08 April 2008
Press Release 8 April 2008
('VPhase' or 'the Group')
for the year ended 31 December 2007
VPhase plc (AIM: VPHA), a leading developer of energy saving devices for the
home and small commercial/retail applications, announces its preliminary results
for the year ended 31 December 2007:
Operational and financial highlights:
• re-admission to AIM via reversal into Flightstore Group plc and change of
name to VPhase plc;
• cash balance of £551,000;
• financial performance in line with the Group's expectations;
• achieved all key development and performance testing targets planned for
• VPhase plc's voltage control device showing c.10% energy savings in
• appointment of Dr. Lee Juby as CEO, who started in January 2008.
• installation of VPhase voltage control unit in a test house March 2008;
• to complete the design for manufacture of the first product and achieve
• to design unit to work at 120 volts for US configured markets;
• to select manufacturing partner.
Commenting on the results, Adrian Hutchings, Chairman, said: 'VPhase technology
has tremendous potential and presents a great opportunity to create a range of
products that are low cost and simple to install allowing both homeowners and
small businesses to save money and help combat climate change. The business has
only been on the AIM market for a short period of time and, already, it has
generated significant interest from a wide range of influential groups,
including power utilities, social housing providers, electrical equipment
manufacturers and government influencers.'
For further information please contact:
Dr Lee Juby, Chief Executive Officer Tel: +44 (0)151 339 8799
Richard Smith, Chief Financial Officer Tel: +44 (0)151 348 2116
Zimmerman Adams Tel: +44 (0)207 060 1760
Charity Walmsley www.zimmint.com
Novum Securities Limited Tel: +44 (0)20 7562 4700
Henry Turcan www.novumsecurities.com
Monique Tsang Tel: +44 (0)20 7398 7712
Justin Heath Tel: +44 (0)20 7398 7781
We are pleased to present your Group's first results following our reverse
acquisition of Flightstore Group plc and also to welcome our new shareholders.
Since the reverse acquisition in September 2007, we have made excellent progress
in the development of the VPhase voltage control product, a low cost energy
efficiency device for domestic and small commercial properties. In particular,
the Group has:
• achieved all the key development and performance testing targets planned for
Q4 of 2007;
• entered into discussions with potential suppliers, routes to market and major
• recruited a high calibre Chief Executive, Dr. Lee Juby, who was appointed on
1 January 2008; and
• since March 2008, been running a device in a test house.
The product platform developed by the Group maintains incoming voltage to a
property to a set point. Whilst electricity is provided by generators to a
nominal specification (in the UK this is 230 volts and in North America it is
120 volts), the actual voltage received can vary significantly. In the UK it is
legally permissible for domestic electricity to be delivered anywhere between
207 volts and 253 volts, and in North America between 114 volts and 126 volts,
with resulting effects on device performance and reliability.
The majority of electrical devices do not derive any benefits from excess
voltage, instead they convert the additional energy into wasted heat and in some
cases, such as light bulbs, the excess voltage can result in a shortened
The Group's voltage control device has consistently demonstrated savings of 10%
or greater of the electricity used by products such as fridges/freezers,
televisions, computers, vacuum cleaners, lights and central heating pumps by
ensuring that they run closer to the voltage for which they were designed.
The device, which can fit into the consumer unit or be installed as a stand
alone unit, controls the incoming voltage to a set point of 220 volts. This is
slightly higher than the minimum design point for household electrical items in
Europe. The initial product is aimed at the new-build and refurbishment markets
although a retrofit device will soon follow, as will a 120 volt version
targeting the North American market. It is the intention of the Group to build
a range of products based on the core technology.
The Group is in active discussions with manufacturers of consumer units, meters
and electrical appliances as well as utility companies. It is expected that the
first product will be launched in the second half of 2008.
Future activities planned for 2008 include completing the design for manufacture
and achieving certification of the first product and the design and introduction
of a 120 volt variant for the US market.
The business has maintained its cost controls during the year resulting in
greater cash resources at the end of the year than had been internally forecast.
The cash and bank balances at the end of the year were £551,000 (2006: £nil).
At this stage of the Group's development, the Board is not recommending a
dividend in respect of the year to 31 December 2007.
Investment in property, plant and equipment in the year totalled £1,000 (2006:
We are delighted with the excellent progress VPhase has made in 2007 and look
forward with confidence to continued progress in 2008 and in delivering value to
our shareholders. We would like to thank all management and staff for their
dedication and commitment without which this progress would not have been
A C Hutchings
8 April 2008
The Group's financial performance for the year and the loss were in line with
internal projections. The loss for the year was £727,000 (2006: £26,000)
reflecting the increased commercialisation activity and the costs, in excess of
the fair value assets received, of the reverse acquisition of the Group on 25
September 2007 by Energetix Voltage Control Limited which amounted to £542,000.
Further details are disclosed in note 5.
Research and development costs of £93,000 (2006: £26,000) were incurred in the
year. These costs have been charged to the income statement as the Directors do
not believe that all the criteria of IAS38 'Intangible Assets' have been met.
Capital expenditure in the year totalled £1,000 (2006: £500).
The Group maintains its focus on strong cash management and at the year end the
cash and bank balance totalled £551,000 (2006: £nil).
During the year the Group raised £71,000 through the issue of new ordinary
shares of 0.25 pence each. Its subsidiary Energetix Voltage Control Limited
raised £600,000 by the issue of new shares to a minority investor and £115,000
by the issue of a share to Energetix Group plc.
The Group's policy for investing in deposit accounts with UK banks, in line with
our strategy of maximising interest earnings whilst maintaining sufficient funds
for operations, has generated £6,000 (2006: £nil).
Cash utilised by the Group during the year on operating activities was £258,000
(2007 £nil), our gain from investing activities was £35,000 (2006: £nil) and the
issue of shares generated £774,000 (2006: £nil). The resultant cash inflow in
the period was £551,000.
During the year, the Group entered into an agreement to pay the annual fees of
its broker in new ordinary shares of 0.25 pence each. Whilst no shares were
issued in the period a share based payment charge amounting to £20,000 has been
created in other reserves with a corresponding charge to the income statement in
respect of services received to 31 December 2007.
Chief Financial Officer
8 April 2008
Group Income Statement
for the year ended 31 December 2007
Year ended 31 December
Note 2007 2006
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (733,615) (26,061)
Operating loss (733,615) (26,061)
Finance income 6,332 -
Loss before income tax (727,283) (26,061)
Income tax expense - -
Loss for the year (727,283) (26,061)
Equity holders of the Company (727,283) (26,061)
Loss per share attributable to the equity holders of the Company during the year:
Total and continuing
- Basic and diluted 3 (0.14)p (0.01)p
All costs originate from continuing activities.
Group statement of changes in shareholders' equity
for the year ended 31 December 2007
Attributable to equity holders of the Company
Share Share Merger Capital Retained Reverse Other Total
premium relief redemption earnings acquisition reserves
capital reserve reserve reserve equity
£ £ £ £ £ £ £ £
Balance at 1 January 2006 1 - - - (30,075) - - (30,074)
Total recognised loss for year - - - - (26,061) - - (26,061)
As previously reported in
Energetix Voltage Control
Limited as at 31 December 2006 1 - - - (56,136) - - (56,135)
Total recognised loss for the
year - - - - (727,283) - - (727,283)
Share based payment - - - - - - 20,200 20,200
Shares issued by legal
subsidiary before reverse
- 4 May 2007 99 - - - - - - 99
- 28 August 2007 - 115,009 - - - - - 115,009
- 3 September 2007 33 599,967 - - - - - 600,000
Share issue expenses - (12,005) - - - - - (12,005)
Cost of reverse acquisition - - - - - 572,272 - 572,272
Reallocation of reserves on 1,460,168 698,021 1,149,737 993,726 - (4,254,374) (47,278) -
Shares issued by legal parent
after reverse acquisition
- 26 September 2007 100,000 57,000 - - - - - 157,000
- 19 October 2007 2,500 - - - - - - 2,500
Share issue expenses - (88,493) - - - - - (88,493)
Balance at 31 December 2007 1,562,801 1,369,499 1,149,737 993,726 (783,419) (3,682,102) (27,078) 583,164
Total recognised income and expense recognised directly to equity amounts to
£nil (2006: £nil) representing the cost of the reverse acquisition.
Merger relief reserve
Merger relief reserve represents the premium on the shares issued to acquire
Energetix Voltage Control Limited.
Capital redemption reserve
Capital redemption reserve represents the cancellation of 100,376,460 deferred
shares at 0.99 pence each on 24 September 2007.
Reverse acquisition reserve
As disclosed in note 2, the reverse acquisition reserve relates to the reverse
acquisition between Energetix Voltage Control Limited and VPhase plc on 25
Other reserves comprise of a share based payment granted to the Group's broker
in payment for services received from 25 September to 31 December 2007. This
requires the issue of 1,248,240 new ordinary shares.
In addition, other reserves comprise an investment in own shares amounting to
£47,278 which comprises of the shares held by FG Employee Trustee Company
Limited. These shares were originally purchased to satisfy options under the
Flightstore Group plc's Employee Share Option Trust. As at 31 December 2007,
there are no options over the Ordinary Shares in the Company which have been
granted under any option scheme and which are capable of exercise, all such
options having lapsed, been cancelled or waived. At 31 December 2007, 4,491,344
(2006: 4,491,344) shares in Flightstore Group plc were held by FG Employee
Trustee Company Limited. The market value of these shares at 31 December 2007
was £179,654 (2006: £12,576).
Group Balance Sheet
at 31 December 2007
As at 31 December
Property, plant and equipment 1,134 520
Trade and other receivables 62,437 859
Cash and cash equivalents 551,477 -
Total Assets 615,048 1,379
Trade and other payables 31,884 57,514
Total liabilities 31,884 57,514
Capital and reserves attributable to equity holders
of the Company
Share capital 1,562,801 1
Share premium 1,369,499 -
Merger relief reserve 1,149,737 -
Capital redemption reserve 993,726 -
Retained earnings (783,419) (56,136)
Reverse acquisition reserve (3,682,102) -
Other reserves (27,078) -
Total shareholders' equity 583,164 (56,135)
Total equity 583,164 (56,135)
Total equity and liabilities 615,048 1,379
Group Cash Flow Statement
for the year ended 31 December 2007
Year ended 31 December
Note 2007 2006
Cash flows from operating activities
Cash consumed by operations 6 (258,031) 519
Cash flows from investing activities
Purchases of property, plant and equipment (934) (520)
Cash acquired on reverse acquisition 30,000 -
Interest received 6,332 -
Cash flows from financing activities
Net proceeds from the issue of ordinary shares 774,110 1
Net increase in cash and cash equivalents 551,477 -
Cash and cash equivalents at the beginning of the
year - -
Cash and cash equivalents at the end of the year 551,477 -
1. Basis of preparation
The preliminary results for the year ended 31 December 2007 have been extracted
from the audited accounts which have not yet been delivered to the Registrar of
Companies. The financial information set out in this announcement does not
constitute statutory accounts for the year ended 31 December 2007 or 31 December
2006. The financial information for the year ended 31 December 2007 was
unqualified and did not contain a statement under section 237 of the Companies
Act 1985. The statutory accounts for the year ended 31 December 2006 have been
delivered to the Registrar, while the statutory accounts for the year ended 31
December 2007 will be delivered to the Registrar following the Company's Annual
First time adoption of International Financial Reporting Standards
During the year, the Group has adopted for the first time International
Financial Reporting Standards as adopted by the European Union.
The preliminary results have been prepared under the historical cost convention
and in accordance with IFRS1 'First-time Adoption of International Financial
Reporting Standards'. VPhase plc's preliminary results statements were prepared
in accordance with United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice) until 31 December 2006. The date of transition to
IFRS was 1 January 2006. The disclosures required by IFRS 1 concerning the
transition from United Kingdom Generally Accepted Accounting Practice to
International Financial Reporting Standards as adopted by the European Union are
explained in note 7.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS as adopted by
the European Union requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying
the Group's accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are
significant to the preliminary results are disclosed below.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the present circumstances.
Re-admission and placing costs
Management have reviewed the expenditure related to its re-admission and placing
on AIM and, where appropriate, made judgements as to how much of the expenditure
related to the placing of existing shares, and should therefore be charged to
the Group Income Statement, and how much related to the placing of new shares,
and should therefore be charged against share premium.
Research and development activities
Management have reviewed the Group's research and development activities and
have made estimates and judgements on the amount of development expenditure it
is appropriate to capitalise. No research and development costs have been
capitalised as the Directors do not believe that all the criteria of IAS38 '
Intangible Assets' have been met.
Share based payments
During the year, the Group has issued shares to its broker for annual services
rendered up to September 2008. These shares have been valued at their fair
value as the services are received and are charged to the income statement with
a corresponding credit to equity.
Reversal of Energetix Voltage Control Limited
Management consider that the share for share exchange between VPhase plc and
Energetix Voltage Control Limited to be a reverse acquisition, as Energetix
Voltage Control Limited is the acquirer as outlined in reverse acquisition
methodology. The difference between the fair value of the cost of the
combination and the fair value of the net assets acquired has been charged to
the Group income statement as a cost of listing. Further details of the basis
of consolidation are outlined in note 2.
Management have not provided for deferred tax in relation to unrelieved tax
losses as the recoverability is currently uncertain.
2. Basis of consolidation
On 26 September 2007, the Company changed its name to VPhase plc and the Company
became the legal holding company of Energetix Voltage Control Limited via a
share for share exchange, see note 5.
The share for share exchange has been accounted for as a reverse acquisition.
Although these preliminary results has been issued in the name of the legal
parent, the Company it represents in substance is a continuation of the
financial information of the legal subsidiary, Energetix Voltage Control Limited
because after the transaction former Energetix Voltage Control Limited
shareholders hold 55.1% of the share capital of the legal parent which at that
time had no business as defined under reverse acquisition methodology. The
following accounting treatment has been applied in respect of the reverse
a) the asset and liabilities of the legal subsidiary, Energetix Voltage Control Limited are recognised
and measured in the Group financial statements at the pre-combination carrying amounts, without
reinstatement to fair value;
b) the retained (loss)/earnings and other equity balances recognised in the Group financial statements
reflect the retained (loss)/earnings and other equity balances of Energetix Voltage Control Limited
immediately before the business
c) combination, and the results of the period from 1 January 2007 to the date of the business
combination are those of Energetix Voltage Control Limited. However, the equity structure appearing
in the Group financial statements reflects the equity structure of the legal parent, including the
equity instruments issued under the share for share exchange to effect the business combination;
d) comparative numbers presented in the Group financial statements are those reported in the financial
statements of the legal subsidiary, Energetix Voltage Control Limited for the year ended 31 December
e) the cost of the combination has been determined from the perspective of Energetix Voltage Control
Limited. The fair value of Energetix Voltage Control Limited has been determined from the issue of
shares to a third party on 3 September 2007 for £600,000. An implied value has been ascertained based
on the number of new shares Energetix Voltage Control Limited would have had to issue such that its
shareholders hold the appropriate post combination ratio. The difference between the fair value of
the cost of the combination and the fair value of the net assets acquired has been charged to the
Group income statement as a cost of listing.
The Company had no significant assets, other than cash nor liabilities or
contingent liabilities of its own at the time that the share for share exchange
took effect and no cash consideration was paid in respect of the business
combination. Transaction costs of equity transactions relating to the issue and
listing of the Company's shares are accounted for as a deduction from equity
where it relates to the issue of new shares and listing costs are charged to the
Income Statement as an administrative expense.
The Group accounting policies used in the preliminary results are consistent
with those applied in its most recent annual financial statements other than
where noted below:
Early adoption of new accounting standards
The Group has adopted IFRIC 11 IFRS 2 Group and treasury share transactions. The
adoption of this interpretation has resulted in the fair value charge for
options given to subsidiary employees being added to the Company's investment in
those subsidiaries and the resulting cost charged to the subsidiaries income
3. Segmental information
The business of the Group comprises one segment, energy efficiency, and as such
no segmental information is provided. The Group currently operates entirely
within the United Kingdom.
4. Loss per share
The loss per share is based on the loss of £727,283 (2006: loss of £26,061) and
532,238,143 (2006: 500,105,004) ordinary shares of 0.25p each, being the
weighted average number of shares in issue during the period. The weighted
average number of ordinary shares for the period ended 31 December 2006 assumes
that the 500,105,004 ordinary shares issued in relation to the reverse
acquisition of Energetix Voltage Control Limited existed for the entire period.
VPhase plc shares have been included since 25 September 2007, the date of the
reverse acquisition, and all shares have been included in the computation based
on the weighted average number of days since issue.
Year ended 31 December
Loss attributable to equity holders of the Group (£) (727,283) (26,061)
Weighted average number of ordinary shares in issue 532,238,143 500,105,004
Basic and diluted loss per share (pence) 0.14 0.01
The share options in issue are anti-dilutive in respect of the basic loss per
share calculation and have therefore not been included.
On 25 September 2007, VPhase plc acquired the whole of the issued share capital
of Energetix Voltage Control Limited in exchange for the issue of ordinary
shares. This has been accounted for as a reverse acquisition as explained in
note 2. As a result of the reverse acquisition cash of £30,000 was acquired. The
difference between the cost of the business combination of £572,272 and the fair
value of net assets acquired amounting to £30,000 has consequently been charged
to the Group Income Statement.
The cost of the combination has been determined from the perspective of
Energetix Voltage Control Limited. The fair value of Energetix Voltage Control
Limited has been determined from the issue of shares to a third party on 3
September 2007 for £600,000. An implied value has been ascertained based on the
number of new shares Energetix Voltage Control Limited would have had to issue
such that its shareholders hold the appropriate post combination ratio. The
difference between the fair value of the cost of the combination and the fair
value of the net assets acquired has been charged to the Group income statement
as a cost of listing.
6. Cash consumed by operations
Year ended 31 December
Loss before income tax (727,283) (30,075)
- Depreciation 320 -
- Other income (6,332) -
- Share based payment 20,200
- Cost of reverse acquisition (note 5) 542,272 -
Changes in working capital: -
- Trade and other receivables (61,578) 30,594
- Trade and other payables (25,630) -
Cash consumed by operations (258,031) 519
The difference between the cost of the business combination of £572,272 and the
fair value of net assets acquired amounting to £30,000 has consequently been
charged to the Group Income Statement.
7. Explanation of transition to IFRS
As stated in basis of preparation, these are the Group's first Group financial
statements prepared in accordance with IFRS as adopted by the European Union.
As stated in note 2 to the preliminary results, the Company became the legal
holding company of Energetix Voltage Control Limited via a share for share
exchange. As this business combination occurred post transition to IFRS, the
share for share exchange has been accounted for as a reverse acquisition. On
this basis, the preliminary results have been issued in the name of the legal
parent VPhase plc (formerly Flightstore Group plc), however the company it
represents in substance is a continuation of the financial information of the
legal subsidiary, because after the transaction the former Energetix Voltage
Control Limited shareholders hold 55.1% of the share capital of the legal parent
which at that time had no business as defined under reverse acquisition
methodology. As a consequence, the comparative numbers represented in the Group
financial statements are those reported in the financial statements of the legal
subsidiary, Energetix Voltage Control Limited for the year ended 31 December
An explanation on how the transition from UK GAAP to IFRS has affected the
Group's financial position, financial performance and cash flows is set out
below for Energetix Voltage Control Limited:
The adoption of IFRS in relation to the VPhase plc legal subsidiary Energetix
Voltage Control Limited has resulted in some reordering of the presentation of
certain balances within both the Group Income Statement and balance sheet.
However, there has been no impact on previously reported equity (pre reverse
acquisition), liabilities or assets at 31 December 2006.
8. Availability of financial statements
Copies of the full statutory accounts will be available from the registered
office at Steam Packet House, 76 Cross Street, Manchester, M2 4JU from 25 April
2008 and will also be available from the Group's website at www.vphase.com
9. Annual General Meeting
The Annual General Meeting will be held at 12pm on 21 May 2008 at the Company's
registered office, Steam Packet House, 76 Cross Street, Manchester, M2 4JU.
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