11 Mar 2009 10:50
Andes Energia plc ("Andes")
(AIM:AEN)
Unaudited results for
Empresa Distribuidora de Electricidad de Mendoza Sociedad Anonima ("EDEMSA")
for the year ended 31 December 2008
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 year ended 31 December 2008. 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 loss for the year of AR$8.5 million compared to a profit of AR$296.6 million in 2007. This result is not directly comparable due to first, the impact of the successful restructuring of the company's debt in 2007, which resulted in a write back of AR$275 million and second, a tax credit of AR$26 million.
Sales in 2008 increased by 24.6% over 2007 to AR$428 million. This increase resulted primarily from the increase in tariffs in recognition of cost inflation, which became effective 1 February 2008, together with a 2.5% increase in the demand for energy and the pass through of an increase in the cost of energy purchased.
Although the gross profit has increased to AR$100 million from AR$51 million, the increase in operating expenses resulted in an operating profit of AR$25 million from AR$7 million in 2007, with EBITDA increasing to AR$53 million (2007: AR$33 million).
Notwithstanding the debt restructuring, which was completed in 2007, the finance costs for the year have been adversely impacted by the weakening of the AR$ against the US$, resulting in a non cash exchange loss of AR$22 million for the year. It is becoming increasingly difficult to enter into forward contacts to hedge this risk due to the lack of available contracts and the associated high cost. The company continues to evaluate all options available to it to minimise this currency risk and has recently secured, subject to CNV approval, 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 the company more flexibility to manage this currency risk.
As announced on 24 November 2008, EDEMSA expects the next tariff review for the third pricing period to take effect from 1 February 2009 but at the date of this announcement the provincial government law decree has not yet been issued. The Board remains confident that the new tariff regime will be forthcoming and will update the market as appropriate.
Neil Bleasdale, EDEMSA President commented, "2008 was a year of positive transition and whilst operating results were much improved over 2007, current tariff levels are still not sufficient. The generation of acceptable future results is dependent on establishing a reasonable tariff for the next review period".
balance sheet
(All amounts in Argentine Pesos (AR$))
|
| 31 December 2008 | 31 December 2007 |
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 515,966,820 | 508,828,352 |
| Intangible assets | 156,705,088 | 156,705,088 |
| Available for sale investments | 847,632 | 1,858,673 |
| Other investments | 21,594,778 | - |
| Deferred income tax assets and other credits | 32,265,713 | 20,858,330 |
| 727,380,031 | 668,250,443 | |
| Current assets | ||
| Inventories | 16,139,939 | 11,755,870 |
| Trade and other receivables | 99,517,552 | 74,495,967 |
| Available for sale investments | 480,647 | - |
| Cash and cash equivalents | 6,117,900 | 5,738,818 |
| 122,256,038 | 91,990,655 | |
| Total assets | 849,636,069 | 780,241,098 |
| EQUITY Capital and reserves | ||
| Share capital | 462,585,254 | 462,585,254 |
| Fair value and other reserves | (301,905) | 674,635 |
| Retained earnings and other reserves | (26,254,831) | (939,033) |
| Legal reserve | 16,856,263 | 3,004 |
| Total equity | 452,884,781 | 462,323,860 |
| LIABILITIES Non-current liabilities | ||
| Borrowings | 228,720,522 | 204,967,982 |
| 228,720,522 | 204,967,982 | |
| Current liabilities Trade and other payables | 120,935,572 | 82,159,576 |
| Borrowings | 17,111,903 | 7,907,551 |
| Provisions | 29,983,291 | 22,882,129 |
| 168,030,766 | 112,949,256 | |
| Total liabilities | 396,751,288 | 317,917,238 |
| Total equity and liabilities | 849,636,069 | 780,241,098 |
income statement
(All amounts in Argentine Pesos (AR$))
| Year ended | Year ended | |
| 31 December 2008 | 31 December 2007 | |
| Sales | 427,580,215 | 343,172,367 |
| Cost of sales | (327,651,213) | (292,491,775) |
| Gross profit | 99,929,002 | 50,680,592 |
| Selling and marketing costs | (36,862,395) | (27,360,108) |
| Administrative expenses | (42,641,391) | (20,539,423) |
| Other operating expenses | 4,726,706 | 4,097,076 |
| Operating profit | 25,151,922 | 6,878,137 |
| Finance (costs)/income | (39,597,163) | 263,985,411 |
| (Loss)/profit before tax | (14,445,241) | 270,863,548 |
| Income tax | 5,982,702 | 25,772,538 |
| (Loss)/profit for the year | (8,462,539) | 296,636,086 |
statement of changes in shareholders' equity
(All amounts in Argentine Pesos (AR$))
| Share capital | Fair value and other reserves | Retained earnings | Legal reserve | Total equity | |
| Balance at 1 January 2007 | 462,585,254 | 1,115,243 | (297,575,119) | 3,004 | 166,128,382 |
| Net expense recognised directly in equity | - | (440,608) | - | - | (440,608) |
| Gain for the year | - | - | 296,636,086 | - | 296,636,086 |
| Balance at 31 December 2007 | 462,585,254 | 674,635 | (939,033) | 3,004 | 462,323,860 |
| Balance at 1 January 2008 | 462,585,254 | 674,635 | (939,033) | 3,004 | 462,323,860 |
| Net expense recognised directly in equity | - | (976,540) | - | - | (976,540) |
| Transfer from retained earnings | - | - | (16,853,259) | 16,853,259 | - |
| Loss for the year | - | - | (8,462,539) | - | (8,462,539) |
| Balance at 31 December 2008 | 462,585,254 | (301,905) | (26,254,831) | 16,856,263 | 452,884,781 |
cash flow statement
(All amounts in Argentine Pesos (AR$))
| Year ended | Year ended | |
| 31 December 2008 | 31 December 2007 | |
| Cash flows from operating activities | ||
| Net cash generated from operating activities | 40,049,636 | 37,477,693 |
| Cash flows from investing activities | ||
| Purchases of property, plant and equipment | (11,695,779) | (19,458,831) |
| (Purchase)/sale of financial assets | (22,040,925) | 130,279 |
| Grant received | 2,565,209 | - |
| Net cash used in investing activities | (31,171,495) | (19,328,552) |
| Cash flows from financing activities | ||
| Debt repaid | (8,499,059) | (29,544,076) |
| Net cash used in financing activities | (8,499,059) | (29,544,076) |
| Net increase/(decrease) in cash and bank overdrafts | 379,082 | (11,394,935) |
| Cash and bank overdrafts at beginning of the year | 5,738,818 | 17,133,753 |
| Cash and bank overdrafts at the end of the year | 6,117,900 | 5,738,818 |
1. Basis of preparation
The report for the year ended 31 December 2008 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 2007.
Enquiries:
Andes Energia plc Tel :020 7495 5326
Neil Bleasdale, Chairman
Nigel Duxbury, Finance Director
Arbuthnot Securities Tel: 020 7012 2000
James Steel
Antonio Bossi
Bishopsgate Communications Tel: 020 7562 3350
Maxine Barnes
Nick Rome