Interim Results

16th Sep 2008 07:01



Press Release

16 September 2008

Energetix Group plc

("Energetix" or "the Group")

Consolidated Interim Financial Statements for the six months ended 30 June 2008

Energetix Group plc (AIM:EGX) a leading developer of low cost products for alternative and sustainable energy markets, today reports its Interim Results for the six months ended 30 June 2008.

Financial highlights

·; Turnover £29,000 (30 June 2007: £Nil)

·; Operating loss £2,075,000 (30 June 2007: £1,314,000)

·; Profit before tax £664,000 (30 June 2007: loss £1,322,000)

·; Basic earnings per share 1.21 pence (30 June 2007: loss 2.94 pence)

·; Cash at bank at the end of the period £13,778,000 (30 June 2007: £2,937,000), of which £3,628,000 is held in VPhase plc.

 

Alan Aubrey, Chairman of Energetix, said "We are delighted by the substantial progress the Group has made in the first six months of the year. We continue to deliver all the targets we have set for the company and we see the following 6 to 12 months as a truly exciting period as each of our subsidiaries will be completing the development and commercial launch of their first products. Indeed, a fully working, Genlec home power unit has already been demonstrated to Malcolm Wickes, the Energy Minister, and he is planning to take part in the formal launch event later this year. 

"To have all three subsidiaries reach the point of near term revenue generation at the same time is extremely rewarding. In addition the continued rise in energy prices has further improved the competitive advantage of the Group's products, potentially increasing the scale of each of these opportunities. We are delighted with the market's response to our VPhase business since it started trading on the AIM market in September 2007."

- ENDS -

 

 

For further information:

Energetix Group plc
Adrian Hutchings, Chief Executive Officer	Tel: +44 (0) 151 348 2111
Richard Smith, Chief Financial Officer	Tel: +44 (0) 151 348 2116
	www.energetixgroup.com

Zeus Capital	Tel: +44 (0) 161 831 1512
Alex Clarkson
	www.zeuscapital.co.uk

Novum Securities	Tel: +44 (0) 20 7099 1940
Michael Brennan
Henry Turcan	www.novumsecurities.com

Media enquiries:

Abchurch Communications	Tel: +44 (0) 20 7398 7712
Justin Heath
Monique Tsang
[email protected]	www.abchurch-group.com

Chief Executive's Statement

Overview

I am pleased to present the Group's interim results for the six months ended 30 June 2008 which reflect the substantial progress made in the period - and indeed the period since the half year end. All three of Energetix's businesses have reached the same point at almost the same time, with Pnu Power's next generation products being launched at Intelec in San Diego in September 2008, VPhase's first product being launched at Interbuild in October 2008 and Malcolm Wickes, the Energy Minister, launching Genlec in Westminster in November 2008. These are very exciting times for the Group and we look forward to early commercialisation of sales across the Group in 2009.

At the same time, the business environment for the Group continues to improve with rises in global energy prices, combined with growing public awareness of the need for advanced alternative energy products giving our clean, energy efficient products an even greater competitive advantage over older technologies. At the same time, there is also increased positive regulatory pull and resources for products that meet lower carbon emission targets. Since the flotation of Energetix Group in August 2006, the average cost of electricity for a UK domestic customer has increased by 16%. These increases have a direct, positive impact on the competitive advantage of both our Genlec and VPhase products. 

Our businesses continue to deliver to the targets set for them at the beginning of the year and the rest of 2008 and 2009 will see milestones continuing to be met. 

Energetix Genlec Limited ("Genlec")

Genlec entered the 2008 'heating season' with one utility partner and three major European boiler partners meaning that Genlec units are now being tested in the UK and Holland. Progress continues to be made on both the unit product design and performance.

Our Dutch partner, Daalderop, exhibited a Genlec enabled product named CombiVolt at the prestigious VSK show in Holland in February this year and we continue to work with them to enable the start of a Genlec field trial in Holland this winter. As part of this project, Genlec has started to work with previously identified third parties to ensure the delivery of Genlec units and to test the supply chain. Genlec will not have to invest in or build any plant to manufacture its units for mass production. 

Our other boiler partners continue to work positively with us and all eyes, including those of other potential boiler partners, will be on the results of the field trial which will mark a watershed in the Company's progress. 

In addition to the above, Genlec continues to work with E.ON UK, its utility partner to progress assessment of the Genlec micro-CHP technology leading to independent evaluation in accordance with the British Standards Institute's Publicly Available Specification (PAS) 67 - the UK's draft performance specification document for micro-CHP test methodology. 

The culmination of all of the above is that Malcolm Wickes, the Energy Minister, is currently scheduled to formally launch the Genlec product on 10 November 2008 and we continue to raise the profile of Genlec through attendance at shows, presentations and exhibitions.

Energetix Pnu Power Limited ("Pnu Power")

The Pnu Power product and product offering have been substantially improved during calendar year 2008, both as a result of trials that are being undertaken with the South African Utility, Eskom, and on-going research and dialogue with other potential partners.

Most importantly, the unit installed on Eskom's network has delivered exemplary performance. Johan Beukes at Eskom recently commented:

 "The unit we have on test continues to perform as required, every time there has been an outage the system has responded." 

In September 2008, a paper by Eskom was presented on the performance of the Pnu Power system at the major Intelec power show in San Diego, generating significant further interest in the Pnu Power product range. 

We continue to add to the product range and our new higher power TC2 product is performing well in accelerated life cycle tests and our first 50kW UPS unit is currently in assembly. Accelerated life testing of the initial product range has exceeded 20 years compared to an average battery life of 3 to 5 years. In addition, we have also developed a new rack, or wall mounted version called Pnu Bay which will fit into a standard electronics rack in a computer centre, and this was first displayed at Intelec in San Diego in September.

We have also installed an environmental chamber on our site at Capenhurst and are successfully testing Pnu Power products in aggressive environments such as high heat and humidity where batteries have very short life expectancy.

On-going testing and development has also resulted in the use of even less components, substantial operating improvements, cost savings and an improved IP position. We have also started to test the supply chain that has been put in place and we are confident that Pnu Power has the capability to deliver on future orders. Again, the majority of this will be outsourced and there are no plans to invest in factories and substantial plant.

The sales cycle for Pnu Power is as expected, as potential customers are buying an insurance policy and we are negotiating with European operators for initial trial sites. Our first sales office has been opened in North America and we are confident that this will deliver results in the current financial year.

VPhase plc ("VPhase") 

A VPhase unit has now been on test continuously since March 2008 and we are rapidly progressing through the design for manufacture and CE certification phases. CE certification (Conformité Europeénne (CE) is a mandatory conformity mark on products sold in the single market in the European Economic Area to prove the equipment has met the necessary European legislation and directives, thereby enabling the product to be sold in the UK and Europe. After this stage, the product will be supplied to partners and select early adopters before anticipated volume roll out in 2009. VPhase has announced that it will launch its first commercial product, VX1, at Interbuild, the UK's largest building industry exhibition in October 2008. This exciting development keeps us on target for the start of mainstream sales in 2009.

VPhase has also announced the signing of a letter of intent with SSE to fund product trials to achieve CERT approval which is a major step forward for the Company. It is intended that the relationship with Scottish and Southern Energy plc ("SSE") will support the commercialisation of VPhase's energy saving products and that SSE will work with VPhase to identify and explore opportunities to use the VPhase device to promote energy efficiency. The CERT scheme is a Government initiative and is intended to stimulate about £2.8 billion of investment by energy suppliers in promoting carbon reduction measures, usually through subsidies, in the period from 2008-2011.

In addition, during the period, discussions have been on-going with consumer unit (fuse box) manufacturers and other utility companies. It is through these channels that VPhase expects to achieve volume product sales. Further discussions have been held with market influencers such as Government bodies and third party test and certification providers.

We already have in place a fixed price contract for the production of the first 1,000 VPhase units, and have established target prices in line with our expectations for production rates of up to 10,000 units in a month. 

Summary

In summary, each of our subsidiaries continue to meet their commercial obligations under our agreements, whether with E.ON, Daalderop or Eskom – and now SSE - plus our other commercial partners and they are progressing along the adoption curve for new technologies as their products are tested and are performing to expectations.

 

Financial performance

I am pleased to report that for the six month period ended 30 June 2008 the Group's financial performance was in line with expectations. Revenues of £29,000 (2007: £nil) were achieved through sales of prototype product to our partners. Research and development costs and administrative overheads increased to £2,094,000 (2007: £1,314,000) as each of our three businesses established themselves and continued to invest in the products and commercial capabilities of the Group.

Interest receivable increased to £327,000 in the period (2007: £99,000) reflecting the increased cash balances held on short term deposit with financial institutions. A further financial gain of £799,000 resulted from the reassessment of the fair value of long term liabilities.

 

During the period our subsidiary, VPhase plc, raised £3,305,000, net of expenses, by the issue of 70,000,000 new ordinary shares of 0.25 pence each at 5 pence per share. This transaction has both strengthened the Group’s bank balances as well as recording a profit on a deemed disposal of £1,613,000. The Group holds 49.29% of VPhase plc which has a market value of £64 million at 7 September 2008 and the Group continues to control the company on the basis that it controls the financial and operating policies of VPhase plc through its board members.

 

The profit for the period attributable to equity holders of the Company increased to £845,000 (2007: loss £1,322,000).

The net increase in cash and cash equivalents for the period was £1,000,000 to £13,778,000. 

People

We continue to recruit high calibre individuals experienced in developing and managing commercial organisations with a global customer base and supply chain. Our commercial supply contracts are being established to deliver volume product supply through 2009 and 2010.

In March 2008, the Energetix Group Board was further strengthened with the appointment of Dr Henry Cialone as a Non-Executive Director. Henry's world class experience having led Battelle Memorial Institute's commercial energy business, served on the governing board of the US National Renewable Energy Laboratory (NREL) and being non-executive director of a spinout company from Idaho National Laboratory, brings the Group both access to and understanding of additional markets and intellectual property sources. At the same time as Henry's appointment, Bryan Gray stepped down from the Board as Non-Executive Director, although he continues to act as Genlec's representative on the Micropower Council. I would like to thank Bryan for his commitment and support to the Group.

Circulation to Shareholders

Following this RNS announcement, a pdf copy of the consolidated interim Financial Statements will be contained on the Group's website (www.energetixgroup.com) due to the Group's views on the environmental impact of printing and distributing glossy sets of consolidated interim Financial Statements. The Group's website is the primary source of information on the Group and this includes an overview of the activities of the Group, information on the Group's subsidiaries and details on all recent Group announcements.

Adrian HutchingsChief Executive16 September 2008 

 

  Consolidated interim income statement

For the six months ended 30 June 2008

			Unaudited 6 months ended 30 June 2008 £'000		Audited 12 months ended 31 December 2007 £'000		Unaudited 6 months ended 30 June 2007 £'000
Continuing activities	Note
Revenue	3		29		55		-
Cost of sales			(10)		(24)		-
Gross profit			19		31		-
Administrative expenses			(2,094)		(3,045)		(1,314)
Operating loss			(2,075)		(3,014)		(1,314)
Finance income	4		1,126		488		(8)
Other gains - net	5		1,613		685		-
Profit/(loss) before income tax			664		(1,841)		(1,322)
Income tax expense			-		(6)		-
Profit/(loss) for the period			664		(1,847)		(1,322)

Attributable to:
Equity holders of the Company			845		(1,842)		(1,322)
Minority interest			(181)		(5)		-
			664		(1,847)		(1,322)
Profit/(Loss) per share attributable to the  equity holders of the Company during the period:
-Basic 6			1.21p		(3.74)p		(2.94)p
-Diluted 6			1.19p		-		-

All revenue and costs originate from continuing activities.

The notes are an integral part of these consolidated interim Financial Statements.

 

Consolidated interim balance sheet

As at 30 June 2008

			Unaudited  6 months  ended 30 June  2008		Audited 12 months ended 31 December 2007		Unaudited 6 months ended 30 June 2007
	Note		£'000		£'000		£'000
ASSETS
Non-current assets
Goodwill			311		311		-
Other intangible assets	7		7,841		7,144		6,797
Property, plant and equipment			277		205		168
			8,429		7,660		6,965
Current assets
Inventories			13		58		-
Trade and other receivables			289		360		213
Cash and cash equivalents			13,778		12,778		2,937
			14,080		13,196		3,150
Total assets			22,509		20,856		10,115
LIABILITIES
Non-current liabilities
Financial liability - borrowings	4		1,385		2,245		2,626
			1,385		2,245		2,626
Current liabilities
Financial liability - borrowings	4		38		89		188
Trade and other payables			837		719		582
			875		808		770
Total liabilities			2,260		3,053		3,396
EQUITY
Capital and reserves attributable to  equity holders of the Company
Share capital			2,754		2,752		2,250
Share premium			15,169		15,376		4,591
Retained earnings			690		(155)		365
Reverse acquisition reserve			(821)		(821)		(821)
Warrant reserve			591		256		256
Other reserves			168		144		78
Total Shareholders' equity			18,551		17,552		6,719
Minority interest			1,698		251		-
Total equity			20,249		17,803		6,719
Total equity and liabilities			22,509		20,856		10,115

The notes are an integral part of these consolidated interim Financial Statements.

Consolidated interim cash flow statement

For the six months ended 30 June 2008

			Unaudited 6 months ended  30 June  2008		Audited  12 months ended  31 December 2007		Unaudited  6 months ended  30 June 2007
	Note		£'000		£'000		£'000
Cash flows from operating activities
Cash consumed by operations	9		(1,532)		(2,437)		(854)
Cash flows from investing activities
Expenditure on intangible fixed assets			(866)		(1,020)		(532)
Purchases of property, plant and equipment			(122)		(190)		(114)
Proceeds from part disposal of business			-		600		-
Net cash acquired with subsidiaries			-		30		-
Interest received			327		413		98
			(661)		(167)		(548)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares			-		11,287		-
Net proceeds from the issue of subsidiary shares to minorities			3,305		-		-
Other borrowings			-		-		(106)
Repayment of other borrowings			(112)		(350)		-
			3,193		10,937		(106)
Net increase/(decrease) in cash and cash equivalents			1,000		8,333		(1,508)
Cash and cash equivalents at the beginning of the period			12,778		4,445		4,445
Cash and cash equivalents at the end of the period			13,778		12,778		2,937

The notes are an integral part of these consolidated interim Financial Statements.

  Consolidated interim statement of changes in equity

For the six months ended 30 June 2008

	Attributable to equity holders of the Company
	Share capital	Share premium	Retained earnings	Reverse acquisition reserve	Warrant reserve	Other reserves	Total shareholders'  equity	Minority interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 January 2007	2,250	4,591	1,687	(821)	256	44	8,007	-	8,007
Total recognised loss for the period	-	-	(1,322)	-	-	-	(1,322)	-	(1,322)
Share based payments	-	-	-	-	-	34	34	-	34
Balance as at 30 June 2007	2,250	4,591	365	(821)	256	78	6,719	-	6,719
Total recognised loss for the period	-	-	(520)	-	-	-	(520)	(5)	(525
Partial disposal of Energetix Voltage Control Limited	-	-	-	-	-	-	-	256	256
Share based payments	-	-	-	-	-	34	34	-	34
Other share based payments	-	-	-	-	-	32	32	-	32
Proceeds from placing	500	11,500	-	-	-	-	12,000	-	12,000
Shares issued by legal subsidiary before reverse acquisition
- 21 August 2007	1	11	-	-	-	-	12	-	12
- 8 October 2007	1	11	-	-	-	-	12	-	12
Share issue expenses	-	(737)	-	-	-	-	(737)	-	(737)
Balance as at 31 December 2007	2,752	15,376	(155)	(821)	256	144	17,552	251	17,803
Total recognised profit/(loss) for the period	-	-	845	-	-	-	845	(181)	664
Share based payments (note 8)	-	-	-	-	-	37	37	-	37
Other share based payments	-	-	-	-	-	12	12	-	12
Shares issued by legal parent
- 13 February 2008	1	11	-	-	-	(12)	-	-	-
- 12 June 2008	1	12	-	-	-	(13)	-	-	-
Deemed disposal in VPhase plc (note 5)	-	-	-	-	-	-	-	1,628	1,628
Issue of warrants in VPhase plc	-	-	-	-	105	-	105	-	105
Issue of warrants	-	(230)	-	-	230	-	-	-	-
Balance as at 30 June 2008	2,754	15,169	690	(821)	591	168	18,551	1,698	20,249

Total income and expense recognised directly to equity amounts to £nil.

The notes are an integral part of these consolidated interim Financial Statements.

 

Selected explanatory notes

 

1. Nature of operations and general information

 

 

2 . Accounting policies

The consolidated interim Financial Statements have been prepared under the historical cost convention. The Group accounting policies used in the interim Financial Statements are consistent with those applied in its most recent annual Financial Statements except research and development costs which have been capitalised in the period. For further information, please refer to Energetix Group plc's annual Financial Statements for the year ended 31 December 2007.

 

3. Segmental information

			Distributed generation and load shifting £'000		Power quality and reliability £'000		Energy Efficiency £'000		Unallocated £'000		Group £'000
Segment revenue			29		-		-		-		29
Operating loss			(707)		(366)		(369)		(633)		(2,075)
Financial income			-		-		14		1,112		1,126
Other gains			-		-		1,613		-		1,613
Profit/(loss) before income tax			(707)		(366)		1,258		479		664
Profit/(loss) for the year			(707)		(366)		1,258		479		664
Depreciation and amortisation expense			204		-		-		17		221
Other non cash movements			799		-		(105)		24		718

 

The segment results for the year ended 31 December 2007 are as follows:

			Distributed generation and load shifting £'000		Power quality and reliability £'000		Energy Efficiency £'000		Unallocated £'000		Group £'000
Segment revenue			47		8		-		-		55
Operating loss			(1,160)		(757)		(191)		(906)		(3,014)
Financial income			25		-		3		460		488
Other gains			-		-		685		-		685
Profit/(loss) before income tax			(1,135)		(757)		497		(446)		(1,841)
Income tax expense			-		-		-		(6)		(6)
Profit/(loss) for the year			(1,135)		(757)		497		(452)		(1,847)
Depreciation and amortisation expense			(338)		(35)		-		(22)		(395)
Other non cash movements			(174)		26		(6)		(123)		(277)

 

3. Segmental Information (continued)

 

The segment results for the six months ended 30 June 2007 are as follows:

			Distributed generation and load shifting £'000		Power quality and reliability £'000		Energy Efficiency £'000		Unallocated £'000		Group £'000
Segment revenue			-		-		-		-		-
Operating loss			(667)		(421)		(38)		(188)		(1,314)
Financial income			(107)		-		-		99		(8)
Profit/(loss) before income tax			(774)		(421)		(38)		(89)		(1,322)
Income tax expense			-		-		-		-		-
Loss for the year			(774)		(421)		(38)		(89)		(1,322)
Depreciation and amortisation expense			192		12		-		10		214
Other non cash movements			-		-		-		34		34

The segment assets and liabilities at 30 June 2008 and capital expenditure for the period then ended are as follows:

			Distributed generation and load shifting £'000		Power quality and reliability £'000		Energy Efficiency £'000		Unallocated £'000		Group £'000
Assets			7,560		522		3,704		10,723		22,509
Liabilities			(1,320)		(147)		(80)		(700)		(2,247)
Capital expenditure
-Tangible			17		58		2		45		122
-Intangible			488		369		9		-		866

 

The segment assets and liabilities at 31 December 2007 and capital expenditure for the year then ended are as follows:

			Distributed generation and load shifting £'000		Power quality and reliability £'000		Energy Efficiency £'000		Unallocated £'000		Group £'000
Assets			6,306		1,273		953		12,324		20,856
Liabilities			(2,164)		(99)		(87)		(703)		(3,053)
Capital expenditure
-Tangible			38		73		7		72		190
-Intangible			535		485		-		-		1,020

 

3. Segmental Information (continued)

 

The segment assets and liabilities at 30 June 2007 and capital expenditure for the period then ended are as follows:

			Distributed generation and load shifting £'000		Power quality and reliability £'000		Energy Efficiency £'000		Unallocated £'000		Group £'000
Assets			6,347		166		10		3,592		10,115
Liabilities			(501)		(396)		(36)		(2,463)		(3,396)
Capital expenditure
-Tangible			13		63		-		38		114
-Intangible			532		-		-		-		532

Revenue and loss before income tax are attributable to the principal activity of the Group. All revenue and costs originate from continuing operations. Revenue can be summarised as follows:

 

Geographical analysis of revenue:

							30 June 2008		31 December 2007		30 June 2007
							£'000		£'000		£'000
UK							7		39		-
Europe							22		8		-
Rest of world							-		8		-
							29		55		-

4. Finance income

		30 June 2008		31 December  2007		30 June 2007
		£'000		£'000		£'000
Loans and receivables including bank balances		327		413		98
Fair value adjustment of long term borrowings		799		75		(106)
		1,126		488		(8)

In July 2006, Energetix (Europe) Limited and Energetix Genlec Limited entered into an agreement with Battelle Memorial Institute (Battelle) under which Battelle agreed to waive all rights to subscribe for 40% of the share capital of Energetix Genlec Limited in exchange for a £3,000,000 preference debt in Energetix Genlec Limited. The preference debt has been discounted at 7.50% (2007: 7.50%) from the date of assuming until anticipated settlement date giving rise to a non current liability of £1,135,000 (2007: £1,995,000) and a current liability of £37,500 (2007: £89,000). The terms are that it is non interest bearing, that £500,000 will be repaid over the two years ending August 2008 and that the balance will be repaid by (i) an amount equal to 10% of any license fees paid to Energetix Genlec Limited by any third party and (ii) 2% of amounts received by Energetix Genlec Limited in respect of all mainstream sales of the product. During the period, £112,000 was repaid and the discounting of estimated future repayments at 7.50% has resulted in an adjustment to the carrying value of the liability. The obligation for future repayments based on a percentage of mainstream sales is considered an embedded derivative. Accordingly the Group has designated the entire instrument as fair value through profit and loss (FVTPL).

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest-related changes and changes in an instruments fair value are reported in the Group Income Statement and are shown within finance income.

5. Deemed disposals

During the period, the Group made deemed disposals in its AIM listed subsidiary, VPhase plc. The chronology of the transactions is outlined below:

On 7 February 2008, VPhase plc issued 1,248,240 ordinary shares of 0.25 pence each at 1.6 pence per share to Novum Securities Limited, its broker in settlement of outstanding fees reducing the Group's interest from 55.1% to 54.9%. 

On 19 May 2008, VPhase plc issued 70,000,000 ordinary shares of 0.25 pence each at 5 pence per share via a placing. The placing raised £3,500,000 before issue costs of £195,000 and share based payments of £105,000. This reduced the Group's interest from 54.9% to 49.38%.

On 12 June 2008, VPhase plc issued an additional 1,248,240 ordinary shares of 0.25 pence each at 1.6 pence per share to Novum Securities Limited, its broker in settlement of outstanding fees reducing the Group's interest from 49.38% to 49.29%. 

The reductions in the Group's interest in VPhase plc constitutes deemed disposals at Group level and results in gains to the Group as calculated below:

Deemed disposal 1

	Group		Minority Interest		Total
	£		£		£
Fair value of consideration	20,000		-		20,000
Share of net assets disposed of	(9,695)		9,695		-
Group gain on deemed disposal	10,305		9,695		20,000

Deemed disposal 2

	Group		Minority Interest		Total
	£		£		£
Proceeds from placing	3,500,000		-		3,500,000
Share issue expenses	(300,000)		-		(300,000)
Share of net assets disposed of	(1,607,452)		1,607,452		-
Group gain on deemed disposal	1,592,548		1,607,452		3,200,000

Deemed disposal 3

	Group		Minority Interest		Total
	£		£		£
Fair value of consideration	20,000		-		20,000
Share of net assets disposed of	(10,353)		10,353		-
Group gain on deemed disposal	9,647		10,353		20,000

The total deemed gain resulting from the disposals is £1,612,500 and the increase in minority interest is £1,627,500.

Following the deemed disposals in VPhase plc, the Group held 49.29% of the ordinary share capital of VPhase plc. The Group continues to consolidate the results of the subsidiary on the basis that it controls the financial and operating polices of VPhase plc through Board members.

The Group has control over 53.85% of the voting rights of the ordinary shares in VPhase plc as a result of retaining the voting rights over shares held by an employee benefit trust.

 

6. Profit/(loss) per share

Basic earnings per share amounts are calculated by dividing net profit/(loss) for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing net profits attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period adjusted for the effects of dilutive options and warrants.

		Unaudited 6 months ended 30 June  2008		Audited  12 months ended 31 December 2007		Unaudited  6 months ended 30 June 2007
Profit/(loss) attributable to equity holders of the group (£'000)		664		(1,842)		(1,322)
Basic weighted average number of Ordinary shares in issue ('000)		55,065		49,178		45,000
Dilutive effect of:
-Employee share options		320		-		-
-Warrants		535		-		-
Diluted weighted average number of shares ('000)		55,920		-		-
Basic profit/(loss) per share (pence)		1.21p		(3.74)p		(2.94)p
Diluted profit/(loss) per share (pence)		1.19p		(3.74)p		(2.94)p

Share options and warrants in issue for the periods ended 31 December 2007 and 30 June 2007 are anti-dilutive in respect of the basic loss per share calculation and have therefore not been included.

 

7. Other intangible assets

		Micro CHP						Compressed air battery		Energy Efficiency		Total
		Intellectual property		R&D Assets		Total		R&D Assets		R&D Assets
		£'000		£'000		£'000		£'000		£'000		£'000
At 1 January 2007		5,583		272		5,855		602		-		6,457
Additions		-		277		277		255		-		532
Accumulated amortisation		(192)		-		(192)		-		-		(192)
At 30 June 2007		5,391		549		5,940		857		-		6,797
Additions		-		259		259		230		-		489
Accumulated amortisation		(142)		-		(142)		-		-		(142)
At 31 December 2007		5,249		808		6,057		1,087		-		7,144
Additions		-		489		489		367		10		866
Accumulated amortisation		(169)		-		(169)		-		-		(169)
At 30 June 2008		5,080		1,297		6,377		1,454		10		7,841

Intangibles include internally generated capitalised product development costs in accordance with IAS 38.

The Group currently has internally generated intangible assets from development of its micro CHP module, compressed air battery and energy efficiency device. All other development work has been written off as incurred as the criteria for recognition as an asset are not met.

On 19 May 2008 VPhase plc raised £3,305,000 net of expenses via a placing of 70,000,000 new ordinary shares of 0.25 pence each at a price of 5 pence per share. The Directors consider that, following the placing, VPhase plc has adequate financial resources, to complete the development and marketing of the product and that the product is considered to be technically feasible in accordance with IAS 38. Accordingly, development costs incurred subsequent to the placing have been capitalised as intangible assets.

 

8. Share options

The Company established, in June 2006, two share option schemes in relation to ordinary shares, namely the Energetix Unapproved Share Option Scheme 2006 and the Energetix Enterprise Management Incentive Scheme 2006. 

The Group grants options over the ordinary shares of the Company at not less than the market value of the Company's ordinary shares on the date of grant. The vesting period is generally three to four years. If the option remains unexercised after a period of 10 years from the date of grant, the options expire. The Group has no legal or constructive obligation to repurchase or settle the options in cash. 

No share options were granted during the period to 30 June 2008. As at 30 June 2008, 337,500 share options were capable of being exercised (2007: 337,500). The options outstanding at 30 June 2008 had a weighted average exercise price of 48.1 pence (2007: 40 pence), and a weighted average remaining contractual life of eight years five months. The weighted average exercise price of share options granted during the prior year was 60.1 pence. No options were exercised during the year.

The Group uses the Black-Scholes model to fair value the Group's share options which resulted in a fair value charge of £49,000 (2007:£nil) and a corresponding credit to other reserves. 

 

 

9. Cash consumed by operations

			Unaudited 6 months ended 30 June 2008 £'000		Audited 12 months ended 31 December 2007 £'000		Unaudited 6 months ended 30 June 2007 £'000
Profit/(loss) before income tax			664		(1,847)		(1,322)
Adjustments for:
Depreciation			52		62		23
Amortisation			169		333		191
Finance income			(1,126)		(488)		(8)
Gain on deemed disposal of Subsidiary (note 5)			(1,613)		(685)		-
Share based payment			37		68		34
Other share based payments			12		32		-
Issue of warrants in subsidiary			105		-		-
Income tax charge			-		6		-
Changes in working capital:
Decrease/(increase) in inventories			45		(58)		-
Decrease/(increase) in trade and other receivables			71		(232)		(78)
Increase in trade and other payables			52		372		306
			(1,532)		(2,437)		(854)

ENDIR ILFSTASIELIT

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