Ege haina 3q 2008

Quarterly Financial Report September, 2008

EGE Haina Reports Third Quarter 2008 Earnings of US$19.4 million; Revenues of US$146.2 million, up 50% Santo Domingo, Dominican Republic, December 8th, 2008 – EGE Haina announced today third quarter earnings of US$19.4 million, up 61% from the third quarter 2007, driven primarily by an increase in operating income. Third quarter 2008 revenues were US$146.2 million, showing a 50% increase when compared to revenues for the same period of the previous year.

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

3Q'08

3Q'07

Var %

YTD'08

YTD'07

Var %

Revenues

146,176

97,686

50%

368,014

241,314

53%

Operating Costs

121,639

80,510

51%

309,482

212,507

46%

Variable Margin

39,978

34,369

16%

104,734

84,994

23%

EBITDA

28,960

21,643

34%

71,475

48,266

48%

Operating Income

24,537

17,176

43%

58,532

28,807

103%

Net Income

19,441

12,073

61%

41,206

16,476

150%

Operational cash, net

(6,362)

2,715

-334%

(4,425)

(16,709)

74%

Availability, % Sales, GWh

94 588

97 599

-3% -2%

92 1,648

97 1,628

-5% 1%

Generation, GWh

350

480

-27%

1,088

1,278

-15%

Spot Purchase, GWh

238

119

100%

561

354

59%

Quarter Highlights and Recent Developments In August, 2008 the Company entered into a power sales agreement with Consorcio Energético Punta Cana Macao S.A. (CEPM). Through the aforementioned, the Company committed to sell 50MW and associated energy over an eighteen (18) year period.

Related to the contract described above, three engines form Sultana Barge were disconnected from the national interconnected system and will be fully dedicated to sell electricity to CEPM in accordance with the terms of the agreement.

In September, 2008 the Company entered into a letter of intent with Vestas Argentina, S.A. to acquire 25 wind turbine generators for the Juancho Los Cocos project for a total purchase price of €53,212,791. Related to this contract, the Company made a down-payment for an amount of €10,642,558 (20% of the total purchase price) as a retention fee.

On September 17th, 2008 the Sultana and Barahona plants were declared commercially unavailable due to lack of fuel.

Both units were synchronized with the national interconnected system on September 21st.

On September 22nd, 2008 the Company collected the total amount lent to CEPM by US$18.3 million.

On October 23rd, 2008 the Company paid the third interest coupon under the US$175 million senior notes.

On October 29th, 2008 Ede Este and EGE Haina signed a contract suspension agreement for the PPA signed in 1999 between the parties. The suspension is effective November 1st and will last until EDE Este pays in full its current outstanding electricity bills with EGE Haina. As per conditions of the agreement, EGE Haina will continue to receive the revenues of pledge customers and credit card receipts for approximately US$6.0 million on a monthly basis.

On November 26th, 2008 the Company entered into a Letter of Credit (LC) with Citibak for an amount up to US$3,014,000, in favor of Carbon and Minerals, LLC (coal supplier). The LC expires on September 1st, 2009 and is collateralized with a time deposit held at the Citibank.

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Quarterly Financial Report September, 2008

External Factors 30 25 20 15 10 5 -

During the quarter, fuel prices started to decline reaching a price of US$71.15 /Bbl for Platt’s US Gulf Coast HFO #6, 3% Sulfur (fuel used to index the tariffs under contract and for purchases in the international markets).

Exchange rate as of September 30th, 2008, closed at RD$35.13/USD.

Q1

Accumulated inflation as of September 30th, 2008, was 10.76%.

Q2

Q3

Q4

Q1

Q2

2006

Q3

Q1

2007

Q2

Q3

2008

PLATTS US$/MMBTU CARBON US$/MMBTU

GDP grew 5.4% as of September 30th, 2008.

Q4

LFO US$/MMBTU NG US$/MMBTU

Consolidated Financial Results1 Revenues (US$ Thousands) Description Contracted Energy Contracted Capacity Others Total Revenues

3Q'08

3Q'07

Var %

YTD'08

YTD'07

Var %

136,566

89,028

53%

341,346

215,817

58%

9,179

8,659

6%

26,237

25,486

3%

432

(1)

-100%

432

11

100%

146,176

97,686

50%

368,014

241,314

53%

3Q’08 revenues exceeded 3Q’07 comparative figures by 50% (US$ 146.1MM Vs. US$ 97.6MM). Revenues were positively impacted by the prices of fuel, and negatively impacted by a decrease in the total quantity of energy sold (595 GWh in 3Q’07 Vs. 556 GWh in 3Q’08).

The positive variance in energy sales is mainly driven by a 65.02% increase in the energy sales price (US¢23.45 per KWh vs.

US¢14.21 per KWh 3Q’08 Vs 3Q’07, respectively).

Operating Expenses (US$ Thousands) Description

3Q'08

3Q'07

Var %

YTD'08

YTD'07

Var %

Fuel Expense

44,944

39,491

14%

120,759

92,254

31%

Transmission Tolls

3,044

3,984

-24%

10,264

11,857

-13%

Purchased Power

51,873

16,020

224%

116,636

42,595

174%

-

100%

Capacity Rebilling

883

100%

883

Frequency Regulation

291

403

-28%

1,823

1,212

Regulatory Payment

849

538

58%

2,056

1,284

60%

4,314

2,882

50%

10,858

7,118

53% -9%

Technical Advisory Fee

-

50%

Labor Cost

3,043

3,453

-12%

9,988

10,929

Operating & Maintenance

5,898

5,941

-1%

17,508

16,204

8%

General & Administrative

2,076

3,333

-38%

5,764

9,594

-40%

Book Depreciation

4,045

3,989

1%

12,010

12,021

0%

378

478

-21%

933

7,438

-87%

80,510

51%

309,482

212,507

46%

Amortization Total Operating Expenses

121,639

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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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Quarterly Financial Report September, 2008

During 3Q’08 operating expenses surpassed 3Q’07 comparative figures by 50% (US$121.6 MM Vs. US$80.5 MM). The Company changed the source of its sales from own generation to purchased power and energy. Therefore, the rise in operational expenses can be broken down as the net result of the following: Own generation: 14% increase in fuel expenses (US$44.9 MM Vs US$39.4 MM). The increase in fuel costs by 71.89% is partially offset by lower volume of fuel consumed (29.32% decrease).

Purchased power: The 224% increase (US$51.8MM Vs US$16.0MM) resulted from the combination of i) higher average purchase price (US$222.39 per MWh in 3Q’08 Vs US$129.66 MWh in 3Q’07) and ii) higher volume of electricity purchases in the spot market and through PPA’s (236.67 GWh in 3Q’08 Vs 119.32 GWh in 3Q’07).The total energy purchased in spot during the 3Q’08 includes the energy purchased under contract to AES Andres.

General and Administrative: In the 3Q’08 this item presented savings by US$1.2 million when compared to the same period of the prior year. Such positive impact is the result of not having an asset tax paying position in 2008.

As a percentage of revenues, Operating expenses represented 83% and 82% in the 3Q’08 and 3Q’07, respectively.

Other Expenses (US$ Thousands) Description

3Q'08

3Q'07

Var %

YTD'08

YTD'07

Var %

990

2,197

-55%

5,602

5,563

1%

Other Expense (Income)

1,753

1,397

26%

5,798

3,308

75%

Exchange Loss (Gain)

(369)

123

-401%

(250)

(360)

-31%

3,716

-36%

11,150

8,511

31%

Interest and Fee

Total Other expenses

2,374

Net Income Net Income increased to US$19.4 million in the 3Q’08, from US$12.0 million in the same period of 2007. As a percentage of revenues, net income increased 0.9% in the 3Q’08, when compared with the same period of the previous year. The main variances impacting net income can be summarized as the net result of: i) US$5.6 million of higher variable margin, ii) US$1.7 million of lower G&A expenses, iii) US$1.2 million of lower net interest expenses, and iv)US$1.3 million of higher tax expenses.

Cash Flow Cash provided by (used in) operating activities Net cash used in operating activities was US$6.4 million during the 3Q’08, compared to a net cash provided by US$2.7 million in the same period of 2007. The most significant factors that increased the use of cash from operating activities were: a) US$17.9 million increase of accounts receivable; b) US$13.8 million increase in inventory; c) US$1.9 million increase in prepaid expenses; d) US$2.0 million decrease in accounts payable to related parties and other liabilities; and e) US$1.4 million of higher negative adjustments reconciling net income to the net cash used in operating activities. These negative factors were partially offset by i) US$7.5 million increase in net income; and ii) US$20.4 million increase of accounts payable.

Cash provided by investing activities Net cash provided by investing activities was US$36.0 million in the 3Q’08, compared to a net cash used in 3Q’07 by US$9.6 million. The most significant factors that decreased the use of cash from investing activities were: (i) The company used cash in the amount of US$17.5 million in the acquisition of fixed assets; (ii) the cancellation of short term investments provided US$44.4 million; and (iii) during the 3Q’08 the Company received the payment from money lent to CEPM by US$19.3 million.

Financing activities Net cash used in financing activities was US$2.0 million in the 3Q’08, compared to a net cash provided by US$2.8 million in the same period of the prior year. The Company repaid US$2.0 million in short term debt during the 3Q’08, while in 3Q’07 the Company shows an increase by US$2.8 million through from the incurrence of short term debt.

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Quarterly Financial Report September, 2008

Financial Debt (US$ millions) Description

Sep'08

Dec'07

Var %

Short Term

3,701

12,441

Long Term

175,000

175,000

0%

Total Financial Debt

178,701

187,441

-5%

Local currency

0%

0%

Foreign currency

100%

100%

Fixed rate

99.7%

99.5%

Variable rate

0.3%

0.5%

Financial Ratios

-70%

3Q'08

3Q'07

Dec'07

Interest Coverage Ratio (No less than 2.5:1)

5.04

6.73

3.80

Net debt to EBITDA Ratio (No greater than 3.5:1)

1.30

1.91

1.51

Collections Collections versus the quarterly invoices equaled 89% as compared to the 72% level of last year’s same quarter. In the 3Q’08 distribution companies have fallen more than 90 days in payments of their monthly power invoices, caused by a short fall of funds from the subsidy of the central government to cover increasing fuel prices.

During the 3Q’08, the three distribution companies have sustained their energy supply at 74% of the total demand. Naturally, this is not met by a proportional increase in collections from customers, thus creating the delay in payment to generators, including EGE Haina. The Dominican government, via CDEEE, during the course of the 3Q’08 was seeking to increase the subsidy funding from the national treasury in order to reestablish the balance of payments between generators and distributors. International agencies such as World Bank, IDB and IMF are actively working along with the Dominican Government to fund energy theft reduction programs, clearly demonstrating that the principal solution to the Dominican electrical problem lies in the resolution of the energy theft.

Unofficially, the deficit, and therefore, the subsidy estimated for 2008 equals US$1,000 million. The government budgeted US$650 million for this purpose.

Collections Vs Billings Q1 06 - Q3 08 140% 120% 100% 80% 60% 40%

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 4Q07 1Q08 2Q08 3Q08

Series 1 105% 74% 81% 70% 129% 83% 72% 92% 92% 95% 108% 89%

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Quarterly Financial Report September, 2008

Operational Statistics Description

3Q'08 9,681

3Q'07 9,698

Availability, %

93.7

96.9

-3.3%

Forced Outage Rate, %

1.4

0.8

75.0%

Installed Capacity, MW

599

599

0.0%

Effective Capacity, MW

547

547

0.0%

Firm Capacity, MW

326

336

-3.0%

Heat Rate, Btu/KWh

Var % -0.2%

Energy Balance 580

GWh

430 280 130 (20) (170) 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Spot

16

(78)

Contracts

471

547

551

531

490

539

596

544

503

558

588

Generation

486

469

420

386

389

409

480

395

377

361

350

(133) (152) (105) (132) (116) (149) (126) (197) (237)

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Quarterly Financial Report September, 2008

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A, S.A, U AUDITED CO DE SED CO SOLIDATED BALA CE SHEETS AS OF SEPTEMBER 30, 2008 A D DECEMBER 31, 2007 Amounts in US$ Thousands

Sep-08 Assets: Current Assets: Cash and cash equivalents Investments in certificate of deposit Accounts receivable Inventory Prepaid expenses and other Deferred income tax Total current assets Deposits in banks, restricted Long term receivables Property, plant and equipment Intangible assets, net Other assets Total Assets Liabilities and shareholders' equity: Current liabilities: Short-term debt Current portion of long-term debt Accounts payable Accounts payable to related parties Other Liabilities Total current liabilities Long-term debt, Deferred income tax Other non-current liabilities

Shareholders' equity: Common stock Legal Reserve Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity

Dec-07

42,167 867 185,686 33,182 7,097 5,177 274,176

47,053 20,000 110,758 18,250 4,106 5,177 205,344

8,313 36,663 271,446 11,032 162 601,792

8,313 44,380 261,359 11,965 134 531,495

3,200 501 34,332 20,715 18,645 77,392

11,440 1,002 12,618 17,630 7,277 49,967

175,000 7,929 351 260,672

175,000 6,273 341 231,581

289,000 8,698 74,454 (31,032) 341,120

289,000 8,698 33,248 (31,032) 299,914

601,792

531,495

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Quarterly Financial Report September, 2008

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A. S.A., U AUDITED CO DE SED CO SOLIDATED I COME STATEME TS FOR THE THREE A D I E MO TH PERIODS E DED SEPTEMBER 30, 2008 A D 2007 Amounts in US$ Thousands

Three month period ended September 30, 2008 2007

ine month period ended September 30, 2008 2007

Revenue Capacity Energy - contractual Other Fuel Storage

9,179 136,566 125 307

8,659 89,028 (1) -

26,237 341,346 125 307

25,486 215,817 4 7

Total revenue

146,176

97,686

368,014

241,314

44,944 7,714 3,044 50,792 1,081 883 291 849 4,314

39,491 7,922 3,984 14,653 1,367 403 538 2,882

120,759 23,573 10,264 113,170 3,466 883 1,823 2,056 10,858

92,254 22,481 11,857 37,819 4,776 1,212 1,284 7,118

113,912 32,264

71,239 26,447

286,852 81,161

178,801 62,513

3,304 4,423 7,727

4,804 4,467 9,271

9,686 12,943 22,630

14,247 19,459 33,706

Operating Income

24,537

17,176

58,532

28,807

Other income (expense) Other income (expense) Interest income Interest expense Foreing currency gain (loss) Income tax Total other income (expense)

(1,753) 4,542 (5,532) 369 (2,722) (5,096)

(1,397) 2,920 (5,117) (123) (1,386) (5,103)

(5,798) 9,520 (15,121) 250 (6,176) (17,325)

(3,308) 7,170 (12,733) 360 (3,819) (12,331)

et Income

19,441

12,073

41,206

16,476

Operating Costs Fuel Operation and maintenance Transmission Tolls Purchase of Energy Purchase of Capacity Capacity Rebilling Frequency Regulation Regulatory Payment Technical Advisory Fee Total operating costs Operating Margin Operating Expenses Administrative expenses Depreciation and amortization Total operating expenses

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Quarterly Financial Report September, 2008

EMPRESA GE ERADORA DE ELECTRICIDAD HAI A. S.A., U AUDITED CO DE SED CO SOLIDATED CASH FLOW STATEME TS FOR THE THREE A D I E MO TH PERIODS E DED SEPTEMBER 30, 2008 A D 2007 Amounts in US$ Thousands Three Months Ended

ine Months Ended

September 30,

September 30,

2008 Cash flows from operating activities Net income Adjustments to reconcile the net income to net cash provided by (used in) operating activities: Deferred Income Tax Depreciation and amortization Gain on Sales of fixed assets Changes in current assets and liabilities: Accounts receivable Inventories Prepaid expenses Other Assets net Accounts payable and accrued expenses Payables to related parties Other Liabilities Other Non Current Lialibities Net cash provided by (used in) operating activities

2007

2008

2007

19,441

11,902

41,206

16,476

(31) 4,423 -

1,387 4,467 -

1,656 12,943 -

3,834 19,459 (325)

(48,590) (10,322) (1,387) (28) 19,810 2,940 7,372 10 (6,362)

(30,727) 3,459 469 39 (597) 6,464 5,310 542 2,715

(74,929) (16,309) (2,991) (28) 20,146 2,505 11,367 9 (4,425)

(19,322) (6,750) (1,677) (13,766) (2,324) (16,235) 3,544 377 (16,709)

Net changes in bank deposits restricted and unrestricted Purchases of property, plant and equipment Sales of Property, plant and equipment Changes in Short Term Investment Changes in Long Term Receivables Net cash provided by (used in) investing activities

(17,498) 34,193 19,347 36,042

(37) (10,247) 698 (9,586)

(18,569) 19,132 7,717 8,280

3,632 (578) 325 (70,293) 698 (66,216)

Cash flows from financing activities Net changes in Short Term Debt Repayment of Long Term Debt Proceeds from Long Term Debt Net cash (used in) provided by financing activities

(2,046) (2,046)

2,834

2,834

(8,240) (501) (8,741)

(1,748) (3,368) 86,587 81,471

27,634 14,533

(4,037) 8,995

(4,886) 47,053

(1,454) 6,412

42,167

4,958

42,167

4,958

Cash flows from investing activities

Net increase (decrease) in cash Cash at the beginning of the period Cash at the end of the period

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Quarterly Financial Report September, 2008

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, currently operating 11 electric power generation units at six plants, consisting of San Pedro, Sultana del Este – barge, Haina and Barahona in the southern part of the country, Puerto Plata in the northern and Pedernales in the western part of Santo Domingo. EGE Haina has contracted approximately 98% of its power generation to the three Dominican Republic distributors. 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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