Interim Results

VPhase plc

("VPhase" or "the Group")

Consolidated Interim Financial Statements

for the six months ended 30 June 2010

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 2010.

Financial and operational highlights

Post period end

Vanda Murray OBE, Chairman of VPhase, said: "The rate of commercial progress in VPhase has accelerated significantly in the last few months, in particular VPhase is in the final stage of negotiating a number of framework agreements with leading power utilities and a large outsourcing company that provides heating and renewable energy in the UK. Successful negotiation of these agreements would be a substantial step toward the Company being able to reach breakeven and profitability.

"As the number of electricians trained to fit VPhase grows and we scale up our marketing efforts, the Board is confident that the recent improvement in sales performance will continue, especially once our Carbon Emissions Reduction Target ("CERT") approval is rubber-stamped."

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Chairman's Statement

Whilst progress to date has been slower than anticipated, several major milestones have been reached: external trials of VPhase have demonstrated electricity savings of between 6% and 12% per annum in the home; VPhase is in the final stages of negotiating a number of framework agreements with large utilities and a leading outsourcing company that provides heating and renewable energy; and VPhase is now listed in over 1,000 electrical wholesalers' outlets across the UK. We were also delighted to be awarded a full EU patent for the unique VPhase technology post period end.

Since my appointment in July, and working closely with Rick Smith, a new commercial strategy has been implemented.

Highlights include:

·; increased consumer awareness through TV and magazine coverage, as well as a new website www.vphase.co.uk;

·; increased awareness amongst professional electricians through trade advertising, increased efforts of the field sales team and a new trade section on the website;

·; a new pricing structure which should result in an installed price for the homeowner of no more than £250 if installed in conjunction with a new consumer unit; and

·; a mail shot sent to over 2,200 social housing providers outlining the results of the Great Places trial.

It is also pleasing to see that VPhase's innovation is being recognised by the industry, as VPhase has been selected as a finalist for the Electrical Industry Awards 2010 in the category of Innovative Residential/Domestic product of the year.

By September, this increased commercial activity had resulted in a three-fold uplift in monthly sales over the average of those seen in the first six months of the year and greatly increased interest by larger organisations to enter into framework agreements for significant volumes.

Installing a VPhase unit is a compelling economic proposition; a product that you can fit, forget and start saving money with immediately. VPhase typically demonstrates electricity savings of 6% to 12% per household per annum, without any change in activity or lifestyle, and a lifetime carbon reduction in excess of four tonnes. This latter point should enable the qualification of VPhase under the UK Government's CERT scheme later this year which the Board believe will further accelerate its adoption by the social housing and utilities sectors.

Energy efficiency continues to be a key focus with the new coalition Government announcing that central government departments will cut their carbon emissions by 10% in the next year and will publish their energy usage online in real time. The Department of Energy and Climate Change ("DECC") is focusing on programmes which emphasise the importance of energy conservation and generation on a domestic level. VPhase is ideal for energy conservation on the domestic level given its low cost, ease of fit, long life and the fact that it typically delivers between 6% and 12% electricity saving for the homeowner without the need for behavioural changes.

Board Changes

I am delighted to announce that with effect from today Rick Smith has been appointed as Chief Executive Officer of VPhase plc taking full responsibility for all activities within the Group from Lee Juby who steps down with immediate effect.

I would like to thank Lee for his major contribution over the last three years in progressing VPhase's technology platform into a fully fledged energy saving product that customers can simply fit, forget and save money with instantly.

Financial performance

Loss before income tax increased in the period under review to £727,000 (2009: £412,000) reflecting the commercial activity necessary to increase awareness of the product and the sales effort undertaken. The results of this activity are coming through with much improved rates of sales being achieved in the second half of the year.

Overheads have been controlled in the period to a level better than the Directors' expectations to offset the reduced contribution from lower than expected sales. Total overheads in the period were £766,000 (2009: £430,000) net of any development expenditure incurred and capitalised in the period, in accordance with IAS 38, of £Nil (2009: £190,000). In accordance with the Group's accounting policies, an impairment review has been carried out on the carrying value of this intangible asset and no impairment charge is required.

Purchase of property, plant and equipment in the period totalled £1,000 (2009: £3,000) in accordance with the low capital required for a subcontract manufacturing business model.

The net cash utilised by the business in the period was £737,000 (2009: £677,000) and the Group had cash resources of £940,000 at 30 June 2010 (2009: £2,526,000).

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.vphase.co.uk) 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 hard copies of its 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 of all recent announcements.

Outlook

The slow start to 2010 will impact on the full year's results for the business, however the Directors expect the recent dramatic increase in sales performance to continue as the Group continues its efforts to drive sales. The recent commercial progress is particularly pleasing and we await CERT in order to further accelerate our growth. With the new commercially focused Board in place, we look forward to the rest of the coming year as VPhase moves into full commercial roll-out.

Vanda Murray OBE

Chairman

28 September 2010

Unaudited consolidated income statement

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 unaudited Consolidated Interim Financial Statements.

Unaudited consolidated statement of financial position

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

Unaudited consolidated statement of changes in equity

Unaudited consolidated statement of changes in equity (continued)

Unaudited consolidated statement of cash flows

These notes are an integral part of these unaudited 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 Castlefield House, Liverpool Road, Castlefield, Manchester, M3 4SB. 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 434 of the Companies Act 2006. The consolidated statement of financial position as at 31 December 2009 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 2009. Those Financial Statements have received an unqualified report from the auditors and have been delivered to the Registrar of Companies. The 2009 statutory accounts contained no statement under section 498(2) or section 498(3) of the Companies Act 2006.

The Consolidated Interim Financial Statements for the period ended 30 June 2010 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 8 September 2010 for release on 28 September 2010.

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 2010. 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 2009.

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

The Directors recognise that the customer adoption process of the Group's products has taken longer than anticipated and the Directors have tightly managed the Group's cash resources to reflect this position.

In addition, the Group is in a position to generate income from the contractual negotiations currently in progress with major utilities and a large heating and renewable outsourcing company. Given this and, if required, the availability of alternative funding opportunities through, for example, loans under the Enterprise Finance Guarantee scheme, the Directors have a reasonable expectation that the Company and the Group have 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 2009.

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 2010, no shares were issued to Novum Securities Limited in settlement of broker services received (30 June 2009: 416,666 0.25 pence shares were issued at 6.0 pence per share). On 6 July 2009, Ambrian Partners Limited was appointed as Nominated Adviser and Broker to the Company. Fees payable to Ambrian Partners Limited are settled in cash.

5 Intangible assets

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

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:

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.