VPhase plc Group Financial Statements
for the year ended 31 December 2010 
VPhase plc Group Financial Statements for the year ended  31 December 2010 
VPhase plc
Capenhurst Technology Park
Chester
CH1 6EH
T. 0151 348 2100
F. 0151 348 2101
E: info@vphase.co.uk
www.vphase.co.uk VPhase plc was admitted 
to AIM in 2007.
VPhase plc specialises in Domestic Voltage 
Optimisation and is selling the first product 
developed from its technology platform, with 
further plans for a range of products  
to reduce energy used in homes and  
small businesses.
Welcome to VPhase
Contents
01 Highlights
02 Chairman’s Statement
03 Chief Executive Officer’s Statement
08 Corporate Responsibility
09 Board of Directors
10 Directors’ Remuneration Report
12 Group Directors’ Report
16 Independent Auditor’s Report
17 Group Income Statement
18 Group Statement of Changes in Equity
19 Group Statement of Financial Position
20 Group Statement of Cash Flows
21 Notes to the Group Financial Statements
34 Company Balance Sheet
35 Notes to the Company Balance Sheet
41 Directors, Secretary and Advisors to the Group
FSC logo  
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Company registration number
4958332
Registered office
Castlefield House
Liverpool Road
Castlefield
Manchester
M3 4SB
Principal place of business
Capenhurst Technology Park
Capenhurst
Chester
CH1 6EH
Directors
V J Murray (Non-Executive Chairman) 
R H Smith (Chief Executive Officer)
N A Moss (Non-Executive Director)
D R Sedgwick (Non-Executive Director)
Company Secretary
P M Barry
Nomad and Broker
Ambrian Partners Limited
Old Change House
128 Queen Victoria Street
London
EC4V 4BJ
Bankers
HSBC Bank plc
Chester & Deeside Commercial Centre
Vista
St David’s Park
Ewloe
Flintshire
CH5 3RX
Solicitors
Atticus Legal LLP
Castlefield House
Liverpool Road
Castlefield
Manchester
M3 4SB
Independent Auditors
Grant Thornton UK LLP
Registered Auditors
Chartered Accountants
4 Hardman Square
Spinningfields
Manchester
M3 3EB
Public Relations Advisors
Abchurch Communications Limited
125 Old Broad Street
London
EC2N 1AR
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
Directors, Secretary and Advisors to the Group
41 www .vphase .c o .uk 	 VPhase plc
Group Financial Statements for the year ended 31 December 2010 1 w w w . vph a s e . c o . u k 	 V Ph as e plc
Group Financial Statements for the year ended 31 December 2010
Post year end:
Shell Springboard awards, regional •	
winner and national runner up;
A number of additional trials •	
completed reinforcing that the typical 
saving a home will see is between 
6% and 12% off their annual 
electricity usage; and
CERT value of 2.5 tonnes over the  •	
20 year life of the measure confirmed 
by Ofgem.
Highlights 
During 2010:
New Chairman and Chief Executive •	
Officer appointed in July and 
September 2010 respectively;
£2,000,000 new funds raised via •	
institutional placing in October 2010;
Product sales increased to £217 ,000 •	
(2009: £53,000);
First Framework Agreement •	
concluded with Eaga Heating 
Services Limited;
Winner Electrical Industry Awards •	
most innovative residential/domestic 
product 2010; and
CERT Demonstration Action •	
completed and results submitted  
to Ofgem. 2 V Ph as e plc 
Group Financial Statements for the year ended 31 December 2010
Chairman’s Statement
“We have clarified our 
messages, VPhase is the low 
cost energy saving product 
that you simply fit, forget and 
save money instantly.”
I am pleased to present my first full year statement since my 
appointment in July 2010 and to report that VPhase has made 
significant progress in delivering its strategic objectives. These 
were set out at the time of our interims:
• to establish major framework deals with national players;
• to gain product specifications with social housing providers;
• to achieve Carbon Emission Reduction Target (“CERT”) 
accreditation and to progress the process of securing the 
Community Energy Savings Programme (“CESP”) and the code 
for sustainable homes; 
• to build awareness in our immediate customer base and with 
consumers in general; 
• to continue the training of independent electricians on the 
product, its benefits, the ease of the installation process and 
their margin opportunity; 
• to leverage our unique technology platform in the development 
of further innovative energy solutions; and
•   to establish a Board and management to deliver the full 
commercial benefit of the VPhase technology.
On 13 December we announced our first framework agreement 
with Eaga Heating Services Limited (“Eaga”) and the Group is 
making good progress with a number of other potential partners. 
The Group has clarified its powerful marketing message to 
consumers: VPhase is the low cost energy saving product that you 
simply fit, forget and save money instantly. We have developed 
better marketing tools and made extensive use of our website, 
television advertising, celebrity endorsement and social media as 
well as more traditional means of promotion.
The Company has won the Electrical Industry Awards most 
innovative residential/domestic product and was runner up in the 
Shell Springboard national competition having won the regional 
finals. All such accreditations add considerable endorsement to the 
product.
Subsequent to the year end we have also secured CERT 
accreditation at 2.5 tonnes of carbon dioxide over a 20 year 
measure.
Board appointment
To further strengthen your Board I am delighted to announce that 
Duncan Sedgwick will be joining as a Non-Executive Director on 
1 April 2011. With over 37 years experience in the electricity supply 
industry including five years as the CEO of the Energy Retail 
Association, Duncan brings extensive knowledge to the Board.
The year ahead is a critical one for the business as we execute our 
commercial strategy and build on the strong partnerships that we 
have in place. I look forward to updating shareholders as the year 
progresses.
Vanda Murray OBE
Chairman
22 March 2011
Vanda Murray OBE
Chairman
“VPhase has made 
significant progress 
in delivering its 
strategic objectives.” 3 w w w . vph a s e . c o . u k 	 V Ph as e plc
Group Financial Statements for the year ended 31 December 2010
Chief Executive Officer’s Statement
Richard H Smith
Chief Executive Officer
  
Mission:
Our mission is to be the leading supplier of •	
products for domestic and light commercial 
energy efficiency in the UK and selected 
international markets.
Vision:
Our vision is clear:
We will develop long term relationships with  •	
key partners and customers to drive consumer 
demand.
We will continuously innovate in the design, •	
manufacture and supply of products to satisfy 
changing customer needs and seek to expand 
our portfolio of products from both internal and 
external sources.
We will achieve this through committed  •	
people operating in an open and stimulating 
environment.
Values:
Efficiency  We will promote energy efficiency  
in our markets and efficiency in  
our own operations.
Innovation   We are committed to innovation in  
our products, processes, service 
and support.
Partnership  We will work closely with strategic 
partners to support our key 
competences, and with our 
employees to drive our business 
forward.
“Working with our 
strategic partners and 
our employees we will 
drive the business 
forward.”
Operating Review 2010
Since my appointment as Chief Executive Officer in September 
2010 I have made sure that both the strategic objectives and the 
short term targets for the business are clearly understood, both 
internally and by our shareholders, as we set out at the time of our 
interim results in September 2010.
Six Months of Progress
In December 2010, we announced our first Framework Agreement 
with Eaga, part of EAGA plc, and this has already resulted in a 
further supply agreement via Eaga with Everest Limited who now 
offer VPhase with every solar Photovoltaic (“PV”) or energy efficient 
boiler they sell. The Eaga agreement enables us to offer national 
fulfilment within our advertising and marketing campaigns, directed 
at both retailers and domestic customers.
The Group has completed or has ongoing trials with 27 different 
social housing groups and local authorities. This will be an area of 
considerable focus for the Group over the forthcoming period and 
a significant number of enquiries are currently being progressed.
CERT Accreditation
CERT (Carbon Emission Reduction Target) is seen as a key enabler 
to accelerate the adoption of our technology.
Over the last six months, an increased effort has been placed on 
securing CERT credits. The field trial results, as independently analysed 
by EA Technology, were submitted to Ofgem in October 2010, their 
peer review by AEA Technology was completed by December 2010 
and our response to that review submitted by the end of 2010. 
On 21 March 2011 Ofgem confirmed that VPhase has secured a 
CERT measure based around its initial Demonstration Action with 
Scottish and Southern Energy (“SSE”) and Ofgem; at 2.5 tonnes of 
carbon dioxide over a 20 year measure. The savings represent an 
excellent, proven approach to lowering household carbon 
emissions, yet the figure falls somewhat short of anticipated results, 
given that the device has been independently rated for a 36 year 
component lifespan. Other trials, for example Great Places and 
staff homes, have demonstrated carbon dioxide savings to be 
around 3.6 tonnes over a notional 20 year life. The CERT 
Demonstration Action that was conducted in association with SSE 
has indicated energy savings of 5.2 % (6.3% for a gas centrally 
heated home). Whilst this is an important energy saving figure, the  4 V Ph as e plc 
Group Financial Statements for the year ended 31 December 2010
Chief Executive Officer’s statement continued
methodology upon which the Demonstration Action was based 
upon ‘day on/day off’ is too easily impacted by day to day load 
variability in the home which can be significant. Ofgem has agreed 
with VPhase that the 2.5 tonnes of carbon dioxide and 6.3% saving 
figures may be reviewed as further trial data is made available to 
improve the CERT measure beyond this current baseline.
I am aware that the Department for Energy and Climate Change 
(“DECC”) is carrying out a consultation on the future of consumer 
electronics and appliances in CERT and that one of the scenarios 
being considered is that everything other than insulation and 
heating be removed from CERT. If this scenario was adopted then 
VPhase would no longer be able to utilise its CERT measure. 
We have also started work on the inclusion of VPhase in the 
Government’s Community Energy Saving Program (“CESP”). CESP 
targets households in areas of low income across Great Britain to 
improve efficiency and reduce fuel bills. As an energy efficiency and 
money saving product, VPhase typically delivers a reduction in 
household electricity consumption of between 6% and 12% making 
it an ideal product for this program.
As this program is delivered through a partnership with local 
authorities, energy suppliers and energy generators, there was 
some concern that it would be impacted by the Government’s 
spending review. After some reported delays the consensus is that 
the project funding within CESP is accelerating.
In December 2010 the Government published the Energy Bill which 
set out future objectives for tackling barriers to investment in energy 
efficiency, enhancing energy security and enabling investment in 
low carbon technologies. Included in the Bill was the Green Deal 
where bill payers will be able to acquire energy efficiency 
improvements by spreading the payments rather than having to pay 
cash upfront. This is seen as being a further initiative for which 
VPhase is ideally suited as, despite its low cost, this reduces the 
competition for consumers’ money for similar “non-energy” related 
products in the same price bracket.
From 2013 there will be a new Energy Company Obligation to replace 
CERT and CESP and to work alongside the Green Deal finance offer 
by targeting appropriate measures at those households which are 
likely to need additional support, in particular those containing 
vulnerable people on low incomes and those in hard to treat housing. 
We believe our product is ideally suited to all such initiatives.
Building Consumer Awareness
To build consumer and trade awareness we refocused our message 
that VPhase is a ‘low cost, easy to fit and forget product that will 
save money instantly’; it is not reliant on the sun shining, the wind 
blowing or behavioural change. This message has been consistently 
delivered and has resulted in growing awareness of the product 
and how voltage optimisation can save money for home owners. 
This in turn has led to increased sales.
To further extend consumer awareness, the Group trialled a 
television advertising campaign, initially in the Granada region. To 
date we can directly attribute 30% uplift in hits on our website to 
this campaign. The campaign will run until the end of March 2011 
after which a wider roll out will be considered.
Consumer awareness will remain a key focus in 2011 and we are 
also promoting the product in the national press and on relevant TV 
programmes.
For a new product it is important to grow consumer confidence and 
we have worked with:
•	 D i c k	 S t r aw b r i g e	 f r o m	 e c o - a r k ,	 w h o	 h a s	 fi l m e d	 a n	 e c o - v i d e o	 f o r	
VPhase and now promotes and sells the VPhase product on his 
website www.ecoark.co.uk;
•	 O l i v e r	 H e a t h	 f r o m	 H e a t h	 D e s i g n	 h a s	 p r o m o t e d	 t h e	 V P h a s e	
product in a number of publications and at a number of events, 
and given a positive review of the VPhase product:
 “The unit now sits quietly reducing the voltage input and helping 
us to cut our electricity bills, and CO
2
 footprint. It’s certainly good 
that we can quietly make energy savings and live more efficiently 
without any impact, time cost or reduction in quality of life.”
•	 M i c h a e l	H o l m e s	h a s	s p o k e n	p o s i t i v e l y	a b o u t	V P h a s e :
 “I fitted two VPhase units to my self-build home in Oxfordshire early 
last October,” says TV Property Expert and Editor-in-Chief of 
Homebuilding & Renovating magazine. “We had very high electricity 
usage with bills averaging £4,200 a year even though we have oil-
fired central heating. We have just received the first electricity bill 
since fitting the two VPhase units and it is over £200 less than for 
the same six months last year with no change to our lifestyle. I can 
only put this 10 per cent reduction in usage down to the VPhase 
units and, on this usage, the payback is less than two years.”
•	 C h r i s	 H o l l o m a n	 h a s	 a	 u n i t	 i n s t a l l e d	 i n	 h i s	 “ m a n ’ s	 d r e a m	 p a d ”	
blog for Sky News; and 
•	 V P h a s e	 s u p p l i e d	 t h i s	 p r o d u c t	 t o	 t h e	 B B C	 O n e ’ s	 s e r i e s	 ‘ D I Y	 S O S :	
The Big Build’ and was used as part of a life changing 
transformation to the home of a family in Brynmawr, Wales.
In September we launched a new website, www.vphase.co.uk. and 
are running initiatives to increase the number of people visiting the 
site. Prior to the re-launch in September 2010 the maximum number 
of hits had been 3,000 per month and, since the re-launch, this has 
grown to a peak of 13,000 per month in February 2011 and now 
stabilised at 11,000 per month. This website is the focal point for 
the education of consumers, the dissemination of technical 
information to the trade, and for communication with investors.
During 2010 the Company won the Electrical Industry Awards for 
the most innovative residential/domestic product of the year and 
received several other accolades from Professional Electrician and 
Installer and the Electrical Times. In February 2011 the Company 
also won the Shell Springboard regional awards and was the runner 
up in the national finals. 5 w w w . vph a s e . c o . u k 	 V Ph as e plc
Group Financial Statements for the year ended 31 December 2010
We also exhibited at various trade and consumer events during the 
year to promote an awareness of Voltage Optimisation, its benefits 
and how fitting a VPhase can deliver them. These shows included 
Elex, Ecobuild, the Salford Energy Hub where a VPhase unit is 
installed, and the National Home Improvement show. We have also 
established a more permanent presence for the next 12 months with 
a stand at the National Self Build and Renovation Centre in Swindon.
In 2010, SSE completed the construction of ten landmark zero 
carbon homes in Slough, each of which has a VPhase unit fitted as 
one of the initiatives contributing to the homes’ low carbon footprint. 
VPhase continues its discussions with the Building Research 
Establishment (“BRE”) and the Department of Energy and Climate 
Change (“DECC”) about the mandatory inclusion of a VPhase in new 
build. 
During the year our training team has continued to conduct training 
seminars around the country for independent electricians and 
dedicated ones for Eaga, Everest, SSE and British Gas. The program 
of seminars will continue through 2011 and during the year additional 
electricians will be educated as to the benefits of VPhase and the 
up-sell opportunity it presents. Innovation is key to VPhase’s future 
success and we are using our unique technology platform in the 
following ways:
to reduce the cost and increase the effectiveness of our existing •	
product;
to develop the VPhase unit for greater power applications, •	
including larger homes; and 
to extend the product range for light commercial and international •	
applications.
A further opportunity for VPhase is the Government’s plans to roll 
out smart meters to all domestic properties. We believe a VPhase 
can be fitted at the same time for minimal additional cost and will 
increase the energy savings without being reliant on behavioural 
changes. We are in continuing dialogue with smart meter suppliers 
as to how we may work together.
The compelling case for VPhase
There are many energy saving devices and renewable energy 
initiatives that will help homes reduce their energy consumption 
from low cost options, such as loft and cavity wall insulation, to 
more expensive measures such as solid wall insulation, heat pumps 
and solar PV.
VPhase is the cheapest “next” option at a similar cost and payback 
to loft insulation; it is also complementary to these other initiatives. 
For example:
A VPhase unit can reduce the electrical costs of a ground source •	
or air source heat pump by up to 18%; and
VPhase helps keep voltage at the appropriate level for appliances •	
in the home when the network voltage rises due to the inclusion 
of increasing amounts of distributed generation from solar PV 
and/or wind.
Case Studies
The Group has carried out a range of trials to demonstrate the 
benefits of voltage optimisation in domestic applications. The 
methods trialled include one day regulated compared with one day 
unregulated, this needs a significant number of days to secure a 
reliable result; 56 minutes regulated with 56 minutes unregulated, 
the shorter time period improves accuracy yet still requires at least 
60 days to smooth out load variations and weather impacts; and 
finally 10 minutes cycling between unregulated and regulated which 
gives the highest accuracy but results in a significant amount of 
data to be managed. 
Trials applying each methodology give the following savings:
Method  Average  
  saving
Day on/off 6.3%
56 min on/off 9.3%
10 min on/off 8.1%
  
A case study from staff homes demonstrates a 9.9% reduction 
in electricity consumed where in the twelve months prior to the 
installation of a VPhase unit the energy consumed was 
7,865kWh and in the twelve months post installation energy 
consumed was 7,090kWh a saving of 725 kWh (9.9%).
Boiler pumps 7%
Electric cookers 11%
Other food preparation devices 6%
Showers 17%
Lighting 13%
Computing equipment 13%
Cold appliances 12%
Wet appliances 12%
Consumer goods 17%
8,000
kwh
7,500
6,500
5,500
6,000
5,000
12 months
unregulated
12 months
VPhase regulated
7,000
Break down of electricty consumption 
for an average household
12 months electrical consumption with
and without a VPhase unit
VPhase energy
saving 725kWh
9.9% 6 V Ph as e plc 
Group Financial Statements for the year ended 31 December 2010
Future Strategy
The Group’s strategy is to be the leading supplier of products for 
domestic and light commercial energy efficiency in the UK and 
selected international markets. We will achieve this through developing 
long term relationships with key partners and customers to drive 
demand and deliver continuous innovation in our products, 
processes, service and support. Working with our strategic partners 
and our employees we will drive the business forward. 
The increasing political importance of climate change, energy 
security and resource conservation are all seen as important factors 
which will help grow the business.
People
We have strengthened the Board with the appointment of Duncan 
Sedgwick who brings extensive knowledge of the electricity 
industry and we are in the process of appointing a Chief Financial 
Officer. At the end of this process we will retain a balanced Board 
with two executive Directors and three Non-Executive Directors.
The senior management team has been strengthened with a new 
Head of Sales and Supply Chain Manager addressing two critical 
areas for the business; sales growth and a low cost product. The 
recruitment of a new Head of Technical continues and should 
conclude in the next few weeks.
Technical
Continual improvement and innovation are core to the Group’s 
future growth and our dedicated technical team has identified 
several areas for product development. These include minor 
changes to the existing product plus the development of a more 
powerful unit for inclusion within larger homes and light commercial 
units, constant cost reduction reviews and development of products 
for the international market.
Commercial Focus
The Group will continue to manage its Framework Agreements 
which are targeted at driving growth. Following the recent CERT 
confirmation, we will increase our efforts with social housing and 
pay special attention to securing sales with bundled offerings 
including; home improvements; solar PV; smart meters; 
home energy audits; and other opportunities when an electrician is 
on-site.
The UK Market
The UK market for VPhase is some 26 million homes of which 
5 million are in the social housing sector with Registered Social 
Landlords (“RSLs”) and Local Housing Authorities (“LHAs”). 
Legislation ensures that social housing re-wires more frequently 
than the private sector and has a far greater proportion of the 
4.5 million UK homes living in fuel poverty (Annual Report on Fuel 
Poverty 2010; DECC) that receive the highest level of subsidy as 
compared to the able to pay sector. 
VPhase provides a compelling proposition for all customer groups 
as VPhase:
delivers savings of between 6% and 12% off the average home’s •	
electricity usage and typically around 10%; 
is not reliant on behavioural change to deliver savings, nor the •	
sun shining or wind blowing;
is a fit and forget solution; •	
is low cost; and •	
pays for itself in 2 to 5 years and continues to save for over •	
another 20 years plus.
Outlook
As a business we have established a platform for growth, and 
discussions are in progress across a range of sectors for substantial 
sales volumes to social housing schemes, utilities, solar PV installers 
as well as the direct routes to market we are developing via the 
electrical appliance distributors and independent electricians.
CERT is a key driver to further growth and the product is ideal for 
CESP and the Green Deal.
Clearly, there is much still to do, but the Group is well positioned to 
capitalise on the opportunities in the sector and the Board looks 
forward to delivering further progress in 2011.
Chief Executive Officer’s statement continued
  
Given the likelihood of ever increasing energy bills, 
with Government statements suggesting a two 
fold increase over the next few years (DECC, July 
2010), the economic rationale for fitting VPhase 
simply gets better.
Applying the average UK domestic energy consumption of 
4,500kWh per annum (source: EA Technology) across the profile of 
normal home electrical consumption under laboratory conditions at 
245 volts and 220 volts, we have demonstrated that the usual 
reduction in electrical consumption will be around 9.5%.
Boiler pumps 7%
Electric cookers 11%
Other food preparation devices 6%
Showers 17%
Lighting 13%
Computing equipment 13%
Cold appliances 12%
Wet appliances 12%
Consumer goods 17%
8,000
kwh
7,500
6,500
5,500
6,000
5,000
12 months
unregulated
12 months
VPhase regulated
7,000
Break down of electricty consumption 
for an average household
12 months electrical consumption with
and without a VPhase unit
VPhase energy
saving 725kWh
9.9% 7 w w w . vph a s e . c o . u k 	 V Ph as e plc
Group Financial Statements for the year ended 31 December 2010
Financial Review
Operating result
 2010  2009 
 £’000  £’000
Product revenue 217  53
Non Product revenue 49  71
Total Revenue 266  124
Gross Margin 104  28
Operating loss (1,713)  (992)
Cash reserves 2,078  1,677
Revenue
Product revenues continue to grow showing significant growth over 
2009 to £217,000 (2009: £53,000). One-off non-product sales of 
£49,000 (2009: £71,000) relate to the CERT trials.
Gross margins
Gross margins improved in the second half reflecting the impact of 
increased product sales and lower other income. Product sales are 
maintaining 39% gross margins.
Administrative expenses
Administrative expenses have increased as the Group has grown 
its sales and marketing team and invested more in consumer 
awareness of both the benefits of voltage optimisation and how 
VPhase is the only effective method to secure these benefits. Total 
administrative expenses were £1,817,000 (2009: £1,020,000); this 
includes £34,000 (2009: £26,000) of depreciation of property, plant 
and equipment and £90,000 (2009: £27,000) of amortisation of the 
Group’s intangible R&D asset.
Loss before tax
The loss before tax has increased in line with the Board’s 
expectations to £1,711,000 (2009: £981,000) reflecting largely the 
increased expenditure on sales and marketing activities as the 
Group accelerates its commercial activity. The new Framework 
Agreement noted earlier in this operating review is expected to 
deliver growth as are the other Framework Agreements 
in negotiation.
Tax
During the year the Group received a tax credit of £Nil (2009: 
£5,000) in relation to research and development expenditure. In 
accordance with Group accounting policies no amounts are 
accrued until the quantum and likelihood of repayment can be 
reliably measured.
Loss per ordinary share
The loss per ordinary share, basic and diluted, was 0.24 pence per 
share (2009: 0.14 pence per share); the increase reflecting the 
increased sales and marketing expenditure by the Group.
Investment in property, plant and equipment
During the year £36,000 (2009: £15,000) was invested in property, 
plant and equipment. The Group outsources its manufacturing 
activities which enables it to keep its investment in property, plant 
and equipment to a minimum.
Investment in intangible assets
Investments in intangible assets in the year were £Nil  
(2009: £176,000) as the business has completed development of 
the first VPhase product. 
Cash and cash equivalents
At the end of the year the Group had cash resources of £2,078,000 
(2009: £1,677,000) with a burn rate of £133,000 (2009: £127,000) 
per month.
Richard H Smith
Chief Executive Officer
22 March 2011 8 V Ph as e plc 
Group Financial Statements for the year ended 31 December 2010
Corporate Responsibility
Overview
As a Company we are committed to ensuring that our business is 
conducted to the highest ethical and professional standards and 
recognise that trust and reputation are key elements in our business 
and make every effort to protect them. We aim to build a long term 
relationship with each customer based on mutual trust and in 
support of our corporate values. 
Employees
Our reputation is dependent on the skill and professionalism of 
everyone within our business and we aim to achieve sustainable 
growth through attracting, developing and retaining skilled and 
motivated people. We promote equality in all areas of our operations. 
The Group is committed to the highest standards of Health and 
Safety in all areas of our business to minimise the risks to our 
employees, our customers and the general public. 
Environment
We aim to play a role in the communities in which we operate, to 
be regarded as a good employer locally, and to minimise any 
adverse impact from our operations on the local community and 
take our environmental responsibilities seriously. We aim to 
minimise our environmental impact and we are developing an 
Environmental Management System to control and improve our 
environmental performance. 
We work with our suppliers to ensure that their environmental 
approach is consistent with our own.
We recognise that we use significant amounts of energy within our 
operations, including supply chain, manufacture and distribution. 
On this basis we aim to reduce the amount of energy we use by 
improving the efficiency of existing buildings and processes, and by 
seeking less environmentally harmful alternatives. 
Suppliers
We regard suppliers as partners and seek to work closely with 
them to achieve our objectives. We buy from suppliers within the 
EU and use reputable sources. 
We work with our suppliers to ensure that they meet our own 
standards of Corporate Responsibility. 9 w w w . vph a s e . c o . u k 	 V Ph as e plc
Group Financial Statements for the year ended 31 December 2010
Board of Directors
Vanda Murray, OBE, BA (Hons), FCIM
Non-Executive Chairman
Appointed to the Board: July 2010
Committee membership:  
Audit (Chairman),  
Remuneration (Chairman)
External appointments: 
Non-Executive Director – Carillion plc
Non-Executive Director –The Manchester Airport Group plc
Deputy Chair – North West Development Agency
Chair – Business Link NW
Vanda has over 20 years of senior management experience across 
a range of B2B and B2C sectors in the UK, Europe, USA and Asia. 
She was previously CEO of Blick plc where she doubled its market 
cap. in two years before orchestrating a sale to Stanley Works Inc. 
She also led a turnaround at Ultraframe (UK) Limited which was 
then sold to Latium Limited in June 2006. With a BA (Hons) in 
European Business Administration and a French Business Diploma. 
Vanda is also currently Non-Executive Director of Carillion plc and 
The Manchester Airport Group plc. In 2002 Vanda was appointed 
OBE for services to Industry and Export.
Richard H Smith, MBA, FCMA
Chief Executive & Financial Officer
Appointed to the Board: September 2007 
September 2007
A fellow of the Chartered Institute of Management Accountants Rick 
also has an MBA from Warwick University. Prior to his appointment 
as CEO, he was CFO of both VPhase plc and Energetix Group plc. 
He was previously FD for Ultraframe (UK ) Limited, 2001-2004, and 
MD in 2004. Previous roles include the FD of Norcros Adhesives 
Limited, 1997-2001, which comprised subsidiary, joint venture and 
licensee operations in the UK, Middle East and India, the FD of 
International Energy Systems Limited, 1995 – 1997 and prior to  
this the FC of a division of Robinson Healthcare, a division of 
Robinson Limited.
Directors
Nicholas Moss
Non-Executive Director
Appointed to the Board: September 2007
Committee membership: 
Audit, Remuneration
External appointments:
Managing Director Walnut Management (UK) Limited
Nicholas has a BSc (1st Class) in 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, Nicholas held 
various senior management positions within Caradon plc including 
Divisional Marketing & Product Development Director for brands 
including Everest, Catnic, Garador and Terrain. Prior to this he was 
Product Manager for MK Electric/Gent with particular responsibility 
for electrical components, fire systems and building management.
Duncan Sedgwick
Non-Executive Director
Appointed to the Board: April 2011
Committee membership:  
Audit, Remuneration
External appointments:  
Director Gateway Management Solutions Limited
Duncan was most recently Chief Executive of Secure Electrans,  
a company that joins together energy metering, energy display 
information and payment methodologies. Prior to this, he was the 
Chief Executive of the Energy Retail Association in the United 
Kingdom (2003 to 2008) delivering major operational performance 
improvements in the areas of selling, customer transfer and billing 
within member organisations. Prior to that, he held a variety of roles 
with Powergen including Director of Business Transformation, Retail 
Director – Residential Markets, and before this was with East 
Midlands Electricity plc as Customer Services Director. Duncan has  
a BA in Law and is an Associate of the Institute of Chartered 
Secretaries and Administrators. 10 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Directors’ Remuneration Report
for the year ended 31 December 2010
This report to shareholders for the year ended 31 December 2010 
sets out the Company’s Remuneration policies. As the Company’s 
shares are registered on the AIM Market of the London Stock 
Exchange, the Company is required to report in accordance with 
the remuneration disclosure requirements of the AIM rules.
Composition and role of the Remuneration Committee
Membership of the Remuneration Committee during the year 
consisted wholly of independent Non-Executive Directors:
Vanda Murray OBE (Chairman) (appointed 7 July 2010)
Nick Moss   (appointed 7 July 2010)
The Company Secretary acts as Secretary to the Remuneration 
Committee.
Prior to its formation, and whilst the Group was a subsidiary of 
Energetix Group plc, the Remuneration Committee of Energetix 
Group plc oversaw the remuneration policies and activities of 
the Group.
The Committee met once in 2010.
The Committee is responsible for determining on behalf of the 
Board, an appropriate remuneration policy for the Executive 
Directors and for designing a remuneration framework for them 
that is consistent with that policy. The Committee also monitors 
remuneration practice amongst other senior executives and 
determines the Chairman’s fee level and that of the other Non-
Executive Directors in consultation with the Chief Executive. No 
member of the Committee participates in discussions concerning 
their own remuneration.
Remuneration structure for Executive Directors
Overview
The Remuneration Committee is committed to maintaining high 
standards of corporate governance and has taken steps to comply 
with best practice in so far as it can be applied practically given the 
size of the Company and the nature of its operations.
Remuneration policy
The Committee aims to ensure that the total remuneration for the 
Executive Directors is soundly based, internally consistent, market 
competitive and aligned with the interests of shareholders. No 
Director takes part in decisions regarding their personal 
remuneration.
To design a balanced package for the Executive Directors and 
senior management the Committee considers:
the individual’s experience and the nature and complexity of •	
their work in order to pay a competitive salary that attracts and 
retains Management of the highest quality, while avoiding 
remunerating those Directors more than is necessary;
the link between the individual’s remuneration package and the •	
Group’s long term performance; and
to provide employment related benefits including the provision •	
of life assurance and medical insurance.
Basic salary
Salaries are reviewed annually and are benchmarked against 
businesses of a similar size and stage of development. The review 
process is undertaken having regard to the development of the 
Group and the contribution that individuals will continue to make as 
well as the need to retain and motivate individuals. In this respect 
the Remuneration Committee draws on findings of external salary 
surveys and undertakes its own research.
Benefits
Directors are provided with life assurance for themselves and 
private medical insurance for themselves and their families.
Performance related pay
Directors can earn a cash bonus of up to one times their annual 
basic salary payable against meeting personal and business 
targets as set out by the Committee at the beginning of each year.
Share options
Share options are granted at the closing mid-market value of the 
Company’s ordinary shares on the day prior to grant. The vesting 
criteria can be that the shares vest after three years or other such 
time period as the Committee may decide or against specific 
business and or market performance criteria.
Service contracts
Each Executive Director has a service contract with the Group 
which contains details regarding remuneration, restrictions and 
disciplinary matters. Executive Directors are appointed by the 
Group on contracts terminable on not more than 6 months notice.
Non-Executive Directors
The fees of the Chairman are determined by the Committee and 
the fees of the Non-Executive Directors by the Board following a 
recommendation from the Chairman. The Chairman and Non-
Executive Directors are not involved in any discussions or decisions 
about their own remuneration.
The annual fee levels as at 31 December 2010 were:
Chairman £60,000
Non-Executive Director £25,000 11 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
Directors’ emoluments for the year ended 31 December 2010 (audited)
       Share-based 
     Salary/fees/bonus Benefits payments Total 
     £ £ £ £
Executive
Richard H Smith     111,000 – 72,000 183,000
Adrian Hutchings     16,000 – – 16,000
Lee Juby     95,000 – 19,000 114,000
Non-Executive
Vanda Murray OBE     29,000 – 72,000 101,000
Nick Moss     12,000 – – 12,000
     263,000 – 163,000 426,000
Directors’ emoluments for the year ended 31 December 2009 (audited)
       Share-based 
     Salary/fees/bonus Benefits payments Total 
     £ £ £ £
Executive
Richard H Smith     25,000 – – 25,000
Adrian Hutchings     31,000 – – 31,000
Lee Juby     99,000 1,000 49,000 149,000
Non-Executive
Nick Moss     10,000 – – 10,000
     165,000 1,000 49,000 215,000
Directors’ Interest in Share options (audited)
 As at  As at 
 1 January  31 December Exercise Exercise 
 2010 Granted 2010 price period
Richard H Smith
(1)
 – 10,507,944 10,507,944 2.38 7 July 2010  
     to 6 July 2020
Vanda Murray OBE
(2)
 – 10,507,944 10,507,944 2.38 7 July 2010 to  
     6 July 2020
Lee Juby
(3)
 15,603,001 – 15,603,001 1.88 1 January 2011 to  
     31 December 2020
(1) Options are exercisable in tranches of a third on achievement of: break even: £100 million market valuation; and £300 million market valuation.
(2) Half of the options are exercisable in tranches of a third on achievement of: break even; £100 million market valuation; and £300 million market valuation. The other half are 
exercisable in tranches of a third after year one, two and three from grant date.
(3) Lee Juby’s options lapsed on 17 January 2011.
Directors’ interest in shares (unaudited)
  As at 1 January 2010 As at 31 December 2010
Richard H Smith Ordinary shares of £0.0025 each 12,489,498 12,909,666
Vanda Murray OBE Ordinary shares of £0.0025 each – 1,260,504
Nick Moss Ordinary shares of £0.0025 each 4,688,250 4,688,250
Vanda Murray OBE
Chairman of Remuneration Committee
22 March 2011 12 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Group Directors’ Report continued 
for the year ended 31 December 2010
Group Directors’ Report continued 
for the year ended 31 December 2010
Group Directors’ Report 
for the year ended 31 December 2010
The Directors present their report and the audited Financial Statements for the year ended 31 December 2010.
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 2010 and for the corresponding period in 2009. Further details are provided in note 2 to the Financial Statements.
Principal activities
VPhase plc is focused on the creation of shareholder value through the provision of home energy efficiency products and services 
designed to reduce energy consumption for domestic and small commercial properties.
Results and dividends
The loss for the year after taxation, amounted to £1,711,000 (2009: £976,000). The Directors do not recommend the payment of a 
dividend.
Review of business and future developments
The Board has continued the commercial development of the business and is pleased with the progress made with CERT and Framework 
Agreements.
A more detailed appraisal of business and future developments is given in the Chairman’s Statement and Chief Executive Officer’s 
Statement on pages 2 to 7.
Risk review
The Directors have monitored the progress of the overall Group strategy and a review of the Key Performance Indicators (KPIs)  
is included below:
Key performance 
indicator Progress
Revenue  Product revenue has increased four fold during 2010.
Product margins  Product margins have increased from 23% in 2009 to 39% in 2010. As volume sales commence margin pressure 
from volume customers will be offset by purchasing/volume economies.
Warranty claims  Warranty claims are inevitable in any product business and the Group aims to minimise its exposure through robust 
development and testing procedures, detailed analysis of warranty claims and quick resolution of issues to maximise 
customer satisfaction.
Research and 
development costs
  No research and development costs were capitalised during 2010 as the current VPhase product was completed  
in 2009. The Group is committed to enhancing the existing VPhase product and developing further energy  
efficiency innovations through its dedicated development team and, when appropriate, will incur appropriate 
development costs.
Administrative 
expenses
  Administrative expenses have increased as the Group has grown its sales and marketing team and invested more in 
consumer awareness of the VPhase technology and the significant benefits it brings.
Capital expenditure  Capital expenditure of £36,000 (2009: £15,000) was incurred in the year. VPhase is not a capital intensive business 
and, in line with this philosophy, the Group has outsourced its manufacturing activities.
Cash management  The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while 
minimising costs and liquidity risk.
Creation of 
shareholder value
  By adhering to the key performance criteria outlined above, the Group is ideally positioned to capitalise upon the 
significant opportunities that lie ahead and ultimately to create substantial shareholder value.
The key business risks affecting the Group are set out below:
Market acceptance
The awareness of voltage optimisation as a technique for saving money off electricity bills is low amongst consumers. End consumers 
may not accept the technology or be prepared to pay a price sufficient to compensate the value chain. The Company is managing this 
through a consumer awareness programme including TV advertising, celebrity endorsement and the use of its website, email and other 
new media, in addition to more traditional marketing media.
There is also greater awareness of the benefits with commercial customers, in particular in the social housing sector and with the utility 
companies. These are a key focus for the Group’s sales activities. 13 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
Government funding may impact the Group
The level of funding available for voltage optimisation through the 
various Government initiatives, CERT, CESP, the Green Deal and 
others may impact the rate of adoption of the Group’s products. 
The economics for the product do not require subsidy, however 
subsidy is seen as a useful enabler to accelerate the adoption of 
the product.
Funding requirements
The Group has sufficient financial resources to continue to operate 
for the foreseeable future and as a result is not currently seeking 
external finance or borrowing facilities. Further details are disclosed 
in note 2.1 to the Financial Statements.
Competition
Currently there is little competition, however as the Group opens 
up the market for voltage optimisation, other companies are likely 
to want to enter with alternative products. The Group has patent 
protection for its existing product and will seek to maintain its 
advantage through continuous innovation.
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 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.
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.
Research and development
The Group undertakes research and development to address 
opportunities in the alternative energy market. In 2010, the Group 
focused on commercial development and on this basis no research 
and development costs were capitalised under IAS 38 ‘Intangible 
Assets’ (2009: £176,000). Research and development costs 
charged to the Income Statement amounted to £81,000 
(2009: £15,000).
Directors
The Directors who held office in the year are shown below. Each 
Director served throughout the period unless otherwise indicated:
V Murray – Non-Executive Chairman – appointed 7 July 2010
R H Smith – Chief Executive Officer and (Chief Financial Officer,  
– appointed Chief Executive Officer 28 September 2010)
N A Moss – Non-Executive Director
A C Hutchings – resigned 7 July 2010
Dr L Juby – resigned 28 September 2010
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 in 
note 18 to the financial statements.
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.
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 
£2,078,000 as at 31 December 2010 (2009: £1,677,000).
The maturity of contractual undiscounted cash flows is set out in 
note 18.4 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. 14 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Group Directors’ Report continued 
for the year ended 31 December 2010
Credit risk
The Company’s principal financial asset is cash. Although the 
credit risk associated with cash is limited, the Group’s treasury 
policy remains the same as in the prior year.
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 payables of the Group at the year 
end as a proportion of amounts invoiced by suppliers during the 
year represent 58 days (2009: 37 days) and for the Company 
represent 19 days (2009: 17 days).
Going concern
Having made reasonable enquiries, the Directors are of the opinion 
that the Group has sufficient 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 2.1 to the Financial Statements.
Major shareholdings
As at 21 March 2011 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  42.86
BlackRock Inv Mgmt   8.48
Legal & General Group plc   6.23
Ora Capital Partners Limited   5.98
Close Asset Management Ltd   5.44
Novum Securities Limited   3.96
XCap Securities PLC   3.67
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 
2010, relevant to the Group’s size and complexity.
Board of Directors
During the period under review the Board comprised of two Non-
Executive and one Executive Director. Biographies of the Directors 
are provided on page 9 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 Directors are highly experienced, exercise 
independent judgement on issues arising and are able to challenge 
constructively the decisions of the Executive Director. 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 reports are tabled 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
Audit Committee
The Audit Committee was formed on 7 July 2010 and held its first 
meeting 8 September 2010. The members of the Audit Committee 
as at 31 December 2010 were Vanda Murray OBE (Chairman) and 
Nick Moss. Executive Directors are permitted to attend meetings at 
the discretion of the Chairman of the Committee. The Committee 
meets at least twice a year and there is an opportunity for any 
meeting to be in private between the Non-Executive Directors and 
the Company’s auditors to consider any matter they wish to bring 
to the attention of the Committee.
The terms of reference and areas of delegated responsibility of the 
Audit Committee are in the consideration and approval of the 
following matters:
monitoring the quality and effectiveness of the internal control •	
environment, including the risk management procedures;
reviewing the Group’s accounting policies and ensuring •	
compliance with relevant accounting standards;
reviewing the Group’s accounting and reporting procedures; •	
ensuring that the financial performance of the business is •	
properly measured and reported on;
recommending the reappointment of the auditors and the level •	
of their remuneration;
considering reports from the auditors on the outcome of the •	
audit process and ensuring that any recommendations arising 
are communicated to the Board and implemented on a timely 
basis;
reviewing the Board’s statement on internal control in the Annual •	
Report; and
ensuring compliance with the relevant requirements of the AIM •	
Rules for Companies.
Remuneration Committee
The Remuneration Committee was formed on 7 July 2010 and held 
its first meeting 28 September 2010. The members of the 
Remuneration Committee as at 31 December 2010 were Vanda 
Murray OBE (Chairman) and Nick Moss. All are independent  
Non-Executive Directors. The Committee meets at least two  
times a year. 15 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
The Committee is primarily responsible for determining and 
agreeing with the Board the remuneration policy relating to the 
Chairman, Executive Directors and senior management of the 
Company ensuring market compatibility and structures necessary 
to ensure appropriate levels of remuneration and incentive.
The full Remuneration Report can be found on pages 10 to 11.
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 10.00am on 19 May 
2011 at the Company’s registered office Castlefield House, Liverpool 
Road, Castlefield, Manchester, M3 4SB.
The Company’s website (www.vphase.co.uk) 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 grows.
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 Directors’ 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. Under that law the Directors have to prepare 
the financial statements in accordance with International Financial 
Reporting Standards as adopted by the European Union. Under 
company law the Directors must not approve the financial 
statements unless they are satisfied that they give a true and fair 
view of the state of affairs and profit or loss of the Company and 
Group for that period. In preparing these financial statements, the 
Directors are required to:
select suitable accounting policies and then apply them •	
consistently;
make judgments and accounting estimates that are reasonable •	
and prudent;
state whether applicable IFRSs have been followed, subject to •	
any material departures disclosed and explained in the financial 
statements;
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 adequate accounting 
records that are sufficient to show and explain the Company’s 
transactions and 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 2006. 
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 each of the Directors is aware:
there is no relevant audit information of which the Company’s •	
auditor is 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 auditor is 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
Grant Thornton UK LLP, having expressed their willingness to 
continue in office, will be deemed reappointed for the next financial 
year in accordance with section 489 of the Companies Act 2006.
On behalf of the Board
Richard H Smith
Chief Executive Officer
22 March 2011 16 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Independent Auditor’s Report
to the Members of VPhase PLC
We have audited the financial statements of VPhase plc for the year 
ended 31 December 2010 which comprise the Group income 
statement, the Group statement of changes in equity, the Group 
statement of financial position, the Group statement of cash flows, 
the parent Company balance sheet and the related notes. The 
financial reporting framework that has been applied in the 
preparation of the group financial statements is applicable law and 
International Financial Reporting Standards as adopted by the 
European Union. The financial reporting framework that has been 
applied in the preparation of the parent company financial 
statements is applicable law and United Kingdom Accounting 
Standards (United Kingdom Generally Accepted Accounting 
Practice).
This report is made solely to the Company’s members, as a body, 
in accordance with Chapter 3 of Part 16 of the Companies Act 
2006. 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 auditor’s 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 auditor
As explained more fully in the Statement of Directors’ responsibilities 
on page 15, the directors are responsible for the preparation of the 
financial statements and for being satisfied that they give a true and 
fair view. Our responsibility is to audit and express an opinion on 
the financial statements in accordance with applicable law and 
International Standards on Auditing (UK and Ireland). Those 
standards require us to comply with the Auditing Practices Board’s 
(“APB’s”) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is 
provided on the APB’s website at www.frc.org.uk/apb/scope/
private.cfm.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of •	
the Group’s and of the parent Company’s affairs as at 
31 December 2010 and of the group’s loss for the year then 
ended;
the Group financial statements have been properly prepared in •	
accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly •	
prepared in accordance with United Kingdom Generally 
Accepted Accounting Practice; and
the financial statements have been prepared in accordance with •	
the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies 
Act 2006
In our opinion the information given in the Directors’ Report for the 
financial year for which the financial statements are prepared is 
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where 
the Companies Act 2006 requires us to report to you if, in 
our opinion:
adequate accounting records have not been kept by the parent •	
Company, or returns adequate for our audit have not been 
received from branches not visited by us; or
the parent Company financial statements are not in agreement •	
with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law •	
are not made; or
we have not received all the information and explanations we •	
require for our audit.
Joanne Kearns
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Manchester
22 March 2011 17 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
       Year ended Year ended 
       31 December 31 December 
       2010 2009 
      Note £’000 £’000
Revenue       266 124
Cost of sales       (162) (96)
Gross profit       104 28
Administrative expenses       (1,817) (1,020)
Operating loss       (1,713) (992)
Finance income      5 2 11
Loss before income tax      4 (1,711) (981)
Income tax      9 – 5
Loss for the year       (1,711) (976)
Loss per ordinary share attributable to the equity holders of the Company during the year
Total and continuing:
– Basic and diluted      11 (0.24)p (0.14)p
The Group has no items to be recognised in the “Group statement of comprehensive income” and consequently this statement has not 
been shown.
All revenue and costs originate from continuing activities.
The notes on pages 21 to 33 are an integral part of these Group Financial Statements.
Group Income Statement
for the year ended 31 December 2010 18 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
 Attributable to equity holders of the Company
   Merger Capital  Reverse  
 Share Share relief redemption  Retained acquisition Warrant Other Total 
 capital premium reserve reserve  earnings reserve reserve reserves equity 
 £’000 £’000 £’000 £’000  £’000 £’000 £’000 £’000 £’000
Balance at 1 January 2009 1,750 4,462  1,150 994 (1,553) (3,682) 105 80 3,306
Share-based payments – – – – – – – 49 49
Shares issued by legal parent  
in consideration for services:
– 5 June 2009 1 24 – – – – – – 25
Transactions with owners 1,751 4,486 1,150 994 (1,553) (3,682) 105 129 3,380
Loss for the year and total
comprehensive income – – – – (976) – – – (976)
Balance at 31 December 2009 1,751 4,486 1,150 994 (2,529) (3,682) 105 129 2,404
Share-based payments – – – – – – – 170 170
Proceeds from placing 250 1,750 – – – – – – 2,000
Placing costs – (134) – – – – – – (134)
Shares issued 4 36 – – – – – – 40
Transactions with owners 2,005 6,138 1,150  994 (2,529) (3,682) 105 299 4,480
Loss for the year and total
comprehensive income – – – – (1,711) – – – (1,711)
Balance at 31 December 2010 2,005 6,138 1,150 994  (4,240) (3,682) 105  299 2,769
Total recognised income and expense recognised directly to equity amounts to £Nil (2009: £Nil).
Merger relief reserve 
Merger relief reserve represents the premium on the shares issued to acquire VPhase Smart Energy Limited (formerly 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 2.3, the reverse acquisition reserve relates to the reverse acquisition between VPhase Smart Energy Limited (formerly 
Energetix Voltage Control Limited) and VPhase plc on 26 September 2007. 
Warrant reserve 
As disclosed in note 19.2, in May 2008 the Company granted 3,500,000 warrants to its then 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.
Other reserves 
Other reserves comprise of share-based payments for the cost of options granted.
At 31 December 2010, 179,653 (2009: 179,653) shares in VPhase plc were held by FG Employee Trustee Company Limited. The market 
value of these shares at 31 December 2010 was £4,000 (2009: £7,000). Further details are contained within note 37.
The notes on pages 21 to 33 are an integral part of these Group Financial Statements. 
Group Statement of Changes in Equity
for the year ended 31 December 2010 19 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
       As at As at 
       31 December 31 December 
       2010 2009 
      Note £’000 £’000
ASSETS
Non-current assets
Intangible assets      12 281 371
Property, plant and equipment      13 63 61
       344 432
Current assets
Inventories      14 362 375
Trade and other receivables      15 334 186
Cash and cash equivalents      16 2,078 1,677
       2,774 2,238
Total assets       3,118 2,670
LIABILITIES
Current liabilities
Trade and other payables      17 349 266
Total liabilities       349 266
EQUITY
Equity attributable to equity holders of the Company
Share capital      19 2,005 1,751
Share premium       6,138 4,486
Merger relief reserve       1,150 1,150
Capital redemption reserve       994 994
Retained earnings       (4,240) (2,529)
Reverse acquisition reserve       (3,682) (3,682)
Warrant reserve       105 105
Other reserves       299 129
Total equity       2,769 2,404
Total equity and liabilities       3,118 2,670
The notes on pages 21 to 33 are an integral part of these Group Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 22 March 2011 and were signed on
its behalf by:
Richard H Smith
Chief Executive Officer
VPhase plc
Company number: 4958332
Group Statement of Financial Position
as at 31 December 2010 20 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
       Year ended Year ended 
       31 December 31 December 
        2010 2009 
      Note £’000 £’000
Cash flows from operating activities
Net cash consumed by operating activities      20 (1,471) (1,351)
Taxation
Tax received       – 5
Cash flows from investing activities
Expenditure on intangible fixed assets      12 – (176)
Purchases of property, plant and equipment      13 (36) (15)
Interest received       2 11
       (34) (180)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares       1,906 –
Net increase/(decrease) in cash and cash equivalents      401 (1,526)
Cash and cash equivalents at the beginning of the year      1,677 3,203
Cash and cash equivalents at the end of the year     16 2,078 1,677
The notes on pages 21 to 33 are an integral part of these Group Financial Statements.
Group Statement of Cash Flows
for the year ended 31 December 2010 21 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
Notes to the Group Financial Statements
for the year ended 31 December 2010
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 41 
of the Group Financial Statements. VPhase plc is a public 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 Basis of preparation 
The Group Financial Statements of VPhase plc have been prepared in accordance with International Financial Reporting Standards (IFRS). 
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 12 to 15. The financial position of the Group, its cash flows and liquidity position are described in 
the Chief Executives Officer’s Statement on pages 6 and 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, together with its ultimate Parent Company, has sufficient financial resources to continue to operate for the foreseeable future 
and with the commencement of sales in 2009 the Group has a sound platform for 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 2014 and taking account of reasonably 
possible changes in performance in relation to sales volumes, 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. 
2.2 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 
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 for options with non-market vesting conditions and the simulation model for options with market 
vesting conditions. 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. 
Taxation 
Management have not recognised a deferred tax asset in relation to unrelieved tax losses as the recoverability is currently uncertain. 
Critical accounting judgments 
Amortisation and capitalisation of development assets 
Development costs capitalised, which form part of the Group’s intangible assets, are amortised on a straight line basis over 60 months 
starting from the point that those products resulting from the development activity commence mainstream sales. Mainstream sales 
commenced in September 2009 and consequently, amortisation of these development costs began from this date. No additional 
development costs have been incurred during the year ended 31 December 2010. Notes to the Group Financial Statements continued
for the year ended 31 December 2010
22 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
2.3 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 VPhase 
Smart Energy Limited (formerly Energetix Voltage Control Limited) via a share for share exchange. The share for share exchange has been 
accounted for as a reverse acquisition. 
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. 
2.4 Intangible assets 
The carrying values of intangible assets 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 2.11), which form part of the Group’s intangible assets, are amortised on a straight line basis over a 
period of 5 years starting from the point that those products resulting from the development activity commence mainstream sales. 
Mainstream sales commenced in September 2009 and consequently, amortisation of these development costs began from this date. 
Amortisation charges are recognised in the Group Income Statement within administrative expenses.
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. 
2.5 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: 
– Property, 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. 
2.6 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. 
Loans and receivables 
Trade 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 initially at fair value and thereafter 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 reporting 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.  23 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
2. Summary of significant accounting policies continued
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.
2.7 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. 
2.8 Trade payables 
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. 
2.9 Other financial liabilities 
Other financial liabilities including borrowings are recognised initially at fair value, net of transaction costs incurred. These are subsequently 
recorded at amortised cost using the effective interest method, with interest related charges recognised as an expense in finance costs 
in the income statement.
2.10 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 are 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. •	
2.11 Research and development 
Research costs are charged against income as incurred. Certain development costs are capitalised when they meet the criteria discussed 
below. 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 reporting 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. 
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. 
The Group has commenced mainstream product sales and any further development expenditure relating to these products will be 
expensed in the Income Statement. Development expenditure relating to future VPhase products will be capitalised/expensed as 
appropriate following careful judgment by the Directors. 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 reporting 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.  Notes to the Group Financial Statements continued
for the year ended 31 December 2010
24 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
2.12 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/includes 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 reporting date. 
2.13 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. 
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 reporting 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 other comprehensive income (such as the revaluation of land) or equity in which case 
the related deferred tax is also charged or credited directly to other comprehensive income or equity as appropriate. 
2.14 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 for options with non-market vesting conditions 
attached and the simulation model for options with market vesting conditions attached, 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. 
2.15 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’. 
2.16 Adopted IFRS not yet applied 
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards 
have been published but are not yet effective, and have not been adopted early by the group. 25 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
2. Summary of significant accounting policies continued
Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the first period 
beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected 
to be relevant to the Group’s financial statements is provided below. Certain other new standards and interpretations have been issued 
but are not expected to have a material impact on the Group’s financial statements.
Annual Improvements 2010 (effective from 1 July 2010 and later)
The IASB has issued Improvements to IFRS 2010 ( 2010 Improvements ). Most of these amendments become effective in annual periods 
beginning on or after 1 July 2010 or 1 January 2011. The 2010 Improvements amend certain provisions of IFRS 3R, clarify presentations 
of the reconciliation of each of the components of other comprehensive income and clarify certain disclosure requirements for financial 
instruments. The Group’s preliminary assessments indicate that the 2010 Improvements will not have a material impact on the Group’s 
financial statements.
IFRS 9 Financial Instruments (effective from 1 January 2013)
The IASB aims to replace IAS 39 Financial Instruments : Recognition and Measurement in its entirety. The replacement standard (IFRS 9) 
is being issued in phases. To date, the chapter dealing with recognition, classification, measurement and derecognition of financial assets 
and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters dealing with 
impairment methodology and hedge accounting are still being developed.
Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Group. However, they 
do not expect to implement the amendments until all chapters of IFRS 9 have been published and they can comprehensively assess the 
impact of all changes.
2.17 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of ordinarily interchangeable items are assigned using the first 
in, first out cost formula. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion 
and costs necessary to make the sale. 
3. Segmental information 
There is only one product sold by the Group being a voltage control device. Consequently, management have identified one segment; 
energy efficiency, and as such no segmental information is provided. Revenue can be analysed between product sales of £217,000 (2009: 
£53,000) and other revenue of £49,000 (2009: £71,000).
The Group currently operates entirely within the United Kingdom, consequently the Group does not report information about geographical 
areas to its chief operating decision maker.
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. 
       2010 2009 
       £’000 £’000
Depreciation (note 13)       34 26
Amortisation (note 12)       90 27
Employee benefit expense (note 7)       838 341
Research costs (not capitalised)       81 15
Inventories recognised as an expense       13 20
Other share-based payments expense       – 25
Audit remuneration:
– fees payable to Company auditors for the audit of Parent Company and Group Financial Statements  4 2
Non-audit services:
– audit of the Company’s subsidiaries       10 9
– other services pursuant to legislation       3 3
– tax services       3 3
Other services pursuant to legislation relate to the interim review (2009: £3,000). Notes to the Group Financial Statements continued
for the year ended 31 December 2010
26 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
5. Finance income 
       2010 2009 
       £’000 £’000
Loans and receivables (including cash and cash equivalents)      2 11
6. Directors’ remuneration
       2010 2009 
       £’000 £’000
Directors’ emoluments
Aggregate emoluments       263 166
Paid as follows:
Emoluments        251 156
Fees to third parties       12 10
       263 166
Highest paid Director
The above includes remuneration of the highest paid Director as follows:
       2010 2009 
       £’000 £’000
Emoluments       111 100
The key management of the Group is the same as the Board of Directors. 
7. Employee benefit expense 
       2010 2009 
       £’000 £’000
Wages and salaries       602 258
Social security costs       66 34
Share-based payments       170 49
       838 341
Average number of persons employed:
       2010 2009 
       No No
Finance and administration       10 5
Research and development       3 3
       13 8
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 or against performance criteria. If the option remains unexercised 
after a period of ten years from the date of grant, the options expire. The options are all equity settled. The movement in the number of 
share options is set out below:
       2010 2009 
       No No
Number of outstanding share options at 1 January       15,943,427 15,943,427
Granted during the year       21,015,888 –
Number of outstanding share options at 31 December       36,959,315 15,943,427
As at 31 December 2010, no share options were capable of being exercised. The weighted average exercise price of share options outstanding 
at 31 December 2010 was 2.20 pence (2009: 1.88 pence). No options were exercised, forfeited, expired or lapsed during the year.  27 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
8. Share-based payments continued
The share options existing at the beginning of the year and granted during the year, including vesting conditions are:
   As at  As at 
   1 January  31 December Exercise  Exercise  
   2010 Granted 2010 price  period 
Richard Smith
(1)
   – 10,507,944 10,507,944 2.38 7 July 2010 to  
       6 July 2020 
Vanda Murray OBE
(2)
   – 10,507,944 10,507,944 2.38 7 July 2010 to  
       6 July 2020
Lee Juby
(3)
   15,603,001 – 15,603,001 1.88 1 January 2011 to  
       31 December 2020
Other
(4)
   340,426 – 340,426 5.88 7 September 2012 to  
       7 September 2019
   15,943,427 21,015,888 36,959,315
(1) Options are exercisable in tranches of a third on achievement of: break even: £100 million market valuation; and £300 million market valuation.
(2) Half of the options are exercisable in tranches of a third on achievement of: break even; £100 million market valuation; and £300 million market valuation. The other half are 
exercisable in tranches of a third after year one, two and three from grant date.
(3) Lee Juby’s options lapsed on 17 January 2011.
(4) No performance criteria are attached.
Share options are valued at the date of grant using the Black-Scholes option pricing model for options with non-market vesting conditions 
attached and the simulation model for options with market vesting conditions attached, and are charged to operating profit over the 
vesting period of the award with a corresponding credit to the ‘other reserves’. This resulted in a fair value charge of £170,000  
(2009: £49,000) 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: 
    Share price  
  Exercise Ordinary at date   Life of Expected 
  price shares of grant Expected Interest option dividends 
Date of grant  (pence) under option (pence) volatility rate (years) (pence)
1 January 2008  1.88 15,603,001 1.88 42.3% 5.50% 3 Nil  
7 September 2009  5.88 340,426 5.88 49.0% 4.50% 3 Nil
7 July 2010  2.38 21,015,888 2.12 49.5% 4.50% 3 Nil
The middle market price of ordinary shares on 31 December 2010 was 2.12 pence. The high and low market prices during the year were 
4.50 pence and 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. 
9. Income tax 
       2010 2009 
       £’000 £’000
Current tax:
Prior year adjustment       – (5)
The prior year adjustment originates from a tax credit received in cash arising from research and development activities during the financial 
years ended 31 December 2006 and 2007. A claim has been submitted to HMRC for development activities during the financial years 
ended 31 December 2008 but no asset has been recognised as recoverability is uncertain.  Notes to the Group Financial Statements continued
for the year ended 31 December 2010
28 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
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:
       2010 2009 
       £’000 £’000
Loss before income tax       (1,711) (981)
Loss before income tax multiplied by rate of corporation tax in the UK of 28.0% (2009: 28.0%)   (479) (275)
Adjustments in respect of prior periods for current tax       – (5)
Adjustment for non-deductible expenses       118 45
Movement in deferred tax not provided       361 230
Current tax       – (5)
Unrelieved tax losses relating to the current trade of £3,210,000 (2009: £1,818,000) 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% (2009: 28%) is set out below: 
       2010 2009 
       £’000 £’000
Accelerated capital allowances       (11) (9)
Other short-term temporary differences       79 100
Share-based payments       (10) (62)
Trade losses       (899) (509)
       (841) (480)
11. Loss per ordinary share 
The loss per ordinary share is based on the loss of £1,711,000 (2009: loss £976,000) and 719,426,982 (2009: 700,351,607) 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. 
       2010 2009
Loss attributable to equity holders of the Company (£’000)      (1,711) (976)
Weighted average number of ordinary shares in issue (‘000)      719,427 700,352
Basic and diluted loss per share (pence)       (0.24) (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 
        £’000
Year ended 31 December 2009
Opening net book value        222
Additions        176
Amortisation        (27)
Closing net book value        371
Year ended 31 December 2010
Opening net book value        371
Amortisation        (90)
Closing net book value        281
At 31 December 2010
Cost or valuation        398
Accumulated amortisation        (117)
Closing net book value        281
At 31 December 2009
Cost or valuation        398
Accumulated amortisation        (27)
Closing net book value        371
All additions during the year arise from internal development. 29 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
The Group commenced amortisation of the intangible asset in September 2009 as management considered mainstream sales to have 
begun. The asset will be written off over 60 months as the Directors believe that this is an appropriate approach given continuing changes 
in market dynamics.
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:
Technology        Cost of capital
Energy efficiency        9.0%
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 until 31 December 2014. These forecasts were constructed 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 
increased by various rates throughout the forecasted period.
The sales growth rate used within the forecast period is in excess of GDP. Management asserts that such a growth rate is appropriate as 
the VPhase products are the only products that are presently available to service the domestic energy efficiency market in this way. 
Consequently, once customer adoption begins in earnest, a growth rate significantly in excess of UK GDP is to be expected.
Cost of capital
The Capital Asset Pricing Model (CAPM) has been used to arrive at the cost of capital.
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: average total positive returns on the ‘Electronics and Electrical Equipment’ sector within AIM for each year from 
31 December 2005 to 31 December 2010. Beta: taken from Digital Look (http://www.digitallook.com). A management derived risk premium 
has then been applied.
Effect of reasonably possible changes 
Management have undertaken scenario analyses, including a significant reduction in sales, and in no scenario does the value in use of the 
cash generating unit approach the carrying value. Notes to the Group Financial Statements continued
for the year ended 31 December 2010
30 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
13. Property, plant and equipment 
        £’000 
Year ended 31 December 2009 
Opening net book value         72
Additions        15
Depreciation charge        (26)
Closing net book value        61
Year ended 31 December 2010
Opening net book value         61
Additions        36
Depreciation charge        (34)
Closing net book value        63
At 31 December 2010
Cost        129
Accumulated depreciation        (66)
Closing net book value        63
At 31 December 2009
Cost        93
Accumulated depreciation        (32)
Closing net book value        61
14. Inventories
       2010 2009 
       £’000 £’000
Components       61 175
Finished goods       301  200
       362  375
In 2010, £13,000 inventories were included in the Group Income Statement as an expense (2009: £20,000). No write downs have incurred 
during the year and no inventories are pledged as securities for liabilities.
15. Trade and other receivables
       2010 2009 
       £’000 £’000
Trade receivables       48 4
Amounts owed by related parties       179 –
Prepayments        59 6
Amounts owed by the ultimate controlling party       – 115
Other receivables        48 61
       334 186
All amounts are short term. The net carrying value of the above receivables are considered a reasonable approximation of fair value.
The average credit period on sales of goods is 65 days (2009: 4 days). The increase in the average credit period from the prior year reflects 
the success the Group has enjoyed in gaining large national distributors as customers. No interest is charged on trade receivables. 
Before accepting any new customer, the Group uses published credit information to assess the potential customer’s credit quality and 
defines credit limits by customer.
Included in the Group’s trade receivables balance are receivables with a carrying amount of £Nil (2009: £Nil) which are past due at the 
reporting date. None of the other receivables are past due.  31 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
15. Trade and other receivables continued
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from 
the date credit was initially granted up to the reporting date. The concentration of credit risk is significant given the low numbers of 
customers that the Group has however the quantum is not currently considered material to the financial statements. The Directors do not 
believe that any credit provision is required at 31 December 2010 (2009: £Nil). 
An impairment loss of £7,000 has been recognised on trade receivables (2009: £Nil) and no other gains or losses have been recognised 
in respect of loans and receivables. The Group does not hold any collateral as security. 
16. Cash and Cash equivalents
       2010 2009 
       £’000 £’000
Cash at bank and in hand       2,078 1,677
17. Trade and other payables 
       2010 2009 
       £’000 £’000
Trade payables       159 143
Amounts owed to related party       85 –
Amounts owed to the ultimate controlling party       –  58 
Social security and other taxes       47 16
Accrued expenses       58 49
       349 266
All amounts are short term. The carrying values of all payables are considered to be a reasonable approximation of fair value.
18. Financial instruments 
18.1 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 2009 to minimise costs and liquidity risk. 
At the beginning of 2009 the Group adopted a new treasury policy which set 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 £2,078,000 (2009: £1,677,000) and equity attributable to 
equity holders of the parent comprising issued capital, reserves and retained earnings as disclosed in note 19 and in the Group Statement 
of Changes in Equity. 
The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk 
characteristics of the underlying assets. In order to maintain or adjust the capital structure the Group may in future adjust the amount of 
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets.
18.2 Categories of financial instrument
       2010  2009 
       £’000 £’000
Financial assets 
Loans and receivables (including cash and cash equivalents)      2,353 1,857
Financial Liabilities 
Amortised cost       302 250
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 the financial risk management objectives and policies 
disclosed in the Group Directors’ Report on pages 12 to 15, and the disclosures within this note. 
18.3 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 1% 
(2009: 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 Reporting date. All 
other variables are held constant.  32 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Notes to the Group Financial Statements continued
for the year ended 31 December 2010
 2010 
|||||||||
 2009
     £’000 £’000 £’000 £’000 
     +1% -1% +1% -1%
Loss for the year     21 (21) 18 (18)
Equity     21 (21) 18 (18)
18.4 Liquidity risk
Liquidity risk is the risk arising from the Group not being able to meet its obligations. The Group manages its liquidity needs by monitoring 
forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used 
in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, 
as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified 
monthly. Net cash requirements are reviewed in order to determine headroom or any shortfalls. This analysis shows that available borrowing 
facilities are expected to be sufficient over the lookout period.
The Group’s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. 
Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell 
long-term financial assets. The Group does not have instruments that include accelerated repayment terms (for example in the event of a 
downgrade in credit rating). 
Contractual maturity analysis 
Contractual undiscounted cash flows in respect of financial liabilities (or outflows in respect of financial assets) are as follows:
 Current 
|||||||||
 Non-current
     Within 6 to 1 to Later than 
     6 months 12 months 5 years 5 years 
     £’000 £’000 £’000 £’000
31 December 2010     
Trade and other payables     302 – – –
31 December 2009  
Trade and other payables     250 – – –
The above amounts correspond to the carrying value of the liabilities at the reporting date.
The Group has no derivative financial liabilities.
19. Share capital and reserves 
19.1 Share capital 
       Ordinary 
       Number Share 
       of shares capital 
       No. £’000
Authorised
At 1 January 2009 and 31 December 2010       1,600,000,000 4,000
Issued and fully paid up
At 1 January 2010       700,529,689 1,751
Shares issued 7 July 2010       1,680,672 4
Shares issued 26 October 2010       100,000,000 250
At 31 December 2010       802,210,361 2,005
Issue of shares 
On 7 July 2010, Vanda Murray procured the subscription of 1,260,504 new ordinary shares of 0.25p each at 2.38 pence per share. On the 
same date, Rick Smith subscribed for 420,168 new ordinary shares of 0.25p each at 2.38 pence per share.
On 26 October 2010, the Company issued 100,000,000 ordinary shares of 0.25p each at 2.0 pence per shares via a placing. 33 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
19.2 Warrants 
On 22 May 2008, the Company granted 3,500,000 warrants with an exercise price of 5 pence to its then broker, as part of the agreed 
placing costs. The warrants outstanding at 31 December 2010 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. 
No warrants were issued during the financial year ended 31 December 2010.
The Group used the Black-Scholes model to fair value the Group’s warrants which resulted in a total fair value charge of £105,000 against 
the share premium account.
As at 31 December 2010, 3,500,000 warrants were capable of being exercised (2009: 3,500,000). The warrants outstanding at 
31 December 2010 had a weighted average exercise price of 5 pence (2009: 5 pence) and a weighted average remaining contractual life 
of 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  (pence) warrant (pence) volatility rate (years) dividends
22 May 2008  5.00 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.
20. Cash consumed by operations
       2010 2009 
       £’000 £’000
Loss before income tax       (1,711) (981)
Adjustments for:
– Depreciation       34 26
– Amortisation       90 27
– Other income       (2) (11)
– Share-based payments (note 7)       170 49
– Other share-based payments       – 25
Changes in working capital:
– Decrease/(increase) in inventories       13 (375)
– Increase in trade and other receivables       (148) (42)
– Increase/(decrease) in trade and other payables       83 (69)
Cash consumed by operations       (1,471) (1,351)
21. Related party transactions 
Within the year, the Group incurred fees of £212,000 payable to Energetix Group plc for administrative services. As at 31 December 2010, 
£63,000 remained outstanding. The above amounts are unsecured and are repayable on demand.
Walnut Management (UK) Limited, a company of which Nick Moss is Managing Director, invoiced £64,000 (2009: £65,000) including expenses 
for Non-Executive Director services and marketing consultancy. At 31 December 2010, £5,000 remained outstanding (2009: £5,000).
22. Off balance arrangements
At 31 December 2010, the Group outsources its manufacturing requirements to meet forthcoming demand. The Directors regularly 
monitor the financial impact of these arrangements on an on-going basis in line with the Group’s business model. 34 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
       2010 2009 
      Note £’000 £’000
Fixed assets
Investments      26 2,427 2,427
Current assets
Debtors      27 3,379 3,384
Cash at bank and in hand      28 1,949 5
       5,328 3,389
Creditors: amounts falling due within one year      30 (1,102) (723)
Net current assets       4,226 2,666
Total assets less current liabilities       6,653 5,093
Net assets       6,653 5,093
Capital and reserves
Called up share capital      31 2,005 1,751
Share premium account      34 6,138 4,486
Merger relief reserve      35 1,150 1,150
Capital redemption reserve      36 994 994
Warrant reserve      33 105 105
Other reserves      37 299 129
Profit and loss account      38 (4,038) (3,522)
Shareholders’ funds      39 6,653 5,093
The notes on pages 35 to 40 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 22 March 2011 and were signed on its 
behalf by:
Richard H Smith
Chief Executive Officer
VPhase plc
Company number: 4958332
Company Balance Sheet
as at 31 December 2010 35 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
Notes to the Company Balance Sheet
23. 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 
2006 and applicable UK accounting standards (United Kingdom Generally Accepted Accounting Practice). 
On 25 September 2007, the Company acquired the entire share capital of VPhase Smart Energy Limited (formerly Energetix Voltage 
Control Limited). The Company is carrying an investment in VPhase Smart Energy Limited (formerly Energetix Voltage Control Limited) of 
£2,427,000 yet the subsidiary has net liabilities. Management believe that it would not show a true and fair view of 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 
supported by value in use calculations. Thus, it would not be true and fair to show a loss by making an impairment provision. If a full 
provision were recognised against the carrying value of the investment, the loss for the year in the Company would increase by £2,427,000 
to £2,943,000.
The principal accounting policies of the Company have remained unchanged from the previous year and are set out below. 
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.
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’. 36 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Notes to the Company Balance Sheet continued
24. Directors’ remuneration
       2010 2009 
       £’000 £’000
Directors’ emoluments
Aggregate emoluments       163 50
Paid as follows:
Emoluments       – 1
Share-based payments       163 49
       163 50
Salary costs of the Directors are borne by the main trading subsidiary VPhase Smart Energy Limited (formerly Energetix Voltage  
Control Limited).
25. Staff numbers and costs
The average number of persons employed by the Company (including Directors) during the period, analysed by category, was as 
follows:
       2010 2009 
       No No
Finance, administration and management       2 3
The aggregate payroll costs of these persons were as follows:
       2010 2009 
       £’000 £’000
Wages and salaries       – 1
Share-based payments (including National Insurance)       163 49
       163 50
26. Investments 
        £’000
Cost and net book value at 31 December 2010 and 31 December 2009      2,427
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
VPhase Smart Energy Limited
1
 (formerly Energetix Voltage Control Limited)  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 
At 31 December the companies had the following capital and reserves:
 2010 
|||||||||
 2009
     Capital and Profit/(loss) Capital and Profit/(loss)  
     reserves for the year reserves for the year 
     £’000 £’000 £’000 £’000
VPhase Smart Energy Limited (formerly Energetix Voltage Control Limited)   (1,803) (1,105) (698) (717)
Flightstore Inflight Retailing Limited     (1,496) – (1,496) –
FG Employee Trust Company Limited     (99) – (99) – 37 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
27. Debtors
       2010 2009 
       £’000 £’000
Amounts owed by subsidiary companies       3,316 3,369
Amounts owed to related parties       40 –
Other debtors       23 15
       3,379 3,384
28. Cash at bank and in hand
       2010 2009 
       £’000 £’000
Cash at bank and in hand       1,949 5
29. Deferred taxation
The unprovided deferred taxation asset calculated at a tax rate of 28% (2009: 28%) is set out below: 
       2010 2009 
       £’000 £’000
Trade losses       268 178
Share-based payments       10 62
       278  240
Unrelieved tax losses of £956,000 (2009: £661,000) 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.
30. Creditors – amounts falling due within one year
       2010 2009 
       £’000 £’000
Trade creditors       6 8
Amounts owed to related parties       19 –
Amounts owed to subsidiary undertakings       1,043 687
Accruals       34 28
       1,102 723
31. Share Capital 
 Ordinary
       Number Share 
       of shares capital 
       No. £’000
Authorised
At 1 January 2009 and 31 December 2010       1,600,000,000 4,000
Issued and fully paid up
At 1 January 2010       700,529,689 1,751
Shares issued 7 July 2010       1,680,672 4
Shares issued 26 October 2010       100,000,000 250
At 31 December 2010       802,210,361 2,005
Issue of shares 
On 7 July 2010, Vanda Murray procured the subscription of 1,260,504 new ordinary shares of 0.25p each at 2.38 pence per share. On the 
same date, Rick Smith subscribed for 420,168 new ordinary shares of 0.25p each at 2.38 pence per share.
On 26 October 2010, the Company issued 100,000,000 ordinary shares of 0.25p each at 2.0 pence per shares via a placing. 38 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Notes to the Company Balance Sheet continued
32. Share-based payments 
Assumptions 
The share options existing at the beginning of the year and granted during the year, including vesting conditions are:
   As at  As at 
   1 January  31 December Exercise  Exercise  
   2010 Granted 2010 price  period 
Richard Smith
(1)
   – 10,507,944 10,507,944 2.38 7 July 2010 to  
       6 July 2020 
Vanda Murray OBE
(2)
   – 10,507,944 10,507,944 2.38 7 July 2010 to  
       6 July 2020
Lee Juby
(3)
   15,603,001 – 15,603,001 1.88 1 January 2011 to  
       31 December 2020
Other
(4)
   340,426 – 340,426 5.88 7 September 2012 to  
       7 September 2019
   15,943,427 21,015,888 36,959,315
(1) Options are exercisable in tranches of a third on achievement of: break even: £100 million market valuation; and £300 million market valuation.
(2) Half of the options are exercisable in tranches of a third on achievement of: break even; £100 million market valuation; and £300 million market valuation. The other half are 
exercisable in tranches of a third after year one, two and three from grant date.
(3) Lee Juby’s options lapsed on 17 January 2011.
(4) No performance criteria are attached.
Share options are valued at the date of grant using the Black-Scholes option pricing model for options with non-market vesting conditions 
attached and the simulation model for options with market vesting conditions attached, and are charged to operating profit over the 
vesting period of the award with a corresponding credit to the ‘other reserves’. This resulted in a fair value charge of £170,000  
(2009: £49,000) and a corresponding credit to other reserves. 
The following assumptions are used to determine the fair value of share options at the respective date of grant: 
    Share price 
  Exercise Ordinary at date   Life of Expected 
  price shares of grant Expected Interest option dividends 
Date of grant  (pence) under option (pence) volatility rate (years) (pence)
1 January 2008  1.88 15,603,001 1.88 42.3% 5.50% 3 Nil  
7 September 2009  5.88 340,426 5.88 49.0% 4.50% 3 Nil
7 July 2010  2.38 21,015,888 2.12 49.5% 4.50% 3 Nil
The middle market price of ordinary shares on 31 December 2010 was 2.12 (2009: 4.00) pence . The high and low market prices during 
the year were 4.50 (2009: 8.50) pence and 1.88 (2009: 3.75) 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. 
33. Warrants 
On 22 May 2008, the Company granted 3,500,000 warrants with an exercise price of 5 pence to its then broker, as part of the agreed 
placing costs. The warrants outstanding at 31 December 2010 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. 39 w w w . vph a s e . c o . u k 	 V P hase plc
Group Financial Statements for the year ended 31 December 2010
33. Warrants continued
No warrants were issued during the financial year ended 31 December 2010.
The Company used the Black-Scholes model to fair value the Group’s warrants which resulted in a total fair value charge of £105,000 
against the share premium account. 
As at 31 December 2010, 3,500,000 warrants were capable of being exercised (2009: 3,500,000). The warrants outstanding at 
31 December 2010 had a weighted average exercise price of 5 pence (2009: 5 pence) and a weighted average remaining contractual life 
of 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  (pence) warrant (pence) volatility rate (years) dividends
22 May 2008  5.00 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.
34. Share premium account 
       2010 2009 
       £’000 £’000
At 1 January       4,486 4,462
Shares issued via placing       1,750 –
Share issue expenses       (134) –
Shares issued in consideration for services received       – 24
Subscription of shares       36 –
At 31 December       6,138 4,486
35. Merger relief reserve
       2010 2009 
       £’000 £’000
At 1 January and 31 December       1,150 1,150
Merger relief reserve represents the premium on the shares issued to acquire VPhase Smart Energy Limited (formerly Energetix Voltage 
Control Limited).
36. Capital redemption reserve 
       2010 2009 
       £’000 £’000
At 1 January and 31 December       994 994
37. Other reserves
       2010 2009 
       £’000 £’000
At 1 January       129 80
Share-based payments       170 49
At 31 December       299 129 40 V P hase plc 
Group Financial Statements for the year ended 31 December 2010
Notes to the Company Balance Sheet continued
37. Other reserves continued
Employee share ownership plan
VPhase plc (formerly 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 £2,000, 
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 2010 was 179,653 (2009: 179,653).
At 31 December 2010, 179,653 (2009: 179,653) shares in VPhase plc were held by FG Employee Trustee Company Limited. The market 
value of these shares at 31 December 2010 was £4,000 (2009: £7,000). 
In compliance with UITF 38 Accounting for ESOP Trusts, Company shares at a cost of £47,000 (2009: £47,000) 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 £2,000 (2009: £2,000) 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. 
38. Profit and loss account 
The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in 
these Financial Statements. The Parent Company’s loss for the year was £516,000 (2009: loss £407,000).
       2010 2009 
       £’000 £’000
At 1 January       (3,522) (3,115)
Loss for the year       (516) (407)
At 31 December       (4,038) (3,522)
39. Shareholders’ funds
       2010 2009 
       £’000 £’000
Loss for the year       (516) (407)
Shares issued in the year, net of expenses       1,866 25
Subscription of shares       40 –
Share-based payments       170 49
Increase/(decrease) in shareholders’ funds       1,560 (333)
Shareholders’ funds at 1 January       5,093 5,426
Shareholders’ funds at 31 December       6,653 5,093
40. Related party transactions
The Directors have taken advantage of the exemption within FRS8 and has not disclosed transactions with wholly owned subsidiaries.
Within the year, the Company incurred fees of £212,000 payable to Energetix Group plc for administrative services. As at 31 December 
2010, the Company owed Energetix Group plc £18,000.
The above amounts are unsecured and are repayable on demand.
Walnut Management (UK) Limited, a company of which Nick Moss is Managing Director, invoiced £64,000 (2009: £65,000) including 
expenses for Non-Executive Director services and marketing consultancy. At 31 December 2010, £5,000 remained outstanding 
(2009: £5,000). VPhase plc was admitted 
to AIM in 2007.
VPhase plc specialises in Domestic Voltage 
Optimisation and is selling the first product 
developed from its technology platform, with 
further plans for a range of products  
to reduce energy used in homes and  
small businesses.
Welcome to VPhase
Contents
01 Highlights
02 Chairman’s Statement
03 Chief Executive Officer’s Statement
08 Corporate Responsibility
09 Board of Directors
10 Directors’ Remuneration Report
12 Group Directors’ Report
16 Independent Auditor’s Report
17 Group Income Statement
18 Group Statement of Changes in Equity
19 Group Statement of Financial Position
20 Group Statement of Cash Flows
21 Notes to the Group Financial Statements
34 Company Balance Sheet
35 Notes to the Company Balance Sheet
41 Directors, Secretary and Advisors to the Group
Company registration number
4958332
Registered office
Castlefield House
Liverpool Road
Castlefield
Manchester
M3 4SB
Principal place of business
Capenhurst Technology Park
Capenhurst
Chester
CH1 6EH
Directors
V J Murray (Non-Executive Chairman) 
R H Smith (Chief Executive Officer)
N A Moss (Non-Executive Director)
D R Sedgwick (Non-Executive Director)
Company Secretary
P M Barry
Nomad and Broker
Ambrian Partners Limited
Old Change House
128 Queen Victoria Street
London
EC4V 4BJ
Bankers
HSBC Bank plc
Chester & Deeside Commercial Centre
Vista
St David’s Park
Ewloe
Flintshire
CH5 3RX
Solicitors
Atticus Legal LLP
Castlefield House
Liverpool Road
Castlefield
Manchester
M3 4SB
Independent Auditors
Grant Thornton UK LLP
Registered Auditors
Chartered Accountants
4 Hardman Square
Spinningfields
Manchester
M3 3EB
Public Relations Advisors
Abchurch Communications Limited
125 Old Broad Street
London
EC2N 1AR
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
Directors, Secretary and Advisors to the Group
41 www .vphase .c o .uk 	 VPhase plc
Group Financial Statements for the year ended 31 December 2010 VPhase plc Group Financial Statements
for the year ended 31 December 2010 
VPhase plc Group Financial Statements for the year ended  31 December 2010 
VPhase plc
Capenhurst Technology Park
Chester
CH1 6EH
T. 0151 348 2100
F. 0151 348 2101
E: info@vphase.co.uk
www.vphase.co.uk