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 year ended 31 December 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 year ended 31 December 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 for the year of AR$35 million (2009: AR$9 million) and a pre-tax profit of AR$77 million. This represents a significant recovery compared to the pre-tax profit of AR$18 million in 2009.

Sales for the year increased by 29% over 2009, to AR$647 million. This increase resulted primarily from a 6.7% increase in the demand for energy, the pass through of increases of 1.5% in the cost of energy purchased and the benefit of increases in electricity tariffs implemented on 1 August and 1 December 2009.

Gross profit showed an increase from AR$121 million in 2009 to AR$205 million, representing 32% of sales (2009: 24% of sales). Operating profit increased from AR$40 million in 2009 to AR$90 million, a 126% increase. EDEMSA recorded EBITDA of AR$118 million in 2010 (2009: AR$68 million).

As noted in our announcement of 7 July 2010, EDEMSA and the investment trust established by EDEMSA acquired the rights over the EDEMSA bonds held under the Total Return Swap Agreement ("TRS") and the TRS Participation Agreement referred in our announcement of 14 June 2010. As a result of these transactions, on termination of the TRS, EDEMSA will own, directly or indirectly through the trust, bonds with a face value of US$76 million. These assets are stated net against borrowings in the balance sheet and a surplus of AR$21 million resulting from the net present value impact of the reduction in the borrowings has been recognised in the income statement under finance costs. The present value of borrowings has fallen from AR$260 million at the end of 2009 to AR$138 million at the end of 2010.

On 30 June 2010 EDEMSA signed an advisory services agreement with MSO Andes Energia Argentina S.A., a wholly owned subsidiary of Andes Energia Plc, for the provision of advisory services. During the year EDEMSA was charged AR$11 million for these services.

Neil Bleasdale, EDEMSA President commented, "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 economic and financial sustainability.".

balance sheet

(All amounts in Argentine Pesos (AR$))

income statement

(All amounts in Argentine Pesos (AR$))

statement of changes in shareholders' equity

(All amounts in Argentine Pesos (AR$))

cash flow statement

(All amounts in Argentine Pesos (AR$))

1. Basis of preparation

The report for the year ended 31 December 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