Ege haina 3q 2012

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

EGE Haina Reports Third Quarter 2012 Net Income of US$16.7 million; Revenues of US$171.8 million Special points of interest:

Santo Domingo, Dominican Republic, November 7, 2012 – EGE Haina announced

 As of September 30th, 2012,

today a Net Income of US$16.7 million for the third quarter of 2012, compared

EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 1.06:1.0, a Consolidated Interest Coverage Ratio of 10.35:1.0 and Minimum Debt Service Coverage ratio of 3.6:1.0.

to a Net Income of US$16.9 million in the third quarter of 2011, driven by a decrease in the average energy sales price; partially offset by higher demand.

Third quarter 2012 revenues amounted to US$171.8 million, showing a 2% decrease when compared to the same period of the previous year.

 During the third quarter

2012, the Company received disbursements for a total of $86MM under the Senior Syndicated and Secured Loan. Additionally, in the fourth quarter, the Company has received disbursements for a total of $63MM.

 In July 2012, Barahona power

plant had a forced outage for 72.06 hours. The plant is currently operating normally.

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

3Q'12

3Q'11

Var %

YTD'12

YTD'11

Var %

Revenues

171,762

175,271

-2%

494,651

456,362

8%

Operating Costs

145,863

148,822

-2%

407,011

382,610

6%

Variable M argin

55,241

50,516

9%

168,281

138,799

21%

EBITDA¹

31,270

30,547

2%

103,305

85,997

20%

Operating Income

25,899

26,449

-2%

87,640

73,752

19%

Net Income

16,681

16,916

-1%

58,930

50,417

17%

Operating cash, net

98,464

11,019

794%

99,626

(48,576)

-305%

Availability, %

96

96

0%

92

98

-6%

Sales, GWh

696

647

8%

1,900

1,825

4%

Generation, GWh

448

486

-8%

1,267

1,307

-3%

Spot Purchases, GWh

117

153

-24%

334

510

-34%

Other Purchases, GWh

131

8

1612%

299

8

3803%

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 SEPTEMBER 30, 2012 Quarter Highlights and Recent Developments 

As of September 30th, 2012, EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 1.06:1.0, a Consolidated Interest Coverage Ratio of 10.35:1.0 and Minimum Debt Service Coverage ratio of 3.6:1.0.



As of September 30th, 2012, Los Cocos II project had a construction progress of approximately 73%. Key milestones achieved include: 100% of land preparation and 100% of the components of the project on site; seven wind turbines were fully assembled already in the first alignment.



As of September 30th, 2012, Quisqueya II project had a construction progress of approximately 29%. Key milestones archived include: 100% of land preparation, 34% of construction the Substation, 43% of HFO Pipeline, 42% foundations and structure and 40% of well water network.



During the third quarter 2012, the Company received disbursements for a total of $86MM under the Senior Syndicated and Secured Loan Agreement with Citibank. Additionally, in the fourth quarter, the Company has received disbursements for a total of $63MM.



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 3Q’12 was US$97.33 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 September 30th, 2012, closed at RD$39.34/USD. Accumulated inflation in DR, as of September 30th, 2012 was 2.37%.2

2

http://www.bancentral.gov.do

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

3Q'12

3Q'11

Var %

YTD'12

YTD'11

Var %

157,059

161,939

-3%

452,333

416,718

9%

14,019

12,926

8%

40,616

38,270

6%

684

406

68%

1,702

1,374

24%

171,762

175,271

-2%

494,651

456,362

8%

3Q’12 revenues decreased 2% when compared with the same period of the previous year (US$171.8 MM vs.

US$175.2MM). This negative variance is essentially driven by a 5.6% decrease in the average energy sales price for the period (3Q’12 US$231.4/MWh vs 3Q’11 US$245.1/MWh); partially offset by a higher demand in 7.6% (3Q’12 695.9 GWh vs 3Q’11 646.9 GWh), mainly driven by the reimplementation of the remaining 50MW under EDE ESTE’s PPA, as well as an increase in the contracted capacity under the CEPM PPA.

Operating Expenses (US$ Thousands) Description

3Q'12

3Q'11

Var %

YTD'12

YTD'11

Var %

Fuel Expense

58,247

81,639

-29%

171,162

191,624

-11%

Transmission Tolls

2,105

2,646

-20%

7,660

8,353

-8%

Purchased Power

54,195

37,506

44%

141,141

110,518

28%

Frequency Regulation

1,974

2,964

-33%

6,407

7,068

-9%

Operation & M aintenance

8,898

7,543

18%

24,821

20,743

20%

General & Administrative

15,073

12,426

21%

40,155

32,059

25%

Depreciation

5,371

4,098

31%

15,665

12,245

28%

145,863

148,822

-2%

407,011

382,610

6%

Total Operating Expenses

During 3Q’12 operating expenses were lower than 3Q’11 comparative figures in 2% or US$2.9MM. This decrease is mainly explained by:



Fuel Expense: 29% or US$23.4MM lower than 3Q’11, essentially as a consequence of a decrease in generation during the period (3Q’12 444 GWh vs 3Q’11 486 GWh), driven by the major maintenance of Haina Turbo Gas as well as a lower dispatch of Haina 4 and lower coal prices.



Purchased Power: 44% or US$16.7MM higher than 3Q’11, essentially due to a lower generation by 42 GWh, or 9%.

Generation during 3Q’12 was negatively impacted by the maintenance works detailed above.



Operation & Maintenance: 18% or US$1.4 MM higher than 3Q’11, due to the maintenance performed to Los Cocos wind farm during 2012 (in construction during 2011) and higher maintenance expenses in Pedernales, Haina Turbo Gas and San Pedro de Macorís Plants.



General and administrative expenses: 21% or US$2.7MM increase when compared to 3Q’11 mainly due to: i) US$0.9MM higher office operation costs, ii) US$0.5MM higher technical advisory fee expense; iii) US$0.4MM higher labor cost, iv) US$0.4MM higher insurance expenses, v) US$0.4MM higher minimum tax expenses and; vi) US$0.1MM higher regulatory payment.



Depreciation: 31% or US$1.3MM higher than 3Q’11, due to the depreciation of the Los Cocos I Wind Farm, inaugurated in December 2011.

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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 SEPTEMBER 30, 2012

Net Income Net income was US$16.7 MM in 3Q’12, compared to a net income of US$16.9MM in the same period of the prior year.

The negative variance of US$0.2 MM is explained by:



US$3.5 MM higher interest expense, net, mainly due to higher financial interests driven by an increase in debt and an increase in commercial interest expenses due to the increment in accounts payable to power vendors.



US$1.3 MM higher depreciation expense.

Partially offset by :



Higher EBITDA by US$ 0.7 MM as explained in the paragraphs above.



US$3.9 MM lower income tax. In June’11, the statutory rate was increased to 29%, from 25%, by law No. 139-11. As a result in 3Q’11, the Company made a true-up adjustment to the tax liability in order to reflect the increase in the tax rate.

Cash Flow Cash provided by operating activities Net cash provided by operating activities was US$98.4 MM during the 3Q’12, compared to US$11.0 MM provided in the same period of 2011. The US$87.4MM variance is explained by: a) US$83.3MM lower accounts receivable, b) US$6.0MM higher accounts payable, c) US$4.6 MM higher other liabilities and, d) US$1.3MM of higher positive adjustments reconciling net income to the net cash provided in operating activities. The aforementioned is partially offset by i) US$6.0MM increase in prepaid expenses, ii) US$1.6 MM higher inventories and iii) US$0.2 MM lower net income.

Cash used in investing activities Net cash used in investing activities was US$67 MM during 3Q’12, compared to US$11.3 MM used in the same period of the prior year. The US$55.7 MM variance is mainly due to higher additions to property, plant and equipment by $35 MM during 3Q’12 and an increase in restricted cash by US$20.9 MM during 3Q’12 in order to fund the escrow account under the construction agreement with Wärtsilä.

Cash provided by financing activities The positive variance of US$84.4MM in financing activities during 3Q’12, when compared to the same period of the prior year, is due to higher proceeds from long term debt by US$78.5 MM, US$5.8MM lower repayment of long term debt and $0.1 MM lower payment of debt issuance cost in 3Q’12.

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

Financial Debt as of September 30th, 2012 FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS Instrument

Balance

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 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 6.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 9.2 Variable (DR US$) 9.6 Variable (DR US$) 1.5 Variable (DR US$) 107.0 Variable (L3M + 5.75%, 6.25% floor) 30.0 Variable (LIBOR 1M + 3%)

Repayment schedule

9.50% 7.75% 7.00% 7.00% 7.00% 6.00% 7.00% 5.91% 6.22% 5.50% 6.25% 3.24%

Bullet payment April 2017 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

7.51% 3.53 378.2

Total Debt vs Financial Assets 240.0 210.0 180.0 150.0 120.0 90.0 60.0 30.0 0.0 2012

2013

2014

2015

Cash on hand

2016

2017

Debt

Financial Expenses (US$ Thousands) Description

3Q'12

3Q'11

2012

2011

Interest on Senior Notes

(4,307)

(4,307)

(12,921)

(12,921)

Interest on Long-Term Debt

(3,691)

(1,294)

(9,428)

(2,974)

Interest on Payables to Power Vendors

(2,173)

(37)

(4,717)

(673)

(380)

(1,793)

(1,153)

5,084

3,918

Financial Expenses

Amortization of Deferred Charges Capitalized Interest Other Financial Expenses

2,357 (215)

1,452 64

13

(458)

(69)

(8,702)

(4,502)

(24,233)

(13,186)

Financial Income: Interest on Trade Accounts Receivable

3,959

2,875

9,762

6,826

Interest on Short-Term Investments

711

764

3,278

1,217

Interest on Long-Term Investments

-

462

-

Other Financial Income

14 4,684

Total Financial Expenses, Net

(4,018)

(30) 4,071 (431)

53

909 186

13,093

9,138

(11,140)

(4,048)

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

Collections Cash Collection rate for 3Q’12 was 153% as compared to the 80% level of last year’s same quarter. The positive variance is due to higher cash collection from Distribution Companies during 3Q’12, particularly in September’12 which represented 412%, thus reducing the invoices in arrears to 2.5, from 3.5 in 3Q’11.

Discos Cash Collections Vs Billings 152%

153%

154% 126%

82%

96%

80% 74% 67% 54%

38%

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

Operational Statistics Description

3Q'12

3Q'11

Var.%

YTD'12

YTD'11

Var.%

Heat Rate, Btu/KWh

9,427

9,886

-4.6%

9,240

9,486

-2.6%

Availability, %

96.3

95.9

0.4%

91.7

97.9

-6.3%

Forced Outage Rate, %

0.7

2.2

-68.2%

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

3Q'12

GWh - Spot Purchase

(53)

(131)

(151)

(219)

(178)

(179)

(161)

(196)

(84)

(149)

(121)

GWh - Sales

483

505

609

582

566

613

647

635

573

631

696

-

-

-

-

-

-

-

-

(63)

(79)

(131)

430

375

458

363

387

434

486

439

426

403

444

GWh - PPA Purchase GWh - Generation

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2012 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 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

240,576 29,555 212,083 33,624 15,317 198 2,023 533,376

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

2,311 441,551 91 10,058 12,536 999,923

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 11,783 138,445 4,870 20,482 2,664 11,334 219,578

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

336,402 12,515 3 568,498

233,751 13,422 3 366,305

289,000 19,684 156,437 (33,696) 431,425

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

999,923

741,465

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

Nine month period ended September 30,

2012

2011

2012

2011

157,059

161,939

452,333

416,718

14,019

12,926

40,616

38,270

684

406

1,702

1,374

171,762

175,271

494,651

456,362

Fuel

58,247

81,639

171,162

191,624

Purchased power Transmission

54,195 2,105

37,506 2,646

141,141 7,660

110,518 8,353

1,974

2,964

6,407

7,068

8,898 15,073 5,371 145,863

7,543 12,426 4,098 148,822

24,821 40,155 15,665 407,011

20,743 32,059 12,245 382,610

25,899 (4,018) 313 (28) 22,166

26,449 (431) 123 194 26,335

87,640 (11,140) 1,159 (239) 77,420

73,752 (4,048) 175 691 70,570

(5,592) 107

(9,024) (395)

(19,241) 751

(19,931) (222)

58,930

50,417

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 income (expenses), net Income before income tax Income tax Current Deferred Net income

16,681

16,916

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2012 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2012 AND 2011 Amounts in thousands of US$ Three month period ended September 30, 2012 Net income Adjustments to reconcile net income to the net cash provided by (used in) 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

Nine month period ended September 30, 2012

2011

16,681

16,916

58,930

50,417

(107) 5,371 41 4,764

396 4,097 4,280

(19) 204 (751) 15,665 107 5,863

(44) 41 222 12,245 122 2,590

47,090 1,206 (10,444) 21,338 6,178 1,035 5,308

(36,259) 2,845 (3,052) (1,440) 41,710 (19,245) 66 705

(72,909) 1,578 527 8,713 82,124 (6,324) 3,095 2,822

(141,004) (6,641) 5,181 (4,582) 47,430 (14,095) 605 (1,062)

98,464

11,019

99,626

(48,576)

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

(46,286) (20,947) 237 (66,995)

(11,301) (11,301)

(111,619) (29,555) (1,700) 237 8,314 (134,322)

58 (21,424) 10,535 (10,831)

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

86,000 (1,570) 84,430

7,537 (7,381) (142) 14

107,000 (10,221) (5,386) 91,393

46,427 (20,191) (9,999) (522) 15,715

Net increase (decrease) in cash and cash equivalents

115,899

(268)

56,697

(43,692)

Cash and cash equivalents at the beginning of the period

124,677

67,500

183,879

110,924

240,576

67,232

240,576

67,232

Net cash provided by (used in) operating activities

Cash and cash equivalents at the end of the period

3

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 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.

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