PGR.L Regulatory News (PGR)

Andes Energia plc ("Andes")

(AIM:AEN)

Unaudited results for

Empresa Distribuidora de Electricidad de Mendoza Sociedad Anonima ("EDEMSA")

for the nine months ended 30 September 2010

EDEMSA, the electricity distributor for the province of Mendoza in which Andes has a 51 per cent. indirect interest, has published its financial results for the nine months ending 30 September 2010. This information, which has been prepared under Argentine GAAP and in Spanish, is available from the web-site of the Argentine Comision Nacional de Valores at www.cnv.gov.ar. This announcement sets out the unaudited financial information of EDEMSA for the same period prepared under IFRS in Argentine Pesos (AR$).

Financial Overview of EDEMSA

EDEMSA reported a profit of AR$35.6 million for the nine months, a significant improvement from the loss of AR$14.3 million in the equivalent period last year.

Sales for the nine months increased by AR$121.8 million over the equivalent last year, representing an increase of 34%.

This increase resulted primarily from:

·; a 6.5% increase in the demand for energy;

·; a decrease in energy losses: 12 month rolling average of 11.4% (30 September 2009: 11.7%); and

·; the benefit of the increases in electricity tariffs for the third tariff review period.

Gross profit for the nine months showed an increase from AR$86.2 million in the equivalent period last year to AR$144.5 million, representing 30% of sales (nine months ending 30 September 2009: 24% of sales). Operating profit for the period increased from AR$14.1 million in the first nine months of 2009 to AR$65.5 million, a 365% increase. EDEMSA recorded EBITDA of AR$87 million for the period (nine months ending 30 September 2009: AR$35 million).

As noted in our announcement of 12 August 2010, EDEMSA acquired the rights over certain EDEMSA bonds and these assets are stated net of borrowings in the balance sheet and a surplus of AR$21,006,546, resulting from the net present value impact of the reduction in the borrowings, has been recognised in the income statement under finance costs. It should also be noted that further to a consulting agreement EDEMSA signed with MSO Andes Energia Argentina S.A., a wholly subsidiary of Andes, the income statement of EDEMSA for the nine months includes a charge of AR$8,800,545 for these services. 

Neil Bleasdale, President of EDEMSA, commented, "We are very pleased with the performance of EDEMSA for the first 9 months, which shows a significant improvement on previous years results. Nonetheless, we are conscious that future results will depend, amongst other factors, on the degree of inflationary pressure on operating expenses, the level of energy demand over the summer period and the uncertainty of the timing of projected inflation adjustments to tariffs for the third tariff review period (2008-2013).".

 (Current rate of exchange AR$3.96 to US$1.00)

balance sheet

(All amounts in Argentine Pesos)

income statement

(All amounts in Argentine Pesos)

statement of changes in shareholders' equity

(All amounts in Argentine Pesos)

cash flow statement

(All amounts in Argentine Pesos)

1. Basis of preparation

The report for the nine months ended 30 September 2010 is unaudited and has been prepared in accordance with International Financial Reporting Standards ("IFRS") on a basis consistent with the accounting policies used in the preparation of the financial information of the ultimate parent company, Andes Energia plc, for the year ended 31 December 2009.

Enquiries:

Andes Energia plc Tel :020 7495 5326

Luis Alvarez Poli, Chief Executive Officer

Nigel Duxbury, Finance Director

Arbuthnot Securities Tel: 020 7012 2000

Antonio Bossi

Ed Groome