Interim Results

15th Sep 2009 07:00



Press Release

15 September 2009

VPhase plc

("VPhase" or "the Group")

Consolidated Interim Financial Statements for the six months ended 30 June 2009

VPhase plc (AIM:VPHA), a leading developer of energy saving products for residential and commercial properties, today reports its Interim Results for the six months ended 30 June 2009.

Financial and operational highlights

●	Achieved CE certification of the VPhase product, enabling the commencement of UK and European sales;
●	Increased marketing and sales efforts, including: – established a dedicated sales team – increased presence through industry trade shows – set up a dedicated consumer hotline to handle the anticipated customer interest;
●	Continued to develop further routes to market with utility companies, electrical distributors, housing associations and local housing authorities; and
●	Continued to exercise strong cash management.

 

Since the period end

●	Product manufacturing contract awarded; and
●	Volume supply of mainstream units of VPhase product to customers commenced.

 

Adrian Hutchings, Executive Chairman of VPhase, said: "The first six months of this year was a period of critical commercial progress for VPhase.  Significantly, the Group achieved CE certification for our smart voltage management product, which has enabled commercial sales to start immediately. The Group has increased its marketing and sales efforts, strengthening our volume production capabilities, and is developing new routes to market.

"Whilst we undertake our commercial activities, the Group continues to exercise strong cash management. We anticipate the next six months to be yet another critical period of transition as VPhase commences volume sales and starts to generate further revenues."

- Ends -

For further information:

VPhase plc
Lee Juby, Chief Executive Officer	Tel: +44 (0) 151 348 2139
Richard Smith, Chief Financial Officer	Tel: +44 (0) 151 348 2116
	www.vphaseplc.com
Ambrian Partners Limited	Tel: +44 (0) 20 7634 4700
Andrew Craig/Ben Wright, NOMAD
Shaun Whyte, Corporate Broking
	www.ambrian.com
Media Enquiries:
Abchurch Communications Limited	Tel: +44 (0) 20 7398 7700
Justin Heath
Monique Tsang
[email protected]
	www.abchurch-group.com

 

Chief Executive's Statement

Overview

I am delighted with the substantial technical and commercial progress made in the first six months of 2009 after two years of development.

Our first product, the VPhase, has achieved CE certification enabling this product to be available for sale throughout the UK and Europe, and initial sales in the UK have commenced with selected customers.

In January 2009, the Group obtained approval by Ofgem to conduct a formal Demonstration Action for the UK Government CERT scheme. This Demonstration Action, with Scottish and Southern Energy plc ("SSE"), has now commenced following our CE certification, and consists of the installation of VPhase units in a number of homes. The Demonstration Action will provide VPhase with independent verification of our product's energy saving capabilities and unlock the door to valuable CERT subsidies, effectively accelerating the market take-up for the VPhase product.

The Group has significantly increased marketing activities both with our partners and through the establishment of a dedicated sales team.  In March 2009, VPhase exhibited at the Ecobuild trade show in London where the Group successfully demonstrated the product and received significant interest from end users and key decision makers in our target markets. Building upon the success of Ecobuild, VPhase has featured in targeted trade publications as well as mainstream media channels such as on the BBC's Working Lunch programme. In addition, the Group has been included in a special interest report in The Times, to raise awareness of the benefits of voltage optimisation and the availability of the VPhase product to deliver these benefits. The further development of the various sales channels is the primary focus for the rest of this year and into 2010.

The Group has established a website, www.vphase.com, and a sales hotline (0845 0038235) where consumers and electrical companies can purchase the product. VPhase is also developing routes to market with utility companies (partners currently include SSE and British Gas), electrical distributors, housing associations and local housing authorities. In addition, the Group continues to work closely with consumer unit manufacturers to consider incorporating VPhase within their products.

Volume production is underway to meet anticipated customer demand. Our technical team has been focusing upon working with our manufacturing partners and the component supply chain to establish the production processes necessary to bring the product to market in volume. This has resulted in the first volume supplies being available this month (September 2009).

Government interest in energy efficiency and energy conservation is well recognised, and the Group has been active in raising Government awareness of the VPhase product. In May 2009, Adrian Hutchings, the Executive Chairman of VPhase, briefed the Secretary of State for Energy and Climate Change, the Rt. Hon. Ed Miliband, MP, on the benefits of our smart voltage management product. The briefing was held during the week that Mr Miliband announced the UK Government's plans to roll out smart meters across 26 million homes and several million businesses over the next ten years.

 

During the period under review, the Group appointed Ambrian Partners Limited as Nominated Advisor and Broker to replace Zimmerman Adams and Novum Securities respectively. These appointments were made to enable wider exposure of the business during its transition from pre-revenue to revenue-generation.

Financial performance

During the six month period to 30 June 2009 pre-tax losses increased to £412,000 (30 June 2008: £356,000), reflecting the planned increased level of commercialisation activity. This increase in activity has necessitated the appointment of additional sales staff and increased marketing activity as the product is brought to market.

Design and development expenditure during the period has been in line with budget.

During the period the Group received a tax credit of £5,000 (2008: £nil) in relation to research and development expenditure in 2006/07. In accordance with the Group's accounting policies no further amounts have been accrued for subsequent accounting periods as the amount expected to be recovered can not be reliably measured.

Prior to the Group's placing in May 2008 the criteria for capitalisation of development spend under IAS38 was not met and accordingly this expenditure was written off as incurred.  Following the placing, the Group has the resources, a working technology and visibility of the market, giving rise to the capitalisation of development expenditure. This expenditure for the period was £190,000 (2008: £10,000) and is carried forward as an intangible asset. Expenditure on tangible fixed assets was £3,000 (2008: £1,000), in line with our plans to minimise capital expenditure wherever practical.

 

At the end of June 2009, the Group had cash of £2,526,000 and provides a strong position from which to achieve its commercial targets.

Circulation to Shareholders

Following this RNS announcement, a pdf copy of the Consolidated Interim Financial Statements will be posted on the Group's website (www.vphaseplc.com) rather than made available in hard copy. This is in line with the Group's efforts in minimising 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 and details on all recent Group announcements.

  Outlook

In the first six months of the year, the Group achieved the major goal of CE Certification, increased marketing effort and appointed a dedicated sales resource to manage the growing database of interested potential customers.

The Group continues to exercise strong cash management whilst accelerating marketing effort and meeting working capital commitments to support its volume manufacturing capability. VPhase continues to focus on business commercialisation, growth and delivering shareholder value.

Lee Juby

Chief Executive Officer

15 September 2009

 Unaudited consolidated income statement

Note	Unaudited 6 months to 30 June 2009	Unaudited 6 months to 30 June 2008	Audited Year to 31 December 2008
	£'000	£'000	£'000
Continuing operations
Revenue     3	60	-	-
Cost of sales	(50)	-	-
Gross profit	10	-	-
Administrative expenses	(430)	(369)	(852)
Operating loss	(420)	(369)	(852)
Finance income	8	13	84
Loss before income tax	(412)	(356)	(768)
Income tax credit	5	-	-
Loss for the financial period	(407)	(356)	(768)

Earnings per share: 

Basic & Dilluted  loss per share   6	(0.06p)	(0.06p)	(0.11p)

The Group has no items to be recognised in the "Consolidated statement of comprehensive income" and consequently this statement has not been shown.

All revenue and costs originate from continuing activities.

The notes are an integral part of these Consolidated Interim Financial Statements.

Unaudited consolidated statement of financial position

		Unaudited 6 months to 30 June 2009	Unaudited 6 months to 30 June 2008	Audited Year to 31 December 2008
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		66	2	72
Other intangible assets	5	412	10	222
		478	12	294
Current assets
Inventories		8	-	-
Trade and other receivables		160	83	144
Cash and cash equivalents		2,526	3,628	3,203
		2,694	3,711	3,347
Total assets		3,172	3,723	3,641
Liabilities
Current liabilities
Trade and other payables		(223)	(138)	(335)
Total liabilities		(223)	(138)	(335)
Net assets		2,949	3,585	3,306
Equity
Equity attributable to equity holders of the parent
Share capital		1,751	1,744	1,750
Share premium account		4,486	4,428	4,462
Merger relief reserve		1,150	1,150	1,150
Capital redemption reserve		989	994	994
Retained earnings		(1,959)	(1,140)	(1,552)
Reverse acquisition reserve		(3,682)	(3,682)	(3,682)
Warrant reserve		105	105	105
Other reserves		109	(14)	79
Total equity		2,949	3,585	3,306

The notes are an integral part of these Consolidated Interim Financial Statements. 

Unaudited consolidated statement of changes in equity

	Share capital	Share premium account	Merger relief reserve	Capital redemption reserve	Retained earnings	Reverse acquisition reserve	Warrant reserve	Other reserves	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2009	1,750	4,462	1,150	994	(1,552)	(3,682)	105	79	3,306
Share-based payments	-	-	-	-	-	-	-	50	50
Issue of share capital (Note 4)	1	24	-	(5)	-	-	-	(20)	-
Transactions with owners	1,751	4,486	1,150	989	(1,552)	(3,682)	105	109	3,356
Loss for the financial period	-	-	-	-	(407)	-	-	-	(407)
Balance at 30 June 2009	1,751	4,486	1,150	989	(1,959)	(3,682)	105	109	2,949

Unaudited consolidated statement of changes in equity (continued)

	Share capital	Share premium account	Merger relief reserve	Capital redemption reserve	Retained earnings	Reverse acquisition reserve	Warrant reserve	Other reserves	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008	1,563	1,369	1,150	994	(784)	(3,682)	-	(27)	583
Share based payments	-	-	-	-	-	-	-	13	13
Issue of share capital by legal parent:
- 14 May 2008	175	3,325	-	-	-	-	-	-	3,500
- 13 February 2008	3	17	-	-	-	-	-	(20)	-
- 12 June 2008	3	17	-	-	-	-	-	(20)	-
Other share-based payments	-	-	-	-	-	-	-	40	40
Expenses in relation to placing:
Cash	-	(195)	-	-	-	-	-	-	(195)
Warrants	-	(105)	-	-	-	-	105	-	-
Transactions with owners	1,744	4,428	1,150	994	(784)	(3,682)	105	(14)	3,941
Loss for the financial period	-	-	-	-	(356)	-	-	-	(356)
Balance at 30 June 2008	1,744	4,428	1,150	994	(1,140)	(3,682)	105	(14)	(3,585)

  Unaudited consolidated statement of changes in equity (continued)

	Share capital	Share premium account	Merger relief reserve	Capital redemption reserve	Retained earnings	Reverse acquisition reserve	Warrant reserve	Other reserves	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008	1,563	1,369	1,150	994	(784)	(3,682)	-	(27)	583
Share based payments	-	-	-	-	-	-	-	106	106
Issue of share capital by legal parent:
-13 February 2008	3	17	-	-	-	-	-	(20)	-
-14 May 2008	175	3,325	-	-	-	-	-	-	3,500
-12 June 2008	3	17	-	-	-	-	-	-	20
-14 August 2008	3	17	-	-	-	-	-	-	20
- 8 October 2008	3	17	-	-	-	-	-	-	20
Other share based payments	-	-	-	-	-	-	-	20	20
Expenses in relation to placing:
Cash	-	(195)	-	-	-	-	-	-	(195)
Warrants	-	(105)	-	-	-	-	105	-	-
Transactions with owners	1,750	4,462	1,150	994	(784)	(3,682)	105	79	4,074
Loss for the financial period	-	-	-	-	(768)	-	-	-	(768)
Balance at 31 December 2008	1,750	4,462	1,150	994	(1,552)	(3,682)	105	79	3,306

Unaudited consolidated statement of cash flows

	Unaudited 6 months to 30 June 2009	Unaudited 6 months to 30 June 2008	Audited Year to 31 December 2008
	£'000	£'000	£'000

Cash flows from operating activities

Loss after income tax	(407)	(356)	(768)
Adjustments for:
Depreciation	9	1	5
Share based payments	50	53	187
Finance income	(8)	(13)	(84)
Income tax credit recognised in income statement	(5)	-	-
Increase in trade and other receivables	(16)	(21)	(82)
Increase in inventories	(8)	-	-
(Decrease)/increase in trade payables	(112)	106	302

Cash used in operations	(497)	(230)	(440)
Income tax received	5	-	-

Net cash used in operating activities

(492)

(230)

(440)

Cash flows from investing activities

Expenditure on intangible fixed assets	(190)	(10)	(222)
Purchase of property, plant and equipment	(3)	(1)	(75)
Interest received	8	13	84

Net cash (used in)/generated from investing activities

(185)

2

(213)

Cash flows from financing activities

Net Proceeds from issue of share capital

-

3,305

3,305

Net cash generated from financing activities

-

3,305

3,305

Net (decrease)/increase in cash and cash equivalents	(677)	3,077	2,652
Cash and cash equivalents at beginning of period	3,203	551	551
Cash and cash equivalents at end of period	2,526	3,628	3,203

These notes are an integral part of these Consolidated Interim Financial Statements.

 

Notes to the Consolidated Interim Financial Statements

1 Nature of operations and general information

VPhase plc ("the Company") and its subsidiaries (together "the Group") is a leading developer of energy saving devices for the home and small commercial/retail applications using voltage control technology where the incoming voltage to a property is held to a set point. The Group's products are targeted at energy efficiency. 

Energetix Group plc is the Group's ultimate parent company. It is incorporated in England and Wales. The address of the registered office is Steam Packet House, 76 Cross Street, Manchester, M2 4JU. The Group trades through a number of subsidiaries, whose place of business is Capenhurst Technology Park, Capenhurst, Chester, CH1 6EH. VPhase plc's shares are listed on the AIM Market of the London Stock Exchange. 

The financial information set out in these Financial Statements does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The consolidated statement of financial position as at 31 December 2008 and the consolidated income statement, consolidated statement of cash flows, consolidated statement of changes in equity and associated notes for the year then ended have been extracted from the Group's Financial Statements as at 31 December 2008. Those Financial Statements have received an unqualified report from the auditors and have been delivered to the Registrar of Companies. The 2008 statutory accounts contained no statement under section 237(2) or (3) of the Companies Act 1985. 

The Consolidated Interim Financial Statements for the period ended 30 June 2009 have not been audited or reviewed in accordance with International Standard on Review Engagement 2410 issued by the Auditing Practices Board.

The Consolidated Interim Financial Statements have been approved by the Board of Directors on 15 September 2009.

VPhase plc's Consolidated Interim Financial Statements are presented in pounds sterling (£), which is also the functional currency of the parent company.

2 Basis of preparation

These Consolidated Interim Financial Statements are for the six months ended 30 June 2009. They have not been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2008.

These financial statements have been prepared under the historical cost convention.

The Group has considerable financial resources and, together with contractual arrangements with certain economic partners in different geographical areas and industries, this provides a sound platform for launching the Group's products and generating future sales. As a consequence, the Directors believe that the Group is well placed to manage its business risk successfully despite the current uncertain economic outlook.

The Group's forecasts and projections, which have been prepared for the period to 31 December 2011 and taking account of reasonably possible changes in performance, show that the Group should be able to operate within the level of its current cash resources.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Group's Consolidated Interim Financial Statements.

These Consolidated Interim Financial Statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2008 except for the adoption of IAS 1 Presentation of Financial Statements (Revised 2007), IFRS 8 Operating Segments and IFRS 2 (amendment), `Share based payments` on `Vesting conditions and cancellations`. 

The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'. In accordance with the new standard the entity does not present a 'Statement of recognised income and expenses (SORIE)'. Further, a 'Statement of changes in equity' is presented.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these Consolidated Interim Financial Statements. 

3 Segment analysis

The business of the Group comprises one segment, energy efficiency, and as such no segmental information is provided. The Group operates entirely within the United Kingdom.

4 Share issue

During the period to 30 June 2009, 416,666 ordinary shares of 0.25 pence each were issued at 6.0 pence per share to Novum Securities Limited in settlement of broker services received. On 6 July 2009, Ambrian Partners Limited was appointed as Nominated Adviser and Broker to the Company. Fees payable to Ambrian Partners Limited will be settled in cash.

 

5 Additions of intangible assets

The following table show the additions to the intangible asset of the energy efficiency product unit.

			Unaudited 6 months to 30 June 2009	Unaudited 6 months  to 30 June 2008	Audited  Year to  31 December 2008
			£'000	£'000	£'000
Carrying amount at 1 January			222	-	-
Additions			190	10	222
Carrying amount at period end			412	10	222

6 Loss per ordinary share

The calculation of the basic loss per ordinary share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

Reconciliations of the loss and weighted average number of shares used in the calculations are set out below:

	Unaudited Period to 30 June 2009	Unaudited Period to 30 June 2008	Audited Year to 31 December 2008
Loss after tax and earnings attributable to ordinary shareholders (£'000)	(407)	(356)	(768)
Weighted average number of shares (thousands)	700,171	641,190	670,318
Basic and diluted loss per share (pence)	(0.06)	(0.06)	(0.11)

The share options and warrants in issue are anti-dilutive in respect of the basic loss per share calculation and have therefore been excluded in the above calculations.

ENDIR KZLFFKKBFBBV

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