EDEMSA results for half year to June 2010

Andes Energia plc ("Andes")

(AIM:AEN)

Unaudited results for

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

for the half year ended 30 June 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 half year ending 30 June 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

In the first half of 2010 EDEMSA reported a profit of AR$27 million, a significant improvement from the loss of AR$11 million in the first half of 2009.

Sales for the first half of 2010 increased by AR$85 million over the first half of 2009, representing an increase of 35%.

This increase resulted primarily from:

·; a 6.8% increase in the demand for energy;

·; a decrease in energy losses to a historically low 12 month rolling average of 10.8% (31 December 2009: 11.3%); and

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

Gross profit showed an increase from AR$60 million in the first half of 2009 to AR$103 million in the first half of 2010, representing 31% of sales (half year ending 30 June 2009: 25% of sales). Operating profit recovered from AR$13 million in the first half of 2009 to AR$47 million in the first half of 2010, a 270% increase. EDEMSA recorded EBITDA of AR$61 million for the first half of 2010 (half year ending 30 June 2009: AR$27 million).

As noted in our announcement of 7 July 2010, EDEMSA and the investment trust established by EDEMSA signed agreements with Magnus International S.A. ("Magnus"), through which it 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 consideration, EDEMSA paid Magnus the sum of US$13,048,556 and AR$21,600,000 (to be paid in 12 monthly instalments) and the trust paid Magnus US$11,930,980.

It should be noted that the trust also holds 3.93% of the Series B bonds and 98.93% of the Series D certificates.

As a result of these transactions, on termination of the TRS, EDEMSA will own, directly or indirectly through the trust; 88.06% of the Series A bonds with a face value of US$46,593,877; 100% of the Series B bonds with a face value of US$16,071,026; 98.93% of the Series D bonds with a face value of US$14,765,463; and 98.93 % of the Series D certificates. All face values are stated as at the date of the execution of the TRS.

As EDEMSA is the trustor, beneficiary and trustee of the trust and considering that almost all the trust assets correspond to bonds issued by EDEMSA, or the right to their ownership in the future, for the purposes of these results EDEMSA is treated as the beneficial owner of all the assets held by the trust. These assets together with the assets acquired by EDEMSA above are stated net against 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.

The repurchase of the debt has significantly changed the financial profile of EDEMSA improving its solvency and decreasing its exposure to foreign exchange risk. This together with the current tariff structure should unable EDEMSA to maintain economic and financial sustainability.

(Current rate of exchange AR$3.931 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 half year ended 30 June 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