EDEMSA results - quarter ended 31 March 2010

Andes Energia plc ("Andes")

(AIM:AEN)

Unaudited results for

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

for the quarter ended 31 March 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 quarter ending 31 March 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 quarter of 2010 EDEMSA reported a profit of AR$10.8 million, a significant improvement from the loss of AR$9.6 million in the first quarter of 2009.

Sales for the first quarter 2010 increased by AR$45.2 million over the first quarter 2009, representing an increase of 36%.

This increase resulted primarily from:

·; a 10% increase in the demand for energy;

·; a decrease in energy losses to a historically low 12 month rolling average of 10.83% (31 December 2009: 11.3%); and

·; the first reporting period to benefit fully from the increases in electricity tariffs for the third tariff review period.

Gross profit showed an increase from AR$30.8 million in the first quarter of 2009 to AR$56.9 million in the first quarter of 2010, representing 33.3% of sales (quarter ending 31 March 2009: 24.5% of sales). Operating profit recovered from AR$7.8 million in the first quarter 2009 to AR$31.2 million in the first quarter 2010, a 301% increase, despite increases in operating expenses due to inflationary pressure. The increases in operating expenses resulted primarily from increases in salaries and other employee benefits, royalties, litigation, penalty claims and taxes. EDEMSA recorded EBITDA of AR$38.5 million for the first quarter 2010 (quarter ending 31 March 2009: AR$14.7 million).

The finance costs for the year have been adversely impacted by the weakening of the AR$ against the US$, resulting in an exchange loss of AR$5.5 million for the quarter ended 31 March 2010. Whilst EDEMSA endeavours to enter into forward contracts to hedge this risk, the high cost and lack of available contracts with long term future maturities has led EDEMSA to continue to invest in a trust established with the objective of investing in US$ denominated assets. At the end of the quarter the carrying value of investments held in the trust was AR$61.4 million.

EDEMSA continues to strengthen its financial position and continues to invest in its infrastructure to improve the quality of its services and satisfy the demand for new supplies.

Borrowings are recognised in the balance sheet at their fair value, based on the present value of management's estimates of future payments and stood at AR$265.3 million at the end of the first quarter 2010 (quarter ending 31 March 2009: AR$266.7 million). The face value of the notes outstanding as at 31 March 2010 was US$83.9 million (31 March 2009: US$88.1 million)

Neil Bleasdale, EDEMSA President commented, "The implementation of the tariff increases in 2009 has significantly improved EDEMSA's results quarter over quarter, which will hopefully lead to stability and economic and financial sustainability in the medium to long term. Equally as important for the future, is the increase in energy demand since the end of 2009 and the improvement in operational efficiency, which have also contributed to the favourable result.".

(Current rate of exchange AR$3.9 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 quarter ended 31 March 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 2008.

Enquiries:

Andes Energia plc Tel :020 7495 5326

Luis Alvarez Poli, Chief Executive Officer

Nigel Duxbury, Finance Director

Arbuthnot Securities Tel: 020 7012 2000

James Steel

Antonio Bossi

Bishopsgate Communications Tel: 020 7562 3350

Nick Rome

Michael Kinirons