13 Mar 2012 07:00
Andes Energia plc ("Andes")
(AIM:AEN)
Unaudited results for
Empresa Distribuidora de Electricidad de Mendoza Sociedad Anonima ("EDEMSA")
for the year ended 31 December 2011
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 2011. 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.gob.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 for the year of AR$11 million (2010: AR$34 million). However, it should be noted that the 2011 finance costs include non-recurring costs of AR$11 million associated with the refinancing of the debt. Furthermore, the finance costs for the comparable period last year include a one-time gain of AR$21 million resulting from the Total Return Swap agreement ("TRS").
Sales for the year increased by 9.5% over 2010, to AR$709 million. This increase resulted primarily from the pass through of increases of 9.3% in the cost of energy purchased and to a lesser extent a 2.9% increase in the demand for energy.
Gross profits were AR$197 million compared to AR$205 million in 2010. Inflationary pressure resulted in operating profit dropping from AR$89 million to AR$44 million, but this should be considered in the context of the fact that current tariffs are those based on 2008 cost values. The main increases in costs arose in salaries and other employee related costs and the costs of third party services. The company recorded EBITDA of AR$74 million in 2011 (2010: AR$118 million).
It should also be noted that, further to the advisory agreement EDEMSA signed with MSO Andes Energia Argentina S.A. a wholly subsidiary of Andes, the income statement of EDEMSA for the year includes a charge of AR$9 million for these services
The highlight of the year was the conclusion of a AR$144 million syndicated loan agreement. This facilitated the buy back and cancellation of the EDEMSA bonds then in issue and the termination of the TRS with Andes and will also allow us to accelerate the implementation of work plans and provide working capital. Finance costs for the year were AR$37 million compared to AR$35 million in 2010 after adjusting the comparable period's costs for the one time surplus resulting from the TRS transaction referred above. As also noted above the finance costs for the period include non-recurring costs of AR$11 million associated with the debt refinancing.
Neil Bleasdale, EDEMSA President commented, "The repurchase of the debt has significantly changed the financial profile of EDEMSA, 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 economic and financial sustainability. ".
(Rate of exchange at 31 December 2011 AR$4.304 to US$1.00)
balance sheet
(All amounts in Argentine Pesos (AR$))
31 December 2011 | 31 December 2010 | |
ASSETS |
|
|
Non-current assets |
|
|
Property, plant and equipment | 574,144,950 | 537,461,019 |
Intangible assets | 156,705,086 | 156,705,088 |
Available for sale investments | 29,197 | 29,197 |
Other investments | - | 676,395 |
Deferred income tax assets and other credits | 60,787,931 | 52,504,716 |
| 791,667,164 | 747,376,415 |
Current assets |
|
|
Inventories | 29,939,465 | 17,390,876 |
Trade and other receivables | 146,886,069 | 109,680,389 |
Other investments | 15,979,126 | - |
Cash and cash equivalents | 31,600,452 | 21,611,103 |
| 224,405,112 | 148,682,368 |
|
| |
Total assets | 1,016,072,276 | 896,058,783 |
| ||
EQUITY Capital and reserves |
| |
Share capital | 462,585,254 | 462,585,254 |
Fair value and other reserves | 18,195,754 | - |
Retained earnings and other reserves | (3,193,428) | 4,868,616 |
Legal reserve | 17,813,935 | 16,856,263 |
Total equity | 495,401,515 | 484,310,133 |
LIABILITIES Non-current liabilities | ||
Deferred income tax liabilities | 36,389,447 | 49,154,075 |
Borrowings | 90,616,385 | 78,904,216 |
Trade and other payables | 21,124,264 | 17,734,488 |
148,130,096 | 145,792,779 | |
Current liabilities Trade and other payables | 223,641,336 | 174,020,556 |
Borrowings | 104,715,789 | 58,896,390 |
Provisions | 44,183,540 | 33,038,925 |
372,540,665 | 265,955,871 | |
Total liabilities | 520,670,761 | 411,748,650 |
|
| |
Total equity and liabilities | 1,016,072,276 | 896,058,783 |
income statement
(All amounts in Argentine Pesos (AR$))
| Year ended | Year ended |
| 31 December 2011 | 31 December 2010 |
Sales | 708,795,260 | 647,117,106 |
Cost of sales | (512,061,232) | (442,337,516) |
Gross profit | 196,734,028 | 204,779,590 |
Selling and marketing costs | (70,157,459) | (57,602,361) |
Administrative expenses | (94,023,255) | (69,972,555) |
Other operating income | 11,823,011 | 11,963,752 |
Operating profit | 44,376,325 | 89,168,426 |
Finance costs net | (37,110,936) | (14,400,603) |
Profit before tax | 7,265,389 | 74,767,823 |
Income tax | 3,825,993 | (40,580,501) |
Profit for the year | 11,091,382 | 34,187,322 |
|
statement of changes in shareholders' equity
(All amounts in Argentine Pesos (AR$))
| Share capital | Fair value and other reserves | Retained earnings | Legal reserve | Total equity |
Balance at 31 December 2009 | 462,585,254 | 581,435 | (17,295,655) | 16,856,263 | 462,727,297 |
Prior year adjustment | - | - | (12,023,051) | - | (12,023,051) |
Balance at 31 December 2009 revised | 462,585,254 | 581,435 | (29,318,706) | 16,856,263 | 450,704,246 |
Net expense recognised directly in equity | - | (581,435) | - | - | (581,435) |
Profit for the year | - | - | 34,187,322 | - | 34,187,322 |
Balance at 31 December 2010 | 462,585,254 | - | 4,868,616 | 16,856,263 | 484,310,133 |
|
|
|
|
|
|
Balance at 1 January 2011 | 462,585,254 | - | 4,868,616 | 16,856,263 | 484,310,133 |
Other reserve | - | 18,195,754 | (18,195,754) | - | - |
Legal reserve | - | - | (957,672) | 957,672 | - |
Profit for the year | - | - | 11,091,382 | - | 11,091,382 |
Balance at 31 December 2011 | 462,585,254 | 18,195,754 | (3,193,428) | 17,813,935 | 495,401,515 |
cash flow statement
(All amounts in Argentine Pesos (AR$))
| Year ended | Year ended |
| 31 December 2011 | 31 December 2010 |
Cash flows from operating activities |
|
|
Net cash generated from operating activities | 43,416,268 | 102,591,316 |
|
| |
Cash flows from investing activities |
| |
Purchases of property, plant and equipment | (47,013,369) | (24,677,374) |
(Purchase)/sale of financial assets | (15,302,732) | 63,868,320 |
Grant received | 2,803,074 | - |
Net cash (used in)/ generated from investing activities | (59,513,027) | 39,190,946 |
| ||
Cash flows from financing activities | ||
Debt | 26,086,108 | (136,583,713) |
Net cash generated from/(used) in financing activities | 26,086,108 | (136,583,713) |
| ||
Net increase in cash and bank overdrafts | 9,989,349 | 5,198,549 |
Cash and bank overdrafts at beginning of the year | 21,611,103 | 16,412,554 |
Cash and bank overdrafts at the end of the year | 31,600,452 | 21,611,103 |
1. Basis of preparation
The report for the year ended 31 December 2011 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 2010.
2. Adoption of IFRS
With effect from 1 January 2012 the adoption of International Financial Reporting Standards ("IFRS") for EDEMSA is mandatory. Consequently, the transition date to IFRS for EDEMSA as provided in IFRS 1 "First-time Adoption of IFRS" is 31 December 2010. On adoption of IFRS by EDEMSA the carrying value of fixed assets restated in accordance with current accounting standards is their deemed cost under IFRS 1 and EDEMSA has chosen not to apply IFRS 3 in calculating the carrying value of intangible assets at the transition date.
The acquisition of EDEMSA by the ultimate parent company was accounting for as a business combination under IFRS and the acquired assets and liabilities were measured at the acquisition date at fair value.
As referred above the unaudited financial information presented in this announcement has been prepared in accordance with IFRS on a basis consistent with the accounting policies used in the preparation of the financial information of the ultimate parent company. This has resulted in certain reclassifications between the EDEMSA IFRS financial information used in the preparation of the group accounts and the EDEMA IFRS financial information reported by EDEMSA. These reclassifications arise primarily in non-current assets, deferred tax, depreciation and amortisation.
3. Prior year adjustment
As EDEMSA is in the process of adopting IFRS, EDEMSA has exercised the option to recognise certain adjustments in the current year. These adjustments have been disclosed as prior year adjustments in the income statement and statement of changes in shareholders' equity.
Enquiries:
Andes Energia plc Tel: +44 20 7495 5326
Luis Alvarez Poli, Chief Executive Officer
Nigel Duxbury, Finance Director
Westhouse Securities Tel: + 44 20 7601 6100
Antonio Bossi