Ege haina 4q 2011

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011

EGE Haina Reports Fourth Quarter 2011 Net Income of US$15.1 million; Revenues of US$161.2 million Special points of interest:  As of December 31st, 2011,

EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 0.79:1.0 and 20.56:1.0, respectively.

 On October 11th, 2011, EGE

Haina inaugurated the first wind farm in the Dominican Republic with an investment of US$81.1MM.

Santo Domingo, Dominican Republic, February 23rd, 2012 – EGE Haina announced today Net Income of US$15.1 million for the fourth quarter of 2011, compared to a net income of US$12.8 million in the fourth quarter of 2010, driven by an increase in energy sales price and higher demand. Fourth quarter 2011 revenues amounted to US$161.2 million, showing a 41% increase when compared to the same period of the previous year.

Financial and Operational Summary

 During the fourth quarter of 2011, the Company fully placed tranches No. 7 to 10 of the $50MM local bond.

 On December 23rd, 2011, the

Company entered into an EPC contract of a 215 MW dual fuel, combined cycle power plant.

 On December 30th, 2011, the

Company entered into a Turnkey Supply, Construction and Installation Agreement with UTE Los Cocos of a 50MW wind power project.

(US$ Thousands, except for Operational data)

Description

4Q'11

4Q'10

Var %

FY'11

FY'10

Var %

Revenues

161,177

114,545

41%

617,540

422,509

46%

Operating Costs

139,042

98,305

41%

521,645

359,943

45%

Variable M argin

47,990

38,288

25%

186,789

146,677

27%

EBITDA¹

26,238

20,300

29%

112,243

78,648

43%

Operating Income

22,135

16,240

36%

95,895

62,566

53%

Net Income

15,095

12,785

18%

65,515

41,973

56%

Operating cash, net

89,648

41,656

115%

41,072

99,816

-59%

Availability, %

95

93

1%

97

90

7%

Sales, GWh

635

582

9%

2,460

2,178

13%

Generation, GWh

439

363

21%

1,746

1,625

7%

Spot Purchases, GWh

196

219

-10%

714

554

29%

What’s inside  Quarter highlights

2

 External factors

2

 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

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 Quarter Highlights and Recent Developments 

On October 11th, 2011, EGE Haina inaugurated the first wind farm in the Dominican Republic with an investment of US$81.1MM. The farm consists of 14 wind turbines with an installed capacity of 25MW.



On December 21st, 2011, the Company signed a promissory note with The Bank Of Nova Scotia, in the amount of US$30 million, with an interest rate equivalent to one (1) month LIBOR plus 3%, calculated over a 360 days base year. This promissory note matures in June 2012.



On December 23rd, 2011, the Company entered into a contract for the design, engineering, procurement of equipment for construction, start-up and testing of a dual fuel, combined cycle reciprocating engine power plant with a net installed capacity of 215.5MW, with Wärtsilä Finland OY and Wärtsilä Dominicana SRL. The total contract value amounts to US$198.7 million. The commercial operation date for the fuel plant is expected by the second half of 2013.



On December 30th, 2011, the Company entered into a Turnkey Supply, Construction and Installation Agreement with UTE Los Cocos for the design, construction and installation and commissioning of a 50MW wind power project which will interconnect with, and therefore expand the existing 25MW of Los Cocos. The total contract value amounts to US$91.0 million. The commercial operation date is expected by the first quarter of 2013.



As of December 31st, 2011, EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 0.79:1.0 and 20.56:1.0, respectively.



During the fourth quarter of 2011, the Company fully placed tranches No. 7 though 10 of the $50MM local bond, at annual interest rates that range from 6% to 7%, and terms ranging from three to five years.

External Factors Average price of fuel for 4Q’11 was US$98.3 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 December 31st, 2011, closed at RD$38.87/USD. Accumulated inflation in DR, as of December 31st, 2011 was 7.76%.2

2

http://www.bancentral.gov.do

2

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 Consolidated Financial Results3 Revenues (US$ Thousands) Description Contracted Energy Contracted Capacity Others Total Revenues

4Q'11

4Q'10

Var %

FY'11

FY'10

Var %

147,506

101,389

45%

564,224

373,912

51%

13,278

12,694

5%

51,549

46,949

10%

393

462

-15%

1,767

1,648

7%

161,177

114,545

41%

617,540

422,509

46%

4Q’11 revenues increased by 41% when compared with the same period of the previous year (US$ 161.2 MM vs. US$ 114.5 MM). This positive variance is essentially driven by a 38.4% increment in the average energy sales price for the period (4Q’11 US$245.6/MWh vs 4Q’10 US$177.4/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 9.2% (4Q’11 635 GWh vs 4Q’10 582 GWh), mainly driven by an increase in the contracted capacity under CEPM’S PPA and the demand from EDE Este.

Operating Expenses (US$ Thousands) Description

4Q'11

4Q'10

Var %

FY'11

FY'10

Var %

Fuel Expense

63,553

37,130

71%

255,177

166,850

53%

Transmission Tolls

2,914

3,094

-6%

11,267

10,840

4%

Purchased Power

44,161

34,829

27%

154,680

92,775

67%

Frequency Regulation

2,559

1,204

113%

9,627

5,367

79%

Operation & M aintenance

9,055

9,288

-3%

29,797

34,603

-14%

General & Administrative

12,697

8,700

46%

44,749

33,426

34%

Depreciation

4,103

4,060

1%

16,348

16,082

2%

139,042

98,305

41%

521,645

359,943

45%

Total Operating Expenses

During 4Q’11 operating expenses were higher than 4Q’10 comparative figures by 41% or US$40.7MM (US$139.0MM Vs. US$98.3MM). This increase is mainly explained by:



Fuel costs: 71% or US$26.4 million increase in fuel cost, essentially as a consequence of: a) higher HFO consumption by 88.8 thousand of BBLS at a higher price (4Q’11 484.9 thousand of BBLS at US$105.48/BBLS vs 4Q’10 396.1 thousand of BBLS at US$76/BBLS); b) higher Coal price (4Q’11 US$147.7/MT vs 4Q’10 US$106.1/MT); and c) higher LFO consumption by 26.6 thousand of BBLS at a higher price (4Q’11 63.2 thousand of BBLS at US$130.2/BBLS vs 4Q’10 36.6 thousand of BBLS at US$96.9/BBLS).



General and administrative expenses: 46% or US$4MM increase when compared to 4Q’10 mainly due to: i) US$1.9MM higher technical advisory fee expense as a result of the increase in sales during 4Q’11; ii) US$0.7MM higher office operation costs mainly due to an increment in development expenses; iii) US$0.5MM higher professional services iv) US$0.3MM higher labor cost head office, v) US$0.3MM higher insurance expenses, vi) US$0.2MM higher regulatory payment; and vii) US$0.1 higher minimum income tax.



Purchased power: 27% or US$9.4 increase is the result of an increase in the average purchase price for the period (4Q’11 US$218.2/MWh vs 4Q’10 US$138.8/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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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 Net Income Net income was US$15.1 MM in 4Q’11, compared to a net income of US$12.8 MM in the same period of the prior year. The positive variance of US$2.3 MM is explained by:



Higher EBITDA by US$5.9 MM as explained in the paragraphs above.



US$0.8 MM lower interest expense, net.



US$0.7 MM lower exchange loss as a result of exposure to the Euro in 2010.

Partially offset by :



US$5.1 MM higher income tax due to the increment in the statutory tax rate to 29% due to enactment of law No. 13911.

Cash Flow Cash provided by operating activities Net cash provided by operating activities was US$89.6 MM during the 4Q’11, compared to US$41.6 MM provided in the same period of 2010. The US$48 MM variance is explained by: a) US$48.1MM decrease in accounts receivable b) US$5.3MM lower inventories, c) US$4.9MM increase in other liabilities; and d) US$2.3MM higher net income. The aforementioned are partially offset by: i) US$9.4MM lower accounts payable ii) US$2.3MM of lower negative adjustments reconciling net income to the net cash used in operating activities; and iii) US$0.9MM higher prepaid expenses; Cash used in investing activities Net cash used in investing activities was US$17.6MM during 4Q’11, compared to US$6.3MM used in the same period of the prior year. The US$11.3MM variance is mainly due to lower sales of restricted investments; partially offset by lower additions to property, plant and equipment during 4Q’11.

Cash provided by financing activities The positive variance of US$37.9 MM in financing activities during 4Q’11, when compared to the same period of the prior year, is due to the net result of higher proceeds from short term debt by US$30 MM and higher proceeds from long term debt

by US$18.6MM in 4Q’11; partially offset by i) US$5MM higher repayment of line of credit ii) US$4.0MM higher dividends paid; and iii)US$1.7MM higher repayment of long term debt during 4Q’10.

4

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 Financial Debt as of December 31, 2011 FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS Instrument

Balance

144 A Bond Local Bond-T4 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 The Bank of Nova Scotia Popular term loan program BHD DR term loan program BHD Panamรก term loan program

Interest type

Interest Rate

164.9 Fixed 6.0 Fixed 6.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 30.0 Variable (LIBOR 1M+3%) 11.4 Variable (DR US$) 11.4 Variable (DR US$) 1.8 Variable (DR US$)

Repayment schedule

9.50% 8.75% 7.75% 7.00% 7.00% 7.00% 6.00% 7.00% 3.29% 6.50% 6.50% 6.50%

Bullet payment April 2017 Bullet payment April 2012 Bullet payment Dec 2012 Bullet payment May 2016 Bullet payment June 2016 Bullet payment June 2016 Bullet payment Oct 2014 Bullet payment Oct 2016 Bullet payment June 2012 Monthly - ending Nov 2015 Monthly - ending March and May 2016 Monthly - ending May 2016

8.04% 4.14 281.4

Weighted av. Interest rate Weighted av. Life (Years) Total financial debt (Millions)

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 Efectivo

2014

2015

2016

2017

Deuda

Financial Expenses (US$ Thousands) FY December Description

4Q'11

4Q'10

2011

2010

Interest on Senior Notes

(4,307)

(4,307)

(17,228)

(17,185)

Interest on Long-Term Debt

(1,370)

(629)

(4,344)

(2,894)

Financial Expenses

Interest on Payables to Power Vendors

(525)

(22)

(512)

(544)

Amortization of Deferred Charges

(698)

(400)

(1,562)

(1,650)

998

654

4,916

2,127

Capitalized Interest Other Financial Expenses

(123)

(87)

(192)

(154)

(6,025)

(4,791)

(18,922)

(20,300)

3,894

3,289

10,720

7,754

594

318

1,811

711

255

909

1,402

59

36

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

Total Financial Expenses, Net

(124)

(1,210)

4,364

2,652

(1,661)

(2,139)

13,499 (5,423)

9,903 (10,397)

5

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 Collections Cash Collection rate from distributions companies for 4Q’11 was 154% as compared to the 126% level of last year’s same quarter, with a peak of 268% in December 2011. As a result, at December 31, 2011 the Company had only two invoices in arrears from the distributions companies, which is in compliance with the stand-by agreement with the IMF.

Discos Cash Collections Vs Billings 154%

152% 126% 82%

96% 64%

80%

67% 60%

39%

43%

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

Operational Statistics Description

4Q'11

4Q'10

Var.%

FY'11

FY'10

Var.%

Heat Rate, Btu/KWh

9,313

9,125

2.1%

9,554

9,458

1.0%

Availability, %

94.5

93.2

1.4%

96.6

90.0

7.3%

Forced Outage Rate, %

0.6

0.7

-14.3%

0.7

1.6

-56.3%

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

290

272

6.6%

305

285

7.0%

Energy Balance

580

GWh

430 280 130 (20) (170)

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q'11 2Q'11 3Q'11 4Q'11

(112)

(149)

(130)

(101)

(53)

(131)

(151)

(219)

(178)

(179)

(161)

(196)

GWh - Sales

457

478

514

507

483

505

609

582

566

613

647

635

GWh - Generation

346

330

384

406

430

375

458

363

387

434

486

439

GWh - Spot Purchase

6

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2011 AND 2010 Amounts in thousands of US$ 2011

2010

183,879 483 162,543 36,104 15,844 523 9,795 409,171

110,924 11,479 110,230 31,642 18,651 540 283,466

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

7,831 1,306 295,298 91 6,463 21,799 741,959

7,831 276,660 7,512 7,916 583,385

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

30,000 17,656 35,042 1,776 26,868 8,022 119,364

5,000 14,600 23,351 1,150 5,701 6,911 56,713

233,751 13,636 3 366,754

186,967 15,505 19 259,204

289,000 14,941 102,296 (31,032) 375,205

289,000 13,464 52,258 (30,541) 324,181

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

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

741,959

583,385 7

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH PERIODS AND THE YEARS ENDED DECEMBER 31, 2011 AND 2010 Amounts in thousands of US$ Three month periods ended December 31, 2011

2010

Years ended December 31, 2011

2010

Revenues Energy

145,052

101,389

561,770

373,912

Capacity

13,278

12,694

51,549

46,949

Others

2,846

462

4,220

1,648

161,176

114,545

617,539

422,509

Fuel

63,553

37,130

255,177

166,850

Purchased power Transmission

44,161 2,914

34,829 3,094

154,680 11,267

92,775 10,840

2,559

1,204

9,627

5,367

9,055 12,697 4,103 139,042

9,288 8,700 4,060 98,305

29,797 44,749 16,348 521,645

34,603 33,426 16,082 359,943

22,134 (1,376) 136 (31) 20,863

16,240 (2,139) (598) (56) 13,447

95,894 (5,423) 311 660 91,442

62,566 (10,397) (737) (1,236) 50,196

(7,381) 1,606

(880) 218

(27,312) 1,384

(5,777) (2,446)

15,088

12,785

65,514

41,973

Operating costs

Compensation for frequency regulation Operating and maintenance Administrative and general expenses Depreciation and amortization Operating income Financial expenses, net Foreign exchange loss, net Other income (expenses), net Income before income tax Income tax Current Deferred Net income

8

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2011 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS FOR THE THREE MONTH PERIODS AND THE YEARS ENDED DECEMBER 31, 2011 AND 2010 Amounts in thousands of US$ Three month periods ended December 31, 2011 Net income Adjustments to reconcile net income to the net cash provided by operating activities: Gain on sale of fixed asset Deferred income tax Depreciation Provision for doubful accounts Net foreing exchange fain Loss on forward contract Financial expenes Put option Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Income tax Payable to related parties Derivative financial liability Other liabilities Other non-currente liabilities Net cash provided by operating activities Sale of property, plant and equipment Additions to property, plant and equipment Collection of other related party receivable Purshase of restricted investments Sales of restricted investments Purshase of investment securities Sales of investment securities Disbursement of notes receivable Net cash used in investing activities Proceeds from line of credit Repayment of line of credit Proceeds from short-term debt Repayment of long-term debt Proceeds from long-term debt Dividends Debt issuance costs paid Net cash provided by (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period 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

2010

Years ended December 31, 2011

2010

15,095

12,785

65,515

41,973

(1) (1,606) 4,103 235 1,328 -

32 (218) 4,060 509 1,879 674 (622)

(45) (1,384) 16,348 235 3,959 -

32 2,446 16,082 509 538 507 3,850 -

92,519 (324) (2,374) (19,096) (21,145) 21,168 17 (714) (16)

26,352 (5,603) (1,463) (1,015) 4,626 5,701 31 (866) (5,212) 6

(48,363) (6,965) 2,807 (23,678) 12,190 21,168 622 (1,787) (16)

29,278 (4,413) 781 (1,042) 9,112 5,701 141 (866) (4,822) 6

89,189

41,656

40,606

99,813

2 (16,115) (1,500) (17,613)

(27,340) 19,043 (2,165) 4,201 (6,261)

60 (37,539) 10,535 (1,500) (28,444)

(37,099) 3,294 (19,043) 19,043 (2,165) 13,360 (22,610)

(5,000) 30,000 (8,014) 31,618 (4,000) 44,604

(6,300) 13,000 6,700

(5,000) 30,000 (28,205) 78,045 (13,999) (514) 60,327

5,000 (13,800) 13,000 (9,997) (30) (5,827)

116,180

42,095

72,489

71,376

67,232

68,829

110,924

39,548

183,412

110,924

183,412

110,924

4,070 2,897

20,414 751

828 2,025

794 (2,117)

9

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