Placing to raise £0.5 million

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VPhase plc

("VPhase" or the "Company" or the "Group")

Placing to raise £0.5 million and Notice of General Meeting

VPhase plc, (AIM:VPHA), a leading developer of energy saving products for residential and commercial properties, is pleased to announce that is has conditionally placed 103,800,000new ordinary shares of 0.25p each ("Placing Shares") at a price of 0.5p per share to raise gross proceeds of £0.5 million (the "Placing").

The Placing is conditional upon the passing of certain resolutions by Shareholders of the Company at a General Meeting of the Company to be called for 10.00 a.m. on Monday 14 January 2013 at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB.

Background and Rationale for the Placing and Use Of Proceeds

The Company has seen growth in sales revenues in the period to November 2012 and a four-fold increase in volumes during the same period, in each case, as compared with 2011. This growth has been driven by a focus on social housing where the Directors believe the benefits of the VPhase product are well recognised. In 2012 we believe we have demonstrated that there is a volume demand for our product and there exist a number of opportunities to drive further sales.

There are some 4.8 million social homes in the UK of which VPhase has penetrated less than 0.2% giving great scope for further growth.

There are many opportunities for combining VPhase on installation when the Registered Social Landlord ("RSL") rewires, installs a boiler or solar PV system or carries out other electrical work.

Our overseas strategy of reacting to opportunities when they arise has resulted in contracts in Australia, Cyprus and as announced on 21 December 2012, France, Luxembourg and Belgium now exceeding £17.3 million over the next five years if contractual volume targets are met.

In addition we also announced on 21 December 2012 our framework agreement with British Gas Trading Limited which the Directors believe should provide further opportunity for the growth of the business.

Our new products continue the VPhase tradition of being the best performing and lowest cost optimisers on the market but have the added benefits of multiple methods of installation making the installer's job easier and with the added benefit of its own modular distribution board. The new 5kW version allows the Company to target the single phase commercial market of shops, small offices, Local Authority offices, community centres care homes and others.

The net proceeds of the Placing will be used to provide working capital for recent new contracts and framework agreements, as announced on 21 December 2012. 

Details of the Placing

The Company has entered into a conditional placing agreement with its corporate broker Panmure Gordon, under which Panmure Gordon has agreed to use its reasonable endeavours to procure placees for up to 103,800,000 Placing Shares at a price of 0.5p per share (the "Placing Price"). The Placing Price represents a discount of 13.0 per cent. to the official closing market price of 0.575p of an existing Ordinary Share on 20 December 2012, being the latest practicable date prior to the release of this announcement. Assuming the maximum number of Placing Shares is issued pursuant to the Placing, such shares will represent 8.1 per cent. of the Company's enlarged issued share capital. Following the Placing, assuming that all the Placing Shares are issued, the Company will have a total of 1,384,594,706 Ordinary Shares in issue.

The Placing Shares are being offered primarily to existing investors subject to the terms and conditions set out in the placing letters which have been sent out by Panmure Gordon to placees. The Placing is not being underwritten.

Director Participation

Pursuant to the Placing, the Company's CEO, Rick Smith has subscribed for 12.8 million shares at the Placing Price. Following the Placing, his holding in the Company's shares will total 26,744,149, representing 1.9 per cent. of the enlarged share capital, assuming that all the Placing Shares are issued.

General Meeting

A circular containing a notice of a General Meeting of the Company, convened for 10.00 a.m. on or about Monday 14 January 2013 at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB, will shortly be posted to Shareholders outlining the terms of the Placing and seeking authority from Shareholders, amongst other things, to allot the Placing Shares and to exclude statutory pre-emption rights for Shareholders (the "Resolutions"). This will allow the Directors to allot the Placing Shares in connection with the Placing.

The Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do so in respect of the 23,783,681 Ordinary Shares beneficially held by them, representing approximately 1.9 per cent. of the entire existing issued share capital of the Company.

A copy of the circular will also be available from the Company's website at www.vphase.co.uk.

Settlement and Dealings

Application will be made for admission of the Placing Shares to trading on AIM ("Admission"). It is expected that Admission will become effective and dealings will commence at 8.00 a.m. on 15 January 2013.

The Placing Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares in issue, including the right to receive any dividends and other distributions declared following Admission.

Share Based Payments

The Non-Executive Directors of the Company, being Vanda Murray, Colin Black and Duncan Sedgwick have, subject to Admission, entered into a binding agreement with the Company, pursuant to which, for the twelve months immediately following Admission, they will receive their directors' fees in Ordinary Shares. Each non-executive director will be issued a number of Ordinary Shares, calculated according to the closing mid-market price of the Ordinary Shares on the penultimate business day of each month.

The Company has also granted Panmure Gordon a warrant to subscribe for a number of shares in the Company equivalent to one per cent. of the issued and to be issued share capital of the Company at that time exercisable at any point after 12 months from completion of the Placing (or at an earlier point in the event of an offer for the Company being announced), at a subscription price of the lower of (i) 0.25 pence per share or (ii) the nominal value of the ordinary shares in the Company at the time.

Comment

Commenting on the placing, Rick Smith, Chief Executive Officer said: "We are delighted to have had the support of our Shareholders in raising funds that will further the continued development of VPhase through the current challenging environment. The Company is working with major partners to roll out our products and we look forward to the next phase of VPhase's growth."

- Ends -

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Notes to Editors:

About VPhase

VPhase plc is an energy efficiency technology company that launched the first domestic voltage optimisation device in the UK. The VPhase VX1 lowers the voltage in the home, reducing the energy consumption of many electrical appliances, saving money and reducing carbon emissions.

The VPhase device:

- has been proven to save up to 12% off home electricity bills;

- is easily installed by a qualified electrician;

- does not require a change in lifestyle or electricity supplier;

- is low cost, with a typical payback of under 5 years;

- has a 5 year manufacturer's warranty and an expected lifespan in excess of 25 years;

- can save up to 4.5 tonnes of CO2 over its 25+ year life;

- attaches to the consumer unit (fuse box) and regulates the voltage to 220 volts;

- is the next most affordable and effective green option for the home, after insulation.

The VPhase VX1 has been extensively tested with independent verification supporting the saving claims, including an Ofgem approved CERT demonstration action, social housing trials and a range of independent consumer trials. Many electrical appliances in the home will benefit from having their voltage optimised and reduced, including fridges, freezers, central heating pumps, televisions, washing machines, vacuum cleaners, etc. - and even 'energy-saving' light bulbs. As well as saving money, there is evidence that the life of electrical appliances can be extended by the use of this product; light bulbs in particular, have demonstrated at least a doubling of operating life when on a voltage optimised circuit.

Web: www.vphase.co.uk

Facebook: http://on.fb.me/cUBnek 

Twitter: www.twitter.com/vphase 

LinkedIn: http://linkd.in/qqbyYS 

YouTube: www.youtube.com/vphase 

Neither the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of, this announcement. This announcement does not constitute an offer to underwrite, subscribe or otherwise acquire or dispose of new Ordinary Shares in VPhase.

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