deferred Charges Capitalized Interest Other Financial Expenses

1,486

1,285

2,727

2,466

(42)

(62)

(243)

(133)

(8,165)

(4,422)

(15,531)

(8,684)

Financial Income: Interest on Trade Accounts Receivable

3,268

2,187

5,803

3,950

Interest on Short-Term Investments

1,438

290

2,567

453

Interest on Long-Term Investments

-

197

-

447

Other Financial Income

Total Financial Expenses, Net

21

106

39

216

4,727

2,780

8,409

5,066

(3,438)

(1,642)

(7,122)

(3,618)

5

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012

Collections Cash Collection rate for 2Q’11 was 74% as compared to the 82% level of last year’s same quarter. As of June, 2012 the invoices in arrears stood at 4 the invoices, reflecting an increase of 2 invoices when compared to the same period of 2011.

Discos Cash Collections Vs Billings 152%

154% 126%

82% 96%

80% 74% 67% 54%

38%

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

Operational Statistics Description

2Q'12

2Q'11

Var.%

YTD'12

YTD'11

Var.%

Heat Rate, Btu/KWh

9,136

9,694

-5.8%

9,240

9,486

-2.6%

Availability, %

88.6

97.2

-8.8%

91.7

97.9

-6.3%

Forced Outage Rate, %

7.3

1.3

461.5%

2.7

0.9

200.0%

Installed Capacity, M W

624

599

4.2%

624

599

4.2%

Effective Capacity, M W

547

547

0.0%

547

547

0.0%

Firm Capacity, M W

279

322

-13.3%

283

312

-9.2%

Energy Balance 580 430

GWh

280 130 (20) (170) 1Q10

2Q10

3Q10

4Q10

1Q'11

2Q'11

3Q'11

4Q'11

1Q'12

2Q'12

GWh - Spot Purchase

(53)

(131)

(151)

(219)

(178)

(179)

(161)

(196)

(84)

(149)

GWh - Sales

483

505

609

582

566

613

647

635

573

631

-

-

-

-

-

-

-

-

(63)

(79)

430

375

458

363

387

434

486

439

426

403

GWh - PPA Purchase GWh - Generation

6

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2012 AND DECEMBER 31, 2011 Amounts in thousands of US$ 2012

2011

Assets: Current Assets: Cash and cash equivalents Restricted cash Short-term investment Accounts receivable Inventories Prepaid expenses Deferred income tax Other current assets Total current assets

124,676 8,608 272,087 34,829 4,872 199 1,637 446,908

183,879 483 161,428 36,105 15,844 201 10,737 408,677

Deposits in banks, restricted Long term receivable Property plant and equipment, net Intangible assets Deferred charges, net Other assets Total assets

2,489 370,898 91 10,732 12,922 844,040

7,831 1,306 295,298 91 6,463 21,799 741,465

Liabilities and Shareholders' Equity Current liabilities Short-term debt Current portion of long-term debt Accounts payable Payable to related parties Income tax payable Derivative financial liability Other liabilities Total current liabilities

30,000 11,737 96,089 3,835 14,304 1,211 6,115 163,291

30,000 17,656 34,537 1,775 26,806 8,355 119,129

251,865 12,683 3 427,842

233,751 13,422 3 366,305

289,000 18,850 140,591 (32,243) 416,198

289,000 16,737 100,455 (31,032) 375,160

Long term debt Deferred income tax Other non-current liabilities Shareholders' equity: Common stock Legal reserve Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity

844,040

741,465

7

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2012 AND 2011 Amounts in thousands of US$ Three month period ended June 30,

Six month period ended June 30,

2012

2011

2012

2011

155,382

143,107

295,274

254,779

12,744

13,283

26,598

25,343

198

152

1,018

968

168,324

156,542

322,890

281,090

Fuel

51,886

63,899

112,915

109,985

Purchased power Transmission

51,904 2,231

40,891 3,339

86,946 5,555

73,012 5,707

1,981

2,539

4,433

4,104

8,071 13,293 5,156 134,522

6,087 10,814 4,072 131,641

15,923 25,083 10,294 261,149

13,201 19,633 8,147 233,789

33,802 (3,438) 221 (192) 30,393

24,901 (1,642) 27 (172) 23,114

61,741 (7,122) 845 (211) 55,253

47,301 (3,618) 52 497 44,232

(7,396) 107

(6,874) 103

(13,649) 644

(10,906) 173

42,248

33,499

Revenues Energy 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 expenses, net Income before income tax Income tax Current Deferred Net income

23,104

16,343

8

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2012 AND 2011 Amounts in thousands of US$ Three month period ended June 30, 2012 Net income Adjustments to reconcile net income to the net cash (used in) provided by operating activities: Gain on sale of property plant and equipment Loss on asset dispossal Gain on early liability extinguishment Deferred income tax Depreciation Provision for doubful accounts Financial expenes Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Income tax payable Payable to related parties Other liabilities

2011

Six month period ended June 30, 2012

2011

23,104

16,343

42,248

33,499

(19) 201 (107) 5,157 38 (3,242)

(9) 41 (103) 4,073 58 (4,711)

(19) 201 (644) 10,294 66 1,099

(44) 0 41 (173) 8,147 122 (1,689)

(47,005) 3,301 12,197 1,473 23,475 (19,927) 470 (3,533)

(31,666) (4,042) 7,600 (1,943) (8,628) 1,178 282 (2,273)

(119,999) 372 10,971 8,713 60,785 (12,502) 2,060 (2,486)

(104,746) (9,487) 8,233 (3,142) 5,719 5,149 539 (1,765)

(4,417)

(23,800)

1,161

(59,595)

Sale of property, plant and equipment Additions to property, plant and equipment Net changes in restricted cash Disbursement of notes receivable Collection of restricted investments Short-term investments Net cash (used in) provided by investing activities

(3,930) (8,608) (12,538)

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

(65,333) (8,608) (1,700) 8,314 (67,327)

58 (10,124) 10,535 470

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

(7,404) (296) (7,701)

33,890 (12,160) (9,999) (355.00) 11,376

21,000 (8,651) (5,386) 6,962

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

Net decrease in cash and cash equivalents

(24,655)

(5,509)

(59,203)

(43,424)

Cash and cash equivalents at the beginning of the period

149,332

73,009

183,879

110,924

124,677

67,500

124,676

67,500

Net cash (used in) provided by operating activities

Cash and cash equivalents at the end of the period

9

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT JUNE 30, 2012 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. Additionally, the Company constructed a 25MW wind farm consisting of 14 wind generators located in Los Cocos, municipality of Oviedo, in the southern part of the country. EGE Haina had contracted approximately 82% of its power generation with three State owned distributors, and approximately 18% 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