30th Sep 2011 07:00
30 September 20011
ANDES ENERGIA PLC
("Andes" or the "Company" or with its subsidiaries the "Group")
ANDES ENERGIA PLC - UNAUDITED 2011 INTERIM RESULTS
Andes (AIM: AEN; BCBA: AEN), the Latin American energy group, is pleased to announce its interim results for the six months ended 30 June 2011.
Financial highlights
·; Revenues of US$88 million (H1 2010: US$88 million)
·; EBITDA before the gain on acquisition US$13.2 million (H1 2010: US$17.4 million)
·; Earnings per share 8.43 US$ cents (H1 2010: 1.70 US$ cents)
Operational highlights
·; Acquisition of 34% working interest in Vega Grande
·; Acquisition of joint venture partner's interest in Confluencia, San Bernardo, Pampa Salamanca Norte, Buen Pasto, Sierra Cuadrada, Rio Senguerr and Laguna El Loro blocks
·; Farm in agreement with YPF S.A. ("YPF") for Confluencia, San Bernardo, Pampa Salamanca Norte, Buen Pasto, Sierra Cuadrada and Rio Senguerr blocks
·; Acquisition of interest in the Ñirihuau Sur block
Post period end highlights
·; Fitch rating of Level 2 granted
·; AR$144 million syndicated loan agreement agreed and Total Return Swap ("TRS") agreement terminated
·; Spudding of well YPF.NQ.MMo.x-1 in the Mata Mora block
·; Option to acquire 78.44% interest in Empresa Distribuidora de Electridad de La Rioja S.A. ("EDELAR")
Luis Alvarez Poli, Chief Executive Officer, said: "We are very pleased with the progress we have made so far this year. The completion of the syndicated loan reduces significantly the EDEMSA's exposure to any devaluation of the AR$ against the US$ and the option to acquire an interest in EDELAR is an exciting opportunity to expand our electricity distribution business.
The acquisition of the joint venture partner's interest in seven blocks and the subsequent farm in with YPF for six of these blocks should enable us to accelerate our oil and gas exploration program. The spudding of well YPF.NQ.MMo.x-1 in the Mata Mora block is our first step in exploring the Vaca Muerta formation and non-conventional resources.
We continue to expand the Group's interests and in particular advance the development of our oil and gas exploration strategy, which will be our focus for the balance of this year and 2012."
Enquiries:
Andes Energia | Luis Alvarez Poli, Chief Executive Officer Nigel Duxbury, Finance Director
| T: 020 7495 5326 |
Arbuthnot Securities | Antonio Bossi Ed Groome
| T: 020 7012 2000 |
Buchanan | Tim Thompson Ben Romney
| T: 020 7466 5000 |
Note to Editors:
Andes is a Latin American energy group, with oil and gas interests, electricity distribution and hydro-electric power in Argentina. The Company's focus is on the Argentinean energy sector.
Chairman's review
First-half revenues in local currency increased by 4% to AR$354 million (US$88 million) compared to revenues of AR$340 million for the equivalent period last year. EBITDA before the gain on acquisition was US$13.2 million (H1 2010: US$17.4 million).
The Group generated gross profits of US$25.9 million (H1 2010: US$29.3 million). Operating profit before the gain on acquisition was US$9.4 million (H1 2010: US$13.5 million) resulting in a profit before tax and the gain on acquisition of US$5.3 million (H1 2010: US$11.0 million). However it should be noted that a one time gain of AR$21 million (US$5.4 million) was recognized in the comparable period last year for the surplus resulting from the TRS agreement and we are therefore pleased with the overall performance of the Group during the period, particularly in the context of the fact that EDEMSA's current tariffs are those based on 2008 cost values.
In August 2011 we announced that EDEMSA had entered into a syndicated loan agreement for AR$144 million to be used to refinance existing debt, accelerate the implementation of work plans and provide working capital. Part of the funds were used to buy back the EDEMSA bonds ("Bonds") with a carrying value representing approximately 90% of the Bonds in issue. As a result, Andes was able to terminate the TRS and Total Return Swap Participation agreements and as a consequence Andes has no further obligations under these agreements and the collateral has been released. This reduces significantly EDEMSA's exposure to any devaluation of the AR$ against the US$.
Earlier this month, we also announced that Andes had entered into an option agreement to acquire a 78.44% interest in EDELAR, which is an exciting opportunity to expand our electricity distribution business, which we hope to complete by the end of the year.
Reduced rainfall and reduced water accumulation has adversely impacted the performance of Hidroeléctrica Ameghino S.A., which resulted in EBITDA for the period of US$1.4 million compared to US$1.6 million for the comparative period last year.
We have made significant advances in developing our oil and gas strategy with the acquisition of a 34% working interest in Vega Grande and the acquisition of the joint venture partner's interest in the Confluencia, San Bernardo, Pampa Salamanca Norte, Buen Pasto, Sierra Cuadrada, Rio Senguerr and Laguna El Loro blocks. We weresubsequently successful in securinga farm in agreement with YPF for six of these blocks, which will allow us to catch up with our original development plan.
We were also successful in our bid to acquire an interest in a new block, Ñirihuau Sur, in Chubut. In September we announced the spudding of well YPF.NQ.MMo.x-1 in the Mata Mora block and look forward to updating you on progress in due course.
Andes has now assembled a diverse portfolio of oil and gas assets and we look forward to exploiting the potential value of these assets over time through our planned exploration and development activities. These activities will comprise a principal focus for Andes in the next 18 months as we continue with our strategy to realise true value from this exciting portfolio of assets.
We have achieved a number of significant goals and objectives so far this year, which we believe have created enhanced value for our shareholders. We are grateful to shareholders for their continued support and look forward to updating you on developments in the near future.
Neil Bleasdale
Chairman
30 September 2011
Group income statement for the six months ended 30 June 2011
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | |
US$ | US$ | US$ | |
Revenue | 87,739,274 | 87,655,175 | 171,253,462 |
Cost of sales | (61,823,350) | (58,325,730) | (116,321,768) |
Gross profit | 25,915,924 | 29,329,445 | 54,931,694 |
Other operating income | 3,094,858 | 472,756 | 4,855,531 |
Distribution costs | (8,111,755) | (6,886,351) | (14,744,453) |
Administrative expenses | (11,455,379) | (9,396,373) | (18,401,946) |
Gain on acquisition | 9,195,550 | - | - |
Total administrative expenses | (2,259,829) | (9,396,373) | (18,401,946) |
Operating profit | 18,639,198 | 13,519,477 | 26,640,826 |
Analysed as: | |||
Operating profit before gain on acquisition | 9,443,648 | 13,519,477 | 26,640,826 |
Gain on acquisition | 9,195,550 | - | - |
Operating profit | 18,639,198 | 13,519,477 | 26,640,826 |
Finance income | 834,832 | 76,767 | 288,235 |
Finance costs | (4,980,750) | (2,613,791) | (5,376,782) |
Profit before taxation | 14,493,280 | 10,982,453 | 21,552,279 |
Taxation | (1,688,133) | (5,036,204) | (11,904,546) |
Profit for the period | 12,805,147 | 5,946,249 | 9,647,733 |
Total comprehensive income attributable to: | |||
Equity holders of the parent | 10,812,437 | 2,058,322 | 4,320,916 |
Minority interests | 1,992,710 | 3,887,927 | 5,326,817 |
12,805,147 | 5,946,249 | 9,647,733 | |
Cents | Cents | Cents | |
Basic and diluted earnings per ordinary share | 8.43 | 1.70 | 3.55 |
Consolidated statement of financial position as at 30 June 2011
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | |
US$ | US$ | US$ | |
Non-current assets | |||
Intangible assets | 99,288,543 | 84,717,185 | 84,793,551 |
Property, plant and equipment | 134,323,558 | 136,164,722 | 135,650,309 |
Investments | 3,987,462 | 4,013,915 | 3,429,772 |
Available for sale financial assets | 367,285 | 489,695 | 323,563 |
Trade and other receivables | 398,055 | 571,232 | 391,479 |
Deferred income tax assets | 23,194,834 | 30,564,572 | 23,805,946 |
Total non-current assets | 261,559,737 | 256,521,321 | 248,394,620 |
Current assets | |||
Inventories | 6,723,904 | 4,794,869 | 4,360,801 |
Available for sale financial assets | 2,498,147 | 696,922 | 925,261 |
Trade and other receivables | 31,249,591 | 31,678,080 | 31,575,094 |
Cash and cash equivalents | 7,854,523 | 5,525,371 | 7,637,473 |
Total current assets | 48,326,165 | 42,695,242 | 44,498,629 |
Current liabilities | |||
Trade and other payables | 56,596,686 | 48,397,387 | 50,116,490 |
Financial liabilities | 16,014,924 | 17,638,079 | 15,924,992 |
Provisions | 8,145,803 | 11,881,081 | 8,284,586 |
Current tax liabilities | 47,992 | 45,288 | 46,491 |
Total current liabilities | 80,805,405 | 77,961,835 | 74,372,559 |
Non-current liabilities | |||
Trade and other payables | 9,112,404 | 1,990,260 | 9,140,446 |
Financial liabilities | 30,251,302 | 32,540,369 | 31,977,230 |
Deferred income tax liabilities | 25,802,534 | 27,278,259 | 26,112,570 |
Total non-current liabilities | 65,166,240 | 61,808,888 | 67,230,246 |
Net assets | 163,914,257 | 159,445,840 | 151,290,444 |
Capital and reserves | |||
Called up share capital | 26,023,226 | 24,147,405 | 24,362,726 |
Share premium account | 31,791,748 | 29,914,999 | 30,131,248 |
Profit and loss account | (42,927,327) | (45,398,634) | (53,826,029) |
Merger reserve | 66,195,556 | 66,195,556 | 66,195,556 |
Reverse acquisition reserve | 42,045,342 | 42,045,342 | 42,045,342 |
Translation reserve | (27,092,732) | (25,440,825) | (25,958,208) |
Fair value reserve | 169,648 | 233,777 | 169,648 |
Equity attributable to equity holders of the parent | 96,205,461 | 91,697,620 | 83,120,283 |
Minority interest | 67,708,796 | 67,748,220 | 68,170,161 |
Total equity | 163,914,257 | 159,445,840 | 151,290,444 |
Consolidated statement of changes in equity for the six months ended 30 June 2011
Capital and reserves | Share | Share | Profit and | Other | Minority | Total |
capital | premium | loss | reserves | interest | ||
US$ | US$ | US$ | US$ | US$ | US$ | |
At 1 January 2010 | 23,947,876 | 29,644,391 | (47,614,929) | 86,337,605 | 65,945,103 | 158,260,046 |
Profit for the period | - | - | 2,058,322 | - | 3,887,927 | 5,946,249 |
Fair value adjustments | - | - | - | (11,905) | (11,438) | (23,343) |
Translation differences | - | - | - | (3,291,850) | (1,893,991) | (5,185,841) |
Total comprehensive profit for the period | - | - | 2,058,322 | (3,303,755) | 1,982,498 | 737,065 |
Issue of ordinary shares | 199,529 | 270,608 | - | - | - | 470,137 |
Fair value of share based payments | - | - | 157,973 | - | - | 157,973 |
Dividends | - | - | - | - | (179,381) | (179,381) |
At 30 June 2010 | 24,147,405 | 29,914,999 | (45,398,634) | 83,033,850 | 67,748,220 | 159,445,840 |
Profit for the period | - | - | 2,262,594 | - | 1,438,890 | 3,701,484 |
Fair value adjustments | - | - | - | (64,129) | (61,614) | (125,743) |
Translation differences | - | - | - | (517,383) | (956,254) | (1,473,637) |
Total comprehensive profit for the period | - | - | 2,262,594 | (581,512) | 421,022 | 2,102,104 |
Issue of ordinary shares | 215,321 | 216,249 | - | - | - | 431,570 |
Acquisition of non-controlling interest | - | - | (10,697,091) | - | - | (10,697,091) |
Fair value of share based payments | - | - | 7,102 | - | - | 7,102 |
Dividends | - | - | - | - | 919 | 919 |
At 31 December 2010 | 24,362,726 | 30,131,248 | (53,826,029) | 82,452,338 | 68,170,161 | 151,290,444 |
Profit for the period | - | - | 10,812,437 | - | 1,992,710 | 12,805,147 |
Translation differences | - | - | - | (1,134,524) | (2,050,610) | (3,185,134) |
Total comprehensive profit for the period | - | - | 10,812,437 | (1,134,524) | (57,900) | 9,620,013 |
Issue of ordinary shares | 1,660,500 | 1,660,500 | - | - | - | 3,321,000 |
Fair value of share based payments | - | - | 86,265 | - | - | 86,265 |
Dividends | - | - | - | - | (403,465) | (403,465) |
At 30 June 2011 | 26,023,226 | 31,791,748 | (42,927,327) | 81,317,814 | 67,708,796 | 163,914,257 |
Other reserves | Merger | Reverse | Translation | Fair value | Total | |
reserve | acquisition | reserve | reserve | other | ||
reserve | reserves | |||||
US$ | US$ | US$ | US$ | US$ | ||
At 1 January 2010 | 66,195,556 | 42,045,342 | (22,148,975) | 245,682 | 86,337,605 | |
Fair value adjustments | - | - | - | (11,905) | (11,905) | |
Translation differences | - | - | (3,291,850) | - | (3,291,850) | |
Total comprehensive profit for the period | - | - | (3,291,850) | (11,905) | (3,303,755) | |
At 30 June 2010 | 66,195,556 | 42,045,342 | (25,440,825) | 233,777 | 83,033,850 | |
Fair value adjustments | - | - | - | (64,129) | (64,129) | |
Translation differences | - | - | (517,383) | - | (517,383) | |
Total comprehensive profit for the period | - | - | (517,383) | (64,129) | (581,512) | |
At 31 December 2010 | 66,195,556 | 42,045,342 | (25,958,208) | 169,648 | 82,452,338 | |
Translation differences | - | - | (1,134,524) | - | (1,134,524) | |
Total comprehensive profit for the period | - | - | (1,134,524) | - | (1,134,524) | |
At 30 June 2011 | 66,195,556 | 42,045,342 | (27,092,732) | 169,648 | 81,317,814 |
Consolidated cash flow statement for the six months ended 30 June 2011
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | |
US$ | US$ | US$ | |
Profit for the period before taxation | 14,493,280 | 10,982,453 | 21,552,279 |
Adjustments for: | |||
Depreciation | 3,669,942 | 3,791,306 | 7,695,449 |
Movement in debt | 2,927,157 | 364,724 | 3,614,587 |
Revaluation of investments | (550,370) | - | (539,627) |
Increase in inventories | (3,641,904) | (3,031,595) | (5,224,456) |
Increase in trade and other receivables | (2,206,409) | (1,640,253) | (1,957,287) |
Increase in creditors and other payables | 4,498,142 | 4,336,819 | 10,801,633 |
Increase in provisions for liabilities and charges | 2,464,409 | 2,944,796 | 2,951,846 |
Profit on disposal of investments | - | 12,664 | 15,808 |
Movement in tax provisions | (527,035) | (609,158) | (1,009,425) |
Impairment write down | 127,843 | 133,115 | - |
Share based payments | 86,266 | 157,973 | 165,075 |
Negative goodwill | (9,195,550) | - | - |
Net cash generated from operating activities | 12,145,771 | 17,442,844 | 38,065,882 |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (4,629,042) | (2,832,947) | (6,350,115) |
(Purchase)/sale of investments and minority interests | (6,745,266) | 15,878,918 | 5,879,156 |
Proceeds from grants | 693,830 | - | - |
Net cash (used in)/generated from investing activities | (10,680,478) | 13,045,971 | (470,959) |
Cash flows from financing activities | |||
Repayments of borrowings | (3,939,205) | (38,666,598) | - |
Acquisition of interest in bonds | - | - | (35,527,641) |
Funds from borrowing | - | 8,336,625 | - |
Proceeds from issue of shares | 3,321,000 | 470,137 | 901,707 |
Dividends | (403,465) | (179,381) | (178,462) |
Net cash used in financing activities | (1,021,670) | (30,039,217) | (34,804,396) |
Net increase in cash and cash equivalents | 443,623 | 449,598 | 2,790,527 |
Cash and cash equivalents at the beginning of the period | 7,637,473 | 5,123,704 | 5,123,704 |
Effect of foreign exchange rate changes | (226,573) | (47,931) | (276,758) |
Cash and cash equivalents at the end of the period | 7,854,523 | 5,525,371 | 7,637,473 |
Notes
1. Basis of preparation
The Group consolidates the financial statements of the Company and its subsidiary undertakings.
The financial information has been prepared under the historical cost convention in accordance with International Financial Reporting Standards (IFRSs). The financial information set out in this half-yearly report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The same accounting policies, presentation and methods of computation are followed in this interim condensed consolidated report as were applied in the Group's annual financial statements for the year ended 31 December 2010. The auditor's report on those financial statements was unqualified and did not contain any statements under section 498(2) or section 498(3) of the Companies Act 2006.
2. Segmental analysis
Revenue | Segment profit | |||||
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | 30-Jun-11 | 30-Jun-10 | 31-Dec-10 | |
Analysis of revenue and profit: | US$ | US$ | US$ | US$ | US$ | US$ |
Electricity distribution | 85,589,639 | 84,602,556 | 165,927,463 | 7,349,780 | 12,078,171 | 22,966,402 |
Electricity generation | 1,953,991 | 3,052,619 | 5,325,999 | 1,250,961 | 1,386,894 | 2,263,954 |
Oil and gas interests | 195,644 | - | - | 25,539 | - | - |
87,739,274 | 87,655,175 | 171,253,462 | 8,626,280 | 13,465,065 | 25,230,356 | |
Central administration costs | (252,490) | (1,717,181) | (1,312,579) | |||
Central administration income | 1,069,858 | 1,771,593 | 2,723,049 | |||
Finance income | 834,832 | 76,767 | 288,235 | |||
Finance costs | (4,980,750) | (2,613,791) | (5,376,782) | |||
Gain on acquisition | 9,195,550 | - | - | |||
Profit before tax (continuing operations) | 14,493,280 | 10,982,453 | 21,552,279 | |||
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | ||||
Analysis of total assets: | US$ | US$ | US$ | |||
Electricity distribution | 236,901,126 | 243,904,165 | 235,747,286 | |||
Electricity generation | 17,090,598 | 16,506,075 | 16,459,725 | |||
Oil and gas interests | 47,634,465 | 30,959,856 | 31,748,173 | |||
Total segment assets | 301,626,189 | 291,370,096 | 283,955,184 | |||
Unallocated assets | 8,259,713 | 7,846,467 | 8,938,065 | |||
Consolidated total assets | 309,885,902 | 299,216,563 | 292,893,249 | |||
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | ||||
Analysis of total liabilities: | US$ | US$ | US$ | |||
Electricity distribution | 113,359,046 | 119,389,476 | 111,077,219 | |||
Electricity generation | 4,159,263 | 4,555,383 | 4,331,646 | |||
Oil and gas interests | 1,876,939 | 14,729 | 25,371 | |||
Total segment liabilities | 119,395,248 | 123,959,588 | 115,434,236 | |||
Unallocated liabilities | 26,576,397 | 15,811,135 | 26,168,569 | |||
Consolidated total liabilities | 145,971,645 | 139,770,723 | 141,602,805 | |||
2. Segmental analysis (continued)
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | ||||
Analysis of total capital expenditure: | US$ | US$ | US$ | |||
Electricity distribution capital expenditure | 6,010,237 | 4,889,668 | 11,179,578 | |||
Electricity generation capital expenditure | 3,993 | 16,320 | 36,638 | |||
Oil and gas interests | - | - | (19,248) | |||
Total segment capital expenditure | 6,014,230 | 4,905,988 | 11,196,968 | |||
Other capital expenditure | - | - | 5,194 | |||
Consolidated total capital expenditure | 6,014,230 | 4,905,988 | 11,202,162 | |||
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | ||||
Analysis of total depreciation: | US$ | US$ | US$ | |||
Electricity distribution depreciation | 3,626,934 | 3,747,336 | 7,341,879 | |||
Electricity generation depreciation | 41,939 | 42,923 | 85,974 | |||
Total segment depreciation | 3,668,873 | 3,790,259 | 7,427,853 | |||
Other depreciation | 1,069 | 1,047 | 2,732 | |||
Consolidated total depreciation | 3,669,942 | 3,791,306 | 7,430,585 |
3. Earnings per share
Earnings per share is presented on two bases: basic earnings per share and diluted earnings per share. Basic earnings per share is in respect of all activities and diluted earnings per share takes into account the dilution effects which would arise on conversion or vesting of warrants in issue.
30-Jun-11 | 30-Jun-10 | 31-Dec-10 | |
Cents | Cents | Cents | |
Basic and diluted earnings per share | 8.43 | 1.70 | 3.55 |
US$ | US$ | US$ | |
Profit for the period attributable to equity holders | 10,812,437 | 2,058,322 | 4,320,916 |
No. | No. | No. | |
Weighted average number of shares | 128,293,510 | 120,897,252 | 121,682,478 |
Effect of dilutive warrants | - | - | - |
Diluted weighted average number of shares | 128,293,510 | 120,897,252 | 121,682,478 |
No. | No. | No. | |
Potential number of dilutive warrants | 29,300,000 | 31,300,000 | 29,300,000 |
29,300,000 | 31,300,000 | 29,300,000 |
4. Acquisitions
The acquisition of the joint venture partner's interest in the Chubut licences resulted in negative goodwill of USS$9,195,550, which has been credited to administrative expenses in the income statement as a gain on acquisition.
5. Other
A copy of this report is available on the Andes's website at www.andesenergiaplc.com.ar
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