EDEMSA Final Results

Published Wednesday 11th, March 2009.

Article Category: Reports

Summary
Unaudited results for Empresa Distribuidora de Electricidad de Mendoza Sociedad Anonima (EDEMSA) for the year ended 31 December 2008 Article Content Andes Energia plc (Andes) (AIM:AEN) 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 minimize this currency risk and has recently secured, subject to CNV approval, shareholders’s 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 in attached document
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