AEN11 May 2011 08:10
CHAIRMAN'S STATEMENT
Overview
Our 2010 financial results incorporating the results of Andes together with its subsidiaries for the year ended 31 December 2010 are set out below.
The Group recorded a profit before tax of US$22 million on revenue of US$171 million for the year compared to a profit before tax of US$4 million on revenue of US$139 million in 2009. This revenue increase results primarily from the EDEMSA tariff increase, the pass through of increases in the cost of energy purchased and an increase in demand. During the year EDEMSA and the investment trust established by EDEMSA acquired the rights over EDEMSA bonds with a face value of US$85.1 million. A surplus of AR$21 million (US$5.4 million), resulting from the net present value impact of the reduction in borrowings has been recognized in the income statement for the period under finance costs. The profit after tax attributable to equity shareholders was US$4 million compared to a loss of US$1 million in 2009. Basic and diluted earnings per share was 3.55 cents for the year compared to a basic and diluted loss per share of 0.45 cents in 2009. In line with the dividend policy set out in the Group's re-admission document, no dividend is proposed.
The results of HASA, our hydroelectric power plant, continue to benefit 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.
We continue to advance the development of our oil and gas strategy and our main focus for the balance of 2011 is to formalise agreements and a work program that will hopefully allow us to maximise the potential of the licences we hold.
Outlook
We are very pleased with the results for the year. The repurchase of the debt has significantly changed the financial profile of EDEMSA, improving and reducing credit risk exposure and decreasing exposure to foreign exchange risk. However, it is important that the implementation of a tariff polynomial formula, that recognises costs in real terms, is approved by the authorities to maintain EDEMSA's economic and financial sustainability.
The results of HASA continue to benefit from the change in the regulations that allows HASA to sell all the electricity it generates to the wholesale market with revenue increasing 31% over 2009.
The Group holds licences in prolific oil and gas provinces in Argentina all of which we believe have the potential for significant discoveries and reserves. During the year the Group concluded a farm-in agreement with YPF S.A. ("YPF") for its two licence blocks Corralera and Mata Mora in the province of Neuquen in Argentina. The Group now holds a 13.5% carried interest in these blocks, subject to completion of the agreement.
After the year-end, the Group acquired a 24% working interest and exercised its option to acquire a further 10% working interest in Vega Grande a produ