Placing to raise £2.35 million and Notice of GM

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VPhase plc

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

Placing to raise £2.35 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 470,000,000 new ordinary shares of 0.25p each ("Placing Shares") at a price of 0.5p per share to raise gross proceeds of £2.35 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 called for 9.00 a.m. on 5 December 2011 at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB.

Background to and Rationale for the Placing and Use Of Proceeds

The Group has been successful in recent months in winning orders within the social housing and utility sectors, the larger orders being with Stockport Homes (1,200 units) and British Gas (980 units). Whilst the take-up from these is slower than the Group would have liked, and other contracts are taking longer to conclude than expected, good commercial progress is being made and there is a substantial pipeline of contracts in negotiation. Nevertheless, the Directors believe that delays in the conclusion of contracts and slower call off on orders will have an impact on the Company's full year revenue expectations.

Progress is being made within the utilities sector, albeit slowly, and social housing groups are showing increasing interest with a number of trial units being placed for assessment. VPhase is pleased to have been selected as a commercial partner for GE's "Powering your home" ecomagination challenge. Discussions continue with GE and the Company looks forward to finalising an agreement. Globally, an order has been received from Australia, discussions have commenced for the possible supply of units to Korea and the Company is investigating product requirements for the USA.

The net proceeds of the Placing will be used to provide the working capital for delivery of the pipeline of contracts, to support the Group by covering costs as sales grow and to fund product range extension from the Group's patented technology.

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 470,000,000 Placing Shares at a price of 0.5p per share ("Placing Price"). The Placing Price represents a discount of 59.2 per cent. to the official closing market price of 1.225p of an existing Ordinary Share on 16 November 2011, 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 36.9 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 1,272,210,361 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.

General Meeting

A circular containing a notice of a General Meeting of the Company, convened for 9.00 a.m. on 5 December 2011 at Castlefield House, Liverpool Road, Castlefield, Manchester M3 4SB, will today 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 21,962,258 Ordinary Shares beneficially held by them, representing approximately 2.74 per cent. of the entire 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 6 December 2011.

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, Nick Moss 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 Thursday before the last Friday of each month.

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 support 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."

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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 potentially saving up to £135 per annum, 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

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 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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