Ege haina 4q 2012

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012

EGE Haina Reports Fourth Quarter 2012 Net Income of US$16.5 million; Revenues of US$182.5 million Special points of interest:

Santo Domingo, Dominican Republic, May 1, 2013 – EGE Haina announced today a Net Income of US$16.5 million for the fourth quarter of 2012, compared to a

 In January 2013, EGE Haina

inaugurated the expansion of the wind farm Los Cocos with an investment of US$103.4MM. The project consisted of the installation of 26 wind turbines with an installed capacity of 52MW.

Net Income of US$15.0 million in the fourth quarter of 2011, driven by a higher demand; partially offset by a decrease in the average energy sales price.

Fourth quarter 2012 revenues amounted to US$182.5 million, showing a 13% increase when compared to the same period of the previous year.

 In January 2013 and

November 2012, the Company paid dividends in the amounts of US$12MM and $2.2MM, respectively.

Financial and Operational Summary

 As of December 31st, 2012,

EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 2.28:1.0, a Consolidated Interest Coverage Ratio of 9.31:1.0 and Minimum Debt Service Coverage ratio of 4.1:1.0.

 During the fourth quarter of

2012, the Company received disbursements for a total of $74MM under the Senior Syndicated and Secured Loan Agreement with Citibank.

Additionally, in January 2013, the Company received disbursements for a total of $19MM, completing the total amount of the loan agreement.

(US$ Thousands, except for Operational data) Description

4Q'12

4Q'11

Var %

FY'12

FY'11

Var %

Revenues

182,535

161,178

13%

677,186

617,540

10%

Operating Costs

158,623

139,035

14%

565,634

521,645

8%

Variable M argin

52,120

47,990

9%

220,401

186,789

18%

EBITDA¹

29,125

26,245

11%

132,430

112,242

18%

Operating Income

23,912

22,143

8%

111,552

95,895

16%

Net Income

16,507

15,054

10%

75,437

65,470

15%

(12,717)

89,649

-114%

86,909

41,072

112%

Availability, %

97

95

3%

92

98

-6%

Sales, GWh

706

635

11%

2,607

2,460

6%

Generation, GWh

481

420

15%

1,749

1,728

1%

Spot Purchases, GWh

99

213

-53%

434

723

-40%

Other Purchases, GWh

125

2

6337%

424

10

4318%

Operating cash, net

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, 2012 Quarter Highlights and Recent Developments 

On April 30th, 2013, a dividend payment amounting to US$14MM was approved in the General Shareholders’ Meeting of the Company.



On April 17th, 2013, the Company signed a promissory note with The Bank of Nova Scotia in the amount of US$13MM, with an interest rate equivalent to one (1) month LIBOR plus 3% p.a., calculated over a 360 days base year. This promissory note matures in October 2013.



On March 5th, 2013, the Company signed a promissory note with The Bank of Nova Scotia, in the amount of US$12MM, with an interest rate equivalent to one (1) month LIBOR plus 3% p.a., calculated over a 360 days base year. This promissory note matures in August 2013.



In January 2013, EGE Haina inaugurated the expansion of the Los Cocos wind farm with an investment of US$103.4MM. The project consisted of the installation of 26 wind turbines with an installed capacity of 52MW.



In January 2013 and November 2012, the Company paid dividends in the amounts of US$12MM and $2.2MM, respectively.



As of December 31st, 2012, EGE Haina reported a Consolidated Net Debt to Consolidated EBITDA Ratio of 2.28:1.0, a Consolidated Interest Coverage Ratio of 9.31:1.0 and Minimum Debt Service Coverage ratio of 4.1:1.0.



As of December 31st, 2012, Quisqueya II project had a construction progress of approximately 46%. Key milestones archived include: 100% of land preparation, 49% of construction the Substation, 62% of HFO Pipeline, 60% foundations and structure and 65% of well water network.



During the fourth quarter of 2012, the Company received disbursements for a total of $74MM under the Senior Secured Syndicated Loan Agreement with Citibank. Additionally, in January 2013, the Company received disbursements for a total of $19MM, completing the total amount of the loan agreement.

External Factors Average price of fuel for 4Q’12 was US$94.26 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, 2012, closed at RD$40.28/USD. Accumulated inflation in DR, as of December 31st, 2012 was 3.91%.2

2

http://www.bancentral.gov.do

2

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012 Consolidated Financial Results3 Revenues (US$ Thousands) Description Contracted Energy Contracted Capacity Others Total Revenues

4Q'12

4Q'11

Var %

FY'12

FY'11

Var %

169,046

147,506

15%

621,379

564,224

10%

12,918

13,279

-3%

53,534

51,549

4%

571

393

45%

2,273

1,767

29%

182,535

161,178

13%

677,186

617,540

10%

4Q’12 revenues increased 13% when compared with the same period of the previous year (US$182.5 MM vs.

US$161.2MM). This positive variance is essentially driven by a higher demand in 11.2% (4Q’12 706.3 GWh vs 4Q’11 635 GWh), mainly as a result of the reimplementation of the remaining 50MW under EDE ESTE’s PPA, as well as an increase in the contracted capacity under the CEPM PPA; partially offset by a 5.6% decrease in the average energy sales price for the period (4Q’12 US$240.6/MWh vs 4Q’11 US$245.6/MWh).

Operating Expenses (US$ Thousands) Description

4Q'12

4Q'11

Var %

FY'12

FY'11

Var %

Fuel Expense

67,023

63,553

5%

238,185

255,177

-7%

Transmission Tolls

1,777

2,914

-39%

9,437

11,267

-16%

Purchased Power

59,459

44,162

35%

200,600

154,680

30%

Frequency Regulation

2,156

2,559

-16%

8,563

9,627

-11%

Operation & M aintenance

6,896

9,054

-24%

31,717

29,797

6%

General & Administrative

16,099

12,690

27%

56,254

44,749

26%

Depreciation

5,213

4,103

27%

20,878

16,348

28%

158,623

139,035

14%

565,634

521,645

8%

Total Operating Expenses

During 4Q’12 operating expenses were higher than 4Q’11 comparative figures by 14% or US$19.6MM. This increase is mainly explained by:



Purchased Power: 35% or US$11.3MM higher than 4Q’11, driven by an increase in demand by 71.2 GWh, which was not fully satisfied with our own generation, as well as the Flow Gate affecting the value of Barahona’s and Los Cocos’ injections during 4Q’12.



Fuel Expense: 5% or US$3.5MM higher than 4Q’11, essentially as a consequence of higher fuel consumption driven by an increase in generation during the period (4Q’12 481 GWh vs 4Q’11 420 GWh); partially offset by lower HFO and coal prices.

General and administrative expenses: 27% or US$3.4MM increase when compared to 4Q’11 mainly due to: i)US$1.6MM higher minimum tax expenses, ii) US$1.4MM higher technical advisory fee expense and iii) US$0.4MM higher professional services related to research and development and legal consultants.

Operation & Maintenance: 24% or US$2.2 MM lower than 4Q’11, due to the maintenance performed to Barahona power plant during 4Q’11 and lower labor cost, due to the capitalization of labor costs directly attributable to Los Cocos II and Quisqueya II projects during 2012.

  

Depreciation: 27% or US$1.1MM higher than 4Q’11, due to the depreciation of Los Cocos I Wind Farm, inaugurated in December 2011.

3

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 DECEMBER 31, 2012

Net Income Net income was US$16.5 MM in 4Q’12, compared to a net income of US$15.0MM in the same period of the prior year.

The positive variance of US$1.5 MM is explained by:



Higher EBITDA by US$ 2.9 MM as explained in the paragraphs above.



US$1.0 MM higher exchange gain, mainly due to the devaluation of the Dominican Peso (RD$) affecting positively our net liability exposure in such currency.



US$0.2 MM lower income tax.



US$0.2 MM higher other income.

Partially offset by :



US$1.7 MM higher interest expense, net, mainly due to higher financial interests driven by an increase in debt and an increase in commercial interest expenses due to the increment in accounts payable to power vendors.



US$1.1 MM higher depreciation expense, due to the depreciation of Los Cocos I Wind Farm, inaugurated in December 2011.

Cash Flow Cash provided by operating activities Net cash used in operating activities was US$12.7 MM during the 4Q’12, compared to US$89.7 MM provided in the same period of 2011. The US$102.4MM variance is explained by: a) US$143.3MM higher accounts receivable, b) US$6.1 MM higher inventories and c) US$5.3 MM lower other liabilities. The aforementioned is partially offset by i) US$34.4MM higher accounts payable, ii) US$15.4MM decrease in prepaid expenses, iii) US$1.4 MM higher net income and iv) US$1.1MM of higher positive adjustments reconciling net income to the net cash provided in operating activities.

Cash used in investing activities Net cash used in investing activities was US$150.8 MM during 4Q’12, compared to US$17.6 MM used in the same period of the prior year. The US$133.2 MM variance is mainly due to higher additions to property, plant and equipment by $114.3 MM during 4Q’12 and an increase in restricted cash by US$20.4 MM during 4Q’12 in order to fund the escrow account under the construction agreement with Wärtsilä; partially offset by US$1.5 MM of disbursement of notes receivable during 4Q’11.

Cash provided by financing activities The positive variance of US$20.0 MM in financing activities during 4Q’12, when compared to the same period of the prior year, is due to higher proceeds from long term debt by US$42.4 MM, US$5.6MM lower repayment of line of credit and long term debt and US$2.0 lower dividends payment during 4Q’12; partially offset by US$30.0 lower proceeds from short term debt.

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012 Financial Debt as of December 31st, 2012 FINANCIAL DEBT GENERAL CONDITIONS AND RELEVANT STATISTICS Instrument

Balance

144 A Bond 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 BPD Panama term loan program BHD DR term loan program BHD Panamรก term loan program Citi Project Facilities Scotiabank Short Term Loan

Interest type

Interest Rate

164.9 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 10.0 Fixed 8.5 Variable (DR US$) 9.0 Variable (DR US$) 1.4 Variable (DR US$) 181.0 Variable (L3M + 5.75%, 6.25% floor) 30.0 Variable (LIBOR 1M + 3%)

9.50% 7.00% 7.00% 7.00% 6.00% 7.00% 5.91% 5.75% 5.50% 6.25% 3.21%

Repayment schedule Bullet payment April 2017 Bullet payment May 2016 Bullet payment June 2016 Bullet payment June 2016 Bullet payment Oct 2014 Bullet payment Oct 2016 Monthly - ending Nov 2015 Monthly - ending March & May 2016 Monthly - ending May 2016 Quarterly - ending March 2017 Bullet payment June 2012

Avg Life

4.33 3.42 3.50 3.50 1.83 3.84 1.09 1.35 1.36 3.11 0.50

7.29% 3.34 444.7

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

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

2013

2014

2015

Cash on hand

2016

2017

Debt

Financial Expenses (US$ Thousands) Description

4Q'12

4Q'11

2012

2011

Interest on Senior Notes

(4,332)

(4,307)

(17,253)

(17,228)

Interest on Long-Term Debt

(4,478)

(1,370)

(13,906)

(4,344)

Interest on Payables to Power Vendors

(1,558)

(525)

(6,275)

(512)

(146)

(698)

(1,939)

(1,562)

998

9,921

4,916

Financial Expenses

Amortization of Deferred Charges Capitalized Interest Other Financial Expenses

4,837 (421)

(123)

(879)

(192)

(6,098)

(6,025)

(30,331)

(18,922)

2,921

4,183

12,683

10,720

75

594

3,353

1,811

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

Total Financial Expenses, Net

11

(127)

-

909

64

59 13,499

3,007

4,650

16,100

(3,091)

(1,375)

(14,231)

(5,423)

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012

Collections Collection rate for 4Q’12 was 65% as compared to the 154% level of last year’s same quarter. A December 31, 2011 had only two invoices in arrears from the distributions companies, which was in compliance with the stand-by agreement with the IMF. A December 31, 2012 the Company had 3.5 invoices in arrears. Such deterioration is mainly driven by lower payments from DR Government to the Distros, as a result of the termination of the aforementioned stand-by agreement.

Discos Cash Collections Vs Billings 154%

152%

153%

126%

82% 96%

80% 74%

67%

65%

54% 38%

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

Operational Statistics Description

4Q'12

4Q'11

Var.%

FY'12

FY'11

Var.%

Heat Rate, Btu/KWh

9,540

9,313

2.4%

9,240

9,486

-2.6%

Availability, %

97.1

94.5

2.8%

91.7

97.9

-6.3%

Forced Outage Rate, %

1.2

0.6

100.0%

2.7

0.9

200.0%

Installed Capacity, M W

624

599

4.2%

624

599

4.2%

Effective Capacity, M W

547

547

0.0%

547

547

0.0%

Firm Capacity, M W

279

322

-13.3%

283

312

-9.2%

Energy Balance 580 430

GWh

280 130 (20)

(170)

1Q10

2Q10

3Q10

4Q10

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12

GWh - Spot Purchase

(53)

(131)

(151)

(219)

(178)

(179)

(153)

(213)

(84)

(134)

(117)

GWh - Sales

483

505

609

582

566

613

647

635

573

631

696

706

-

-

-

-

-

-

(8)

(2)

(71)

(97)

(131)

(125)

430

375

458

363

387

434

486

420

418

401

448

481

GWh - PPA Purchase GWh - Generation

(99)

6

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2012 AND 2011 Amounts in thousands of US$ 2012

2011

Assets: Current Assets: Cash and cash equivalents Restricted cash Short-term investment Accounts receivable Inventories Prepaid expenses Deferred income tax Other current assets Total current assets Restricted cash, long term Long term receivable Property plant and equipment, net Intangible assets Deferred charges, net Deferred tax asset Other assets Total assets Liabilities and Shareholders' Equity Current liabilities Short-term debt Current portion of long-term debt Accounts payable Payable to related parties Diviends payable Income tax payable Derivative financial liability Deferred tax liability Other liabilities Total current liabilities Long term debt Deferred income tax Derivative financial liability Other non-current liabilities Shareholders' equity: Common stock Legal reserve Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity

141,661 38,161 276,643 38,793 2,802 461 498,521

183,879 483 161,430 36,105 2,334 201 10,737 395,168

11,811 13,382 604,184 91 9,910 381 504 1,138,784

7,831 1,306 295,298 91 6,463 21,799 727,955

30,000 15,849 210,060 5,036 10,679 9,398 930 52 8,834 290,839

30,000 17,656 34,537 1,772 3 14,363 7,289 105,620

398,899 12,596 1,717 3 704,055

233,751 13,422 3 352,796

289,000 20,509 158,036 (32,815) 434,729

289,000 16,737 100,455 (31,032) 375,160

1,138,784

727,955

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EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTH PERIODS AND YEAR ENDED DECEMBER 31, 2012 AND 2011 Amounts in thousands of US$ Three month period ended December 31, 2012

2011

Year ended December 31, 2012

2011

Revenues Energy

169,046

147,506

621,379

564,224

12,918

13,279

53,534

51,549

571

393

2,273

1,767

182,535

161,178

677,186

617,540

Fuel

67,023

63,553

238,185

255,177

Purchased power Transmission

59,459 1,777

44,162 2,914

200,600 9,437

154,680 11,267

2,156

2,559

8,563

9,627

6,896 16,099 5,213 158,623

9,054 12,690 4,103 139,035

31,717 56,254 20,878 565,634

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

23,912 (3,091) 1,165 161 22,147

22,143 (1,375) 136 (31) 20,873

111,552 (14,231) 2,324 (78) 99,567

95,895 (5,423) 311 660 91,443

(5,354) (286)

(7,318) 1,499

(24,595) 465

(27,250) 1,277

Net income

16,507

15,054

75,437

65,470

Other comprehensive loss, net of tax: Cash flow hedge Unrealized loss on available-for-sale investments

(1,783) -

-

(1,783) -

(491)

Capacity Others

Operating costs

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

Compehensive income

14,724

15,054

73,654

65,470

8

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012 EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS AND YEAR ENDED DECEMBER 31, 2012 AND 2011 Amounts in thousands of US$ Three month period ended December 31, 2012 Cash flows from operating activities: Net income Adjustments to reconcile net income to the net cash (used in) provided by operating activities: Gain on sale of property plant and equipment Loss on asset dispossal Unrealized gain on available-for-sale investments Deferred income tax Depreciation Infeffectivenness on cash flow hedge Financial expenes Provision for doubful accounts Non-cash expenses Change in assets and liabilities: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Income tax payable Payable to related parties Other liabilities

2011

Year ended December 31, 2012

2011

16,507

15,054

75,437

65,470

(18) 286 5,212 355 (906) 69 186

(1) (41) (1,499) 4,103 1,369 114 -

(37) 204 (465) 20,878 355 4,957 176 186

(45) (1,277) 16,348 3,959 235 -

(50,149) (6,425) (995) (9,015) 36,791 1,359 169 (6,143)

93,197 (324) (5,941) (19,479) (34,812) 38,695 17 (803)

(123,058) (4,847) (468) (301) 118,915 (4,965) 3,264 (3,322)

(47,807) (6,965) (760) (24,061) 12,618 24,600 622 (1,864)

(12,717)

89,649

86,909

41,072

37 (130,498) (20,417) 119 (150,760)

(16,115) (1,500) (17,615)

37 (242,117) (49,972) (1,700) 356 8,314 (285,083)

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

74,000 (7,437) (2,000) (0) 64,562

(5,000) 30,000 31,618 (8,014) (4,000) 8 44,612

181,000 (17,658) (2,000) (5,386) 155,955

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

Net (decrease) increase in cash and cash equivalents

(98,915)

116,647

(42,218)

72,955

Cash and cash equivalents at the beginning of the period

240,576

67,232

183,879

110,924

141,661

183,879

141,661

183,879

Net cash (used in) provided by operating activities Cash flows from investing activities: Sale of property, plant and equipment Additions to property, plant and equipment Net changes in restricted cash Disbursement of notes receivable Collection of notes receivable Collection of restricted investments Sale of investment securities Net cash used in investing activities

Cash flows from financing activities: Repayment of line of credit Proceeds from short-term debt Proceeds from long-term debt Repayment of long-term debt Dividends Debt issuance costs paid Net cash provided by financing activities

Cash and cash equivalents at the end of the period

9

EMPRESA GENERADORA DE ELECTRICIDAD HAINA, S.A. FINANCIAL QUARTERLY REPORT DECEMBER 31, 2012

The consolidated financial statements presented herein have not been audited and were prepared in conformity with Generally Accepted Accounting Principles in the United States (USGAAP).

EGE Haina, the largest generator of electricity in the country, when measured by installed capacity, currently owns and operates seven (7) power plants throughout the country with an installed capacity of 528 MW - San Pedro de Macorís and Sultana del Este in the eastern part of the country, Haina and Barahona in the southern part of the country, Puerto Plata on the northern coast, and Los Cocos and Pedernales in the west. The power plant fleet consists of a number of oil and coal-fired boiler steam-turbine generators, diesel generators, a simple cycle gas turbine, and a 77 MW wind farm. EGE Haina had contracted approximately 84% of its power generation with three State owned distributors, and approximately 16% 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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