VPhase plc
Group Financial Statements
for the year ended 31 December 2008 
 VPhase plc Group Financial Statements for the year ended 31 December 2008 
VPhase plc
Capenhurst Technology Park
Chester
CH1 6EH
T. 0151 348 2100
F. 0151 348 2101
E: info@VPhase.com
www.VPhase.com
Smart Voltage Management
12065 Vphase CVR.indd   1 17/4/09   19:22:34 By 2016, all new homes built in England     
VPhase plc specialises in Smart 
Voltage Management and has 
developed a technology platform 
for a range of products to reduce 
energy used in homes and small 
businesses.
VPhase plc is a subsidiary of Energetix Group plc 
and was listed on AIM in 2007.
Contents
 Page
Highlights 01
At a glance 02
Chairman’s Statement 04
Chief Executive’s Review 05
Finance Review 07
Board of Directors 08
Group Directors’ Report 09
Report of the Independent Auditors 13
Group Income Statement 14
Group Statement of Changes in Equity 15
Group Balance Sheet 17
Group Cash Flow Statement 18
Notes to the Group Financial Statements 19
Company Balance Sheet 35
Notes to the Company Balance Sheet 36
Directors, Secretary and Advisors to the Group 44
FSC logo  
to go here
12065 Vphase CVR.indd   2 17/4/09   19:22:37 UK’s electricity generation accounts for about one third of the UK’s total carbon emissions - Energy White Paper 2007
Curre re r nt energy tre re r nds are patently unsustainable – WEO
By 2016, all new homes built in Engla      will have to be zero carbon - DTI
World energy demand ex ex e pands by by b 45% between now and 2030 – WEO
VPhase plc  
Group Financial Statements for the year ended 31 December 2008
01
Highlights
2008 Highlights:
May – Placing of 70 million shares raising £3.5 million gross; •	
September – Letter of intent signed with Scottish and Southern Energy •	
(‘SSE’) to fund an Ofgem-approved CERT Demonstration Action;
October – VX1 Smart Voltage Management unit had its formal launch at •	
Interbuild; and
October – Memorandum of understanding signed with British Gas Services •	
Limited (‘British Gas’) to distribute the VPhase energy saving product, subject 
to successful trials.
Post year end:
January 2009 – Ofgem approves SSE trials with funding provided by SSE •	
of up to £240,000; and
The Group is fully funded for current strategic plans. •	
12065 Vphase FRONT.indd   1 17/4/09   19:38:32 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
02
At a glance
62% of total domestic 
electricity use across 
Europe could benefit 
from the use of VPhase
1
This is represented by the shaded purple sections.
1 VPhase - mapping the potential European market, November 2008 
 B2B International
Refridgerators 15%
Lighting 12%
Misc 12%
Consumer electronics 6%
Washing machines 4%
Central heating pump 4%
TV 3%
Dishwashers 2%
Driers
2%
Air-conditioners 1%
Ofﬁce equipment 1%
Residential electric
heating 22%
Electric storage water heater 9%
Electric hobs 5%
Electric ovens 2%
62%
Energy use across Europe 
We specialise in 
developing cost effective 
products to meet the 
growing global demand 
for alternative energy 
technologies.
VPhase
VPhase’s Smart Voltage Management device can significantly 
reduce a typical domestic or small commercial property’s 
electricity costs. In addition, the property owner benefits from 
lower carbon emissions and consistent voltage levels.
The voltage supplied to a home or business needs to vary to 
ensure that the distribution network operates effectively. Whilst 
the agreed statutory range across Europe is based on 230V +/- 
10% (207V to 253V), voltages tend to be supplied at the higher 
end of the range to ensure that the network does not drop below 
the minimum when heavy loads are switched in and out. In the 
UK voltage is typically around 245 volts. 
Household appliances are designed to operate satisfactorily 
across the range. Most appliances get no benefit from voltages 
above the minimum level and by managing their voltage down 
from typical levels they will use less energy. These include lighting, 
refrigeration, other white goods, appliances with motors, pumps 
and some entertainment products. The amount of energy saved 
depends on the specific device and the level of voltage reduction 
and can vary from a few percent to over 15%.
The VPhase VX1 product uses the Company’s technology to 
provide cost effective Smart Voltage Management. It works in 
conjunction with the consumer unit (fuse box) to selectively  
apply voltage reduction to the circuits most likely to deliver the 
greatest savings. For example, whilst the typical voltage level 
received by a UK house is 245V, the VX1 unit reduces it to a  
set level of typically 220V: a level that will optimise savings  
and performance.
The principles of voltage reduction to save energy were established 
many years ago and are applied in a range of commercial 
applications. For example, most major supermarkets already 
control voltage at the store and make significant savings on 
electricity bills as a result. However, the traditional methods of 
voltage control, requiring a site survey and a device that can 
manage the full load delivered to premises, mean that historically 
it hasn’t been cost effective to control voltages in domestic 
houses and small commercial properties.
VPhase has developed a technology, protected by intellectual 
property, that allows the voltage delivered to appliances to be 
maintained at VX1’s set point regardless of how high above this 
level the voltage rises. This avoids the need for a costly and time 
consuming site survey each time a unit is installed and, through 
design and application, a device has been developed that is cost 
effective in both domestic and small commercial installations.
12065 Vphase FRONT.indd   2 17/4/09   19:38:42 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
03
“We need to move from incremental steps forward on household 
energy efficiency to a comprehensive national plan – the Great British 
refurb. We know the scale of the challenge: wasted energy is costing 
families on average £300 a year, and more than a quarter of all our 
emissions are from our homes.”
Ed Miliband, Secretary of State for Energy and Climate Change, 2008 Be part of the Great British Refurb - to cut emissions and cut energy costs 
“The average household could save around £200 a year by taking 
energy efficiency measures. This is equivalent to a saving of around 2 
tonnes of CO
2
.”
Energy Saving Trust, ‘Don’t let your home get away with it’ - media facts
“In the UK, we spend £2.4 billion lighting our homes, and with lighting 
accounting for 10 – 15% of our electricity bills.”
Energy Saving Trust, http://www.energysavingtrust.org.uk/Resources/Useful-statistics, cited 27/10/2008
“One of the easiest ways to pay less on our energy bills is to reduce the 
amount of energy we use, either through investing in energy efficiency 
home improvements, or taking a few simple steps such as switching off 
the lights when we leave a room.”
Joan Ruddock MP, Minister for Climate Change, Department of Energy, Energy Saving Week Diary October 2008
“Carbon emissions from buildings account for 45% of total emissions, with 
housing making up 27%. So improvements in the energy efficiency of our 
homes will make a significant impact on our carbon reduction goals. ”
UK Energy Efficiency Action Plan 2007 DEFRA
“Electricity consumption by domestic lights and appliances has nearly 
doubled since 1970 and it is set to increase by 12% to 2010.”
Calor at Home, http://www.calor.co.uk/home/central-heating/energy-efficiency/energy-saving-facts.htm cited 21/10/2008
“The Energy Efficiency Action Plan aims to save 3.5 million tonnes of 
carbon per year by 2010 through energy efficiency measures in the 
residential sector in England.”
UK Energy Efficiency Action Plan 2007, DEFRA
12065 Vphase FRONT.indd   3 20/4/09   16:05:37 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
04
Formal launch of VX1 at 
Interbuild October 2008.
Agreement signed with 
SSE to fund a CERT 
Demonstration Action  
of up to £240,000.
Memorandum of 
understanding signed 
with British Gas.
I am delighted to report that our Group has continued to maintain 
the excellent progress made in the first six months of 2008. 
The formal launch of our VX1 product at Interbuild in October 
2008 was the culmination of a year where we completed the 
development of the product and undertook rigorous in-house 
testing with a unit having operated successfully on a continuous 
basis since March 2008. 
In parallel to our technical progress, the Group has made good 
commercial progress with a memorandum of understanding in 
place with British Gas (part of Centrica plc) and an agreement 
with SSE who is funding an Ofgem-approved Demonstration 
Action of VX1.
Despite the recent shock to the global economy caused by the 
banking crisis and the slow down in consumer demand, the need 
to reduce energy costs and environmental emissions, as well as 
access to reliable quality power, is as strong as ever. This global 
need continues to enhance the already favourable market 
conditions for the Group’s products. Governments across the 
world are looking to stimulate their economies with one of the key 
drivers being their policies and investment in clean and alternative 
energy products. Indeed, Barack Obama has just announced a 
plan to help create five million new jobs by strategically investing 
US$150 billion over the next ten years to act as a catalyst for 
private efforts to build a clean energy future. Furthermore, the 
demand for energy efficiency devices is gaining growing global 
support with governments in the UK, USA, and Europe.
In May 2008, the Group raised £3.31 million (net of costs) through 
the placing of 70 million new ordinary shares of 0.25 pence each 
at 5 pence per share and with our strong emphasis on tight cash 
control, we retain £3.20 million at the end of December 2008. 
I am pleased that the business is fully funded and has sufficient 
cash to carry the business through to commercialisation. 
The Group’s business processes are now in place to manage the 
commencement of commercial sales and this, along with the 
excellent team that we have recruited, leaves the business well 
placed for success.
We understand and have identified the various channels to market 
for VX1 and subsequent products are well understood. The 
Group will be targeting additional channels as 2009 progresses.
I believe that VPhase’s technology can play an important part in 
supporting CO
2
 reduction targets, helping home owners reduce 
their energy costs and, by reducing energy wastage, increasing 
the security of supply.
A C Hutchings
Executive Chairman
23 March 2009
Chairman’s Statement
VPhase VX1 with packaging and installation instructions.
12065 Vphase FRONT.indd   4 17/4/09   19:38:52 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
05
Chief Executive’s Review
I am delighted to report that the Group has successfully delivered 
its key objective of positioning its first product VX1 to be ready for 
the next stage of commercialisation in 2009 and to place VX1 in 
an Ofgem Demonstration Action programme. This programme 
has been fully funded by SSE to a value of up to £240,000, and it 
is anticipated that these trials of VX1 will demonstrate significant 
carbon dioxide savings when used in UK domestic properties. 
Additionally, the Group is starting a programme of commercial 
partnerships to introduce VPhase initially to European and then to 
other geographic markets. We have already entered into a 
memorandum of understanding with British Gas to consider 
routes to market for VPhase products in the UK and also into 
North America through Direct Energy, one of America’s leading 
integrated energy companies and another Centrica-owned 
business. We have also initiated dialogue with consumer unit 
manufacturers, social housing organisations and energy  
efficiency companies.
Furthermore, we have examined both technically and commercially 
the potential to expand the VPhase technology platform to 
additional products and markets. Whilst we are focussed on 
delivering the VX1 product, we believe that further products can 
be readily produced for delivery into a wider range of geographical 
markets such as North America and dedicated to high-end 
energy saving applications.
We have filed another patent on the basis of development work 
carried out that expands the potential footprint, and the protection, 
for our Smart Voltage Management technology.
The Group has made excellent progress in 2008, having 
established an experienced in-house team and working with a 
specialist provider for design for manufacture and initial volume 
manufacturing services, culminating in the trade launch of the 
Group’s first product VX1.
The VX1 product was previewed at a trade launch at the Interbuild 
Exhibition held in October 2008. Interest in the product and the 
principles of Smart Voltage Management was strong from a 
broad section of the building and property industry, and the 
Group is currently recruiting additional sales resource to respond 
to this demand.
Our progress in 2008  
has been substantial  
and provides the 
soundest of foundations 
for commercial success  
in 2009.
We are excited about  
the relationships we have 
built with SSE and British 
Gas and are extremely 
confident about the 
future of VPhase.
VPhase announces Ofgem approval for trialing 
of the VPhase VX1 product under the UK 
Government’s Carbon Emissions Reduction 
Target (CERT) scheme in partnership with 
Scottish and Southern Energy.
“We are looking forward to confirming the 
energy and carbon saving capability of the 
VPhase VX1 device and subsequently making 
the product available to SSE customers.” 
Paul Wilkins, Energy Efficiency Team Leader for SSE 
VPhase plc signs a memorandum of 
understanding with British Gas to distribute  
the VPhase energy saving product – subject to 
successful trials. 
“This MoU is another step in British Gas  
putting in place a range of low carbon energy 
technologies and products for our residential, 
business and public sector customers. These 
technologies will become increasingly 
important as UK consumers seek to become 
more energy efficient.” 
Gearoid Lane, Managing Director of British Gas New Energy, leading the 
product trials on behalf of British Gas Services
12065 Vphase FRONT.indd   5 17/4/09   19:38:53 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
06
We achieved or exceeded 
our goals in 2008 and I 
look forward to repeating 
this success in 2009.
I would like to thank our 
dedicated team who have 
enabled us to achieve so 
much in such a short 
period of time.
2008 Business update
Objectives 2008 Progress  Objectives 2009 
Establish supply chain  Post trial rollout, growing revenue 
and provide customer pull  and contribution
Product engineering. Product is currently being CE marked  Start volume manufacture. 
 and it is anticipated that this will be  
 completed in H1 of 2009. 
Test house installation and data logging. VPhase have had units running  UK market rollout. 
 continuously since March 2008 simulating  
 household usage. This has provided   
 significant data to underpin energy savings. 
Deliver pre-production units for Completed in Q1 2009. Expansion of routes to markets.  
partner evaluation.  
Initial market introduction working with  Relationships are in place with SSE and Develop overseas markets. 
selected partners. British Gas. We are exploring routes to  
 market for the UK, Europe and   
 North America. 
Scale up for volume production. Contract negotiations currently under way. Development of next generation products.
Exhibit at major show. The company exhibited at Interbuild in  
 2008 and Ecobuild in Q1 2009. 
In May 2008, the Group raised £3.5 million (gross) by way of a 
placing of 70 million ordinary shares of 0.25 pence each, 
comprising 10.1% of the enlarged issued share capital, at a price 
of 5 pence per share. This share placing has enabled the Group 
to accelerate the time and access to routes to market, and to 
investigate other potential opportunities for Smart Voltage 
Management, such as further domestic and small commercial 
applications and other geographic regions.
The Group has teamed with the two biggest utility companies in 
the UK who jointly supply energy to around 40% of UK 
households. 
The Group continues to exercise strong cash management and 
ends the year with a substantially strengthened Balance Sheet 
and a well defined route forward to commercialisation, with a 
view to delivering growth and shareholder value.
Key priorities for 2009 include the CE marking of VX1; the 
expansion of our capacity to supply; capitalising on market 
opportunities to generate revenue; and the development of further 
products utilising our Smart Voltage Management technology.
Overall, we expect 2009 to be another year of progress and 
growth for VPhase plc and I look forward to updating you on our 
progress at the time of our interims.
Dr. L Juby
Chief Executive Officer
23 March 2009
Chief Executive’s Review continued
12065 Vphase FRONT.indd   6 20/4/09   15:27:46 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
07
Finance Review
During the year to 31 December 2008 the Group made a pre  
tax loss of £769,000 (2007: £727,000), representing a positive 
variance to internal projections.
On 14 May 2008, the Group raised £3,305,000 (net of costs) 
through the placing of 70,000,000 new ordinary 0.25 pence 
shares at 5 pence per share.
Cash utilised in the year, before the proceeds of the placing  
and interest receipts of £84,000 (2007: £6,000) was £737,000 
(2007: £229,000). The cash was utilised on:
operating activities of £440,000 (2007: £258,000), reflecting •	
increased activity as the business completed the technical 
development of the product;
investment in intangible development assets in accordance •	
with IAS 38 of £222,000 (2007: £Nil); and 
purchase of property, plant and equipment of £76,000  •	
(2007: £1,000). 
The Group has a strong focus on cash management and is 
confident that the business is fully funded. The cash balance at 
the end of the year was £3,203,000 (2007: £551,000).
Strong cash management leaves the Group well positioned with 
£3.2 million of funds at the beginning of 2009. Cash is managed 
within the Group to optimise the value from surplus cash giving 
priority to security then to liquidity and then to yield, and to preserve 
the principal value of the investment by investing surplus funds only 
with institutions of a high credit standing. This strategy has resulted 
in interest earnings during the year of £84,000 (2007: £6,000).
The Board has not recommended a dividend given the stage  
of development of the Group and no dividends were paid during 
the year.
During the year, the fees of the Group’s brokers have been settled 
by the issue of 4,992,960 new ordinary shares of 0.25 pence 
each and the Group has a commitment to issue a further 833,333 
shares for services provided up to 30 September 2009.  
Accordingly, the fair value of these share based payments relating 
to 2008 has been recorded in the Income Statement. 
R H Smith
Chief Financial Officer
23 March 2009
Strong cash management 
leaves the Group well 
positioned with £3.2 
million of funds at the 
beginning of 2009.
The Group is fully funded 
for current strategic plans.
12065 Vphase FRONT.indd   7 17/4/09   19:38:53 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
08
1
3
2
4
Board of Directors
1. Adrian C Hutchings
Executive Chairman 
Adrian is the Chief Executive of Energetix Group plc, the largest 
shareholder in VPhase plc. Prior to founding Energetix Group in 1997 , 
Adrian was the Managing Director of International Energy Systems 
Limited (IES), a subsidiary of BNFL which developed, manufactured, 
and marketed a high technology flywheel for storing electrical energy, 
for the UPS and distributed generation markets.
Before this, Adrian was a Commercial Manager with BNFL New 
Business Ventures. His role was identifying technologies and 
business opportunities based on internal intellectual property, for 
non-nuclear applications, as part of a diversification program. Prior 
to this he was the project manager for a £50 million capital, £500 
million life cycle, design and construction project for a major facility at 
the Sellafield site. Adrian has a degree in Chemical Engineering.
3. Richard H Smith
Chief Financial Officer 
Rick is the Chief Financial Officer of Energetix Group plc, the largest 
shareholder in VPhase plc. A Fellow of the Chartered Institute of 
Management Accountants with an MBA from Warwick University, 
Rick was previously Finance Director for Ultraframe (UK) Limited 
(2001 to 2004), and Finance Director for Norcros Adhesives Limited 
(1997 to 2001) which comprised subsidiary, joint venture and licensee 
operations in the UK, Europe, the Middle East and India. From 1995 
to 1997 Rick worked with Adrian Hutchings as the Finance Director 
for IES and prior to this was the Financial Controller for Robinson 
Healthcare, a division of Robinson Limited that manufactured 
consumables for the healthcare industry.
2. Dr. Lee Juby
Chief Executive Officer 
A Chartered Engineer with a doctorate in electronics and over ten 
years’ experience in the development and commercialisation of 
advanced technology gained within a variety of different roles. Lee 
joined VPhase from Rolls-Royce Distributed Generation Systems 
(RRDGS) where he had been Head of Product Planning and 
transitioned the RRDGS business unit from a capability provider to a 
product provider. Other recent positions include Commercialisation 
Manager at Energetix Group Limited where he developed the original 
VPhase technology, Director of Energetix Pnu Power Limited where 
he developed the initial technology and Senior Consultant at EA 
Technology where, amongst other roles, he acted as Lead Technical 
Expert for a number of banking clients for investment Due Diligence 
activities.
4. Nick A Moss
Non-Executive Director 
Nick has a BSc (1st Class) Chemistry with Business Administration 
and is a Fellow of The Chartered Institute of Marketing. He is the 
Managing Director of Walnut Management (UK) Limited, a strategic 
marketing consultancy with a portfolio of clients in the building 
products and engineering sectors. Prior to establishing Walnut 
Management (UK) Limited, Nick held various senior management 
positions within Caradon plc including Divisional Marketing & Product 
Development Director for leading brands including Everest, Catnic, 
Garador and Terrain, Director & General Manager Caradon ASL and 
Caradon Alpine. Prior to this, he was Product Manager for MK 
Electric/Gent with particular responsibility for electrical components, 
fire systems and building management.
12065 Vphase FRONT.indd   8 17/4/09   19:38:54 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
09
Group Directors’ Report
for the year ended 31 December 2008
The Directors present their report and the audited Financial 
Statements for the year ended 31 December 2008.
Basis of preparation of the Financial Statements
The Financial Statements have been prepared in accordance 
with International Financial Reporting Standards (IFRS) as 
adopted by the European Union. In accordance with IFRS, the 
Financial Statements reflect the results of VPhase plc and its 
subsidiaries for the year ended 31 December 2008 and for the 
corresponding period in 2007. Further details are provided in  
note 2 to the Financial Statements.
Principal activities
VPhase plc is focussed on the development and commercialisation 
of a range of products designed to reduce energy consumption 
for domestic and small commercial properties.
Results and dividends
The loss for the year after taxation, amounted to £768,786  
(2007: £727,283). The Directors do not recommend the payment 
of a dividend.
Review of business and future developments
The business has continued to develop its core products and the 
Directors are pleased to report that development progress to 
date has been in line with or ahead of targets.
A more detailed appraisal of business developments is given in 
the Chairman’s Statement, Chief Executive’s Review and Finance 
Review on pages 4 to 7 and future developments as set out in the 
Chief Executive’s Review on pages 5 to 6.
Risk review 
The Directors have monitored the progress of the overall Group 
strategy and a review of the Key Performance Indicators (KPIs) is 
contained in the Chairman’s Statement, Chief Executive’s Review 
and Finance Review on pages 4 to 7. The Directors believe that, 
given the Group’s current early stage of development, the  
relevant KPIs are; progress towards income, research and 
development costs, administrative expenses, capital expenditure 
and cash management.
The key business risks affecting the Group are set out below:
Funding requirements
The Group is currently fully funded and is not seeking external 
finance or borrowing facilities.
Strength of the Group’s bankers
The Group has reviewed and updated its treasury policy and, in 
accordance with this, funds are only lodged with UK and Irish 
based financial institutions with an ‘A’ rating or better.
Failure of suppliers of essential goods and services
Wherever practical the Group seeks to dual source its key 
components and services. Each supplier is assessed and where 
necessary strategies to manage and protect supply to the Group 
are put in place.
Value creation
The Group’s success will depend on its ability to develop a 
portfolio of products and services which address identified 
market needs, establish appropriate assembly and supply chain 
capabilities, and capture value from business opportunities.
The Group’s business model involves focussing development on 
identified market needs and seeking revenue generation from 
project sales, product sales and licensing, and the building of a 
supply chain around multiple suppliers. These activities are all 
undertaken within appropriate commercial arrangements.
Attraction and retention of key employees
The Group depends on its Directors and other key employees 
and whilst it has entered into contractual arrangements with 
these individuals with the aim of securing the services of each of 
them, retention of these services cannot be guaranteed.
The Group has attempted to reduce this risk by offering 
competitive remuneration packages including the opportunity to 
participate in a share option scheme and investment in training, 
development and succession planning.
Intellectual property
A significant part of the Group’s future depends on its intellectual 
property for future development and growth. If intellectual 
property is inadequately protected, the Group’s future success 
could become adversely affected.
The Group continues to invest in the protection and expansion of 
its intellectual property portfolio. In addition, the Group has 
established internal procedures and controls to capture new 
intellectual property, to prevent unauthorised disclosure to third 
parties and to protect the Group’s rights when dealing with supply 
chain partners.
Market acceptance
The Group’s technologies are either stand alone products or 
will be incorporated into the products or processes of third 
parties. There can be no assurance that such products or 
processes will achieve commercial success or be an attractive 
alternative to conventional products or processes. If a mass 
market for any product or process fails to develop, or develops 
more slowly than anticipated, the Group may fail to achieve 
profitability in respect of the technology associated with such 
product or process.
The Group’s strategy of producing products from existing 
components enabling lower costs for early products plus seeking 
specific channel partnerships which cover defined market 
applications and geographical focus, is designed to facilitate 
adoption of the products and to drive mass market uptake. 
12065 Vphase BACK.indd   9 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
10
Group Directors’ Report continued
for the year ended 31 December 2008
Research and development 
The Group undertakes a significant amount of research and development to address opportunities in the alternative energy market. 
In 2008, the Group incurred research and development costs of £246,292 (2007: £92,857) of which £221,707 of development costs 
(2007: £Nil) has been capitalised under IAS 38 following the placing in May 2008. Development expenditure incurred prior to the 
placing (£24,585) has been recognised in the Income Statement as the Directors do not believe that it met the requirements of IAS 38. 
Intangible assets are set out in note 12.
Directors’ interests in ordinary shares
The Directors who held office in the year and their beneficial interests in ordinary shares of the Company are shown below. Each 
Director served throughout the period unless otherwise indicated:
        Shares held Shares held
        as at 31  as at 31
        December December
        2008 2007
        Ordinary  Ordinary
        0.25 pence 0.25 pence 
A C Hutchings (Executive Chairman)       12,489,498 12,489,498
Dr. L Juby (Chief Executive Officer)       – –
R H Smith (Chief Financial Officer)        12,489,498 12,489,498
N A Moss (Non-Executive Director)        4,688,250 4,688,250
Directors’ options
The Directors who have held office during the year have the following interests in options over the shares of the Company under the 
Group’s unapproved share option scheme.
   Date of grant At 1 January Granted during At 31 December  Exercise Earliest 
    2008 the year 2008 price (p) exercise date Expiry date
Dr. L Juby  16 October 2007 15,603,001 – 15,603,001 1.88 01.11.11 01.01.14
The middle market price of ordinary shares on 31 December 2008 was 6.50 pence (2007: 4.00 pence per share). The high and low 
market prices during the year were 9.38 pence and 3.00 pence respectively (2007: 4.38 pence to 1.88 pence respectively).
Employees
Throughout the year, Directors of the Group provide relevant information to employees and engage in consultation with them to ensure 
that their views are considered. 
Applications for employment by disabled persons are given full and fair consideration for all vacancies in accordance with their 
particular aptitudes and abilities. In the event of employees becoming disabled, every effort is given to retrain them in order that their 
employment with the Group may continue.
It is the policy of the Group that training, career development and promotion opportunities should be available to all employees.
Financial risk management objectives and policies
Other than the proceeds from the issue of shares, the Group uses various financial instruments that include cash and various items, 
such as other receivables and trade payables arising directly from its operations. The main purpose of these financial instruments is 
to finance the Group’s operations.
The existence of these financial instruments exposes the Group to a number of financial risks which are described in more detail on the 
page opposite. 
The main risks arising from the Group’s financial instruments are credit risk and liquidity risk. The Directors review and agree policies 
for managing risk and determining these risk management policies. 
12065 Vphase BACK.indd   10 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
11
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient 
liquidity is available to meet foreseeable needs and to invest cash 
assets safely and profitably. The Group had net cash balances of 
£3,203,163 as at 31 December 2008 (2007: £551,477).
The maturity of contractual undiscounted cash flows is set out in 
note 17.3 to the Financial Statements. 
The Directors have assessed the Group’s currency risk. Presently, 
the Directors do not believe that the Group’s currency risk  
requires hedging, however this situation will be monitored and 
amended if appropriate.
Credit risk
The Company’s principal financial asset is cash. Although the 
credit risk associated with cash is limited, the Group’s treasury 
policy has been updated in the year and is explained in more 
detail earlier in this Group Directors’ Report. 
Supplier payment policy
It is the Group’s policy, in respect of all suppliers, to agree payment 
terms in advance of the supply of goods and services and to 
adhere to those payment terms. Trade creditors of the Group at 
the year end as a proportion of amounts invoiced by suppliers 
during the year represent 33 days (2007: 19 days) and for the 
Company represent 29 days (2007: Nil days). 
Going concern
Having made reasonable enquiries, the Directors are of the 
opinion that the Group has adequate resources to continue  
in operational existence for the foreseeable future and hence 
these Financial Statements have been prepared on a going 
concern basis. Further details are disclosed within note 2.2 to the 
Financial Statements.
Major shareholdings
In addition to the Directors’ beneficial interests shown on page 
10, as at 27 February 2009 the Company had been notified of the 
following interests in 3% or more of the Company’s issued share 
capital, pursuant to the Disclosure and Transparency Rules of the 
Financial Services Authority:
   %
Energetix Group plc   49.1
Ora Capital Partners LLC   17.8
Blackrock Inc   8.6
R Quested   4.7
Novum Securities Ltd   4.6
C Potts   3.5
S James   3.0
Corporate Governance Statement
The Directors are committed to maintaining high standards of 
Corporate Governance. This statement sets out how the Board 
has applied the principles of good corporate governance in its 
management of the business in the period ended 31 December 
2008, relevant to the Group’s size and complexity.
Board of Directors
During the period under review the Board comprised of one Non-
Executive and three Executive Directors. Biographies of the 
Directors are provided on page 8 and set out the broad range  
of commercial, technical and financial expertise possessed by 
Board members. The combination of skills and talents ensures 
that strategic focus and sound commercial stewardship is 
available to the Group. The Non-Executive Director is highly 
experienced, exercises independent judgement on issues  
arising and is able to challenge constructively the decisions  
of the Executive Directors.
The roles of Chairman and Chief Executive are separate, ensuring 
an appropriate division of responsibilities at the head  
of the Group.
All Directors are subject to election by shareholders and  
re-election thereafter is by rotation at intervals of not more than 
three years.
All Directors are offered an opportunity to request information 
and training relevant to their legal and other duties as a Director. 
They are also given written rules and guidelines setting out  
their responsibilities within an AIM listed company. All Directors 
are able to take independent legal and professional advice, if 
required, at the expense of the Company. Directors have access 
at all times to the services of the Company Secretary who is 
responsible to the Board for ensuring that all agreed policies and 
procedures are followed and all relevant rules and guidelines are 
complied with. 
Meetings of the Board
The Board, which meets regularly, has overall responsibility for 
the strategic direction and management of the business. All key 
decisions affecting the Group are considered by the Board as a 
whole. The annual Group budget and business plan, trading and 
cash flow forecasts, major items of capital expenditure and any 
other significant strategic actions all require Board approval. 
Board meetings are subject to a formal agenda and receive 
reports on the performance of the Group’s business. Monthly 
management accounts, that compare actual results with budget, 
are subject to detailed review. Other strategic and commercial 
issues are considered as required. Board decisions are 
communicated on a timely basis to management to ensure that 
operational implementation occurs without delay. 
Committees
The Company has not established Audit or Remuneration 
committees and relies on the support of its parent undertaking, 
Energetix Group plc, to discuss issues that would normally be 
taken to these committees.
Communication with shareholders
The Board is committed to constructive dialogue with its  
shareholders. The Company uses the AGM as an opportunity to 
communicate with its shareholders. The AGM will be held at 12.00pm 
on Wednesday 20 May 2009 at the Company’s registered offices, 
Steam Packet House, 76 Cross Street, Manchester, M2 4JU.
12065 Vphase BACK.indd   11 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
12
Group Directors’ Report continued
for the year ended 31 December 2008
The Company’s website (www.vphase.com) is the primary  
source of information on the Company. This includes an overview 
of the activities of the Company and details of all recent  
Group announcements. 
Internal control
The Board has overall responsibility for ensuring that the Company 
maintains a system of internal control to provide them with 
reasonable assurance regarding the reliability of financial 
information used within the business and for publication. The 
Board is also responsible for ensuring that assets are safeguarded 
and risk is identified as early as practically possible. The internal 
control systems established are designed to manage rather than 
completely eliminate risk and can only provide reasonable, but 
not absolute, assurance against misstatement or loss.
The Group does not currently have an internal audit function  
and this is kept under review as the Group progresses from  
the technology development phase to the commercial  
supply phase.
The Board reviews the effectiveness of the systems of internal 
control and its reporting procedures, and augments and develops 
these procedures as required to ensure that an appropriate 
control framework is maintained at all times.
 
The principal control mechanisms deployed by the Company are:
Board approval for all strategic and commercially significant •	
transactions; 
detailed scrutiny of the monthly management accounts with all •	
material variances investigated;
executive review and monitoring of key decision-making •	
processes at subsidiary board level;
Board reports on business performance and commercial •	
developments;
periodic risk assessments involving senior executive •	
management;
standard accounting controls and reporting procedures; and •	
regular liaison with the Company’s auditors and other •	
professionals as required.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report 
and the Financial Statements in accordance with applicable law 
and regulations.
Company law requires the Directors to prepare Financial 
Statements for each financial year which give a true and fair view 
of the state of affairs of the parent company and the Group as at 
the end of the financial year and of the profit or loss of the Group 
for the financial year. Under that law the Directors are required to 
prepare the Group Financial Statements in accordance with 
International Financial Reporting Standards as adopted by the 
European Union (IFRS). The Directors prepared the parent 
company Financial Statements in accordance with United 
Kingdom Generally Accepted Accounting Practice (UK GAAP). 
In preparing these Financial Statements, the Directors are required to:
select suitable accounting policies and then apply them •	
consistently;
make judgments and estimates that are reasonable and •	
prudent;
for the Group Financial Statements, state whether they have •	
been prepared in accordance with IFRS as adopted by the 
EU;
for the parent company Financial Statements, state whether •	
applicable UK Accounting Standards have been followed, 
subject to any material departures disclosed and explained in 
the parent company Financial Statements; and
prepare the Financial Statements on the going concern basis •	
unless it is inappropriate to presume that the Company will 
continue in business.
The Directors are responsible for keeping proper accounting 
records that disclose with reasonable accuracy at any time the 
financial position of the Company and enable them to ensure that 
the Financial Statements comply with the Companies Act 1985. 
They are also responsible for safeguarding the assets of the 
Company and hence for taking reasonable steps for the prevention 
and detection of fraud and other irregularities.
In so far as the Directors are aware:
there is no relevant audit information of which the Company’s •	
auditors are unaware; and
the Directors have taken all steps that they ought to have taken •	
to make themselves aware of any relevant audit information 
and to establish that the auditors are aware of that 
information.
The Directors are responsible for the maintenance and integrity  
of the corporate and financial information included on the 
Company’s website.
Legislation in the United Kingdom governing the preparation and 
dissemination of Financial Statements may differ from legislation 
in other jurisdictions.
Auditors
A resolution to reappoint Grant Thornton UK LLP as auditors for 
the ensuing year will be proposed at the Annual General Meeting 
in accordance with section 385 of the Companies Act 1985.
On behalf of the Board
Dr. L Juby
Chief Executive Officer
23 March 2009
12065 Vphase BACK.indd   12 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
13
Report of the Independent Auditors to the 
Members of VPhase plc
We have audited the Group and parent company Financial 
Statements (the ‘Financial Statements’) of VPhase plc for the year 
ended 31 December 2008 which comprise the Group Income 
Statement, the Group Statement of Changes in Equity, the  
Group Balance Sheet, the Group Cash Flow Statement, Notes to 
the Group Financial Statements, the Company Balance Sheet 
and Notes to the Company Balance Sheet. These Financial 
Statements have been prepared under the accounting policies 
set out therein. 
This report is made solely to the Company’s members, as a body, 
in accordance with Section 235 of the Companies Act 1985. Our 
audit work has been undertaken so that we might state to the 
Company’s members those matters we are required to state  
to them in an auditors’ report and for no other purpose. To the 
fullest extent permitted by law, we do not accept or assume 
responsibility to anyone other than the Company  
and the Company’s members as a body, for our audit work,  
for this report, or for the opinions we have formed. 
Respective responsibilities of Directors and Auditors
The Directors’ responsibilities for preparing the Annual Report 
and the Group Financial Statements in accordance with United 
Kingdom law and International Financial Reporting Standards 
(IFRS) as adopted by the European Union and for preparing the 
parent company Financial Statements in accordance with United 
Kingdom law and Accounting Standards (UK GAAP) are set out 
in the statement of Directors’ Responsibilities.
Our responsibility is to audit the Financial Statements in 
accordance with relevant legal and regulatory requirements and 
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the Financial 
Statements give a true and fair view and whether the Financial 
Statements have been properly prepared in accordance with the 
Companies Act 1985. We also report to you whether in our 
opinion the information given in the Group Directors’ Report is 
consistent with the Financial Statements. The information given in 
the Group Directors’ Report includes that specific information 
presented in the Chief Executive’s Review, Chairman’s Statement 
and Finance Review that is cross referred from the Business 
Review section of the Group Directors’ Report.
In addition we report to you if, in our opinion, the Company has 
not kept proper accounting records, if we have not received all 
the information and explanations we require for our audit, or if 
information specified by law regarding Directors’ remuneration 
and other transactions is not disclosed.
We read other information contained in the Annual Report and 
consider whether it is consistent with the audited Financial 
Statements. The other information comprises only the Highlights, 
Chairman’s Statement, Finance Review, Group Directors’ Report, 
Chief Executive’s Review and the Board of Directors. 
We consider the implications for our report if we become aware 
of any apparent misstatements or material inconsistencies with 
the Financial Statements. Our responsibilities do not extend to 
any other information.
Basis of audit opinion
We conducted our audit in accordance with International 
Standards on Auditing (UK and Ireland) issued by the Auditing 
Practices Board. An audit includes examination, on a test basis, 
of evidence relevant to the amounts and disclosures in the 
Financial Statements. It also includes an assessment of the 
significant estimates and judgments made by the Directors in the 
preparation of the Financial Statements, and of whether the 
accounting policies are appropriate to the Group’s and Company’s 
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary  
in order to provide us with sufficient evidence to give  
reasonable assurance that the Financial Statements are free  
from material misstatement, whether caused by fraud or other 
irregularity or error. In forming our opinion, we also evaluated  
the overall adequacy of the presentation of information in the 
Financial Statements.
Opinion
In our opinion:
the Group Financial Statements give a true and fair view, in •	
accordance with IFRS as adopted by the European Union, of 
the state of the Group’s affairs as at 31 December 2008 and of 
its loss for the year then ended;
the Group Financial Statements have been properly prepared •	
in accordance with the Companies Act 1985;
the parent company Financial Statements give a true and fair •	
view, in accordance with United Kingdom Generally Accepted 
Accounting Practice, of the state of the parent company’s 
affairs as at 31 December 2008;
the parent company Financial Statements have been properly •	
prepared in accordance with the Companies Act 1985; and
the information given in the Group Directors’ Report is •	
consistent with the Financial Statements.
Grant Thornton UK LLP
Registered Auditors 
Chartered Accountants  
Manchester
23 March 2009
12065 Vphase BACK.indd   13 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
14
Group Income Statement
for the year ended 31 December 2008
        Year ended  Year ended
        31 December 31 December
       Note 2008 2007
        £ £
Revenue        – –
Cost of sales       – –
Gross profit       – –
Administrative expenses       (852,722) (733,615)
Operating loss        (852,722) (733,615)
Finance income      5 83,936 6,332
Loss before income tax      4 (768,786) (727,283)
Income tax      9 – –
Loss for the year       (768,786) (727,283)
Attributable to:   
Equity holders of the Company       (768,786) (727,283)
Loss per share attributable to the equity holders of the Company during the year
Total and continuing:    
 – Basic and diluted      11 (0.11)p (0.14)p
    
All revenue and costs originate from continuing activities.
The notes on pages 19 to 34 are an integral part of these Group Financial Statements.
12065 Vphase BACK.indd   14 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
15
Group Statement of Changes in Equity
for the year ended 31 December 2008
 Attributable to equity holders of the Company
    Capital  Reverse 
 Share Share Merger redemption  Retained acquisition Warrant Other Total 
 capital premium relief reserve reserve earnings reserve  reserve reserves equity 
 £ £ £ £ £ £ £ £ £
Balance at 1 January 2007 1 – – – (56,136) – – – (56,135)
Loss for the year and total  
recognised loss for the year  – – – – (727,283) – – – (727,283)
Other share based payments – – – – – – – 20,200 20,200
Shares issued by legal  
subsidiary before  
reverse acquisition:  
 – 4 May 2007  99 – – – – – – – 99
 – 28 August 2007  – 115,009 – – – – – – 115,009
 – 3 September 2007  33 599,967 – – – – – – 600,000
Share issue expenses  – (12,005) – – – – – – (12,005)
Cost of reverse  
acquisition  – – – – – 572,272 – – 572,272
Reallocation of reserves  
on reverse acquisition  1,460,168 698,021 1,149,737 993,726 – (4,254,374) – (47,278) –
Shares issued by legal  
parent after reverse 
acquisition: 
 – 26 September 2007  100,000 57,000 – – – – – – 157,000
 – 19 October 2007  2,500 – – – – – – – 2,500
Share issue expenses  – (88,493) – – – – – – (88,493)
Balance at 31 December  
2007  1,562,801 1,369,499 1,149,737 993,726 (783,419) (3,682,102) – (27,078) 583,164
Loss for the year and total  
recognised loss for the year  – – – – (768,786) – – – (768,786)
Share based payments  – – – – – –  106,794 106,794
Proceeds from placing 175,000 3,325,000 – – – – – – 3,500,000
Share issue expenses 
 – cash – (195,000) – – – – – – (195,000)
 – warrants – (105,000) – – – – 105,000 – –
Shares issued by legal 
parent in consideration  
for services: – – – – – – – – –
 – 13 February 2008  3,120 16,880 – – 200 – – (20,200) –
 – 12 June 2008 3,120 16,880 – – – – – – 20,000
 – 14 August 2008 3,120 16,880 – – – – – – 20,000
 – 8 October 2008 3,121 16,879 – – – – – – 20,000
Other share based payments – – – – – – – 20,000 20,000
Balance at 31 December 
2008 1,750,282 4,462,018 1,149,737 993,726 (1,552,005) (3,682,102) 105,000 79,516 3,306,172
12065 Vphase BACK.indd   15 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
16
Group Statement of Changes in Equity continued
for the year ended 31 December 2008
Total recognised income and expense recognised directly to equity amounts to £Nil (2007: £Nil). 
Merger relief reserve
Merger relief reserve represents the premium on the shares issued to acquire Energetix Voltage Control Limited.
Capital redemption reserve
Capital redemption reserve represents the cancellation of 100,376,460 deferred shares at 0.99 pence each on 24 September 2007.
Reverse acquisition reserve
As noted in note 2.4, the reverse acquisition reserve relates to the reverse acquisition between Energetix Voltage Control Limited and 
VPhase plc on 26 September 2007.
Warrant reserve
As disclosed in note 18.2, in May 2008 the Company granted 3,500,000 warrants to its broker in relation to the placing of 70,000,000 
shares as part of the agreed placing costs. The fair value of warrants is calculated using the Black-Scholes model at the time of grant 
and is charged to the share premium account. Further costs in relation to this placing of shares, £195,000, were settled in cash.
Other reserves
Other reserves comprise of share based payments for the cost of options granted, £106,794 (2007: £Nil); £20,000 (2007: £20,200) for 
other share based payments to the Company’s broker, and an investment in own shares amounting to £47,278 (2007: £47,278) which  
comprises the shares held by FG Employee Trustee Company Limited. These shares were originally purchased to satisfy options 
under Flightstore Group plc’s Employee Share Option Trust. At 31 December 2008, 4,491,344 (2007: 4,491,344) shares in  
Flightstore Group plc were held by FG Employee Trustee Company Limited. The market value of these shares at 31 December 2008 
was £291,937 (2007: £179,654).
 
The notes on pages 19 to 34 are an integral part of these Group Financial Statements.
12065 Vphase BACK.indd   16 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
17
Group Balance Sheet
as at 31 December 2008
        As at 31 As at 31
         December December
       Note 2008 2007
        £ £
Assets    
Non-current assets    
Intangible assets      12 221,707 –
Property, plant and equipment      13 71,659 1,134
       293,366 1,134
Current assets   
Trade and other receivables      14 144,125 62,437
Cash and cash equivalents      15 3,203,163 551,477
       3,347,288 613,914
Total assets       3,640,654 615,048
Liabilities   
Current liabilities   
Trade and other payables      16 334,482 31,884
Total liabilities       334,482 31,884
   
Equity   
Capital and reserves attributable to  
 equity holders of the Company    
Share capital      18 1,750,282 1,562,801
Share premium       4,462,018 1,369,499
Merger relief reserve       1,149,737 1,149,737
Capital redemption reserve       993,726 993,726
Retained earnings       (1,552,005) (783,419)
Reverse acquisition reserve       (3,682,102) (3,682,102)
Warrant reserve      18 105,000 –
Other reserves       79,516 (27,078)
Total equity       3,306,172 583,164
Total equity and liabilities       3,640,654 615,048
The notes on pages 19 to 34 are an integral part of these Group Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 23 March 2009 and were signed on 
its behalf by:
Dr. L Juby R H Smith  
Chief Executive Officer Chief Financial Officer    
      
12065 Vphase BACK.indd   17 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
18
Group Cash Flow Statement
for the year ended 31 December 2008
        Year ended Year ended 
        31 December 31 December
       Note 2008 2007
        £ £
Cash flows from operating activities    
Cash consumed by operations      19 (439,825) (258,031)
Cash flows from investing activities  
Expenditure on intangible fixed assets      12 (221,707) –
Purchases of property, plant and equipment     13 (75,718) (934)
Cash acquired on reverse acquisition       – 30,000
Interest received      5 83,936 6,332
       (213,489) 35,398
Cash flows from financing activities    
Net proceeds from the issue of ordinary shares      3,305,000 774,110
  
Net increase in cash and cash equivalents      2,651,686 551,477
Cash and cash equivalents at the beginning of the year     551,477 –
Cash and cash equivalents at the end of the year    15 3,203,163 551,477
   
The notes on pages 19 to 34 are an integral part of these Group Financial Statements
12065 Vphase BACK.indd   18 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
19
Notes to the Group Financial Statements
for the year ended 31 December 2008
1. General information
VPhase plc (‘the Company’) and its subsidiaries (together ‘the Group’) develop products that provide energy efficiency solutions to 
certain identified problems in the energy market. The addresses of its registered office and principal place of business are disclosed 
on page 44 of the Group Financial Statements. VPhase plc is a limited company incorporated in England and Wales.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these Group Financial Statements are set out below. 
2.1 Standards and interpretations effective in the current period
Adoption of new accounting standards
One interpretation issued by the International Financial Reporting Interpretations Committee is effective for the current period; IFRIC 
14 IAS 19 – the limit as a defined benefit asset, minimum funding requirements and their interaction. The adoption of the interpretation 
has not led to any changes in the Group’s accounting policies. 
2.2 Basis of preparation
The Group Financial Statements of VPhase plc have been prepared in accordance with International Financial Reporting  
Standards (IFRS) as adopted by the European Union. The Group Financial Statements have been prepared under the historical  
cost convention.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out 
in the Group Directors’ Report on pages 9 to 12. The financial position of the Group, its cash flows and liquidity position are described 
in the Finance Review on page 7. In addition, this note 2 to the Financial Statements includes the Group’s objectives, policies and 
processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; 
and its exposures to credit risk and liquidity risk.
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 risks 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 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 Financial Statements.
2.3 Critical accounting estimates and judgments
The preparation of the Group Financial Statements in conformity with IFRS as adopted by the European Union requires the use of 
certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s 
accounting policies. 
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations 
of future events that are believed to be reasonable under the present circumstances.
The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the Group 
Financial Statements are disclosed below.
Critical accounting estimates
Research and development activities
Management have reviewed the Group’s research and development activities and have made estimates and judgments on the 
amount of development expenditure it is appropriate to capitalise. The criteria about which management have to make judgments are 
set out in note 2.12.
Discount rate on intangible assets
Management have exercised judgment in selecting the appropriate discount rate for application against intangible assets and have 
selected 12.50% to represent the best estimate of the current cost of capital for the Group, see note 12. 
12065 Vphase BACK.indd   19 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
20
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
2.3 Critical accounting estimates and judgments continued
Placing costs
Management have reviewed the expenditure related to VPhase plc’s placing of 70,000,000 shares on AIM and, where appropriate, 
made judgments as to how much of the expenditure related to the placing of existing shares, and should therefore be charged to the 
Income Statement, and how much related to the placing of new shares, and should therefore be charged against share premium.
Impairment of intangible assets
Management have conducted an impairment review of intangible assets and have to make judgments as to the likelihood of them 
generating future cash flow, the period over which those cash flows will be received and what costs are attributable against them. The 
recoverable amount is determined using the value in use calculation. The use of this method requires the estimation of future cash 
flows and the selection of a suitable discount rate in order to calculate the present value of these cash flows. In support of the 
assumptions, management uses a variety of sources including third party published reports and knowledge from discussions with 
partners and potential partners in both the supply and distribution channels as set out in note 12.
Share based incentive arrangements and warrants
Share based incentive arrangements are provided to management and certain employees. These are valued at the date of grant using 
the Black-Scholes option pricing model and management have to exercise judgment over the likely exercise period, interest rate and 
share price volatility. Management uses various sources of information including its own share price performance, or where there is 
insufficient history the performance of comparable listed entities, experience from the historical exercise of options and published 
data on bank base rates.
During the year the Group has issued shares to its broker for services rendered and has entered into a commitment to pay fees to its 
broker for services provided to VPhase plc up to September 2009. These share based payments have been valued at their fair value 
as they are received and are charged to the Income Statement with a corresponding credit to equity.
In addition, during the year the Group has issued warrants to its broker as part of agreed placing costs. These warrants have been 
valued at their fair value as they are received based upon the Black-Scholes option pricing model and are charged against the share 
premium account (as set out in note 18.2).
Taxation
Management have not provided for deferred tax in relation to unrelieved tax losses as the recoverability is currently uncertain.
Critical accounting judgments
Amortisation of development assets
Development costs capitalised, which form part of the Group’s intangible assets, are amortised on a straight line basis over a period 
not exceeding 15 years starting from the point that those products resulting from the development activity commence mainstream 
sales. Sales of prototype products are deemed to still be in the development phase and accordingly no amortisation has been 
charged to the Group Income Statement.
2.4 Basis of consolidation
Reverse acquisition
On 26 September 2007, the Company changed its name to VPhase plc and the Company became the legal holding company of 
Energetix Voltage Control Limited via a share for share exchange. 
The share for share exchange has been accounted for as a reverse acquisition. Although these Group Financial Statements have been 
issued in the name of the legal parent, the Company it represents in substance is a continuation of the financial information of the legal 
subsidiary, Energetix Voltage Control Limited because after the transaction former Energetix Voltage Control Limited shareholders 
held 55. 1% of the share capital of the legal parent which at that time had no business as defined under reverse acquisition methodology. 
The following accounting treatment has been applied in respect of the reverse acquisition:
a) the assets and liabilities of the legal subsidiary, Energetix Voltage Control Limited, are recognised and measured in the Group 
Financial Statements at the pre-combination carrying amounts, without reinstatement to fair value;
b) the retained (loss)/earnings and other equity balances recognised in the Group Financial Statements reflect the retained (loss)/
earnings and other equity balances of Energetix Voltage Control Limited immediately before the business combination, and the 
results of the period from 1 January 2007 to the date of the business combination are those of Energetix Voltage Control Limited. 
However, the equity structure appearing in the Group Financial Statements reflects the equity structure of the legal parent, including 
the equity instruments issued under the share for share exchange to effect the business combination; and
12065 Vphase BACK.indd   20 20/4/09   15:24:38 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
21
2.4 Basis of consolidation continued
Reverse acquisition
c) the cost of the combination has been determined from the perspective of Energetix Voltage Control Limited. The fair value of 
Energetix Voltage Control Limited has been determined from the issue of shares to a third party on 3 September 2007 for £600,000. 
An implied value has been ascertained based on the number of new shares Energetix Voltage Control Limited would have had  
to issue such that its shareholders hold the appropriate post combination ratio. The difference between the fair value of the cost  
of the combination and the fair value of the net assets acquired has been charged to the Group Income Statement as a cost  
of listing.
The Group had no significant assets other than cash, nor liabilities or contingent liabilities of its own at the time that the share for share 
exchange took effect and no cash consideration was paid in respect of the business combination. Transaction costs of equity 
transactions relating to the issue and listing of the Company’s shares are accounted for as a deduction from equity where it relates to 
the issue of new shares and listing costs are charged to the Group Income Statement as an administrative expense.
Consolidation model
The Group Financial Statements also incorporate the Financial Statements of the Company and entities controlled by the Company 
(its subsidiaries). Control is achieved where the Company has power to govern the financial and operating policies of an entity so as 
to obtain benefits from its activities.
Subsidiaries
The results of subsidiaries acquired or disposed of during the year are included in the Group Income Statement from the effective date 
of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies into line with 
those used by other members of the Group.
Inter-company
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Accounting 
policies of the subsidiaries have been established to ensure consistency with the policies adopted by the Group.
2.5 Intangible assets
The carrying values of intangible assets, including those which are not yet available for use, are tested for impairment at least  
annually or when events or changes in circumstances indicate that the carrying amount may not be recoverable.
Development costs capitalised (note 2.12), which form part of the Group’s intangible assets, are amortised on a straight line basis over 
a period not exceeding 15 years starting from the point that those products resulting from the development activity commence 
mainstream sales. Sales of prototype products are deemed to still be in the development phase and accordingly no amortisation has 
been charged to the Group Income Statement.
An impairment loss is recognised in the Group Income Statement within administrative expenses for the amount by which the asset’s 
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less 
costs to sell, and value in use based on an internal discounted cash flow evaluation. Intangible assets are subsequently reassessed 
for indications that an impairment loss previously recognised may no longer exist. The impairment review of intangible assets is 
analysed in note 12.
2.6 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Depreciation of assets is calculated using the straight 
line method to allocate their cost over their estimated useful lives as follows:
– Plant and equipment 3 years
Material residual value estimates are updated as required, but at least annually, whether or not the asset is revalued. Gains and 
losses on disposal are determined by comparing net proceeds with the carrying amount. These are included in the Group  
Income Statement.
12065 Vphase BACK.indd   21 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
22
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
2.7 Financial assets
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held 
to maturity’ investments, ‘available for sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the 
nature and purpose of the financial assets and is determined at the time of initial recognition. The Group currently has only loans and 
receivables recognised in these Group Financial Statements.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of allocating interest 
income/expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts/
payments through the expected life of the financial asset/liability, or, where appropriate, a shorter period.
Income is recognised on an effective interest basis for debt instruments.
Loans and receivables
Amounts owed by the parent undertaking and other receivables that have fixed or determinable payments that are not quoted in an 
active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective 
interest method, less any impairment. Interest income is applied by applying the effective interest rate, except for short-term receivables 
when the recognition of interest would be immaterial.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each Balance Sheet date. Financial assets are impaired where there is 
objective evidence that as a result of one or more events that occurred after initial recognition of the financial asset, the estimated cash 
flows of the investment have been impacted.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount 
and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade 
receivables, where the carrying amount is reduced through the use of an allowance account.
2.8 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits together with other short term highly liquid investments that 
are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
2.9 Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. 
2.10 Other financial liabilities
Other financial liabilities including borrowings are recognised initially at fair value, net of transaction costs incurred. 
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
2.11 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course 
of the Group’s activities excluding VAT and trade discounts. Revenue is recognised as follows:
Sales of goods
Revenue from the sales of goods will be recognised when all the following conditions have been satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods which is when the goods have •	
been delivered to, or collected by the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control •	
over the goods sold which is when the goods have been delivered to, or collected by the buyer;
the amount of revenue can be measured reliably; •	
it is probable that the economic benefits associated with the transaction will flow to the Group; and •	
the costs incurred or to be incurred in respect of the transaction can be measured reliably. •	
12065 Vphase BACK.indd   22 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
23
2.11 Revenue recognition continued
Interest income
Interest is recognised using the effective interest method which calculates the amortised cost of a financial asset and allocates the 
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts 
through the expected life of the asset to the net carrying amount of the financial asset.
Contingent income
Contingent income is only recognised when the contingent sale crystallises. Crystallisation will vary dependent on the specific terms 
of the sale to which it refers. 
2.12 Research and development
Research costs are charged against income as incurred. Certain development costs are capitalised as intangible assets when it is 
probable that future economic benefits will flow to the Group. Such intangible assets are amortised on a straight line basis from the 
point at which the asset is ready for use over the period of the expected benefit, and are reviewed for impairment at each Balance 
Sheet date or when events or changes in circumstances indicate that the carrying value may not be recoverable. Other development 
costs are charged against income as incurred since the criteria for their recognition as an asset are not met.
The criteria for recognising expenditure as an asset are:
completion of the intangible asset is technically feasible so that it will be available for use or sale; •	
the Group intends to complete the intangible asset and use or sell it; •	
the Group has the ability to use or sell the intangible asset; •	
the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for •	
the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in 
generating such benefits;
that the Group has available to it adequate technical, financial and other resources to complete the development and to use or sell •	
the intangible asset; and
that the Group can reliably measure the expenditure attributable to the intangible asset during its development. •	
The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce, and prepare 
the asset to be capable of operating in the manner intended by management. Directly attributable costs include employee (other than 
Directors) costs incurred on technical development, testing and certification, materials consumed and any relevant third party costs. 
The cost of internally generated developments are recognised as intangible assets and are subsequently measured in the same way 
as externally acquired intangible assets. However, until completion of the development project, the assets are subject to impairment 
testing only.
Careful judgment by the Directors is applied when deciding whether the recognition requirements for development costs have been met. 
This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems 
at the time of recognition. Judgments are based on the information available at each Balance Sheet date which includes progress with 
field trials, testing and certification and progress on, for example, establishment of commercial arrangements with third parties. In 
addition, all internal activities related to research and development of new products are continuously monitored by the Directors.
2.13 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Group Income 
Statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items 
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or 
substantively enacted by the Balance Sheet date.
2.14 Deferred tax
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the 
difference between the carrying amounts of assets and liabilities and their tax bases. Deferred tax is not provided on the initial 
recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or 
affects tax or accounting profit. Tax losses available to be carried forward as well as other income tax credits to the Group are 
assessed for recognition as deferred tax assets.
12065 Vphase BACK.indd   23 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
24
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
2.14 Deferred tax continued
Deferred tax liabilities that are recognised are provided in full, with no discounting. Deferred tax assets are recognised to the extent 
that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current 
and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, 
provided they are enacted or substantively enacted at the Balance Sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Income Statement, except where 
they relate to items that are charged or credited directly to equity (such as the revaluation of land) in which case the related deferred 
tax is also charged or credited directly to equity.
2.15 Employee benefits
Share based payments
All share-based payment arrangements granted after 7 November 2002 that had not vested prior to 1 January 2005 are recognised 
in the Group Financial Statements.
All goods and services received in exchange for the grant of any share based payment are measured at their fair values. Where 
employees are rewarded using share based payments the fair values of employees’ services are determined indirectly by reference to 
the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes the impact of non-
market vesting conditions (for example profitability and sales growth targets).
Share options are valued at the date of grant using the Black-Scholes option pricing model and are charged to operating profit over 
the vesting period of the award with a corresponding credit to the ‘other reserves’.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period based on the best 
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that 
the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised 
in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are 
different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital and where 
appropriate share premium account.
Bonus plans
The Group operates discretionary staff bonus schemes for its employees and Directors. The maximum annual bonus payable under 
the scheme is 100% of the relevant employee’s basic annual salary (plus social security costs). Payments in excess of 10% of an 
employee’s basic salary can be settled by the allocation of equity at the Company’s discretion.
2.16 Other share based payments
Warrants relating to the Company’s placing and admission to AIM have been provided to certain third parties. Warrants are fair valued 
at the date of grant using the Black-Scholes option pricing model and are charged to share premium with a corresponding credit to 
‘warrant reserve’.
In addition, during the year the Group has issued shares to its broker for services rendered and has entered into a commitment to pay 
fees to its broker for services provided to VPhase plc up to September 2009. These share based payments have been valued at the 
fair value of services received and are charged to the Income Statement with a corresponding credit to equity.
12065 Vphase BACK.indd   24 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
25
2.17 Adopted IFRS not yet applied
The following IFRS have been issued but have not yet been adopted by the Group in these Financial Statements as they are not yet 
effective:
IFRS 8 ‘Operating segments’ was issued in November 2006 and is effective for periods beginning on or after 1 January 2009. As •	
the changes are presentational only, the adoption will have no impact upon the results or net assets of the Group.
IAS 1 ‘Presentation of financial statements’ (revised 2007) effective 1 January 2009. As the changes are presentational only, the •	
adoption will have no impact upon the results or net assets of the Group.
IAS 23 ‘Borrowing costs’ (revised 2007) requires that borrowing costs that are directly attributable to the acquisition or construction •	
of a qualifying asset are capitalised as part of the cost of that asset. The standard must be applied for accounting periods beginning 
on or after 1 January 2009. As the Group does not have any borrowing costs directly attributable to qualifying assets, the adoption 
will have no impact upon the results or net assets of the Group.
Amendment to IFRS 2 ‘Share based payment – vesting conditions and cancellations’ effective 1 January 2009 and should be •	
applied retrospectively. The amendment to the standard may require the Group to re-estimate the grant date fair value of certain 
share-based payments whereby non-vesting conditions apply. As the Group currently utilises share based payments the adoption 
of the standard may have an impact upon the results or net assets of the Group.
IFRS 3 ‘Business combinations’ (revised 2008) effective 1 July 2009 and IAS 27 ‘Group and separate financial statements’ (revised •	
2008) effective 1 July 2009. The revised standard introduces changes to the accounting requirements for business combinations, 
transactions with non controlling interests and the loss of control of a subsidiary. The Group has no plans to adopt the revised 
standard in advance of its mandatory implementation date and it is not possible to quantify the effect of the standard on future 
business combinations until those combinations take place.
IFRIC 12 ‘Service concession arrangements’ gives guidance on the accounting treatment relating to service arrangements over •	
public infrastructure and is effective for periods beginning on or after 1 January 2008. This standard has not yet been adopted by 
the European Union and, as the Group does not enter into such arrangements, its adoption will have no impact upon the results 
or net assets of the Group.
IFRIC 13 ‘Customer loyalty programmes’ gives guidance on the treatment of the grant of award credits under a customer loyalty •	
programme and is effective for periods beginning on or after 1 July 2008. As the Group does not operate such schemes, the 
adoption will have no impact upon the results or net assets of the Group.
IFRIC 15 ‘Agreements for the construction of real estate’ gives guidance on the definition of a construction contract, the articulation •	
between IAS 11 and IAS 18 and on how to account for revenue when the agreement for the construction of real estate falls within 
the scope of IAS 18. IFRIC 15 is effective for annual periods beginning on or after 1 January 2009. As the Group does not engage 
in the construction of real estate, the adoption will have no impact upon the results or net assets of the Group.
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’ gives guidance on: identifying the foreign currency risks that qualify •	
as a hedged risk in the hedge of a net investment in a foreign operation; where, within a group, hedging instruments that are 
hedges of a net investment in a foreign operation can be held to qualify for hedge accounting; and how an entity should determine 
the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item. IFRIC 16 is 
effective for annual periods beginning on or after 1 October 2008. As the Group holds no such investments, the adoption will have 
no impact upon the results or net assets of the Group.
IFRIC 17 ‘Distributions of Non-cash Assets to Owners’ gives guidance on the recognition and measurement of dividends and •	
replaces IFRIC D23 Distributions of Non-cash Assets to Owners. IFRIC 17 is effective for annual periods beginning on or after  
1 July 2009. As the Group does not engage in distributions of non-cash assets to owners, the adoption will have no impact upon 
the results or net assets of the Group. 
IFRIC 18 ‘Transfers of Assets from Customers’ clarifies the requirements of IFRS for agreements in which an entity receives from a •	
customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to 
provide the customer with ongoing access to a supply of goods or services. As the Group does not enter into such transfers, the 
adoption will have no impact upon the results or net assets of the Group.
The other standards and interpretations are not expected to have any significant impact on the Group’s Financial Statements, in their 
periods of initial application, except for the additional disclosure requirements on operating segments when IFRS 8 ‘Operating 
Segments’ comes into effect for periods commencing on or after 1 January 2009, and the additional presentational impact of IAS 1 
‘Presentation of financial statements.’
3. Segmental information
The business of the Group comprises one segment, energy efficiency, and as such no segmental information is provided. The Group 
currently operates entirely within the United Kingdom.
12065 Vphase BACK.indd   25 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
26
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
4. Loss before income tax
Loss before income tax is attributable to the principal activity of the Group, which is carried on entirely in the United Kingdom. All costs 
originate from continuing operations.
        2008 2007
        £ £
Depreciation (note 13)       5,193 320
Employee benefit expense (note 7)       567,006 61,672
Research costs       24,585 92,857
Cost of reverse acquisition        – 542,272
Other share based payments expense       80,000 20,200
Audit remuneration:   
 – fees payable to Company auditors for the audit of  
    parent company and Group Financial Statements      11,000 10,500
Non-audit services:   
 – other services pursuant to legislation       3,500 8,750
 – tax services       – –
Other services pursuant to legislation relate to the Company’s flotation on AIM £Nil (2007: £5,000) and £3,500 for the interim review  
(2007: £3,750). Of this £Nil has been charged against share premium (2007: £5,000) and £3,500 to the Income Statement  
(2007: £3,750).
During the year, the Group has issued shares to its broker for annual services rendered up to September 2008. These shares have 
been valued at their fair value as the services are received and are charged to the Income Statement with a corresponding credit  
to equity.
5. Finance income
        2008 2007
        £ £
Loans and receivables (including cash and cash equivalents)     83,936 6,332
6. Directors’ remuneration
        2008 2007
        £ £
Directors’ emoluments   
Aggregate emoluments       360,478 13,164
Paid as follows:   
Emoluments       243,684 7,333
Share based payments       106,794 –
Payments made to third parties       10,000 5,831
       360,478 13,164
Highest paid Director
The above includes remuneration of the highest paid Director as follows:
        2008 2007
        £ £
Emoluments       116,748 13,164
Share based payments       106,794 –
       223,542 13,164
The key management of the Group is the same as the Board of Directors.
12065 Vphase BACK.indd   26 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
27
7. Employee benefit expense
        2008 2007
        £ £
Wages and salaries       412,403 56,773
Social security costs       47,809 4,899
Share based payments       106,794 –
       567,006 61,672
Average number of persons employed: 
        2008 2007
        No No
Finance and administration       3 3
Research and development       3 1
       6 4
8. Share based payments 
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. The movement in the number of share options is set out below:
        2008 2007
        No No
Number of outstanding share options at 1 January      – –
Granted during the year       15,603,001 –
Number of outstanding share options at 31 December     15,603,001 –
As at 31 December 2008, no share options were capable of being exercised. The weighted average exercise price of share options 
granted during the year was 1.88 pence. No options were exercised, forfeited, expired or lapsed 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 £106,794 and 
a corresponding credit to other reserves. 
Assumptions
The following assumptions are used to determine the fair value of share options at the respective date of grant:
     Ordinary Share price   Life of  
   Exercise  shares at date Expected Interest option Expected 
   price under option of grant volatility rate (years) dividends 
Date of grant   (p)  (p)    (p)
1 January 2008  1.88 15,603,001 1.88 42.3% 5.50% 3 Nil
The middle market price of ordinary shares on 31 December 2008 was 6.50 pence. The high and low market prices during the year 
were 9.38 pence and 3.00 pence respectively.
Expected volatility is derived from observation of the volatility of the Company’s shares.
The expected life used in the model has been adjusted based on management’s best estimate, for the effects of non-transferability, 
exercise restrictions and behavioural conditions.
National insurance is payable on gains made by employees on exercise of share options granted to them. 
Other share based payments
During the year, the Group has issued shares to its broker for annual services rendered up to September 2008 and has entered into a 
commitment to pay fees to its broker for services provided, up to September 2009. These share based payments have been valued at 
their fair value as they are received and are charged to the Group Income Statement with a corresponding credit to equity.
The Group also issued warrants in the year, as set out in note 18.2.
12065 Vphase BACK.indd   27 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
28
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
9. Income tax
        2008 2007
        £ £
Current tax       – –
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average rate applicable 
to profits of the consolidated entities as follows:
        2008 2007
        £ £
Loss before income tax       (768,786) (727,283)
Loss before income tax multiplied by rate of corporation tax in the UK of 28.49% (2007: 30%)  (219,027) (218,185)
Adjustment for tax rate differences       2,748 4,611
Adjustment for tax exempt income       – (79,743)
Adjustment for non-deductible expenses      50,055 245,607
Movement in deferred tax not provided       166,224 47,710
Current tax       – –
Unrelieved tax losses relating to the current trade of £788,000 (2007: £231,000) remain available to offset against future taxable 
trading profits. No deferred tax asset has been recognised in respect of the losses, as recoverability is uncertain.
10. Deferred tax
The unprovided deferred taxation asset calculated at a tax rate of 28% (2007: 28%) is set out below:
        2008 2007
        £ £
Accelerated capital allowances       (1,544) 12
Share based payments       (74,562) –
Trade losses       (229,231) (64,564)
       (305,337) (64,552)
11. Loss per ordinary share
The loss per ordinary share is based on the loss of £768,786 (2007: loss of £727,283) and 670,317,974 (2007: 532,238,143) ordinary 
shares of 0.25 pence each, being the weighted average number of shares in issue during the year. All shares have been included in 
the computation based on the weighted average number of days since issuance.
        2008 2007
 Loss attributable to equity holders of the Company (£)     (768,786) (727,283)
Weighted average number of ordinary shares in issue     670,317,974 532,238,143
Basic and diluted loss per share (pence)      (0.11) (0.14)
The share options and warrants in issue are anti-dilutive in respect of the basic loss per share calculation and have therefore not  
been included.
12. Intangible assets
         £
Cost and net book value
At 1 January 2008        – 
Additions         221,707 
Accumulated amortisation         –
At 31 December 2008         221,707
12065 Vphase BACK.indd   28 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
29
12. Intangible assets continued
Intangibles include internally generated product development costs capitalised in accordance with IAS 38. 
On 19 May 2008, the Group raised £3,305,000 (net of expenses) via a placing of 70,000,000 ordinary shares. The Directors consider 
that the Group has adequate financial resources, following the placing, 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. All other development 
work, £24,585 (2007: £92,857), has been written off as incurred as the criteria for recognition as an asset were not met.
Impairment review
In accordance with IAS 36, the Group has undertaken an impairment review by cash generating unit. The Group determines that there 
exists one cash generating unit and that its cost of capital is:
Technology Cash generating unit Cost of capital % Total intangible carrying value £
Smart Voltage Management unit VPhase plc 12.5% 222,000
IAS 36 requires an impairment charge against assets “if and only if the recoverable amount of an asset is less than its carrying 
amount”. The standard further states that the recoverable amount is determined as the higher of:
fair value, less costs to sell, in an arms length transaction; and •	
value in use. •	
Management determine that given the explicit technological nature of VPhase, the fair value in an arms length transaction does not 
constitute the most appropriate recoverable amount valuation methodology and, consequently, the recoverable amount has been 
ascertained via the value in use methodology.
Value in use has been established by taking into account the following:
estimated future cash flows; •	
potential variation in the amount and timing of these cash flows; •	
the time value of money; •	
the price for bearing the uncertainty inherent in the asset; and •	
other factors such as liquidity. •	
Following a review of the business, the Directors do not believe that the carrying value of the intangible asset in VPhase is impaired 
and, hence, no charge has been made.
Key assumptions
In determining value in use, forecasts have been prepared for the five years following the Balance Sheet date. These forecasts were 
constructed with:
the most recent approved forecasts and, where forecasts have not been approved; •	
prudent extrapolations of the above. •	
Revenues were computed using:
signed commercial agreements; •	
memoranda of understanding with commercial partners; and •	
management’s assertions following discussion with various potential customers. •	
 
Costs have been calculated using existing cost bases adjusted for achievement of the above revenues.
Growth rates contained within forecasts are based on management’s assertions following discussions with potential customers and 
increase by various rates throughout the forecasted period. The forecasted value in use period is five years and is based on the Board 
approved forecasts for the period to 31 December 2011 and reasonably possible extrapolations thereon for the following two years.
12065 Vphase BACK.indd   29 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
30
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
12. Intangible assets continued
Cost of capital
The Capital Asset Pricing Model (CAPM) has been used to arrive at the cost of capital previously stated. 
The components of this calculation were determined as follows:
Risk-free rate: lower range of UK Gilts as provided by the website of the Debt Management Office website (http://www.dmo.gov.uk/).
Market-return rate: taken as the annual return on the ‘Industrial Engineering’ and ‘Electronics and Electrical Equipment’ sectors within 
AIM for each year from 02 January 2004 to 31 December 2007. Returns for the 12 months to 31 December 2008 have been excluded 
from the analysis as management do not believe returns of circa minus 31% are representative of the return demanded by investors.
Beta: taken from MoneyAM (http://www.moneyam.com). 
Effect of reasonably possible changes 
Management have undertaken scenario analyses, including a material reduction in sales, and in no scenario does the value in use of 
the cash generating unit approach the carrying value.
13. Property, plant and equipment
         Furniture fittings  
         & equipment 
         £
Year ended 31 December 2007     
Opening net book value        520
Additions        934
Depreciation charge        (320)
Closing net book value        1,134
Year ended 31 December 2008     
Opening net book value        1,134
Additions        75,718
Depreciation charge        (5,193)
Closing net book value        71,659
At 31 December 2008     
Cost or valuation        77,172
Accumulated depreciation        (5,513)
Closing net book value        71,659
At 31 December 2007     
Cost or valuation        1,454
Accumulated depreciation        (320)
Closing net book value        1,134
14. Trade and other receivables
        2008 2007
        £ £
Prepayments       – 6,923
Amounts owed by parent undertaking       73,869 12,888
Other receivables        70,256 42,626
       144,125 62,437
15. Cash and Cash equivalents
        2008 2007
        £ £
Cash at bank and in hand       3,203,163 551,477
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Group Financial Statements for the year ended 31 December 2008
31
16. Trade and other payables
        2008 2007
        £ £
Trade payables       38,519 13,785
Amounts owed to parent undertaking       56,974 –
Social security and other taxes       7,650 8,099
Accrued expenses       231,339 10,000
       334,482 31,884
17. Financial instruments
17.1 Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the 
return to stakeholders. The Group’s overall strategy remains unchanged from 2007 to minimise costs and liquidity risk.
At the beginning of 2009, in light of recent bank failures the Group adopted a new treasury policy which sets out to optimise the value 
from surplus cash balances giving priority to security then to liquidity and then to yield; and to preserve the principal value of the 
investment by investing surplus funds only with institutions of a high credit standing.
The capital structure of the Group consists of cash and cash equivalents of £3,203,000 (2007: £551,000) and equity attributable to 
equity holders of the parent comprising issued capital, reserves and retained earnings as disclosed in note 18 and in the Group 
Statement of Changes in Equity.
17.2 Significant accounting policies
Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and 
the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity 
instrument are disclosed in note 2 to the Financial Statements.
17.3 Categories of financial instrument
        2008 2007
        £ £
Financial assets   
Loans and receivables (including cash and cash equivalents)     3,277,032 564,365
Financial Liabilities   
Amortised cost       326,832 23,785
The carrying amount reflected above represents the Group’s maximum exposure to credit risk for such loans and receivables.
For commentary on interest rate risk, credit risk, and liquidity risk please see note 2 and the financial risk management objectives and 
policies disclosed in the Group Directors’ Report on pages 9 to 12.
Contractual undiscounted cash flows in respect of financial liabilities (or outflows in respect of financial assets) are as follows:
 
      2008 2008 2007 2007 
      0 - 60 days Total 0 - 60 days Total
Trade payables     38,519 38,519  13,785 13,785
17.4 Interest rate sensitivity
The following table illustrates the sensitivity of the loss for the year and equity to a reasonably possible change in interest rates of 2% 
(2007: 1%) with effect from the beginning of the year. These changes are considered to be reasonably possible based on observation 
of current market conditions. The calculations are based on the Group’s cash and cash equivalents held in cash on the Balance Sheet 
date. All other variables are held constant.
   2008 
I
 2007
      £ £  £ £ 
      +2% -2% +1% -1%
Loss for the year     65,541 (65,541) 5,644 (5,644)
Equity     65,541 (65,541) 5,644 (5,644)
12065 Vphase BACK.indd   31 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
32
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
18. Share capital and reserves
18.1 Share capital
 Ordinary 
I
 Deferred
 Number of shares Share capital Number of shares Share capital 
 No £ No £
Authorised
At 1 January 2007
Ordinary shares of 1p each 40,062,730,460 4,006,274 100,376,460 993,726
On conversion to ordinary shares of  
0.01p each and deferred shares of 0.99p each (38,400,000,000) – – –
Cancellation of deferred shares (62,730,460) (6,274) (100,376,460) (993,726)
At 31 December 2007 1,600,000,000 4,000,000 – –
At 31 December 2008 1,600,000,000 4,000,000 – –
Issued and fully paid
At 1 January 2007  2,100,376,460 210,038 100,376,460 993,726
Consolidation to ordinary shares of 0.25p each (2,016,361,401) – – –
 84,015,059 210,038 100,376,460 993,726
Shares issued to acquire Energetix Voltage Control Ltd 500,105,004 1,250,263 – –
Shares issued in satisfaction of warrants 40,000,000 100,000 – –
Cancellation of deferred shares – – (100,376,460) (993,726)
Exercise of warrants    1,000,000 2,500 –  –
At 31 December 2007 625,120,063 1,562,801 – –
Shares issued 13 February 2008  1,248,240 3,120 – –
Shares issued 14 May 2008 70,000,000 175,000 – –
Shares issued 12 June 2008 1,248,240 3,120 – –
Shares issued 14 August 2008 1,248,240 3,120 – –
Shares issued 8 October 2008 1,248,240 3,121 – –
At 31 December 2008 700,113,023 1,750,282 – –
Issue of shares
On 24 July 2007, in anticipation of the proposed consolidation and in order that the number of ordinary shares would be divisible by 
25, 15 ordinary shares of 0.01 pence each were issued fully paid to the Company’s Registrars, Neville Registrars. 
On 24 September 2007, the ordinary shares of 0.01 pence each in the capital of the Company (both issued and unissued) were 
consolidated so that every 25 ordinary shares of 0.01 pence each were consolidated into one new ordinary share of 0.25 pence in the 
capital of the Company.
On 24 September 2007 , the authorised share capital of the Company was altered by the cancellation of 62,730,460 unissued ordinary 
shares of 0.01 pence each and the cancellation of 100,376,460 deferred shares of 0.99 pence each resulting in a transfer of £993,726 
to a capital redemption reserve.
On 25 September 2007 , the Company issued 500,105,004 new ordinary shares of 0.25 pence at 0.48 pence per share in consideration 
for the acquisition of the entire share capital of Energetix Voltage Control Limited. 
On 26 September 2007, the Company’s enlarged share capital was admitted to trading on AIM, a market operated by the London 
Stock Exchange.
On 26 September 2007, the Company issued 40,000,000 ordinary shares of 0.25 pence in satisfaction of outstanding warrants at an 
issue price of 0.3925p each.
On 19 October 2007, 1,000,000 ordinary shares of 0.25 pence were issued in satisfaction of outstanding warrants at par.
On 13 February 2008, the Company issued 1,248,240 ordinary share of 0.25 pence each at 1.602 pence per share to Novum 
Securities Limited in settlement of broker services received.
12065 Vphase BACK.indd   32 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
33
18.1 Share capital continued
Issue of shares
On 14 May 2008, the Company issued 70,000,000 ordinary shares of 0.25 pence each via a placing at 5 pence per share.
On 12 June 2008, the Company issued 1,248,240 ordinary shares of 0.25 pence each at 1.602 pence per share to Novum Securities 
Limited in settlement of broker services received.
On 14 August 2008, the Company issued 1,248,240 ordinary shares of 0.25 pence each at 1.602 pence per share to  
Novum Securities Limited in settlement of broker services received.
On 8 October 2008, the Company issued 1,248,240 ordinary shares of 0.25 pence each at 1.602 pence per share to  
Novum Securities Limited in settlement of broker services received.
18.2 Warrants
On 22 May 2008, the Company granted 3,500,000 warrants with an exercise price of 5 pence to its broker, as part of the agreed 
placing costs. The warrants outstanding at 31 December 2008 were: 
Date granted Number of warrants Exercise price (pence) Exercise period
22 May 2008 3,500,000 5 3 years
These warrants are exercisable during a three year period from the date of grant. On exercise each warrant entitles the holder to one 
0.25 pence ordinary share in the Company.
The Group uses the Black-Scholes model to fair value the Group’s warrants which resulted in a total fair value charge of £105,000 
(2007: £Nil). This has been charged against the share premium account and credited to warrant reserve in the period.
As at 31 December 2008, 3,500,000 warrants were capable of being exercised (2007: Nil). The warrants outstanding at 31 December 
2008 had a weighted average exercise price of 5 pence (2007: Nil) and a weighted average remaining contractual life of two years and 
five months. No warrants were exercised during the year.
Assumptions
The following assumptions are used to determine the fair value of warrants at the respective date of grant:
     Ordinary Share price     
   Exercise  shares at date   Life of  
   price under  of grant Expected Interest option Expected 
Date of grant   (p) warrant (p) volatility rate (years) dividends
22 May 2008  5 3,500,000 6.25 43.2% 5.5% 3 –
       
The share price at date of grant is the closing price on the day that the warrants were granted.
Expected volatility is derived from observation of the volatility of the Company’s shares.
The expected life used in the model has been adjusted based on management’s best estimate, for the effects of non-transferability, 
exercise restrictions and behavioural conditions.
12065 Vphase BACK.indd   33 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
34
Notes to the Group Financial Statements continued
for the year ended 31 December 2008
19. Cash consumed by operations
        2008 2007
        £ £
Loss before income tax       (768,786) (727,283)
Adjustments for:   
 – Depreciation       5,193 320
 – Other income       (83,936) (6,332)
 – Share based payments (note 7)       106,794 –
 – Other share based payments       80,000 20,200
 – Cost of reverse acquisition       – 542,272
Changes in working capital:   
 – Increase in trade and other receivables      (81,688) (61,578)
 – Increase/(decrease) in trade and other payables      302,598 (25,630)
Cash consumed by operations       (439,825) (258,031)
20. Commitments
The Group has entered into an agreement to pay its broker in shares for services provided until 23 September 2009. This agreement 
requires the issue of 833,333 new ordinary shares of 0.25 pence at 6 pence per share. As at 31 December 2008, no shares had been 
issued in settlement of fees, and a further 833,333 are to be issued. 
21. Related party transactions
The immediate and ultimate controlling party of the Group is Energetix Group plc. Transactions between the Company and its 
subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. 
Details of the transactions between the Group and other related parties are disclosed below:
Within the year, the Group incurred management fees of £60,000 (2007: £15,000) payable to Energetix Group plc.
At 31 December 2008, the net amount owed from Energetix Group plc, its parent undertaking, was £16,895 (2007: amounts owed 
from Energetix Group plc £12,888). 
The above amounts are unsecured and are repayable on demand.
Walnut Management (UK) Limited, a company of which Nick Moss is Managing Director, invoiced £41,455 (2007: £14,913) including 
expenses for Non-Executive Director services and marketing consultancy. At 31 December 2008, £10,211 remained outstanding 
(2007: £2,225).
12065 Vphase BACK.indd   34 20/4/09   15:24:39 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
35
Company Balance Sheet
as at 31 December 2008
  2008 
I
 2007
     Note £ £ £ £
Fixed assets     
Investments    25  2,426,578  2,426,578
      2,426,578  2,426,578
Current assets     
Debtors    26 3,382,560  7,555 
Cash at bank and in hand    27 1,105  1,725 
     3,383,665  9,280 
Creditors: amounts falling due within one year   29 (384,753)  –
Net current assets      2,998,912  9,280
Total assets less current liabilities      5,425,490  2,435,858
Net assets      5,425,490  2,435,858
Capital and reserves     
Called up share capital    30  1,750,282  1,562,801
Share premium account    33  4,462,018  1,369,499
Merger relief reserve    34  1,149,737  1,149,737
Capital redemption reserve    35  993,726  993,726
Warrant reserve    32  105,000  –
Other reserves    36  79,516  (27,078)
Profit and loss account    37  (3,114,789)  (2,612,827)
Shareholders’ funds    38  5,425,490  2,435,858
The notes on pages 36 to 43 are an integral part of the Company’s Financial Statements. 
These Financial Statements were approved by the Board of Directors and authorised for issue on 23 March 2009 and were signed on 
its behalf by:
Dr. L Juby R H Smith 
Chief Executive Officer Chief Financial Officer
12065 Vphase BACK.indd   35 20/4/09   15:24:40 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
36
Notes to the Company Balance Sheet 
22. Principal accounting policies – UK GAAP
Basis of preparation
The Company Financial Statements have been prepared under the historical cost convention and in accordance with the Companies 
Act 1985 and applicable UK accounting standards (United Kingdom Generally Accepted Accounting Practice).
The principal accounting policies of the Company have remained unchanged from the previous year and are set out below. 
On 25 September 2007 , the Company acquired the entire share capital of Energetix Voltage Control Limited. The Company is carrying 
an investment in Energetix Voltage Control Limited of £1,500,000 yet the subsidiary has net liabilities. Management believe that it 
would not show a true and fair view in the parent Company’s profit and loss account if it were to recognise a provision against the 
carrying value of the investment, since the value of the investment is strongly linked to the unamortised intellectual property of the 
intangible asset being carried in the Group accounts. Management have reviewed the carrying value of the intangible asset and 
consider that its carrying value and that of the investment are supported by discounted forecasted future cash flows. Thus, it would 
not be true and fair to show a loss by making an impairment provision. 
If a full provision was recognised against the carrying value of the investment, the loss for the year in the Company would increase by 
£1,500,000 to £2,002,162.
Cash
Cash comprises cash in hand and deposits repayable on demand, less overdrafts repayable on demand.
Investments
Investments are included at cost, subject to any provisions required for a permanent impairment of their value.
Current tax
The current tax charge is based on the profit for the year and is measured at the amounts to be paid based on the tax rates and laws 
substantively enacted by the Balance Sheet date. Current and deferred tax is recognised in the profit and loss account.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date where 
transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, 
with the following exception; deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than 
not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing 
differences reverse, based on tax rates and laws enacted or substantively enacted at the Balance Sheet date.
Equity-settled share based payments 
All share based payment arrangements are recognised in the Financial Statements in accordance with FRS 20. All goods and services 
received in exchange for the grant of any share based payment are measured at their fair values. Where employees are rewarded 
using share based payment, the fair values of employees’ services are determined indirectly by reference to the fair value of the 
instrument granted to the employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting 
conditions (for example, profitability and sales growth targets).
All equity-settled share based payments are ultimately recognised as an expense in the profit and loss account with a corresponding 
credit to ‘other reserves’.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best 
available estimate of the number of share options expected to vest. Estimates are revised subsequently if there is any indication that 
the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is  
recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options that have vested 
are not exercised.
Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where 
appropriate share premium.
12065 Vphase BACK.indd   36 20/4/09   15:24:40 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
37
22. Principal accounting policies – UK GAAP continued
Other share based payments
Warrants relating to the Company’s placing and admission to AIM have been provided to certain third parties for services rendered. 
Warrants are valued at the date of grant using the Black-Scholes option pricing model and are charged to share premium with a 
corresponding credit to ‘warrant reserve’.
In addition, during the year the Company has issued shares to its broker for annual services rendered up to September 2008 and has 
entered into a commitment to pay fees to its broker for services provided up to September 2009. These share based payments have 
been valued at their fair value as they are received and are charged to the profit and loss account with a corresponding credit to equity.
23. Directors’ remuneration
        2008 2007
        £ £
Directors’ emoluments  
Aggregate emoluments       218,314 13,164
Paid as follows:  
Emoluments       101,520 7,333
Share based payments       106,794 –
Payments made to third parties       10,000 5,831
       218,314 13,164
24. Staff numbers and costs
The average number of persons employed by the Company (including Directors) during the period, analysed by category, was as 
follows:
        2008 2007
        No No
Finance, administration and management      3 2
The aggregate payroll costs of these persons were as follows:
        2008 2007
        £ £
Wages and salaries       90,000 31,416
Share based payments       95,352 –
Social security costs        22,962 2,702
Payments made to third parties       10,000 5,831
       218,314 39,949
25. Investments 
         £
Cost and net book value at 31 December 2008 and 31 December 2007     2,426,578
The principal investment comprises of shares at cost in the following companies all of whom are registered in England and Wales:
     Percentage held  Nominal Value  Ordinary Shares
Energetix Voltage Control Limited 
1
    100%  1 pence each  13,334
Flightstore Inflight Retailing Limited 
1
    100%  1 pence each  2,115,170
FG Employee Trust Company Limited 
1
    100%  100 pence each  2
1
 Directly owned subsidiaries
12065 Vphase BACK.indd   37 20/4/09   15:24:40 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
38
Notes to the Company Balance Sheet continued
25. Investments continued
On 25 September 2007, the Company acquired the entire share capital of Energetix Voltage Control Limited which was satisfied by 
the issue, credited as fully paid, of 500,105,004 ordinary share of 0.25 pence each at 0.48 pence per share. In addition, the Company 
incurred additional acquisition costs of £26,578.
At 31 December the companies had the following capital and reserves:
 2008 
I
 2007
 Capital and reserves Profit/(loss) Capital and reserves Profit/(loss) 
 £ £ £ £
Energetix Voltage Control Limited 19,158 (460,302) 479,460 (167,508) 
Flightstore Inflight Retail Limited (1,496,471) (1,500) (1,494,975) –
FG Employee Trust Company Limited (99,458) 14 (99,472) 36
26. Debtors
         2008  2007
        £ £
Amounts owed by subsidiary companies      3,365,103 –
Other debtors        17,457 7,555
       3,382,560 7,555
27. Cash at bank and in hand
        2008 2007 
        £ £
Cash at bank and in hand       1,105 1,725
Cash raised from the placing of 70,000,000 shares in May 2008 is held within the operating company, Energetix Voltage Control 
Limited, which is wholly owned subsidiary of VPhase plc.
28. Deferred taxation
The unprovided deferred taxation asset calculated at a tax rate of 28% (2007: 28%) is set out below:
        2008 2007
        £ £
Trade losses       84,427 7,382
Share based payments       74,562 –
       158,989 7,382
 
Unrelieved tax losses of £301,524 (2007: £26,364) remain available to offset against future taxable trading profits. No deferred tax 
asset has been recognised in respect of the losses as recoverability is uncertain.
29. Creditors - amounts falling due within one year
        2008 2007
        £ £
Trade creditors       13,710 –
Amounts owed to subsidiary undertakings      226,172 –
Accruals       144,871 –
       384,753 –
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Group Financial Statements for the year ended 31 December 2008
39
30. Share Capital
 Ordinary 
I
 Deferred
 Number of shares Share capital Number of shares Share capital 
 No £ No £
Authorised
At 1 January 2007
Ordinary shares of 1p each 40,062,730,460 4,006,274 100,376,460 993,726
On conversion to ordinary shares of  
0.01p each and deferred shares of 0.99p each (38,400,000,000) – – –
Cancellation of deferred shares (62,730,460) (6,274) (100,376,460) (993,726)
At 31 December 2007 1,600,000,000 4,000,000 – –
At 31 December 2008 1,600,000,000 4,000,000 – –
Issued and fully paid
At 1 January 2007  2,100,376,460 210,038 100,376,460 993,726
Consolidation to ordinary shares of 0.25p each (2,016,361,401) – – –
 84,015,059 210,038 100,376,460 993,726
Shares issued to acquire Energetix Voltage Control Ltd 500,105,004 1,250,263 – –
Shares issued in satisfaction of Warrants 40,000,000 100,000 – –
Cancellation of deferred shares – – (100,376,460) (993,726)
Exercise of warrants    1,000,000 2,500 –  –
At 31 December 2007 625,120,063 1,562,801 – –
Shares issued 13 February 2008  1,248,240 3,120 – –
Shares issued 14 May 2008 70,000,000 175,000 – –
Shares issued 12 June 2008 1,248,240 3,120 – –
Shares issued 14 August 2008 1,248,240 3,120 – –
Shares issued 8 October 2008 1,248,240 3,121 – –
At 31 December 2008 700,113,023 1,750,282 – –
Issue of shares
On 24 July 2007, in anticipation of the proposed consolidation and in order that the number of ordinary shares would be divisible by 
25, 15 ordinary shares of 0.01 pence each were issued fully paid to the Company’s Registrars, Neville Registrars. 
On 24 September 2007, the ordinary shares of 0.01 pence each in the capital of the Company (both issued and unissued) were 
consolidated so that every 25 ordinary shares of 0.01 pence each were consolidated into one new ordinary share of 0.25 pence in the 
capital of the Company.
On 24 September 2007 , the authorised share capital of the Company was altered by the cancellation of 62,730,460 unissued ordinary 
shares of 0.01 pence each and the cancellation of 100,376,460 deferred shares of 0.99 pence each resulting in a transfer of £993,726 
to a capital redemption reserve.
On 25 September 2007, the Company issued 500,105,004 new ordinary shares of 0.25 pence at 0.48 pence per share in  
consideration for the acquisition of the entire share capital of Energetix Voltage Control Limited. 
On 26 September 2007, the Company’s enlarged share capital was admitted to trading on AIM, a market operated by the London 
Stock Exchange.
On 26 September 2007, the Company issued 40,000,000 ordinary shares of 0.25 pence in satisfaction of outstanding warrants at an 
issue price of 39.25 pence each.
On 19 October 2007, 1,000,000 ordinary shares of 0.25 pence were issued in satisfaction of outstanding warrants at par.
On 13 February 2008, the Company issued 1,248,240 ordinary shares of 0.25 pence each at 1.602 pence per share to Novum 
Securities Limited in settlement of broker services received.
12065 Vphase BACK.indd   39 20/4/09   15:24:40 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
40
Notes to the Company Balance Sheet continued
30. Share Capital continued
Issue of shares 
On 14 May 2008, the Company issued 70,000,000 ordinary shares of 0.25 pence each via a placing at 5 pence per share .
On 12 June 2008, the Company issued 1,248,240 ordinary shares of 0.25 pence each at 1.602 pence per share to Novum Securities 
Limited in settlement of broker services received.
On 14 August 2008, the Company issued 1,248,240 ordinary shares of 0.25 pence each at 1.602 pence per share to Novum 
Securities Limited in settlement of broker services received.
On 8 October 2008, the Company issued 1,248,240 ordinary shares of 0.25 pence each at 1.602 pence per share to Novum 
Securities Limited in settlement of broker services received.
31. Share based payments
The Company 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 option expires. The Group has no legal or constructive obligation to repurchase or settle the option 
in cash. The movement in the number of share options is set out below:
        2008 2007
        No No
Number of outstanding share options at 1 January      – –
Granted during the year       15,603,001 –
Number of outstanding share options at 31 December     15,603,001 –
As at 31 December 2008, no share options were capable of being exercised (2007: Nil). The weighted average exercise price of share 
options granted during the year was 1.88 pence (2007: Nil 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 £106,794 
(2007: £Nil) and a corresponding credit to other reserves. 
Assumptions
The following assumptions are used to determine the fair value of share options at the respective date of grant:
     Ordinary Share price   Life of  
   Exercise  shares at date Expected Interest option Expected 
   price under option of grant volatility rate (years) dividends 
Date of grant   (p)  (p)
1 January 2008  1.88 15,603,001 1.88 42.3% 5.50% 3 Nil
The middle market price of ordinary shares on 31 December 2008 was 6.50 (2007: 4.00) pence. The high and low market prices 
during the year were 9.38 (2007: 4.38) pence and 3.00 (2007: 1.88) pence respectively.
Expected volatility is derived from observation of the volatility of the Company’s shares. 
The expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, 
exercise restrictions and behavioural conditions.
National insurance is payable on gains made by employees on exercise of share options granted to them.
Other share based payments
During the year the Company has issued shares to its broker for annual services rendered up to September 2008 and has entered 
into a commitment to pay fees to its broker for services provided up to September 2009. These share based payments have been 
valued at the fair value of services received and are charged to the profit and loss account with a corresponding credit to equity.
12065 Vphase BACK.indd   40 20/4/09   15:24:40 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
41
32. Warrants
On 22 May 2008, the Company granted 3,500,000 warrants with an exercise price of 5 pence to its broker, as part of the agreed 
placing costs. The warrants outstanding at 31 December 2008 were: 
Date granted Number of warrants Exercise price (pence) Exercise period
22 May 2008 3,500,000 5 3 years
These warrants are exercisable during a three year period from the date of grant. On exercise each warrant entitles the holder to one 
0.25 pence ordinary share in the Company.
The Company uses the Black-Scholes model to fair value the Company’s warrants which resulted in a total fair value charge of 
£105,000 (2007: £Nil), this has been charged against the share premium account and credited to warrant reserve in the period.
As at 31 December 2008, 3,500,000 warrants were capable of being exercised (2007: Nil). The options outstanding at 31 December 
2008 had a weighted average exercise price of 5 pence (2007: Nil) and a weighted average remaining contractual life of two years and 
seven months. No warrants were exercised during the year.
Assumptions
The following assumptions are used to determine the fair value of warrants at the respective date of grant:
     Ordinary Share price     
   Exercise  shares at date   Life of  
   price under  of grant Expected Interest option Expected 
Date of grant   (p) warrant (p) volatility rate (years) dividends
22 May 2008  5 3,500,000 6.25 43.2% 5.5% 3 –
The share price at date of grant is the closing price on the day that the warrants were granted.
Expected volatility is derived from observation of the volatility of the Company’s shares.
The expected life used in the model has been adjusted based on management’s best estimate, for the effects of non-transferability, 
exercise restrictions and behavioural conditions.
33. Share premium account
        2008 2007
        £ £
At 1 January        1,369,499 1,400,992
Shares issued       3,325,000 57,000
Shares issued in consideration for services received (note 30)     67,519 –
Issue of warrants       (105,000) –
Share issue expenses       (195,000) (88,493)
At 31 December        4,462,018 1,369,499
  
34. Merger relief reserve
        2008 2007
        £ £
At 1 January        1,149,737 –
Shares issued to acquire Energetix Voltage Control Limited     – 1,149,737
At 31 December        1,149,737 1,149,737
Merger relief reserve represents the premium on the shares issued to acquire Energetix Voltage Control Limited.
12065 Vphase BACK.indd   41 20/4/09   15:24:40 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
42
Notes to the Company Balance Sheet continued
35. Capital redemption reserve
        2008 2007
        £ £
At 1 January        993,726 –
Arising on the cancellation of deferred shares      – 993,726
At 31 December        993,726 993,726
36. Other reserves
        2008 2007
        £ £
At 1 January        (27,078) (47,278)
Share based payments       106,794 –
Other share based payments       – 20,200
Transfer to profit and loss account       (200) –
At 31 December        79,516 (27,078)
Employee share ownership plan
Flightstore Group plc established an employee share ownership trust under a trust deed dated 3 December 2003. FG Employee Trust 
Company Limited is a trustee of the trust.
The purpose of the FG Employee Trust Company Limited is to hold shares in the Company on behalf of the trust for the benefit of the 
employees, including Executive Directors, in satisfaction of their options under the Flightstore Group plc’s Employees Share Option 
Scheme. All rights to dividends have been waived.
Following the capital reorganisation the nominal value of the shares held by the FG Employee Trustee Company Limited is £44,913, 
representing less than one per cent of called up share capital at 31 December 2006. The maximum number of shares held by FG 
Employee Trustee Company Limited during 2008 was 4,491,344 (2007: 4,491,344).
At 31 December 2008, 4,491,344 (2007: 4,491,344) shares in Flightstore Group plc were held by FG Employee Trustee Company 
Limited. The market value of these shares at 31 December 2008 was £291,937 (2007: £179,654).
In compliance with UITF 38 Accounting for ESOP Trusts, Company shares at a cost of £47,278 (2007: £47,278) held by FG Employee 
Trustee Company Limited have been included in the Group and Company Balance Sheets as a reduction in shareholders’ funds. A cash 
balance held by FG Employee Trustee Company £1,542 (2007: £1,527) has also been aggregated into the Group and Company Balance 
Sheet. Flightstore Group plc’s £2 investment in FG Employee Trustee Company Limited has been eliminated on consolidation.
The Flightstore Group plc Employees Share Option Scheme was approved by the shareholders on 7 September 2004 and no options 
have been granted under the scheme. 
12065 Vphase BACK.indd   42 20/4/09   15:24:40 VPhase plc  
Group Financial Statements for the year ended 31 December 2008
43
37. Profit and loss account
The Company has taken advantage of section 230 of the Companies Act 1985 and has not included its own profit and loss account 
in these Financial Statements. The parent Company’s loss for the year was £502,162 (2007: loss £241,757).
        2008 2007
        £ £
At 1 January        (2,612,827) (2,371,070)
Loss for the year       (502,162) (241,757)
Transfer from other reserves       200 –
At 31 December        (3,114,789) (2,612,827)
38. Shareholders’ funds
        2008 2007
        £ £
Loss for the year       (502,162) (241,757)
Shares issued in the year, net of expenses      3,280,000 2,471,007
Issue of warrants       105,000 –
Share based payments        106,794 20,200
Increase in shareholders’ funds       2,989,632 2,249,450
Shareholders’ funds at 1 January       2,435,858 186,408
Shareholders’ funds at 31 December       5,425,490 2,435,858
39. Commitments
The Company has entered into an agreement to pay its broker in shares for services provided until 23 September 2009. This 
agreement requires the issue of 833,333 new ordinary shares of 0.25 pence at 6 pence per share. As at 31 December 2008, no 
shares had been issued in settlement of fees, and a further 833,333 are to be issued. 
40. Related party transactions
The Company has taken advantage of the exemption in Financial Reporting Standard No. 8 ‘Related party disclosures’ and has not 
disclosed transactions with Group undertakings.
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Group Financial Statements for the year ended 31 December 2008
44
Directors, Secretary and Advisors to the Group
Company registration number
4958332
Registered office
Steam Packet House
76 Cross Street
Manchester
M2 4JU
Principal place of business
Capenhurst Technology Park
Capenhurst
Chester
CH1 6EH
Directors
A C Hutchings (Executive Chairman)
Dr. L Juby (Chief Executive Officer) 
R H Smith (Chief Financial Officer)
N A Moss (Non-Executive Director)
Company Secretary
P M Barry
Steam Packet House
76 Cross Street
Manchester
M2 4JU
Nomad
Zimmerman Adams International Limited
New Broad Street House
35 New Broad Street
London 
EC2M 1NH
Broker
NOVUM Securities Limited
Austin Friars House
2-6 Austin Friars
London
EC2N 2HD
Bankers
HSBC Bank plc
Chester & Deeside Commercial Centre
Vista
St David’s Park
Ewloe
Flintshire
CH5 3RX
Solicitors
Atticus Legal LLP
Steam Packet House
76 Cross Street
Manchester
M2 4JU
Independent Auditors
Grant Thornton UK LLP
Registered Auditors
Chartered Accountants
4 Hardman Square
Spinningfields
Manchester
M3 3EB
Public Relations Advisors
Abchurch Communications Limited
100 Cannon Street
London
EC4N 6EU
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
12065 Vphase BACK.indd   44 20/4/09   15:24:40 By 2016, all new homes built in England
VPhase plc specialises in Smart 
Voltage Management and has 
developed a technology platform 
for a range of products to reduce 
energy used in homes and small 
businesses.
VPhase plc is a subsidiary of Energetix Group plc
and was listed on AIM in 2007.
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32099emp_cover:Layout 1 20/4/09 12:27 Page 2 Group Financial Statements
for the year ended 31 December 2008
VPhase plc Group Financial Statements for the year ended 31 December 2008
VPhase plc
Capenhurst Technology Park
Chester
CH1 6EH
T. 0151 348 2100
F. 0151 348 2101
E: info@VPhase.com
www.VPhase.com
Smart Voltage Management
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