(AEN.L) Andes Energia PLC Buy/Sell

Operational highlights

During the period

After the period end

Luis Alvarez Poli, Chief executive Officer, said: "We are pleased with the progress we have made in the first six months of this year. The first new tariffs for the third review period have now been implemented and we continue to work towards advancing our oil and gas exploration interests and the development of our oil and gas exploration strategy. The ADR program has been established to broaden our existing shareholder base and increase the Company's visibility with investors in the US."

Enquiries:

Andes Energia Luis Alvarez Poli, Chief T: 020 7495 5326
Executive Officer
Nigel Duxbury, Finance Director
Arbuthnot Securities James Steel T: 020 7012 2000
Antonio Bossi
Bishopsgate Communications Maxine Barnes T: 020 7562 3350
Nick Rome

Note to Editors:

Andes is a Latin American energy group, with electricity distribution, hydro-electric power and oil and gas interests in Argentina. The Company's focus is on the Argentinean energy sector.

Chairman's review

First-half revenues increased to US$ 69.2 million compared to revenues of US$66.5 million for the equivalent period last year. EBITDA was US$7.2 million (6 months to 30 June 2008: US$8.8 million).

Although the gross profit has increased to US$17.8 million from US$16.1 million the increase in operating expenses resulted in an operating profit of US$3.2 million down from US$4.2 million for the equivalent period last year.

The finance costs for the year have been adversely impacted by the weakening of the AR$ against the US$, resulting in a non-cash exchange loss of US$6.7 million in EDEMSA for the period. The Company continues to evaluate all options available to it to minimise this currency risk. EDEMSA has established a trust with the objective of investing in US$ denominated assets and has secured shareholders' approval to issue up to an equivalent of US$80 million of debt instruments denominated in AR$ or other foreign currencies at the Board's discretion, which would give EDEMSA more flexibility to manage this currency risk.

After the period end EDEMSA completed the process for the implementation of the first new tariffs for the third review period. This follows the approval of the procedure for the calculation of the new tariffs, which was announced on 12 August 2009. The new electricity tariffs will result in an average increase of between 0% and 15% for residential users and between 12% and 22% for commercial users, representing an average total increase of approximately 12%, which will be effective retrospectively from 1 August 2009. As announced on 21 February 2008, the terms for the acquisition of the final 50 per cent. interest in Sodem S.A. included the possibility of an earn-out payment. The approval of the procedure for the calculation of the new tariffs might crystallise this earn-out payment, which may be satisfied in cash and/or through the issue of new Company shares. However, under the terms of the stock purchase agreement, certain elements of the earn-out are still open to interpretation and are being agreed with the seller. At this time no liability has been recognised in the balance sheet for an earn-out payment, due to the uncertainty of whether it will become due or not.

The results of Hidroelectrica Ameghino S.A. ("HASA") have benefited from the change in the regulations implemented in October 2008 that now allows HASA to sell all the electricity it generates to the wholesale market resulting in revenues increasing by over 100% for the six months compared to the equivalent period last year, with a resulting increase of 689% in EBITDA over the same period.

Whilst the international economic turmoil has had an impact on oil companies and in particular exploration projects, we continue to gather and interpret seismic data and are looking to conduct further geochemical surveys and if necessary further 3D seismic work towards the end/beginning of this/next year. As announced on 29 June 2009, meetings have been held with the Chubut regulator to discuss a possible extension of the first exploration period and possible changes to exploration commitments. We will be looking to continue these discussions with the regulator over the coming months.

As announced on 25 June 2009, Juan Carlos Esteban, Chief Executive Officer of the Group's oil and gas interests was appointed to the Board. His appointment significantly strengthens the Board, particularly given the focus on the development of the group's oil and gas interests.

During the period the Company successfully completed the renegotiation of its secured US$5,000,000 loan facility, which carries a 12.75 per annum coupon and defers the principal repayment until March 2013.

Your Company continues to grow and develop and has made significant steps in putting the Company on a solid financial footing in these difficult markets. We are confident that our efforts throughout 2009 will allow us to make further progress in the development of our energy businesses and we are grateful to shareholders for their continued support and look forward to updating you on developments in the near future.

Neil Bleasdale

Chairman

29 September 2009
Consolidated income statement for the six months ended 30 June 2009
30-Jun-09 30-Jun-08 31-Dec-08
US$ US$ US$
Revenue (see note2) 69,205,678 66,478,155 138,087,122
Cost of sales (51,378,117) (50,365,155) (105,837,484)
Gross profit 17,827,561 16,113,000 32,249,638
Other operating income 320,116 793,686 420,367
Distribution costs (5,771,274) (5,492,556) (11,628,516)
Administrative expenses (9,157,008) (7,213,540) (20,091,895)
Operating profit 3,219,395 4,200,590 949,594
Finance income 2,347,865 412,528 1,203,496
Finance costs (9,587,650) (1,478,127) (14,675,946)
(Loss)/profit before taxation (4,020,390) 3,134,991 (12,522,856)
Taxation 1,394,647 (1,594,688) 1,839,144
(Loss)/profit for the year (2,625,743) 1,540,303 (10,683,712)

Attributable to:
Equity holders of the parent (1,450,580) 77,256 (9,620,280)
Minority interests (1,175,163) 1,463,047 (1,063,432)
(2,625,743) 1,540,303 (10,683,712)
(Loss)/earnings per ordinary share US$ Cents US$

(see note 3)
Basic (0.01) 0.07 (0.08)
Diluted (0.01) 0.07 (0.08)

Consolidated statement of financial position as at 30 June 2009

30-Jun-09 30-Jun-08 31-Dec-08
US$ US$ US$

Non-current assets
Intangible assets 89,907,621 110,159,992 90,559,507
Property, plant and equipment 136,830,013 165,901,448 150,710,046
Investments 16,198,843 4,701,644 10,452,546
Available for sale financial assets 297,123 546,972 300,543
Trade and other receivables 142,284 31,117 121,466
Deferred income tax assets 35,223,910 4,520,333 36,612,211
Total non-current assets 278,599,794 285,861,506 288,756,319

Current assets
Inventories 3,393,143 5,169,935 4,678,243
Available for sale financial assets 1,614,263 1,004,324 724,793
Trade and other receivables 28,793,159 30,147,474 32,088,564
Cash and cash equivalents 5,679,723 10,863,399 2,547,841
Total current assets 39,480,288 47,185,132 40,039,441

Current liabilities
Trade and other payables 42,275,139 36,296,635 38,522,363
Financial liabilities 11,391,207 4,780,178 5,289,176
Provisions 8,211,304 7,863,862 8,690,809
Current tax liabilities 49,490 59,988 43,491
Total current liabilities 61,927,140 49,000,663 52,545,839

Non-current liabilities
Trade and other payables 1,602,842 2,943,963 1,511,958
Financial liabilities 74,689,783 76,299,141 79,244,243
Deferred income tax liabilities 25,364,365 - 28,391,542
Total non-current liabilities 101,656,990 79,243,104 109,147,743
Net assets 154,495,952 204,802,871 167,102,178

Capital and reserves
Called up share capital 23,418,920 23,418,920 23,418,920
Share premium account 28,692,270 28,779,259 28,692,270
Profit and loss account (48,703,204) (38,073,013) (47,332,067)
Merger reserve 66,195,556 66,195,556 66,195,556
Reverse acquisition reserve 42,045,342 42,045,342 42,045,342
Translation reserve (20,919,132) - (17,516,645)
Fair value reserve 119,916 175,019 76,178
Equity attributable to equity 90,849,668 122,541,083 95,579,554

holders of the parent
Minority interest 63,646,284 82,261,788 71,522,624
Total equity 154,495,952 204,802,871 167,102,178

Consolidated statement of changes in equity as at 30 June 2009

Share Share Profit and Other Minority Total
capital premium loss reserves interest
US$ US$ US$ US$ US$ US$
At 1 January 2008 23,418,920 28,949,260 (42,308,581) 108,458,522 118,865,465 237,383,586
Profit for the period - - 77,256 - 1,463,047 1,540,303
Fair value adjustment - - - (42,605) - (42,605)
Total comprehensive income for - - 77,256 (42,605) 1,463,047 1,497,698

the period
Share issue costs - (170,001) - - - (170,001)
Exercise of option to acquire - - 4,158,312 - (38,066,724) (33,908,412)

minority interest in Sodem S.A.
At 30 June 2008 23,418,920 28,779,259 (38,073,013) 108,415,917 82,261,788 204,802,871
Loss for the period - - (9,697,536) - (2,526,479) (12,224,015)
Fair value adjustments - - - (98,841) (133,427) (232,268)
Translation differences - - - (17,516,645) (8,099,266) (25,615,911)
Total comprehensive income for - - (9,697,536) (17,615,486) (10,759,172) (38,072,194)

the period
Share issue costs - (86,989) - - - (86,989)
Fair value of share based - - 458,490 - - 458,490

payments
Exercise of option to acquire - - (20,008) - 20,008 -

minority interest
At 31 December 2008 23,418,920 28,692,270 (47,332,067) 90,800,431 71,522,624 167,102,178
Loss for the period - - (1,450,580) - (1,175,163) (2,625,743)
Fair value adjustments - - - 43,738 42,023 85,761
Translation differences - - - (3,402,487) (6,529,670) (9,932,157)
Total comprehensive income for - - (1,450,580) (3,358,749) (7,662,810) (12,472,139)

the period
Fair value of share based - - 79,443 - - 79,443

payments
Dividends - - - - (213,530) (213,530)
At 30 June 2009 23,418,920 28,692,270 (48,703,204) 87,441,682 63,646,284 154,495,952
Analysis of other reserves: Merger Reverse Translation Fair value Total
reserve acquisition reserve reserve other
reserve reserves
US$ US$ US$ US$ US$
At 1 January 2008 66,195,556 42,045,342 - 217,624 108,458,522
Profit for the period - - - - -
Fair value adjustment - - - (42,605) (42,605)
Total comprehensive income for - - - (42,605) (42,605)

the period
Share issue costs - - - - -
Exercise of option to acquire - - - - -

minority interest in Sodem S.A.
At 30 June 2008 66,195,556 42,045,342 - 175,019 108,415,917
Loss for the period - - - - -
Fair value adjustments - - - (98,841) (98,841)
Translation differences - - (17,516,645) - (17,516,645)
Total comprehensive income for - - (17,516,645) (98,841) (17,615,486)

the period
Share issue costs - - - - -
Fair value of share based - - - - -

payments
Exercise of option to acquire - - - - -

minority interest
At 31 December 2008 66,195,556 42,045,342 (17,516,645) 76,178 90,800,431
Loss for the period - - - - -
Fair value adjustments - - - 43,738 43,738
Translation differences - - (3,402,487) - (3,402,487)
Total comprehensive income for - - (3,402,487) 43,738 (3,358,749)

the period
Fair value of share based - - - - -

payments
Dividends - - - - -
At 30 June 2009 66,195,556 42,045,342 (20,919,132) 119,916 87,441,682

Consolidated cash flow statement for the six months ended 30 June 2009

30-Jun-09 30-Jun-08 31-Dec-08
US$ US$ US$
(Loss)/profit for the year before (4,020,390) 3,134,991 (12,522,856)

taxation

Adjustments for:
Depreciation 3,885,088 4,435,700 8,720,842
Movement in debt 9,667,719 839,671 13,077,587
Revaluation of investments - - 101,362
Profit on sale of property, plant 76,447 19,086 1,475

and equipment
Increase in inventories (936,448) (4,227,711) (9,011,621)
(Increase)/decrease in trade and (2,225,201) 3,406,685 (10,875,326)

other receivables
Increase in creditors and other 6,218,059 6,407,816 10,777,973

payables
Increase in provisions for 1,371,512 1,262,283 4,518,354

liabilities and charges
Profit on disposal of investments - - (34,091)
Movement in tax provisions (285,525) - (248,283)
Impairment write down 141,892 182,213 317,449
Share based payments 79,443 - 458,490
Net cash generated from operating 13,972,596 15,460,734 5,281,355

activities

Cash flows from investing activities
Purchase of property, plant and (1,945,606) (1,539,591) (3,716,132)

equipment
Purchase of exploration assets 18,044 - (345,174)
Purchase of investments and minority (7,787,372) - (32,465,984)

interests
Proceeds from available for sale - 448,263 458,725

shares
Proceeds from grants 1,473,515 - 809,214
Acquisition of subsidiary - (34,123,403) -
Net cash used in investing (8,241,419) (35,214,731) (35,259,351)

activities

Cash flows from financing activities
Repayments of borrowings (2,827,642) (1,334,698) (2,681,160)
Funds from borrowing 804,765 8,774,864 14,059,253
Share issue costs - (170,001) (256,990)
Dividends (213,530) - -
Net cash (used in)/generated from (2,236,407) 7,270,165 11,121,103

financing activities

Net increase/(decrease) in cash and 3,494,770 (12,483,832) (18,856,893)

cash equivalents
Cash and cash equivalents at the 2,547,841 23,347,231 23,347,231

beginning of the year
Effect of foreign exchange rate (362,888) - (1,942,497)

changes
Cash and cash equivalents at the end 5,679,723 10,863,399 2,547,841

of the year

Notes 1. Basis of preparation

These interim financial statements set out in this announcement do not constitute statutory accounts and are unaudited.

These condensed financial statements have been prepared using policies based on the International Financial Reporting Standards ("IFRS"), as adopted by the European Union, which will be applied in the Group's statutory financial statements for the year ended 31 December 2009. As is currently permissible under the rules of the AIM market, this report does not comply with the full requirements of IAS 34: "Interim Financial Reporting".

The financial information for the year ended 31 December 2008 set out in this interim report does not constitute the Group's statutory accounts for that period. The statutory accounts for the year ended 31 December 2008 have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985 and did not include references to any matters to which the auditor drew attention by way of emphasis. 2. Segmental analysis

Revenue Segment profit
30-Jun-09 30-Jun-08 31-Dec-08 30-Jun-09 30-Jun-08 31-Dec-08
Analysis of revenue and US$ US$ US$ US$ US$ US$

profit:
Electricity distribution 66,860,324 65,104,335 134,883,349 3,472,596 5,191,198 7,920,823
Electricity generation 2,345,354 1,373,820 3,203,773 857,667 (66,057) 292,729
69,205,678 66,478,155 138,087,122 4,330,263 5,125,141 8,213,552
Central administration costs (1,110,868) (924,551) (7,263,958)
Finance income 2,347,865 412,528 1,203,496
Finance costs (9,587,650) (1,478,127) (14,675,946)
(Loss)/profit before tax (4,020,390) 3,134,991 (12,522,856)
30-Jun-09 30-Jun-08 31-Dec-08
Analysis of total assets: US$ US$ US$

Electricity distribution 259,282,386 261,940,641 273,160,720
Electricity generation 16,664,660 24,672,361 18,260,956
Oil and gas interests 33,755,115 41,100,569 29,882,775
Total segment assets 309,702,161 327,713,571 321,304,451
Unallocated assets 8,377,921 5,333,067 7,491,309

Consolidated total assets 318,080,082 333,046,638 328,795,760

30-Jun-09 30-Jun-08 31-Dec-08
Analysis of total liabilities: US$ US$ US$
Electricity distribution 143,041,849 109,959,710 141,889,769
Electricity generation 4,428,486 3,821,944 4,818,047
Oil and gas interests 11,072 425,017 8,432
Total segment liabilities 147,481,407 114,206,671 146,716,248
Unallocated liabilities 16,102,723 14,037,096 14,977,334

Consolidated total liabilities 163,584,130 128,243,767 161,693,582

30-Jun-09 30-Jun-08 31-Dec-08
Analysis of total capital expenditure: US$ US$ US$
Electricity distribution capital 3,960,277 4,833,372 12,004,318

expenditure
Electricity generation capital 1,976 1,355 21,911

expenditure
Oil and gas interests - - 345,174
Total segment capital expenditure 3,962,253 4,834,727 12,371,403
Other capital expenditure - - 4,701
Consolidated total capital expenditure 3,962,253 4,834,727 12,376,104
30-Jun-09 30-Jun-08 31-Dec-08
Analysis of total depreciation: US$ US$ US$

Electricity distribution depreciation 3,838,300 4,383,226 8,616,586
Electricity generation depreciation 45,896 50,710 100,718
Total segment depreciation 3,884,196 4,433,936 8,717,304
Other depreciation 892 1,764 3,538
Consolidated total depreciation 3,885,088 4,435,700 8,720,842

3. (Loss)/earnings per share

(Loss)/earnings per share is presented on two bases: basic (loss)/earnings per share and diluted (loss)/earnings per share. Basic (loss)/earnings per share is in respect of all activities and diluted (loss)/earnings per share takes into account the dilution effects which would arise on conversion or vesting of warrants in issue.

30-Jun-09 30-Jun-08 31-Dec-08
Cents Cents Cents
Basic (loss)/earnings per (1.24) 0.07 (8.22)

share
Diluted (loss)/earnings per (1.24) 0.07 (8.22)

share

US$ US$ US$
(Loss)/profit for the financial year attributable to (1,450,580) 77,256 (9,620,280)

equity holders

No. No. No.
Weighted average number of 117,094,598 117,094,598 117,094,598

shares
Effect of dilutive warrants - - -
Diluted weighted average 117,094,598 117,094,598 117,094,598

number of shares

No. No. No.
Potential number of dilutive 31,300,000 31,300,000 31,300,000

warrants
31,300,000 31,300,000 31,300,000

This information is provided by RNS The company news service from the London Stock Exchange

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