Third Quarter 2012 Relevant Results
Contact: Maribel Álvarez Corporate Finance Director (1) (809) 955-2223
Santo Domingo, Dominican Republic December 12th, 2012
Q3 2012 Relevant Results
inversoraescac@aes.com
www.aesdominicana.com.do
AES Andres B.V. and Subsidiary and Dominican Power Partners and Subsidiary announced a Combined Net Income of US$12.1 million for Third Quarter 2012 and US$32.1 million as of September 2012 Santo Domingo, Dominican Republic, December 12th, 2012 – Andres-DPP and Itabo announced today results for the third quarter 2012 and September 2012. All operating and financial information, except where otherwise specified, are expressed in accordance with International Financial Reporting Standards, as of any date of determination, or “IFRS”. These figures are not audited. For Andres-DPP the Revenues increased 8.9% in third quarter 2012 compared with the same period of 2011 and year-to-date (or “YTD”) 2012 increased 14.9% compared with the same period of the previous year. Net Income decreased to US$12.1 million for third quarter 2012 and YTD 2012 Net Income decreased to US$32.1 million. Table 1: Summary of Financial Results of Andres & DPP Q3 (Millions of US$)
YTD
2012
2011*
2012
2011*
Revenues Operating costs and expenses Operating income
135.6 97.2 38.4
124.5 71.5 53.0
381.0 293.4 87.6
331.7 195.8 135.9
Operating income margin
28.3%
42.6%
23.0%
41.0%
Net Income (**)
12.1
42.1
32.1
83.5
Net Cash Provided by (Used in) Operating Activities
12.1
30.1
40.7
53.1
(*) 2011 amounts revised. (**) Net Income includes interest expenses of US$9.6 million in 3Q12 and 3Q11 and US$28.6 million YTD 2012 and US$28.5 YTD 2011, related to interest under a subordinated intercompany loan under which AES made its capital injections to finance the development and construction of Andres. AES views this loan as an equity investment and the respective interests are a restricted payment under the indenture.
Inside this report: Page External Factors
2
Analysis of Andres-DPP Combined Financial Results
2
Analysis of Itabo’s Consolidated Financial Results
4
Financial Debt Summary
5
Other Relevant Information
6
Dividends
6
Liquidity
6
Operational Results of Andres & DPP
6
Operational Results of Itabo
7
Operational Highlights
8
Safety Indicators
8
Environmental Matters
9
Financial Statements
10
Glossary of Key Terms
17
Itabo Net Income was US$0.8 million for third Quarter 2012 and US$13.8 million as of September 2012 For Itabo, Revenues for the 3Q2012 decreased 10.7% to US$56.8 million compared to US$63.6 million in the 3Q2011. In addition, YTD 2012 Revenues increased 4.1% to US$185.5 million compared to 2011 YTD Revenues of US$178.1 million. Net Income was US$0.8 million for third quarter 2012 against a Net Loss of US$7.7 million in same period 2011 and YTD 2012 Net income was US$13.8 million compared to Net Loss of US$3.0 million by 2011 year end. Table 2: Summary of Financial Results of Itabo Q3 (Millions of US$)
YTD
2012
2011
2012
2011
56.8 49.1 7.7
63.6 72.6 (9.0)
185.5 154.0 31.5
178.2 179.1 (0.9)
13.6%
-14.2%
17.0%
-0.5%
Net Income (loss) (*)
0.8
(7.7)
13.8
(3.0)
Net Cash Provided by (Used in) Operating Activities (*)
64.8
(13.1)
68.6
(17.5)
Revenues Operating costs and expenses Operating Income (loss) Operating Income margin
(*) 2011 amounts revised.
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results External Factors
1
Chart 1: Fuel Prices Evolution 2
Dominican Republic’s annual GDP grew 3.8% as of June 30th , 2012.
Coal, Natural Gas and Fuel-Oil #6 Price Evolution
The accumulated Inflation stood at 2.37% as of September 2012.
18
th
15.25
14.56 15.26
14.74
12
Fuel-Oil #6
10 8 6
Average Coal prices were US$3.31 per MMBtu for third quarter 2012, with a peak of US$3.50 per MMBtu and a low of US$3.20 per MMBtu.
4
4.56
Coal
3.31
3.65
4.10
2
2.89
Natural Gas Nymex
2.50
0 3Q11
Total electricity demand as of September 2012 reached 9,904 GWh, an increase of 7% versus the same period 2011.
16.17
14
US$/MMBTU
Average Nymex Henry Hub natural gas prices were US$2.89 per MMBtu for third quarter 2012, with a peak of US$3.32 per MMBtu 3 and a low of US$2.61 per MMBtu.
16.40 Natural Gas Spot
16
The exchange rate as of September 30 , 2012 was RD$39.34 per US dollar (Ask) and RD$39.26 per US dollar (Bid).
4Q11
1Q12
2Q12
3Q12
Natural Gas Spot: As reference, it is used the 14% of Dated Brent Index, published in the Platts Crude Oil Marketwire
4
Analysis of Andres-DPP Combined Financial Results (In IFRS) Table 3: Results for Third Quarter & Year-to-day 2012 of Andres & DPP Q3 2012
Revenues Electricity sales – Contracts Electricity sales – spot market Natural Gas Sales Other Sales
YTD 2011 2012 (Millions of US$)
2011
135.6 64.8 29.5 39.8 1.5
124.5 78.3 42.4 3.8 0.0
381.0 190.2 78.7 108.0 4.1
331.7 206.8 108.6 16.3 0.0
Operating Cost and Expenses Cost of sales- fuel & electricity purchases for generation Cost of sales- fuel & related costs purchased for resale Operating, maintenance and general expenses Depreciation
97.2 61.7 18.8 9.7 7.0
71.5 51.0 5.9 8.2 6.4
293.4 191.7 51.7 29.3 20.7
195.8 135.4 14.6 26.4 19.4
Other (Expenses) Income(*) Interest (expense) – financial - net Interest income – commercial and others-net Intercompany loan interest expense (**) Other (expense) income Exchange (loss)
(9.2) (4.2) 6.1 (9.6) (0.8) (0.7)
1.0 (4.1) 3.1 (9.6) 11.7 (0.1)
(27.0) (12.3) 17.7 (28.6) (2.3) (1.5)
(23.3) (12.9) 7.2 (28.5) 11.1 (0.2)
Cash Flows Variations- Provided by (Used in) Operating Activities Increase (decrease) accounts payable (Increase) decrease accounts receivable Income Tax Paid (Negative) positive adjustments (Decrease) Increase net income
12.1 (31.7) 16.7 (9.5) 24.5 12.1
30.1 (8.8) (23.9) (4.4) 25.1 42.1
40.7 11.2 5.9 (42.3) 33.9 32.1
53.1 (19.8) (33.2) (19.8) 42.4 83.5
Free Cash Flow (***) Net Cash Provided by (Used in) Operating Activities (Less) Maintenance and enviromental CAPEX
3.2 12.1 (9.0)
26.5 30.1 (3.6)
21.2 40.7 (19.5)
29.6 53.1 (23.5)
(*) Amounts revised for 2011 (**) Related to interest under a subordinated intercompany loan under which AES made its capital injections to finance the development and construction of Andres. AES views this loan as an equity investment and the respective interests are a restricted payment under the indenture. (***) Free Cash Flow is a non-GAAP financial measure defined as net cash from operating activities less CAPEX Maintenance and environment. 1
Source: Dominican Central Bank, Coordinating Body and FOB, 6300 kcal/kg Puerto Bolivar, Platts International Coal Report. September 2012 figures not yet available. 3 Pricing under the BP Contract is at a premium to the Henry Hub natural gas price per MMbtu on the NYMEX Index. 2
4
The accompanying combined financial results include the accounts of Andres, DPP and its subsidiary Andres Dominicana.LTD. Intercompany balances and transactions have been eliminated in these combined financial statements.
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results Key drivers of Third Quarter results (Q3 2012 Vs. Q3 2011) for Andres-DPP: •
Revenues increased 8.9% to US$135.6 million. This result was mainly driven by the net effect of: (i) higher natural gas sales by US$36.0 million due to (a) US$21.5 million related to an increase in the average LNG sales price (indexed to the spot LNG prices in the international market) and (b) US$14.5 million due to an increase in the volume sold; (ii) lower spot sales by US$12.9 million due to higher energy required by contracts during Q3 2012, and therefore lower energy available to sold in the spot market (Q3 2012- 43GWh Vs. Q3 2011-177GWh); (iii) US$13.5 million of lower contracted sales due to lower contracted prices derived of the reduction of the natural gas price index (NYMEX); and, (iv) higher other sales by US$1.5 million basically from pipeline fees to third parties.
•
Operating Costs and Expenses increased 35.9% to US$97.2 million. This variance was principally due to: (i) US$12.9 million due to higher fuel & related cost purchased for resale; (ii) higher cost of fuel & electricity purchased for generation by US$10.7 million mainly related to an increase in the average LNG cost attributable to the vessels of LNG at spot prices bought during the quarter; (iii) US$1.5 million of higher operating, maintenance and general expenses basically for the annual maintenance of Los Mina VI; and, (iv) higher depreciation by US$0.6 million.
•
Total Other Expenses was US$9.2 million. This negative result was mainly a net function of: (i) lower other income by US$12.5 million, basically due to an agreement between CDEEE – DGII (local tax authorities) and DPP in 2011 due to local taxes paid and recognized by CDEEE. d; (ii) higher commercial interest income by US$3.0 million; during 2011 there was a sector agreement whereby calculation of commercial interests was eliminated, this agreement ended in December 2011; and, (iii) higher exchange loss by US$0.6 million.
•
Net Cash Provided by Operating Activities was US$12.1 million as net result of the following: (i) Higher accounts receivable collections by US$40.6 million for the proceeds received of a Sovereign Bonds monetized by the Government during the quarter; (ii) lower net income (net of non-cash activities) by US$30.6 million derived of higher cost of sales; (iii) negative impact for higher operating payments by US$22.9 million; and, (iv) negative impact by US$5.1 million from higher income tax paid..
•
Free Cash Flow was net cash provided by US$3.2 million. During this period there were maintenance and environmental CAPEX by US$12.1 million.
Key drivers of Year-to-Date Quarter results (YTD 2012 Vs. YTD 2011) for Andres-DPP: •
Revenues increased 14.9% to US$381.0 million. This increase was mainly a net result of: (i) higher natural gas sales by US$91.7 million due to (a) US$57.2 million related to an increase in the average LNG sales price and (b) US$34.5 million due to an increase in the volume sold; (ii) lower spot sales by US$29.9 million, mainly related to higher energy required by contracts during first half of 2012, and therefore lower energy available to sold in the spot market (Q3 2012- 93GWh Vs. Q3 2011- 466GWh); (iii) lower contracted energy sales by US$16.6 million due to lower contracted prices; and, (iv) higher other sales by US$4.1 million mainly from pipeline fees to third parties.
•
Operating Costs and Expenses increased 49.8% to US$293.4 million. This variance was mainly caused by: (i) higher cost of fuel & electricity purchased for generation by US$56.3 million mainly related to (a) US$42.0 million due to an increase in the average LNG cost for the purchase of four vessels at spot prices and due to higher generation, and (b) US$14.3 million due to higher spot energy purchases during January and February 2012 as a consequence of lower generation triggered by a major maintenance performed in Andres plant and the major maintenance performed in July in Los Mina VI; (ii) US$37.1 million due to higher fuel & related cost for resale due to (a) US$24.9 million related to an increase in the average LNG price and (b) US$12.2 million due to an increase in the volume sold; and, (iii) higher operating, maintenance and general expenses by US$2.9 million.
•
Total Other Expenses increased 15.9% to US$27.0 million. This increase was mainly a net function of: (i) lower other income by US$13.4 million; (ii) higher net commercial interest income by US$10.5 million due to same factor driving third quarter 2012 variance; (iii) higher exchange loss by US$1.3 million; and, (iv) lower net financial interest expense by US$0.6 million mainly related to higher investments held during 2012 and lower deferred financing cost.
•
Net Cash Provided by Operating Activities was US$40.7 million, as result of: (i) lower net income (net of non-cash activities) by US$42.9 million derived from higher cost of sales; (ii) positive impact due to higher account receivables collections by US$39.1 million; (iii) positive impact due to lower operating payments by US$31.0 million; and, (iv) negative impact due to higher tax paid by US$22.5 million.
•
Free Cash Flow was net cash provided by US$21.2 million. During this period there were maintenance and environmental CAPEX by US$19.5 million.
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results 5
Analysis of Itabo’s Consolidated Financial Results (In IFRS)
Table 4: Results for Third Quarter & Year-to-day 2012 of Itabo
Q3 2012
YTD 2011
2012
2011
(Millions of US$) Revenues Electricity Sales Other revenues
56.8 56.8 0.0
63.6 63.3 0.3
185.5 184.9 0.6
178.2 177.6 0.6
Operating Cost and Expenses Cost of Revenues Operating, maintenance and general expenses Depreciation Amortization of contracts
49.1 34.7 8.3 6.0 0.1
72.6 58.2 8.8 5.5 0.1
154.0 111.9 24.2 17.6 0.3
179.1 139.7 22.3 16.8 0.3
Other Income (Expenses) Interest (expenses)- financial- net Interest income (expenses)- commercial- net Other (expenses)- net (*) Foreign Currency Income (loss) (*)
(5.0) (2.8) (1.2) (1.3) 0.3
(7.7) (3.0) 1.0 (5.6) (0.1)
(11.3) (8.3) (2.1) (1.3) 0.4
(9.0) (8.9) 6.1 (6.0) (0.2)
Cash Flows Variations- Provided by (Used in) Operating Activities Increase (decrease) accounts payable (Increase) decrease accounts receivable (Negative) positive adjustments (Decrease) Increase net income
64.8 2.2 42.2 19.6 0.8
(13.1) 5.8 (17.5) 6.3 (7.7)
68.6 12.3 2.3 40.2 13.8
(17.5) 13.9 (51.1) 22.7 (3.0)
Free Cash Flow (**) Net Cash Provided by (Used in) Operating Activities (Less) Maintenance and enviromental CAPEX
60.6 64.8 (4.2)
(21.5) (13.1) (8.4)
58.7 68.6 (9.9)
(34.0) (17.5) (16.5)
(*) 2011 amounts revised (**) Free Cash Flow is a non-GAAP financial measure defined as net cash from operating activities less CAPEX Maintenance and environmental.
Key drivers of Third Quarter results (Q3 2012 Vs. Q3 2011) for Itabo: •
Revenues decreased 10.7% to US$56.8 million. This result was mainly driven by US$6.5 million of lower electricity sales that resulted from lower contract prices indexed by lower average coal market prices.
•
Operating Costs and Expenses decreased 32.4% to US$49.1 million. This variance was principally a net result of: (i) lower electricity purchases by US$22.4 million derived from higher generation; (ii) lower coal consumption by US$1.1 million due to lower average cost and in spite of higher generation; (iii) lower operating, maintenance and general expenses by US$0.5 million; and, (iv) higher depreciation by US$0.5 million.
•
Other Expenses decreased to US$5.0 million. This positive variation was primarily attributable to: (i) lower other expenses by US$4.3 million basically for lower assets disposal during Q3 2012; and, (ii) higher commercial interest expense by US$2.2 million; during 2011 there was there was a sector agreement whereby calculation of commercial interests was eliminated, this agreement ended in December 2011.
•
Net Cash Provided by Operating Activities was US$64.8 million, as result of: (i) Higher accounts receivable collections by US$59.7 million basically for the proceeds received of a Sovereign Bonds monetized by the Government during the quarter; (ii) US$21.8 million of higher net income (net of non-cash activities), basically for lower cost and expenses; and, (iii) negative impact higher operating payments by US$3.6 million.
5
The accompanying consolidated financial results include the accounts of Itabo, and its subsidiary Itabo Dominicana, LTD. Intercompany balances and transactions have been eliminated in these consolidated financial statements.
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results •
Free Cash Flow was net cash provided of US$60.6 million. During this period there were maintenance and environmental CAPEX by US$4.2 million.
Key drivers of Year-to-Date Quarter results (YTD 2012 Vs. YTD 2011) for Itabo: •
Revenues increased 4.1% to US$185.5 million. This increment was mainly a result of higher electricity sales by US$7.3 million due to increase in contract and spot energy prices and higher energy quantity sold.
•
Operating Costs and Expenses decreased 14.0% to US$154.0 million. This variation was mainly caused by net effect of: (i) lower cost of sales by US$27.8 million derived of lower coal average cost and lower energy purchased due to higher generation; (ii) higher operation maintenance and general expenses by US$1.9 million basically from higher maintenance expenses; and, (iii) higher depreciation by US$0.8 million.
•
Other Expenses increased to US$11.3 million. This variance was net result of: (i) higher net commercial interest expense by US$8.2 million; (ii) lower other expense by US$4.7 million mainly for lower obsolete generation equipment retired; (iii) lower net financial interest expense by US$0.6 million and, (iv) higher foreign currency income by US$0.6 million.
•
Net Cash Provided by Operating Activities was US$68.6 million. This variation was primarily the net result of: (i) Higher accounts receivable collections by US$53.4 million due to lower days sales outstanding (DOS); (ii) higher net income (net of non-cash activities) by US$34.3 million; and, (iii) negative impact from higher operating payments by US$1.6 million.
•
Free Cash Flow was net cash provided by US$58.7 million. During this period there were maintenance and environmental CAPEX by US$9.9 million.
Financial Debt Summary Table 6: Summary of Debt Profile of Itabo
Table 5: Summary of Debt Profile of Andres-DPP Financial Debt
Sep-12
Financial Debt
Dec-11
Sep-12
Dec-11
(expressed in millions of US$)
(expressed in millions of US$)
Local Currency
-
-
Local Currency
-
Foreign Currency
168
168
Foreign Currency
131
131
Total Debt
168
168
Total Debt
131
131
100%
100%
Fixed Rate
-
100%
100%
Variable Rate
0%
0%
Variable Rate
0%
0%
Short Term
0%
0%
Short Term
0%
0%
100% 10.56%
100% 10.56%
100% 10.21%
100% 10.21%
8
9
7
8
Long Term Financing Cost (*) Average Life (years)
Fixed Rate
Long Term Financing Cost (*) Average Life (years)
(*) (1) After tax rates. (2) The Notes effective rate includes the interest income accrued by the interest debt reserve.
Table 7: Summary of International & Local Ratings Rating Agency
Market
Rating
Outlook
Fitch Ratings (Andres-DPP)
International
Senior Notes 2020
B
Positive
Fitch Ratings (Itabo)
International
Senior Notes 2020
B
Positive
Standard & Poor's (Andres-DPP)
International
Senior Notes 2020
B
Stable
Standard & Poor's (Itabo)
International
Senior Notes 2020
B-
Stable
Fitch Dominicana (Itabo)
Local
Corporate Bonds 2013
Andres Dominicana and Itabo Dominicana, Earning Release
A- (dom)
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Q3 2012 Relevant Results Other Relevant Information
In August 2012, Coastal and NCI initiated an international arbitration proceeding against FONPER and the Dominican Republic, seeking a declaration that Coastal and NCI have acted both lawfully and in accordance with the relevant contracts with FONPER and the Dominican Republic in relation to the management of Itabo.
In October government bid round to contract out the construction of new power generation plants was suspended.
In November 10 , 2012, the Dominican Government promulgated a tax reform designed to reduce the fiscal deficit.
th
Dividends th
On September 25 , 2012 Itabo paid dividends for a gross amount of US$3.4 million. These were declared in its Annual Shareholders Assembly performed in June.
On September 26 , 2012, AES Andres paid dividends for a gross amount of US$20.4 million.
th
Liquidity
Chart 2: Average Collection Rate
Collections
During third quarter 2012 the average collection rate for Andres-DPP was 138% against 83% in the same period 3Q11 and for Itabo 164% against 76%. This improvement is due to the Government paid part of current debts to generation companies with a sovereign bond of US$500 million issued in September. YTD 2012, the average collection rate for Andres-DPP was 99% against 87% in the same period 2011 and for Itabo 102% against 78% YTD 2011. th
As of September 30 , 2012 Andres accounts receivables have 75 days sales outstanding (DSO), 69 DSO for DPP and 72 DSO for Itabo compared to 33, 61 and 72 DSO, st respectively as of December 31 , 2011.
Andres - DPP
Itabo
164%
146% 83%
144%
76% 3Q11
138%
100% 58%
89%
57% 4Q11
1Q12
2Q12
3Q12
The average collection rate is calculated using the total collected vs. the total billed to the DISCOS during the quarter.
Chart 3: Days Sales Outstanding (DSO) 181 DPP 147
Itabo Andres
111 107 73
69
2008
2009
66 63
75
72 61
24
33
2010
2011
72 69
Sep. 12
The DSO was calculated using the current account receivables as of September 30th, 2012, divided by the average month sales for 6 months. It assumes 30 days in a month.
Operational Results of Andres-DPP Table 8: Summary of Technical Details
As of Sep. 30th, 2012 Installed capacity (MW)
Andres DPP 319 236
Aggregate 555
Power Generation Units Effective capacity (MW)
1 304
2 236
3 540
Contracted capacity (MW)
232
210
442
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results Table 9: Summary of Key Performance Indicators Q3 Operating Data
YTD
2012
2011
2012
2011
Gross generation
GWh
903
907
2,551
2,522
Internal consumption
GWh
(17)
(13)
(51)
(36)
Net Generation
GWh
886
894
2,486
Total Energy Sold (*) GWh Andres' Firm Capacity (average) MW Andres Heat Rate Btu/KWh Andres EAF % Andres EFOR % DPP's Firm Capacity (average) MW
890 277 7,740 98.0 0.9 67
894 281 7,667 98.3 0.3 66
2,500 0 2,547 279 7,724 93.2 0.4 83
DPP EAF
%
92.8
98.2
96.3
93.3
DPP EFOR
%
0.0
0.4
0.3
0.2
2,507 281 7,741 90.6 0.4 51
(*) Amount revised for 2011.
Key drivers of Third Quarter results (Q3 2012 Vs. Q3 2011) for Andres-DPP: •
Combined Net Generation decreased 0.9% to 886 GWh.
•
Total Energy generated during the quarter was completely sold. The Firm Capacity decreased to an average of 277MW.
•
EAF of Andres was 98.0% and its EFOR increased to 0.9%, as well as its Heat Rate to 7,740 Btu/KWh.
•
DPP’s Firm Capacity increased to an average of 67MW, as a result of higher availability since operational improvements performed on its units.
•
DPP’s EAF decreased to 92.8% due to a major maintenance for 11 days and its EFOR improved to 0.02%.
Key drivers of Year-to-Date Quarter results (YTD 2012 Vs. YTD 2011) for Andres-DPP: •
Combined Net Generation increased 0.6% to 2,500 GWh. The Energy Sold increased 1.6% to 2,547 GWh, basically due higher generation and due to Andres has more contracted energy.
•
The Andres’ EAF improved to 93.2% and the EFOR was 0.41%.
•
DPP’s Firm Capacity increased to 83MW, as a result of higher availability since the operational improvements performed on its units.
•
EAF has increased to 96.3% since its units has been working as based load plants since 2010. The EFOR improved to 0.25%.
Operational Results of Itabo Table 10: Summary of Technical Details (*)
As of Sept. 30th, 2012 Installed capacity (MW)
294
Power Generation Units Effective capacity (MW)
3 294
(*)Includes San Lorenzo turbogas with 34MW
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results
Table 11: Summary of Key Performance Indicators Q3
Gross generation
GWh
YTD
2012
2011
2012
2011
471
334
1,403
1,212
(31) 303 435 226 11,186 67.6 0.6
(115) 1,288 1,350 230 11,271 82.4 6.2
(110) 1,102 1,316 226 11,208 72.0 4.3
Internal consumption GWh (37) Net Generation GWh 434 Total Energy Sold GWh 458 Firm Capacity (average) MW 239 Heat Rate Btu/KWh 11,304 EAF % 89.1 EFOR % 6.5
Key drivers of Third Quarter results (Q3 2012 Vs. Q3 2011) for Itabo: •
Net Generation increased 43.2% to 434 GWh due to lower maintenances days (2012- 23 days vs. 2011-52 days) and due to San Lorenzo unit started operations. The total Energy sold increased 5.3% to 458 GWh. The startup of Lorenzo increased the Firm Capacity to 239 in average for the quarter.
•
The Heat Rate increased 1.1% to 11,304 Btu/KWh. The EFOR increased to 6.5% due to Itabo II had a forced outage for 18 days and the EAF increased to 89.1% due to lower maintenance days.
Key drivers of Year-to-Date Quarter results (YTD 2012 Vs. YTD 2011) for Itabo: •
Net Generation increased 16.9% to 1,288 GWh and average Firm Capacity increased to 230 MW since the startup of San Lorenzo unit.
•
The Energy Sold increased 2.6% due to higher contracted and spot sales, derived for higher generation.
•
Heat Rate increased 0.6% to 11,271 Btu/KWh, the EFOR increased to 6.2% for the failure occurred in June and the EAF improved to 82.4% due to lower maintenance days.
Operational Highlights From July 07th to 18th, 2012, Los Mina VI was put out of service due to its annual Programmed Maintenance. On August 25th, the Electricity Superintendence authorized the commercial operation of the San Lorenzo Plant, a turbogas power plant with 34MW of installed capacity. In September 2012, the contracted capacity between Andres and EdeEste increased to 120 MW from 105 MW, according to the established in the agreement signed in July 2011. During third quarter 2012, Andres received six vessels with 13.1TBTU of natural gas, including three bought at spot prices and Itabo received two coal vessels containing 103,261 MT. In October 2012, the third LNG vaporization train at AES Andres facility was finalized. The startup of the new vaporization send out train will increase the operating rate from the current plant design of 125 to 250 Million standard cubic feet per day (MMSCFD) while permitting concurrent truck loading operation, and maintaining 125 MMSCFD as a backup, increasing in this way the operational reliability and availability of AES LNG import Terminal.
Safety Indicators During third quarter 2012, Andres, DPP and Itabo did not have Lost Time Incidents (LTI) or fatalities. During third quarter 2012, 8,055 man hours invested in safety training, including AES people and contractors. Besides, there were performed 815 safety walks during the medium and high risk works, for AES people and contractors.
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results Environmental Matters During third quarter 2012, Andres, DPP and Itabo have complied with all environmental requirements of AES Corporation and the Dominican laws. During third quarter 2012, an internal recycling campaign was launched during Values & Environment Day Celebration. Our collaborators received a booklet with instructions for recycling and bags for segregating plastic, paper and glass.
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results Dominican Power Partners and subsidiary (Indirect Wholly-Owned Subsidiaries of The AES Corporation) UNAUDITED COMBINED STATEMENTS OF INCOME (Expressed in thousandsUS$)
Three Months Ended September 30, 2012 2011 (*)
Nine Months Ended September 30, 2012 2011 (*)
REVENUES Electricity sales – contracts Electricity sales – spot market Natural gas sales Other sales Total revenues
64,757 29,517 39,790 1,578 135,642
78,326 42,442 3,735 13 124,516
190,178 78,779 107,880 4,174 381,011
206,840 108,577 16,218 39 331,674
(61,713) (18,815) (9,670) (6,989)
(50,982) (5,896) (8,189) (6,383)
(191,678) (51,720) (29,232) (20,733)
(135,364) (14,572) (26,418) (19,444)
(97,187)
(71,450)
(293,363)
(195,798)
38,455
53,066
87,648
135,876
1,909 (9,634) (806) (698)
(955) (9,634) 11,730 (141)
5,436 (28,694) (2,337) (1,502)
(5,606) (28,589) 11,149 (256)
OPERATING COSTS AND EXPENSES Cost of sales – electricity purchases and fuel costs used for generation Cost of sales – fuel and fuel related costs purchased for resale Operating, maintenance and general expenses Depreciation Total operating costs and expenses OPERATING INCOME OTHER INCOME (LOSS) Interest income (expense) – net Intercompany loan interest expense (**) Other (expense) income Exchange loss INCOME BEFORE TAXES Income tax NET INCOME (***)
29,226
54,066
60,551
112,574
(17,167)
(11,970)
(28,494)
(29,034)
12,059
42,096
32,057
83,540
(*) The Q3 2011 and September 2011 amounts were revised. (**) Interest expenses are those generated by the subordinated intercompany loan under which AES made its capital injections to finance the development and construction of Andres. (***) Net Income includes interest expenses of US$9.5 million in Q3 2012 and Q3 2011, related to interest under a subordinated intercompany loan under which AES made its capital injections to finance the development and construction of Andres. AES views this loan as an equity investment and the respective interests are a restricted payment under the indenture. The results presented in this report have not been audited and were prepared in Dollars in conformity with the International Financial Reporting Standards, as of any date of determination, or “IFRS.”
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results AES Andres B. V. and subsidiary, and Dominican Power Partners and subsidiary (Indirect Wholly-Owned Subsidiaries of The AES Corporation) UNAUDITED COMBINED STATEMENTS OF FINANCIAL POSITION (Expressed in thousands US$) Sep. 30th, 2012
Dec. 31st, 2011
ASSETS CURRENT ASSETS Cash and cash equivalents Short term investment Accounts receivables Accounts receivable – related parties Inventories Other financial assets Other assets Derivative asset Total Total current current assets assets PROPERTY, PLANT AND EQUIPMENT Land Property, plant and equipment Less accumulated depreciation Property, Total plant Property, and equipment plant and equipment OTHER ASSETS Accounts receivables non curent Debt service reserves Other financial assets Other assets Total other assets TOTAL ASSETS
128,825 8,600 121,159 60,307 40,233 80 12,021 391 371,616
131,130 92,254 52,670 19,326 5,000 11,707 312,087
16,192 722,965 (225,402) 513,755
15,784 706,689 (206,310) 516,163
15,917 7,959 19,285 1,351 44,512 929,883
19,774 7,959 22,685 1,736 52,154 880,404
39,111 21,099 9,634 6,158 5,197 15 81,214
18,113 5,303 2,136 22,963 762 301 49,578
58,647 413,153 164,207 5,006 103 641,116
54,479 413,153 164,025 3,135 170 634,962
15,019 109,258 672 (36) 36,852 45,788 207,553 929,883
15,019 109,236 662 (36) 36,852 34,131 195,864 880,404
LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable Related parties Interest related parties Interest payable Income tax payable Derivative current Accrued expenses and other liabilities TotalTotal current current liabilities liabilities LONG TERM LIABILITIES Deferred income tax Intercompany loan Notes payable Derivative non current Other non current liabilities TotalTotal longlong termterm liabilities liabilities SHAREHOLDER'S EQUITY Common stock Contributed capital Additional paid–in capital Accumulated other comprehensive loss Restricted retained earnings Accumulated earnings TotalTotal shareholder's shareholder's equity equity TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY
The results presented in this report have not been audited and were prepared in Dollars in conformity with the International Financial Reporting Standards, as of any date of determination, or “IFRS.”
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results
AES Andres B. V. and subsidiaries, and Dominican Power Partners and Subsidiaries (Indirect Wholly-Owned Subsidiaries of The AES Corporation) UNAUDITED COMBINED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (Expressed in thousands US$)
Three Months Ended September 30, 2012 2011 (*)
Nine Months Ended September 30, 2012 2011 (*)
CASH FLOW FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization Derivative instruments Income tax expense Loss on asset disposal Gain on asset sale Long term compensation Subordinated intercompany loan interest expense Interest expense – net Foreign exchange loss Decrease (Increase) in accounts receivable Decrease (Increase) in accounts receivable – related parties Decrease (Increase) in inventories Decrease (Increase) decrease in other assets Increase (Decrease) in accounts payable and accrued liabilities (Decrease) in accounts payable – related parties Increase (Decrease) in accrued and other liabilities Cash generated from operations
12,059
42,096
32,057
83,540
6,989 3,476 17,167 825 23 9,634 (1,908) 698 10,851 5,889 (19,817) 11,615 (5,934) (25,754) 52 25,865
6,383 2,357 11,970 2,153 63 9,320 955 142 (17,925) (5,997) 4,255 (2,945) (1,478) (7,317) (1,085) 42,948
20,733 560 28,494 2,456 (2) 71 28,694 (5,435) 1,503 (13,858) 19,758 (20,415) 2,724 14,309 (3,090) 1,499 110,058
19,444 6,534 29,034 2,820 (39) 187 28,589 5,606 256 (41,284) 8,064 (1,862) (3,116) (8,558) (11,248) 59 118,027
Interest received Interest paid Income taxes paid Net cash provided by operating activities
149 (4,457) (9,474) 12,083
(8,834) 370 (4,402) 30,081
447 (27,451) (42,333) 40,721
597 (45,730) (19,774) 53,120
(8,964) (52) 0 (9,016)
(3,569) (5,003) 359 (372) (8,585)
(19,537) 4,959 (8,600) 555 108 2 (22,513)
(23,538) (5,148) 359 (10,579) 19,269 39 (19,598)
(20,400) (34) (5) (20,439)
(314) 8 (306)
(20,400) (100) (13) (20,513)
(314) (1) (315)
CASH FLOW FROM INVESTING ACTIVITIES: Additions to property, plant and equipment Decrease (increase) in restricted cash Sale of short term investment Purchase of short term investment Collections of loans made to other parties - principal payments Debt service reserve and other assets Proceeds from the sales of assets Net cash (used in) by investing activities CASH FLOW FROM FINANCING ACTIVITIES: Dividend payment Financing costs payments Repayments of capital lease obligations Net cash (used in) financing activities NET (DECREASE) INCREASE IN CASH CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
(17,373) 146,198
21,190 131,669
(2,305) 131,130
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
128,825
152,859
128,825
33,207 119,652 152,859
(*) The Q3 2011 and YTD 2011 report was revised. The results presented in this report have not been audited and were prepared in Dollars in conformity with the International Financial Reporting Standards, as of any date of determination, or “IFRS.”
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results
EMPRESA GENERADORA DE ELECTRICIDAD ITABO, S. A. AND SUBSIDIARY (An indirectly subsidiary of The AES Corporation) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts expressed in thousands of US dollars) Three Months Ended September 30, 2012 Revenues
2011
Nine Months Ended September 30, 2012
2011
56,832
63,552
185,515
178,181
(139,687)
Operating costs and expenses Cost of sales
(34,737)
(58,158)
(111,921)
General, operating and maintenance expenses
(8,309)
(8,745)
(24,218)
(22,279)
Depreciation Amortization of contracts
(6,000) (118)
(5,535) (118)
(17,544) (353)
(16,805) (353)
(49,164)
(72,556)
(154,036)
(179,124)
7,668
(9,004)
31,479
Total operating costs and expenses
Operating Income (loss)
(943)
Other income (expense) Interest expense, net
(4,035)
(2,048)
(10,431)
(2,842)
Other expenses – net (*) Exchange gain (loss), net (*)
(1,258) 266
(5,637) (118)
(1,266) 319
(6,059) (189)
2,641
(16,807)
20,101
(10,033)
(1,849)
9,148
(6,276)
7,134
(7,659)
13,825
(2,899)
Income (loss) before income taxes (*) Income tax expense (*) Net Income (loss) (*)
792
(*) The final September 2011 report was modified in these lines. The results presented in this report have not been audited and were prepared in Dollars in conformity with the International Financial Reporting Standards, as of any date of determination, or “IFRS.”
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results EMPRESA GENERADORA DE ELECTRICIDAD ITABO, S. A. AND SUBSIDIARY (An indirectly subsidiary of The AES Corporation) UNAUDITED CONSOLIDATED BALANCE SHEETS (Amounts expressed in thousands of US dollars)
Sep. 30th, 2012
Dec. 31st, 2011
Assets Current Assets Cash Accounts receivable from clients Accounts receivable - Related parties, net Inventories Prepaid tax Other non financial assets
108,624 77,050 3,313 17,840 6,344 1,622
52,892 8,068 71,509 27,028 1,516 1,365
214,793
162,378
337,890 23,114 8,887
349,142 28,727 17,663
Long term investment Other financial assets
5,531
323 5,531
Other non financial assets
8,317
6,146
383,739
407,532
Total current assets
Non Current Assets Property, plant and equipment, net Long term accounts receivable Prepaid tax
Total non current assets Total Assets
598,532
569,910
Current Liabilities Accounts payable Accounts payable - Related parties Accrued expenses and other liabilities payable
24,439 63,363 6,904
23,788 51,597 3,837
Total current liabilities
94,706
79,222
Non Current Liabilitites Financial Liabilities Deferred income tax Other non-current liabilities
128,975 36,372 16
128,792 33,855 19
Total non current liabilities
165,363
162,666
355,556
355,556
245 (110,087)
229 (120,512)
Liabilities and Equity
Equity Common stock, RD$100 par value; 56,355,556 shares authorized and outstanding Additional paid in capital Accumulated deficit Restricted retained earnings Total shareholders' equity Total Liabilities and Equity
92,749
92,749
338,463
328,022
598,532
569,910
The results presented in this report have not been audited and were prepared in Dollars in conformity with the International Financial Reporting Standards, as of any date of determination, or “IFRS.�
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results EMPRESA GENERADORA DE ELECTRICIDAD ITABO, S. A. AND SUBSIDIARY (An indirectly subsidiary of The AES Corporation) UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts expressed in thousands of US dollars) Three Months Ended September 30, 2012
2011 (*)
Nine Months Ended September 30, 2012
2011 (*)
CASH FLOWS FORM OPERATING ACTIVITIES: Net income (loss)
792
(7,659)
13,825
(2,899)
6,000
5,535
17,544
16,805
118
118
353
Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation Amortization of contracts
353
Income tax
1,531
(7,134)
1,531
(7,134)
Provision for deferred taxes Net loss on sale or disposal of asset
(335) 1,246
(1,282) 5,643
1,244
6,009
Loss(gain) unrealized foreign currency
(266)
Long-term compensation Interest expenses, net
118
(319)
189
9
5
28
16
4,035
2,048
10,431
2,842
Changes in assets and liabilities: (Increase) Decrease Accounts receivable
(71,402)
Decrease (Increase) Accounts receivable - related parties
113,613
172 (17,640)
(65,888)
(5,609)
68,196
(45,521) (3,217)
Decrease (Increase) Inventories
6,060
(293)
9,027
(Increase) Decrease Income Tax Receivable - Foreign
1,037
(741)
4,934
16
(1,807)
Decrease (Increase) Prepaid expenses (Decrease) Increase Accounts payable Increase Accounts payable - related parties
(5,385) 7,577
(257)
(8) (700)
4,890
559
7,196
878
11,766
6,668
589
4,866
(Decrease) Increase Accrued expenses and other liabilities
(1,152)
3,186
Cash provided (used in) by operating activities
63,494
(13,962)
786 484
1,092 (202)
64,764
73,563
(20,144)
2,837 (7,725)
9,148 (6,507)
(13,072)
68,675
(17,503)
(4,224)
(8,408)
(9,866)
(16,493)
-
-
(4,224)
(8,408)
(9,543)
(16,553)
Dividends paid
(3,400)
(1,224)
(3,400)
(1,224)
Net cash used in financing activities
(3,400)
(1,224)
(3,400)
(1,224)
NET INCREASE (DECREASE) IN CASH
57,140
(22,705)
55,732
(35,280)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
51,484
58,907
52,892
71,482
108,624
36,202
108,624
36,202
Interest received Interest paid Net cash provided (used in) by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment Long term investment Net cash used in investing activities
323
CASH FLOW FROM FINANCING ACTIVITIES:
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
(60)
(*)The final September 2011 report was revised. The results presented in this report have not been audited and were prepared in Dollars in conformity with the International Financial Reporting Standards, as of any date of determination, or “IFRS.”
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results Andres-DPP and Itabo are controlled and managed by subsidiaries of AES. Itabo owns the lowest-cost thermal power generation units in the Dominican Republic. Itabo operates power generation units that in the aggregate have 260 MW of effective and installed capacity. Itabo also has the only loading dock with the capacity to service Panamax vessels and to unload to 60,000 tons of solid fuels in bulk. Andres and DPP, own and operate power generation units that in the aggregate have 555 MW of installed capacity, which represent approximately 18.7% of the current total installed capacity, in the Dominican Republic. Andres also has the only liquefied natural gas, or LNG, shipment receiving terminal in the Dominican Republic, a degasification facility and a storage facility, or LNG facility, and a natural gas pipeline to Santo Domingo. The unaudited pro forma combined balance sheet and statement of operations presented in this report have not been audited and were derived from the unaudited consolidated financial statements of Andres and the unaudited consolidated financial statements of DPP. The information provided by the consolidated financial statements of Andres and the consolidated financial statements of DPP and for Itabo has been prepared in accordance with International Financial Reporting Standards (IFRS) as established in the Offering Memorandum of the USD$284 million notes units. The unaudited pro forma combined financial information described above is being provided for illustrative purposes only. Andres and DPP may have performed differently if they had actually been combined during the periods presented. This unaudited proforma combined financial information should be read in conjunction with the unaudited consolidated financial statements as of and for the periods ended on September 30th, 2012 and 2011 and notes thereto, of each of Andres and DPP. You should not rely on the pro forma combined financial information as being indicative of the historical results that would have been achieved by Andres and DPP if they had always been combined. The AES Corporation (NYSE: AES) is a Fortune 200 global power company. We provide affordable, sustainable energy to 27 countries through our diverse portfolio of distribution businesses as well as thermal and renewable generation facilities. Our workforce of 27,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2011 revenues were $17 billion and we own and manage $45 billion in total assets. To learn more, please visit www.aes.com. This report may contain forward-looking statements speculative in nature based on the information, operational plans and forecasts currently available about future trends and facts. As such, they are subject to risks and uncertainties. A wide variety of factors may cause future real facts to differ significantly from the issues presented or anticipated in this report, including, among others, changes in general economic, political, government and business conditions. In the event of materializing any of these risks or uncertainties, or if underlying assumptions prove to be mistaken, future real facts may vary significantly. Itabo is not bound to update or correct the information contained in this report.
Please address any questions or comments related to this report to Investor Relations, email address: inversoraescac@aes.com
Andres Dominicana and Itabo Dominicana, Earning Release
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Q3 2012 Relevant Results Glossary of key terms Btu:
CDEEE: Coordinating Body:
Deregulated Users (NRU):
EAF: Effective Capacity: EFOR: Firm Capacity: FX:
British thermal units of measurement. It is a unit of heat in the English European System. Its equivalence in the International System (IS) is the Calorie. The prices of Natural Gas are usually expressed in US$/MMBtu. 1 Btu is equivalent to 252 calories. Corporación Dominicana de Empresas Eléctricas Estatales. Previously known as CDE. “OC” or Organismo Coordinador. Whose function is to plan and coordinate the economic operations of the power providers with those of the transmission, distribution and commercialization system that form the SENI.
The user of the electrical service which monthly demand exceeds the limits established by Superintendence in order to be classified as an unregulated user under the General Electricity Law.
Equivalent Availability Factor The currently available capacity, as of any date of determination, for generation of a unit or the amount of MW that a power generation unit can reliably generate. Equivalent Forced Outage Rate The amount of capacity assigned by the Coordinating Body to each power generation unit for being available to cover the demand in peak hours. Foreign exchange, a banking term for changing money from one currency into another.
GDP:
The gross domestic product (GDP) is one of the measures of national income and output for a given country's economy. GDP is defined as the total market value of all final goods and services produced within the country in a given period of time (usually a calendar year).
Henry Hub:
The specific pricing point for natural gas future contracts on the New York Mercantile Exchange, or NYMEX.
Installed capacity:
The amount of MW a turbine is designed to produce upon installment (name-plate capacity).
Liquid Natural Gas (LNG):
Platts:
Natural Gas processed to be transported in liquid form. It is the best alternative for transporting and storage because when transformed into liquid at atmospheric pressure and -163° C, the liquefaction process reduces the volume of gas by 600 times. Is a provider of energy information around the world that has been in business in various forms for more than a century and is now a division of The McGraw-Hill Companies. Products include Platts Energy Economist, industry news and price benchmarks for the oil, natural gas, electricity, nuclear power, coal, petrochemical and metals markets.
PPA:
Power Purchase Agreement.
SENI:
Sistema Eléctrico Nacional Interconectado or the National Interconnected Electrical System.
Andres Dominicana and Itabo Dominicana, Earning Release
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