Ege haina 3q 2011

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011

EGE Haina Reports Third Quarter 2011 Net Income of US$16.9 million; Revenues of US$175.3 million Special points of interest:  In July 2011, the Company completed the issuance of tranches 5 and 6 of the $50MM local bond.

 In July 2011, the Company

repaid at maturity US$6.0MM corresponding to the tranche No.3 of the $30MM local bond.

Santo Domingo, Dominican Republic, October 24th, 2011 – EGE Haina announced today third quarter 2011 net income of US$16.9 million, compared to a net income of US$11.8 million in the third quarter 2010, driven by an increase in energy sales price and higher demand. Third quarter 2011 revenues amounted to US$175.3 million, showing a 47% increase when compared to the same period of the previous year.

 As of September 30, 2011

EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 1.47:1.0 and 19.1:1.0, respectively.

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

 On October 11, 2011 EGE

Haina inaugurated the first wind farm in the Dominican Republic with an investment of US$90MM approximately.

The farm consists of 14 wind turbines with an installed capacity of 25MW. Commercial operation date expected by December 2011.

 In October 2011, the

Company initiated the issuance of tranches No. 7 to 10 of the $50MM local bond.

What’s inside  Quarter highlights

2

 External factors

2

 MD&A

3

 Financial Debt

5

 Collections

6

 Financial Results

7

3Q'11

3Q'10

Var %

YTD'11

YTD'10

Var %

Revenues

175,273

118,935

47%

456,363

307,964

48%

Operating Costs

148,815

101,931

46%

382,603

261,638

46%

Variable M argin

50,517

37,773

34%

138,799

108,389

28%

EBITDA¹

30,555

21,004

45%

86,005

58,348

47%

Operating Income

26,458

17,004

56%

73,760

46,326

59%

Net Income

16,921

11,810

43%

50,420

29,188

73%

Operating cash, net

11,018

(19,975)

-155%

(48,576)

58,160

-184%

Availability, %

96

92

4%

97

82

19%

Sales, GWh

647

609

6%

1,178

988

19%

Generation, GWh

486

458

6%

821

804

2%

Spot Purchases, GWh

161

151

6%

357

184

95%

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 SEPTEMBER 30, 2011 Quarter Highlights and Recent Developments In July 2011, the Company completed the issuance of tranches 5 and 6 of the $50MM local bond.

In July 2011, the Company repaid at maturity US$6.0MM corresponding to the tranche No.3 of the $30MM local bond.

As of September 30th, 2011 EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio and a Consolidated Interest Coverage Ratio of 1.47:1.0 and 19.1:1.0, respectively.

On October 11, 2011 EGE Haina inaugurated the first wind farm in the Dominican Republic with an investment of US$90MM approximately. The farm consists of 14 wind turbines with an installed capacity of 25MW. Currently in commissioning period. Commercial operation date expected by December 2011.

In October 2011, the Company initiated the issuance of tranches No. 7 to 10 of the $50MM local bond. As of the date of this report, US$13.3MM have been placed.

External Factors Average price of fuel for 3Q’11 was US$98.6 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, 2011, closed at RD$38.33/USD. Accumulated inflation in DR, as of September 30th, 2011 was 7.51%.2 According to the IMF, the DR GDP is estimated to grow between 4% and 5% in 2011.3

2 3

http://www.bancentral.gov.do http://www.bancentral.gov.do/noticias/avisos/aviso2011-09-15.pdf

2

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011 Consolidated Financial Results4 Revenues (US$ Thousands) Description Contracted Energy Contracted Capacity Others Total Revenues

3Q'11

3Q'10

Var %

YTD'11

YTD'10

Var %

161,939

105,382

54%

416,718

272,523

53%

12,927

12,544

3%

38,271

34,255

12%

406

1,010

-60%

1,374

1,186

16%

175,273

118,935

47%

456,363

307,964

48%

3Q’11 revenues increased by 47% when compared with the same period of the previous year (US$ 175.3 MM vs. US$ 118.9 MM). This positive variance is essentially driven by a 43.7% increment in the average energy sales price for the period (3Q’11 US$245.1/MWh vs 3Q’10 US$170.6/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 6.2% (3Q’11 646.9 GWh vs 3Q’10 608.9 GWh), mainly driven by an increase in the contracted capacity under CEPM PPA.

Operating Expenses (US$ Thousands) Description

3Q'11

3Q'10

Var %

YTD'11

YTD'10

Var %

Fuel Expense

81,639

49,604

65%

191,624

129,720

48%

Transmission Tolls

2,646

3,257

-19%

8,353

7,746

8%

Purchased Power

37,507

26,309

43%

110,519

57,946

91%

Frequency Regulation

2,964

1,992

49%

7,068

4,163

70%

Operation & M aintenance

7,542

8,053

-6%

20,742

25,315

-18%

General & Administrative

12,420

8,715

43%

32,052

24,726

30%

Depreciation

4,098

4,000

2%

12,245

12,022

2%

148,815

101,931

46%

382,603

261,638

46%

Total Operating Expenses

During 3Q’11 operating expenses were higher than 3Q’10 comparative figures by 46% or 46.9MM (US$148.8MM Vs. US$101.9MM).

This increase is mainly explained by: Fuel costs: 65% or US$32.0 million increase in fuel cost, essentially as a consequence of: a) higher HFO consumption by 122.1 thousand of BBLS at a higher price (3Q’11 573.7 thousand of BBLS at US$104.8/BBLS vs 3Q’10 451.6 thousand of BBLS at US$72.1/BBLS); b) higher Coal price (3Q’11 US$151.2/MT vs 3Q’10 US$99.7/MT); and c) US$38.1/BBLS increase in LFO price (3Q’11 US$131.1/BBLS vs 3Q’10 US$93.0/BBLS).

Purchased power: 43% or US$11.2MM increase is the result of an increase in the average purchase price for the period (3Q’11 US$221.9MWh vs 3Q’10 US$174.6/MWh), and higher spot energy purchases (3Q’11 154.2 GWh vs 3Q’10 152.1 GWh).

General and administrative expenses: 43% or US$3.7MM increase when compared to 3Q’10 mainly due to: i) US$2.3 MM higher technical advisory fee expense as a result of the increase in sales during 3Q’11; ii) US$0.5 MM higher office operation costs mainly due to an increment in development expenses; iii) US$0.3 MM higher professional services iv) US$0.2 MM higher regulatory payment v) US$0.2 MM higher labor cost head office, and vi) US$0.2 higher insurance expenses.

4

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (USGAAP). These consolidated financial statements include the accounts of EGE Haina, and those of its wholly owned subsidiary EGE Haina Finance Company. Intercompany balances and transactions have been eliminated in consolidation.

3

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011 Net Income Net income was US$16.9 MM in 3Q’11, compared to a net income of US$11.8 MM in the same period of the prior year. The positive variance of US$5.1 MM is explained by: Higher EBITDA by US$9.5 MM as explained in the paragraphs above.

US$3.2 MM lower interest expense, net.

US$0.3 MM higher other income mainly due to US$0.7 million insurance reimbursement of the 48 MVA transformer received during 2011, and the Euro forward loss recorded in 2010.

Partially offset by : US$6.2 MM higher income tax due to the increment in the statutory tax rate to 29% due to enactment of law No. 13911.

US$1.7 MM lower exchange gain as a result of exposure to the Euro in 2010.

Cash Flow Cash (used in) provided by operating activities Net cash provided by operating activities was US$11.0MM during the 3Q’11, compared to US$20.0 MM used in the same period of 2010. The US$31.0MM variance is explained by: a) US$12.8MM decrease in accounts receivable b) US$16.9MM higher accounts payable c) US$9.4MM of lower negative adjustments reconciling net income to the net cash used in operating activities, and d) US$5.1MM higher net income. The aforementioned is partially offset by: i) US$5.3MM decrease in other liabilities ii) US$4.2MM lower inventories; and iii) US$3.7MM higher prepaid expenses and other asset.

Cash used in investing activities Net cash used in investing activities was US$11.3MM during 3Q’11, compared to US$19.5MM used in the same period of the prior year. The US$8.2 variance is mainly due to lower short term investment restricted, partially offset by higher additions to property, plant and equipment during 3Q’11.

Cash provided by (used in) financing activities The positive variance of US$2.5MM in financing activities during 3Q’11, when compared to the same period of the prior year, is due to the net result of higher proceeds from long term debt by US$7.5MM in 3Q’11; partially offset by US$4.9MM higher repayment of long term debt during the same period of the prior year.

4

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011 Financial Debt as of September 30, 2011 FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS Instrument

Balance

144 A/ Reg S Senior Notes $30MM Local Bond-T4 $30MM Local Bond-T5 $50MM Local Bond - T1/2 $50MM Local Bond - T3/4 $50MM Local Bond - T5/6 Popular term loan program BHD DR term loan program BHD Panamรก term loan program

Interest Rate

9.50% 8.75% 7.75% 7.00% 7.00% 7.00% 6.50% 5.50% 5.50%

Repayment schedule Bullet payment April 2017 Bullet payment April 2012 Bullet payment Dec 2012 Bullet payment May 2016 Bullet payment June 2016 Bullet payment July 2016 Monthly - ending Nov 2015 Monthly - ending March 2016 Monthly - ending March 2016

8.72% 4.87 232.8

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

180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0

Interest type

164.9 Fixed 6.0 Fixed 6.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 12.1 Variable (DR US$) 12.0 Variable (DR US$) 1.9 Variable (DR US$)

Total Debt vs Financial Assets

2011

2012

2013

2014

Cash on hand

2015

2016

2017

Debt

Financial Expenses (US$ Thousands) Description

3Q'11

3Q'10

YTD'11

YTD'10

Interest on Senior Notes

(4,307)

(4,307)

(12,921)

(12,878)

Interest on Long-Term Debt

(1,294)

(707)

(2,974)

(2,265)

(37)

(69)

(95)

(417)

Financial Expenses

Interest on Payables to Power Vendors Amortization of Deferred Charges Capitalized Interest Other Financial Expenses

1,452 65

572

13 (864) 3,918

(522) (1,250) 1,473

(40)

(69)

(67)

(4,216)

(4,969)

(12,897)

(15,509)

2,876

1,259

6,826

4,465

Interest on Short-Term Investments

766

254

1,217

393

Interest on Long-Term Investments

462

255

909

1,147

Other Financial Income

163

5

183

1,246

Financial Income: Interest on Trade Accounts Receivable

4,267 Total Financial Expenses, Net

51

1,773

9,135

7,251

(3,196)

(3,762)

(8,258)

5

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011 Collections Cash Collection rate from distributions companies for 3Q’11 was 80% as compared to the 67% level of last year’s same quarter. The positive variance is the result of higher cash collections from Edenorte and Edesur.

Discos Cash Collections Vs Billings

152% 126% 96%

82%

80%

64% 67%

60% 39%

43%

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

Operational Statistics Description

3Q'11

3Q'10

Var.%

YTD'11

YTD'10

Var.%

Heat Rate, Btu/KWh

9,886

9,725

1.7%

9,633

9,557

0.8%

Availability, %

95.9

92.1

4.1%

97.3

81.8

18.9%

Forced Outage Rate, %

2.2

3.6

-38.9%

0.7

3.9

-82.1%

Installed Capacity, M W

599

599

0.0%

599

599

0.0%

Effective Capacity, M W

547

547

0.0%

547

547

0.0%

Firm Capacity, M W

306

285

7.2%

312

292

7.1%

Energy Balance

580 430

GWh

280 130 (20) (170)

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q'11

2Q'11

3Q'11

(112)

(149)

(130)

(101)

(53)

(131)

(151)

(219)

(178)

(179)

(161)

GWh - Sales

457

478

514

507

483

505

609

582

566

613

647

GWh - Generation

346

330

384

406

430

375

458

363

387

434

486

GWh - Spot Purchase

6

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011 UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2011 AND DECEMBER 31, 2010 Amounts in thousands of US$ Sep-11 Assets: Current Assets: Cash and cash equivalents Short term investment Accounts receivable Accounts receivable related parties Inventory Prepaid expenses and other Deferred income tax Total current assets Deposits in banks, restricted Property, plant and equipment Intangible assets, net Other assets Total Assets Liabilities and shareholders' equity: Current liabilities: Line of credit Current portion of long-term debt Accounts payable Accounts payable to related parties Dividends payable Income tax payable 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 Unrealized gain on bonds available Total shareholders' equity Total liabilities and shareholders' equity

Dec-10

67,232 483 241,386 6,627 35,347 15,907 530 367,512

110,924 11,479 103,846 6,384 31,643 18,651 540 283,467

7,831 292,233 6,882 12,500 686,958

7,831 276,659 7,512 7,916 583,385

11,885 39,709 1,755 1 19,796 13,336 86,482

5,000 14,600 23,351 1,150 5,701 6,912 56,714

220,917 15,446 3 322,848

186,967 15,504 19 259,204

289,000 14,941 91,201 (31,032) 364,110

289,000 13,464 52,258 (31,032) 491 324,181

686,958

583,385 7

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2011 AND 2010 Amounts in thousands of US$ Three month periods ended September 30, 2011

Nine month periods ended September 30,

2010

2011

2010

161,939

105,382

416,718

272,523

12,927

12,544

38,271

34,255

406

1,010

1,374

1,186

175,273

118,935

456,363

307,964

Fuel Transmission

81,639 2,646

49,604 3,257

191,624 8,353

129,720 7,746

Purchased power

37,507

26,309

110,519

57,946

2,964

1,992

7,068

4,163

7,542 12,420 4,098 148,815

8,053 8,715 4,000 101,931

20,742 32,052 12,245 382,603

25,315 24,726 12,022 261,638

26,458 51 123 (291) 26,341

17,004 (3,196) 1,850 (627) 15,031

73,760 (3,762) 175 400 70,573

46,326 (8,258) (139) (1,180) 36,749

(9,025) (395)

(2,053) (1,168)

(19,931) (222)

(4,897) (2,664)

16,921

11,810

50,420

29,188

Revenues Energy Capacity Others

Operating costs

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

8

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 2011 UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2011 AND 2010 Amounts in thousands of US$ Three month periods ended September 30, 2011 Net income Adjustments to reconcile net income to the net cash (used in) provided by operating activities: Gain on sale of fixed asset Net foreign exchange loss Deferred income tax Depreciation and amortization Gain on liability extinguishment Financial expenses (income) Forward contracts Put option Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Payable to related parties Other liabilities

2010

Nine month periods ended September 30, 2011

2010

16,921

11,810

50,420

29,188

395 4,098 4,279 -

(1,341) 1,168 4,000 (5,066) 622

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

(1,341) 2,664 12,022 3,176 507 622

(36,261) 2,846 (3,052) (1,440) 22,466 66 700

(49,023) 7,089 (763) (1) 5,393 175 5,962

(140,882) (6,641) 5,181 (4,582) 33,334 605 (1,065)

2,926 1,190 2,244 (27) 4,489 110 390

11,018

(19,975)

(48,576)

58,160

Sale of property, plant and equipment Advance payments of property, plant and equipment Additions to property, plant and equipment Long-term investments Short-term investments restricted Proceeds from available-for-sale securities Net cash used in investing activities

(11,300) (11,300)

(55) (1,564) 3,294 (19,043) (2,161) (19,529)

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

(3,482) (6,277) 3,294 (19,043) 9,159 (16,349)

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

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

(2,500) (2,500)

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

5,000 (7,500) (10,000) (30) (12,530)

(268)

(42,004)

(43,692)

29,281

67,500

110,833

110,924

39,548

67,232

68,829

67,232

68,829

728 474

945 2,815

3,242 872

19,620 2,868

Net cash provided by (used in) operating activities

Net (decrease) 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

9

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT SEPTEMBER 30, 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. EGE Haina had contracted approximately 86% of its power generation with three State owned distributors, and approximately 14% with a related operating company. For more information, visit the Company's Web site at www.egehaina.com.

Caution Concerning Forward-Looking Statements: This report may contain “forward-looking statements”- that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” believe,” “seek,” or “will”. Forward-looking statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of the Company may differ materially from those expressed or implied by such forward-looking statements and assumptions. For us, particular uncertainties that could adversely or positively affect our future results include, but are not limited to: changes in general economic, political, governmental and business conditions; the behavior of financial markets; changes in commercial market regulations. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. EGE Haina assumes no obligation and does not undertake to update forward-looking statements.

Investor Contact: Please address any questions or comments related to this report to our investor’s e-mail: hainainvestors@egehaina.com.

10