Brand new thinking on 
domestic energy saving
VPhase plc
VPhase plc 
Group Financial Statements 2011
savings
savings
savings
savings VPhase saves up to 12% off domestic 
electricity bills.
“2011 has been a year of steady progress 
in delivering our strategic objectives. We 
have seen significant growth in interest 
within the Social Housing sector.”
Brand new thinking on domestic 
energy saving.
Contents
01 Highlights of our Year
02 Our Technology
04 Voltage Optimisation Fact or Fiction?
08 Chairman’s Statement 
10 Chief Executive’s Review
12 Financial and Business Review
14 Principal Risks and Uncertainties
15 Board of Directors
16 Corporate Responsibility
18 Directors’ Remuneration Report
21 Directors’ Report 
25 Independent Auditor’s Report
26 Group Income Statement
27 Group Statement of Changes in Equity
28 Group Statement of Financial Position
29 Group Statement of Cash Flows
30 Notes to the Group Financial Statements
42 Company Balance Sheet
43 Notes to the Company Balance Sheet
49 Directors, Secretary and Advisors to the Group
www.vphase.co.uk VPhase plc Group Financial Statements 2011 1
www.vphase.co.uk
Highlights of our Year
a winner of the worlwide 
GE Ecomagination challenge 
and framework agreement 
with Procurement for Housing
June
September
 > First significant social housing 
contract for 1,200 units with 
Stockport Homes
 > Contract with Enact Energy to 
supply VPhase via Tesco’s 
home energy efficiency website
 > Second significant social 
housing contract for 980 units 
to be installed by British Gas 
Community Energy
of gross proceeds 
raised in December 
(2010: £2,000,000)
£2,350,000
winner of the North West 
Innovator Award at the 
North West Business 
Masters
April
 > Agreement for product supply to 
Australia with the potential to 
achieve £12.4 million in revenue over 
five years commences in April 2012
 > Healthy order book and good pipeline 
of prospects and potential orders
 > City South Manchester Housing Trust 
have confirmed all future rewires will 
have a VPhase unit fitted;
 > Great Places Housing now specifies 
VPhase VX1 unit in all new builds, 
rewires, voids and boiler replacements.
Post year end
to £440,000 
(2010: £266,000)
65%
Revenue increased
February
winner of the Shell 
Springboard regional 
award for Carbon Busting 
Technology and Runner Up 
in the National Finals
Ofgem awards 2.5 
tonnes CERT credits 
for each VPhase unit
March VPhase plc Group Financial Statements 2011 2
www.vphase.co.uk
Why do we need to optimise voltage?
Voltage in the UK can vary between the 
statutory limits, a low of 216 volts and a 
high of 253 volts. EU harmonisation has 
changed this for appliances to 207 volts 
minimum and 253 volts maximum 
equating to a 230 volt nominal supply plus 
or minus 10%. In reality whilst the UK has 
agreed to adopt the range and all our 
appliances are manufactured to meet the 
EU range, the Government has not 
changed the supply parameters. 
The way the UK electricity network 
operates, amongst other things requires 
the voltage supply level to be kept at the 
upper end of the statutory limits to ensure 
that voltage sags as load levels change do 
not allow the voltage at the home to drop 
below the statutory minimum. This also 
helps minimise current in the network. 
The majority of appliances in the home do 
not benefit from the additional voltage and 
waste it as heat above their optimum 
operating point, usually between 210 and 
220 volts. This heat also damages the 
appliance, shortening its life and so 
increasing the frequency with which it 
needs to be replaced.
VPhase 
Technology
 > Proven to save up to 12% 
off home electric bills
 > Easily installed by a 
qualified electrician
 > Low cost with a typical 
pay back of 3 to 5 years
 > Reduces carbon 
emissions by up to 4.5 
tonnes over its 25 year life
 > Extends appliance life
0.58
2.90
0.58
2.40
0.58
2.20
0.58
0.60
0.58
0.80
0.11
0.20
0.09
0.30
0.08 0.10
0.05
0.30
0.03
0.20
0.01
0.10
0.01
0.10
0.00
0.10
-0.01
Loft insulation 
100-270mm
Floor insulation Cavity wall VPhase Loft insulation 
50-270mm
Wind turbine 
6kW mast
Micro CHP Solar PV 
system
Solid wall  
insulation 
internal
Solid wall  
insulation 
external
Wind power 
roof
Solar thermal 
system
Ground source  
heat pump 
2kW
Air source  
heat pump
0.10
 £ saving per £ spent
 CO
2
 saving per £ spent
VPhase is the next most 
affordable and effective 
green option for the home 
after insulation
Our Technology
VPhase is the next most effective green option after insulation
VPhase voltage optimisation
The VPhase unit measures the incoming 
voltage and creates an out of phase voltage 
that will reduce the incoming voltage to a 
set point, usually 220 volts although other 
set points can be chosen. This managing to 
a set point is consistently shown to reduce 
the energy consumption of the majority of 
appliances. Work carried out with 
Manchester University has shown that it 
can extend the life of appliances up to twice 
that normally expected.
The technology and the way it manages 
the incoming voltage is unique and patented 
in thirty seven countries with another seven 
pending. The Group is thus able to offer the 
lowest cost and most effective way of 
optimising voltage to a set point for domestic 
and light commercial applications.
Savings of up to 18% have regularly been 
demonstrated for individual appliances and 
when combined in a home setting with 
those loads that don’t show any savings 
from voltage optimisation, the average 
home saves up to 12% off their annual 
electric bills. This alone makes the 
installation of a VPhase unit very attractive 
economically. Add to this the appliance life 
extension and the 25 year life of the product 
which both enhance the value proposition. VPhase plc Group Financial Statements 2011 3
www.vphase.co.uk
Transformer
Output
Voltage
Mains
Voltage
NEUTRAL NEUTRAL
LIVE OUT
LIVE IN
VX1
Anti-Phase
Voltage
Power
Converter
VX1 Output Voltage
Anti-Phase Voltage
Mains Voltage
VPhase Controller
VPhase Transformer Voltages
Mains Voltage 
(Primary winding)
Secondary Winding 
(opposes the primary 
voltage)
Output Voltage 
(Input Voltage – 
Secondary Voltage)
0.00m
Voltage
Time (ms)
2.00m 6.00m 8.00m 10.0m 12.0m 14.0m 16.0m 18.0m 20.0m
 > Primary and secondary 
windings wound in 
opposing directions to 
create an “anti-phase”
 > The two windings interact 
with each other so that the 
anti-phase is deducted off 
the incoming voltage
 > Primary winding voltage 
set by the VPhase ac/ac 
power convertor
 > The VPhase unit will 
constantly adjust the 
primary winding voltage to 
ensure a stable 220V ac VPhase plc Group Financial Statements 2011 4
www.vphase.co.uk
Voltage Optimisation Fact or Fiction?
There are many myths and misconceptions relating to 
voltage optimisation, about what savings can be made 
or where it is suitable to be applied. These pages aim to 
identify the fact and fiction behind voltage optimisation 
and explain clearly, with substantiation where relevant, 
why the technology works as intended.
FACT: Voltage optimisation from 
VPhase is recognised and approved 
by Ofgem
VPhase has concluded its CERT 
Demonstration Action, approved by Ofgem 
and in association with Scottish and 
Southern Energy (SSE). The Demonstration 
Action was carried out in 50 homes in the 
Thatcham and Reading areas and has led 
to the VPhase device being awarded 
CERT credits for its proven ability to save 
at least 2.5kg of CO
2
 over the life of the 
CERT measure. (CERT is the Carbon 
Emission Reductions Target).
FICTION: Voltage optimisation has not 
been independently tested
VPhase voltage optimisation has been 
robustly tested. The device has gone 
through Ofgem approved testing as part of 
its CERT demonstration action. It has 
either completed or is undergoing trials 
with over 50 housing associations in the 
UK. SSE has installed the product at its 
zero carbon home development, 
Greenwatt Way, in Slough. Eco enthusiasts 
and celebrities such as Dick Strawbridge, 
Oliver Heath, Michael Holmes, Charlie 
Luxton, Joanna Yarrow, Julia Hailes and 
Julia Kendall have all had the unit installed 
in either their own properties or properties 
they have been involved with; and it has 
featured on BBC One’s DIY SOS program.
Voltage Optimisation technology isn’t new. 
It has been widely used in industry for 
many years, yet VPhase is the first 
company in the UK to bring the technology 
to the home and domestic use.
FACT: VPhase Voltage optimisation is 
proven to reduce energy consumption
Independently verified trials have 
demonstrated that the VPhase voltage 
optimisation device will save up to 12% off 
electricity bills, with the typical household 
saving around 10%. All appliances sold in 
the UK since the early 1990’s have had to 
comply with EU legislation that says they 
must be able to function properly across 
the EU range of voltage. In reality, the EU 
range of voltage is as low as 207 volts and 
as high as 253 volts. By VPhase lowering 
and regulating to the default 220 volt level, 
household appliances, lighting and 
devices will work more efficiently using 
less electricity and therefore costing you 
less to run.
FICTION: Voltage optimisation can’t 
make savings on the whole house
A report published by DECC (Department 
for Energy and Climate Change) in July 
2010 indicated that 67% of domestic 
energy consumption is through appliances 
and lighting. Whilst it is true that voltage 
optimisation can’t make savings on 
resistive loads, the rest of the house – all 
the lighting and most appliances – can 
benefit from voltage optimisation. Resistive 
loads can’t benefit from optimisation as 
less power in, means less heat will be 
generated – so the appliances will just 
have to be on longer to reach the desired 
temperature. However, pretty much 
everything else in the house can benefit 
from voltage optimisation – and all of the 
saving calculations quoted are for the 
savings potential of the whole house.
 
FACT: The VPhase is the only domestic 
voltage optimisation device to lower 
and regulate the incoming voltage in 
the home to a set point
The VPhase unit is currently the only 
voltage optimisation device on the market 
that can lower AND regulate the incoming 
voltage into the home to a set point. It is 
important to recognise the benefit in both 
lowering and regulating the voltage: if you 
just chopped the voltage you would 
introduce harmonics, and if you just 
lowered the voltage by a fixed amount 
some pieces of electronic equipment may 
not work, and you would be at greater risk 
of the negative effects of voltage drop. VPhase plc Group Financial Statements 2011 5
www.vphase.co.uk
FICTION: All voltage optimisation 
devices are the same
Not all voltage optimisation devices are the 
same. VPhase is the only domestic voltage 
optimisation device currently on the 
market that reduces the voltage AND 
optimises it. This is an important feature 
because it means less voltage fluctuation, 
smoother power supply and less stressing 
of appliances. The VPhase device is also 
the lowest cost, smallest and only 
accredited domestic voltage optimisation 
device available.
FACT: The VPhase has a built in safety 
bypass system
The VPhase device has been cleverly 
designed to incorporate a safety bypass 
system, which ensures that at no point will 
the power supply to the house ever be lost 
as a result of the VPhase unit’s operation.
FICTION: If the VPhase fails, power to 
the house is lost
As the VPhase unit doesn’t directly 
interrupt the power supply to the house 
(it’s installed in parallel to the main supply), 
and has a safety bypass system built into 
the unit, if the VPhase fails for whatever 
reason, power to the house will not be lost.
FACT: VPhase can save up to 12% on 
electricity consumption in the home
VPhase has gone to great lengths to be 
able to substantiate the savings claims that 
it makes. Having conducted extensive 
tests across a range of properties and had 
the test results analysed and verified 
independently, we’re confident that our 
device can achieve the savings we claim. 
Whilst actual test results demonstrated 
savings of up to 12%, the majority of 
savings cases grouped around the 10% 
mark.
FICTION: Power factor correction 
can save money off domestic electricity 
bills
In the UK, domestic households don’t pay 
for power factor correction. This is 
something that industrial customers are 
penalised for, when the Power Factor of 
their equipment/electrical consumption is 
less than 100% efficient. Power Factor is a 
measure of how efficiently electrical power 
is consumed. The ideal Power Factor is 
one (unity). Anything less than one, means 
that extra power is required – ie it is not 
100% efficient. Power Factor Correction is 
the term given to a technology that has 
been used to restore Power Factor to as 
close to one (unity) as is economically 
possible. It is important to note the 
distinction between voltage optimisation 
and power factor correction – they’re two 
different technologies.
FACT: Voltage optimisation can’t make 
savings on heating circuits
Voltage optimisation can’t make any 
savings on resistive heating circuits. This 
doesn’t mean that the devices or 
appliances will stop working, just that with 
less power going into them, they’ll take 
longer to reach the desired temperature. 
So, any benefits from lowering and 
optimising the voltage will be lost through 
the longer time the appliances are on – 
cancelling each other out. The net impact is 
that the same amount of energy is used.
FICTION: Heating appliances use the 
most electricity in the home
Reports by DECC consistently highlight 
that 67% of domestic electricity 
consumption is from lighting and non-
heating appliances in a home. Less than 
8% of homes in England actually use 
electric heating systems too, dispelling 
many common assumptions regarding 
electrical use and heating in the home. 
Whilst your electrical shower may 
consume a lot of energy in a short time, it 
is not on all day, whereas your fridge and 
freezer are operating 24 hours a day.
FACT: The UK average voltage is 245V
Voltage supply in the UK is nominally at 
230 volts, +10% -6%. This means that the 
range of voltage supply can be as high as 
253 volts and as low as 216 volts. 
However, utility companies tend to supply 
voltage at the higher end of the range to 
avoid the problems of voltage drop (over 
distance) and to manage fluctuations in 
voltage as a result of changing demand 
levels for electricity. 
FICTION: Utility companies can lower 
the voltage at the substation level 
without disrupting supply to the home
Whilst the voltage range in the UK is 
nominally at 230 volts, the reality is that 
supply is typically above 240V (the average 
being 245V). This is largely because of the 
supply infrastructure in the UK and the 
problems associated with voltage drop 
due to load changes and distance from the 
substation. Appliances are designed to 
operate effectively across the whole range 
(between 207V and 253V in the UK and 
Europe). If voltage was supplied at the lower 
end of the scale by the utility company, 
then properties furthest away from the 
substation risk experiencing ‘brown outs’ 
where a demand peak, causes a further 
supply voltage drop, and appliances are 
simply unable to work effectively on the 
lower voltage.
 > VPhase secured a supply 
agreement with Energy 
Home Solutions Pty 
Limited (“EHS”) in Australia 
potentially worth up to 
£12.4 million over the next 
five years. Subject to EHS 
meeting the minimum 
order levels.
 > There are 26 million 
homes in the UK of which 
4.8 million are managed 
by Registered Social 
Landlords (RSL)
 > VPhase to be listed on the 
Tesco Home Efficiency 
website VPhase plc Group Financial Statements 2011 6
www.vphase.co.uk
FACT: VPhase voltage optimisation will 
improve the payback and overall 
efficiency of a solar PV system
VPhase has modelled a range of complex 
simulations and scenarios to understand 
the relationship between voltage 
optimisation and solar PV systems. The 
results demonstrate that by combining the 
two systems, overall household energy 
efficiency is increased leading to a better 
return for the home owner.
Essentially the VPhase unit reduces the 
amount of energy consumed in the home, 
yet the amount of electricity produced by 
the solar PV remains the same. The net 
impact is that less electricity will be drawn 
from the Grid and potentially more 
exported from the PV system – a double 
benefit.
FICTION: Voltage optimisation can’t be 
used alongside other green tech
VPhase voltage optimisation is not an 
exclusive technology, in that it can be 
installed and used alongside other green 
technology options. In many cases, 
combining or bundling technologies 
together with a VPhase, will actually 
improve the overall efficiency of the 
property.
FACT: VPhase voltage optimisation is 
suitable for all types of properties
Unlike solar PV systems, VPhase voltage 
optimisation is suitable for all types of 
properties as it doesn’t require a south 
facing roof or the sun to be shining to work. 
All properties that work on mains voltage 
can benefit from having a VPhase voltage 
optimisation device installed. The savings 
claims are based on the whole house 
saving potential and take into account 
energy efficient appliances. Savings will 
vary, but will largely be dependent on four 
main factors:
1. The number and type of appliances used 
in the home
2. The number of occupants in the home
3. What the incoming voltage is
4. What the VPhase set point is configured to
FICTION: Voltage optimisation only 
works in large houses
VPhase has been proven to work in all 
sizes of property. Its trial with Great Places 
Housing Group, a North West based 
housing association demonstrated whole 
house electrical savings of 8.7%. The trial 
was carried out in a number of terraced 
properties managed by the housing 
association.
FACT: VPhase voltage optimisation 
from VPhase is easy to fit
Whilst the VPhase device must be fitted by 
a qualified electrician, they are easy to fit, 
particularly if being installed at the same 
time as a new consumer unit. The device 
should generally take no more than a 
couple of hours to install.
FICTION: I need to re-wire my house to 
fit a VPhase unit
There is no need to re-wire your house to 
fit a VPhase unit. When installing the 
device, it is preferable that the heating 
circuits are not passed through the unit, so 
a 17th edition consumer unit is best, as 
this already has a split buzz bar. However, 
a 16th edition consumer unit can be 
reconfigured by an electrician, to make it 
suitable for a VPhase unit. However, older, 
wired fuse boards (without switches) 
generally cannot accept a VPhase unit.
FACT: VPhase voltage optimisation 
improves efficiency of energy saving 
lightbulbs and A-Rated fridges & 
freezers
Devices and appliances sold in the UK are 
designed to operate across the EU range 
of voltage (207V – 253V), yet supply in the 
UK is at the higher end of the statutory 
level, typically around 245 volts. Even 
energy saving lightbulbs (compact 
fluorescents) and A rated fridge freezers 
can benefit from being supplied with a 
lower level of voltage.
FICTION: Voltage optimisation 
doesn’t work on newer appliances 
and equipment
A common myth is that because newer 
appliances and equipment are designed to 
be more efficient, they can’t make savings 
through voltage optimisation. Whilst 
equipment such as laptops and chargers use 
switch mode power supplies that typically 
deliver smaller savings with lower voltage, 
other appliances such as the energy efficient 
fridge freezer or energy saving lightbulbs do 
still make quite significant savings. In 
independently verified tests, savings of up 
1 7% have been recorded with A rated fridges, 
and even energy saving lightbulbs are still 
registering savings around 10%.
 
FACT: VPhase voltage optimisation 
can extend the life of appliances
Research undertaken by Manchester 
University has confirmed that managing the 
voltage to a 220 volt set point will double 
the life of motor pumps and be beneficial 
for other appliances. In addition, 
independent work carried out by the 
Lighting Industry Federation has 
demonstrated that reducing the voltage 
supplied to incandescent light bulbs will 
extend their life. The voltage supply must 
still be within the operating guidelines (207V 
to 253V), so with VPhase optimising the 
voltage to 220V the bulbs are being 
supplied with an optimal level of voltage, 
just as the manufacturers intended. 
FICTION: Lowering the voltage to 
220V will result in appliances not 
working properly
All modern appliances and devices sold in 
the UK since the early 90’s are designed 
to work across the EU voltage range (207V 
to 253V), so with the VPhase lowering the 
voltage to 220V, it is still well within the 
operating range indicated by the 
manufacturer. In fact, because voltage 
optimisation means you’re not over-
supplying the appliances or devices, 
there’s less excess voltage to cope with 
(often dissipated as heat, which is known 
to shorten appliance life) and there’s 
reduced strain on the appliance circuits.
Voltage Optimisation Fact or Fiction?
continued VPhase plc Group Financial Statements 2011 7
www.vphase.co.uk
VPhase wins order with 
British Gas
 > 980 units to be 
provided for British 
Gas to supply to City 
South Manchester 
Housing Trust
VPhase receives order for 
600 VPhase VX1 units from 
Stockport Home as part of 
their “Shine” program. This 
represents the first phase of 
a 1200 unit project to install 
the VPhase VX1 unit 
alongside solar photovoltaic 
panels
50 Trials 
Significant interest 
generated in the Social 
Housing Sector with over  
50 registered social 
landlords trialling  
VPhase units VPhase plc Group Financial Statements 2011 8
www.vphase.co.uk
Progress within the social housing sector 
has been pleasing and there are now over 
50 registered social landlords trialling the 
VPhase product. 2011 orders include 
Stockport Homes with a 1,200 unit order 
and City South Manchester Housing Trust 
with a 980 unit order which British Gas 
Community Energy (“BGCE”) is installing.
Other routes to market are also being 
developed and our product will shortly be 
available on the Tesco Home Energy 
website via Enact Energy.
The Group’s focus on converting its 
pipeline to sales intensified as the year 
progressed with over 35% of the total 
sales volume occurring in the last quarter 
of 2011. At the end of the year the Group 
had orders worth £178,000. 
We continue to lobby for inclusion in the UK 
Government’s Green Deal programme and 
have gained the support of some utilities 
and other organisations in this regard.
We have announced the extension of our 
product range with the introduction of our 
premium priced and light commercial 
products. This includes a modular 
distribution board offering, making it even 
quicker and more cost effective to fit a 
VPhase unit and widening significantly the 
number of properties where a VPhase can 
be fitted. These products will be available 
for sale from the beginning of the third 
quarter of 2012.
During 201 1, the Group saw sales grow 65% to 
£440,000, and demand for our product continues to 
grow steadily. As we start 2012, our monthly run rate 
continues to increase and our pipeline of potential 
business has strengthened further.
Chairman’s Statement
Awards
We were pleased to win a number of 
prestigious awards during the year, 
notably being named winner of the 
Shell Springboard regional Awards for 
carbon busting technologies and the 
National Runner up in the national finals 
and being a winner of the worldwide 
GE Ecomagination challenge.
Outlook
2011 was a year of steady progress, we 
remain confident that significant further 
progress will be made in 2012.
Vanda Murray OBE
Chairman 
19 March 2012
As we start 2012 
our monthly run rate 
continues to increase 
and our pipeline of 
potential business has 
strengthened further. VPhase plc Group Financial Statements 2011 9
www.vphase.co.uk
We have developed an 
excellent team with a 
breadth of knowledge 
in our industry
Rick Smith
CEO  VPhase plc Group Financial Statements 2011 10
www.vphase.co.uk
201 1 was a year of steady progress in the Social 
Housing sector for VPhase. The Group is also beginning 
to attract significant interest from overseas markets and 
has sold product to Australia, France, South Africa 
and Poland.
Chief Executive’s Review
Growth Drivers
 > Rising energy bills
 > Carbon reduction 
targets
 > Fuel poverty agenda
 > Energy efficiency is 
the cheapest and 
most effective way  
of tackling our energy 
reduction and climate 
objectives
In 2011 we made steady progress against 
our stated objective of driving the business 
forward and finished the year with an order 
book of £178,000 (2010: £Nil). Since the 
year end the rate of sales has increased 
and the order book is healthy with a good 
pipeline of potential orders.
The Group’s increased focus on the Social 
Housing market, where our product 
addresses the key objectives of Registered 
Social Landlords, tackling fuel poverty and 
reducing the carbon footprint of their 
housing stock, has resulted in increased 
demand. We have entered into a 
framework agreement with Procurement 
for Housing, received an order for 1,200 
units with Stockport Homes as part of 
their Shine program, as well as an order 
for 980 units from British Gas to supply 
City South Manchester Housing Trust. 
Subsequent to the year end and following 
the installation of the first 500 units, City 
South Manchester Housing Trust has 
confirmed that all future rewires they carry 
out will have a VPhase unit fitted. 
Additionally, the relationship with Great 
Places Housing continues to strengthen. 
Building on the success of early trials, the 
VPhase VX1 unit is now specified on all 
Great Places new builds, rewires, voids 
and boiler replacements. Great Places 
have been so pleased with the product 
that they now present their experiences  
at Social Housing seminars sharing their 
positive feedback amongst their peer 
group. As a consequence, we have 
generated significant interest in the sector 
and there are now some 50 Registered 
Social Landlords trialling VPhase units.
March 2011 saw the award by Ofgem of  
2.5 tonnes of CERT credits for each 
VPhase installed. The changes to the CERT 
scheme shifting the emphasis to heating 
and insulation, which must now comprise 
67% of the total expenditure, has made 
accessing the value of these credits more 
challenging, but discussions continue with 
the major utilities on how to unlock value.
In June 2011 we were delighted to be 
one of only ten winners of the GE 
Ecomagination challenge out of some 5,000 
applicants. Discussions continue between 
the Group and GE as to how we might work 
closer together, and the award has already 
had the ancillary benefit of attracting other 
organisations to our product.
The supply of VPhase units to Tesco 
customers via Enact Energy, has, before 
going live necessitated the availability of 
a nationwide installation capability. I am 
delighted that this is now substantially in 
place and it is expected that sales would 
commence by the end of the second 
quarter.
Overseas opportunities are considered  
as they arise and I am pleased to announce 
that on 15 March 2012 we secured a supply 
agreement with Energy Home Solutions  
Pty Limited (“EHS”) in Australia worth  
up to £12.4 million over the next five  
years, subject to EHS meeting the minimum 
order levels.
The Group has developed an excellent 
team with a breadth of knowledge in our 
industry and has further added to and 
strengthened that team at both 
management and at the Board level.
Review of the Group’s strategic 
progress through 2011
As outlined in last year’s annual report,  
we continue to establish long term 
relationships with key partners and 
customers to drive demand and whilst our 
policy of establishing these relationships 
with larger organisations takes time to 
deliver, we believe it will provide the base  
for sustainable growth in the future.
In line with our stated objective of 
continuous innovation, we are launching 
two new added value versions of VPhase,  
a 2kW (“VX2”) version and 5kW (“VX5”) 
version each of which can be installed  
more easily, can offer wireless connectivity 
and which will be modular offering 6 way 
and 16 way distribution boards to extend 
the value proposition. VPhase plc Group Financial Statements 2011 11
www.vphase.co.uk
Carbon Footprint
A VPhase unit effectively reduces the 
carbon footprint of any property in which it 
is installed and this can be by as much as 
4,500 kgs of CO
2
 over the product’s 
installed life of 25 years. To ensure that this 
gain is not eroded by our chosen supply 
chain, we have worked with CTech 
Innovation Ltd under a European funded 
project, where we have tested the carbon 
impact of our chosen supply chain, 
component selection, manufacturing 
location and transport implications.
The overall carbon impact of the supply 
chain is around 53 kgs of CO
2
 which in turn 
means that a VPhase VX1 is carbon neutral 
within its first year and will continue to save 
carbon for the subsequent 24 years of its life.
The Compelling Case for VPhase
VPhase is the only voltage optimisation 
technology that can cost effectively 
optimise to a set voltage. 
VPhase has been extensively tested by 
SSE, Ofgem and Housing Authorities 
substantiating the claims that the benefits 
of VPhase unit are:
•	 a saving of up to 12% off a domestic 
electricity bill;
•	 a reduction in carbon emissions by up 
to 4.5 tonnes over its 25 year life;
•	 it becomes an integral part of the 
infrastructure of the property once 
professionally installed;
•	 it is a fit and forget product which sees 
the units of electricity consumed in the 
home reduced with no need for 
behavioural change on behalf of the 
customer; and
•	 a payback of three to five years 
dependent upon overall levels of 
electricity used and mix of appliances 
assuming a typical £300 installed cost.
We restricted headcount growth in 2011 
to those positions that could rapidly add 
value to the business and therefore have 
strengthened our sales, technical and 
supply chain teams as well as the Board 
of Directors with the appointment of 
Duncan Sedgwick as an additional 
Non-Executive Director on 22 March 2011. 
The Group’s headcount has increased 
during the period from 13 to 17 as at 
31 December 2011.
In addition to stand alone benefits, the 
device is complementary with other 
energy saving technologies. For example, 
installing a VPhase unit with a solar PV 
system can reduce the payback period 
and improve the return on investment.
VPhase is the next most affordable green 
option after loft, cavity and floor insulation. 
According to DECC it was estimated that 
at the beginning of 2011 out of 26.6 million 
homes in Great Britain, 23.3 million have 
lofts and 18.7 million have cavity walls of 
which 12.9 million homes had loft 
insulation of at least 125 mm (55.4% of 
relevant homes) and 10.6 million had cavity 
wall insulations (56.6% of relevant homes).
Less than 0.02% of UK homes have 
voltage optimisation.
Future Strategy
VPhase will continue to build on the 
excellent base it has established in the 
Social Housing market.
Our new products should substantially 
increase the footprint of properties that 
can cost effectively fit a VPhase unit and 
open the market for light commercial 
single phase applications.
The Group continues to look for 
opportunities to further accelerate the 
demand for VPhase and where the 
technology can be combined with other 
products/technologies to provide greater 
savings for the home owner.
Outlook
With a healthy and growing order book 
and pipeline of potential orders we are 
confident of making significant further 
progress in 2012.
Rick Smith
Chief Executive Officer
19 March 2012
 > CE Marked appliances 
must work across the 
EU range 207 volts to 
253 volts
 > Most appliances do 
not benefit from 
excess voltage VPhase plc Group Financial Statements 2011 12
www.vphase.co.uk
Financial and Business Review
Revenues
Revenues increased as the Group began to 
secure traction in the Social Housing 
Sector. This required an element of price 
reduction to find the correct market price. 
Product revenue increased 76% and sales 
volumes increased 97%. A continued 
increase in volumes will enable the Group 
to source product from higher volume and 
lower priced suppliers, increasing margins.
Gross Margins
Margins came under pressure as prices 
were reduced to secure volume before 
volume manufacturing could be established. 
This should correct later in 2012/early 2013 
depending on speed of volume growth.
Margins for 2011 were within expectations 
at 34% (2010: 39%). 
Warranty Claims
Warranty claims were low and within 
expectations for a newly introduced product. 
Claims reduced as the year progressed and 
product improvements were introduced 
based on market feedback.
Research and Development 
Expenditure
Research and development expenditure 
increased in the year to £168,000 
(2010: £81,000) of which £110,000 was 
capitalised under IAS38 (2010: £Nil) and 
£58,000 was charged to administrative 
expense (2010: £81,000). This reflects the 
Major Awards
 > Northwest Business award for 
Innovation
 > GE Ecomagination Award
 > Ofgem 2.5 tonne of CERT 
carbon credits
 > Shell Springboard regional 
winner and national runner up 
for carbon busting technology
Set out below is an extract of the Group Financial Statements for the years ended 31 December 
2011 and 2010 together with an analysis of the Group’s Key Performance Indicators.
 2011
£’000
2010
£’000
Product Revenue 383 217
Non-product Revenue 57 49
Total Revenue 440 266
Gross Margin 150 104
% 34% 39%
Administrative Expense (2,118) (1,817)
Operating Loss (1,968) (1,713)
Cash and Cash Equivalents 2,148 2,078
development of new products designed to 
enhance the Group’s product offering. The 
new range of products is due to be 
released early in Q3 2012.
Administrative Expenditure
Administrative expenditure increased in 
line with expectations as the team was 
strengthened and the resources were put 
in place to deliver sales growth.
Total administrative expenditure was 
£2,118,000 (2010: £1,817 ,000), an increase 
of 16%.
Income Tax
During the year the Group received 
research and development tax credits for 
the years 2009 and 2008 amounting to 
£103,000 (2010: £Nil).
Loss for the year and loss per ordinary 
share attributable to the equity holders 
of the Company
The net loss for the year was £1,863,000 
(2010: £1,711,000) and this equates to a 
loss per ordinary share of 0.24 pence 
(2010: £0.24 pence).
Capital Expenditure
Intangible Assets
The Group invests in research and 
development which, when it meets the 
criteria established in IAS38, is capitalised 
and then amortised over its useful 
economic life. These assets form part of 
the Group’s intangible assets.
In 2011 the Group capitalised £110,000 
(2010: £Nil) as it develops new products 
for launch in 2012.
Tangible Assets
The Group outsources its manufacturing 
which reduces the need for high levels of 
investment into tangible assets. The total 
expenditure on property plant and 
equipment was £76,000 (2010: £36,000) 
and was predominantly tooling for the new 
products currently in development.
Cash Management
Cash is critical to any business but 
particularly to a business in the early stages 
of commercialisation. Cash management 
involves the control of inventory debtors 
and creditors as well as overheads.
At the end of 2011 cash resources available 
to the business amounted to £2,148,000 
(2010: £2,078,000) and the net amount 
invested in working capital (inventory plus 
debtors less creditors) was £582,000 (2010: 
£347 ,000). This increase was driven by the 
increase in inventories in anticipation of a 
significant increase in sales.
Rick Smith
Chief Executive Officer
19 March 2012 VPhase plc Group Financial Statements 2011 13
www.vphase.co.uk
 > D o m e st i c v o l tag e 
optimisation is a new 
market
 > The issue of voltage 
supply being generally 
higher than required 
by appliances applies 
to most networks 
world wide
 > Expanding routes to market
 > Social housing
 > Utilities
 > Partners (from large companies 
to independent electricians)
 > Others
 > Focus on conversion of 
pipeline to sales
 > UK Government’s Green 
Agenda
 > Further product development
 > Overseas opportunities
CONSUMERS
SOCIAL HOUSING 
GROUPS
HOUSE 
BUILDERS
UTILITIES
INFRASTRUCTURE
COMPANIES
INDEPENDENT 
ELECTRICIANS
BUYING GROUPS/
PROCUREMENT 
CLUBS
SPECIALIST 
ELECTRICAL 
WHOLESALERS
(NATIONAL)
SPECIALIST 
ELECTRICAL 
WHOLESALERS
(REGIONAL)
Routes to market VPhase plc Group Financial Statements 2011 14
www.vphase.co.uk
Principal Risks and Uncertainties
The Group recognises that effective business management 
requires regular review of its key business risks, to evaluate 
and prioritise them, to assign management ownership and 
to ensure appropriate controls are in place in mitigation.
The Board considers that the key risks and uncertainties 
facing the Group are as follows:
Risk area Potential impact Mitigation
Sales pipeline fails to 
materialise into sales as 
rapidly as expected
Sales Revenue Growth is reduced taking longer for the 
business to reach break even
Continue to promote actively and keep close contact  
with existing potential business whilst seeking other new 
business. Continue to manage costs to a minimum level
Not explicitly included in 
the Green Deal
Sales Revenue Growth is reduced and product 
adoption will take longer
Continue to lobby the Government and work with BRE  
and others to secure a Standard Assessment Procedure 
(SAP) Point
Competitive Environment Increasing number of competitors affects market share 
and erodes product margins
The Group has the market leading product in terms of 
performance and lowest cost. VPhase continues to develop 
market leading products to improve its proposition to 
customers
Loss of key personnel Loss of key personnel resulting in a lack of necessary 
expertise or continuity to execute strategy
The Group offers competitive remuneration packages 
including the opportunity to participate in a share option 
scheme and investment in training development and 
succession planning
Warranty Claims Warranty claims are inevitable in any product business 
and impact product margins
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
Economic Environment The current economic environment results in customers 
seeking to reduce their discretionary expenditure 
impacting the sales growth of the Company
Sales focus is on those segments that buy larger quantities 
for commercial reasons and are less sensitive to current 
economic environment, stressing the ‘best’ value and 
prolonged savings messages
Finance and Treasury Lack of appropriate levels of cash resources could have 
an impact on the Group’s operations and 
growth plans
Following the placing in December 2011, the Group has 
sufficient financial resources to continue to operate for 
the foreseeable future and to meet growth targets 
for 2012
Product development Failure to develop products that customers want would 
severely impact the Group
The Group develops enhancements to the existing VPhase 
product based on feedback and experience from sales of 
existing products. Further energy efficiency innovations are 
based on identified market needs and customer input. The 
Group’s stage gate development process aims to mitigate 
development risk
Failure of suppliers of 
essential goods and 
services
Failure of suppliers of essential goods and services 
could impact on the Group’s ability to manufacture and 
supply product
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, including but not limited to 
the holding of higher inventory levels for some key 
components
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 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 VPhase plc Group Financial Statements 2011 15
www.vphase.co.uk
Board of Directors
1. Vanda Murray OBE
Non-Executive Chairman
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 
market capitalisation 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. She has a 
background in Sales and Marketing. 
Vanda is also currently Non-Executive 
Director of Carillion plc, The Manchester 
Airport Group plc, Chemring plc, Microgen 
plc and Fenner plc where she is the Senior 
Non-Executive Director. In 2002 Vanda 
was appointed OBE for services to 
Industry and Export.
2. Richard Smith FCMA, MBA
Chief Executive Officer
A Fellow of the Chartered Institute of 
Management Accountants Rick, also has 
a 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 Robinson Healthcare, a 
division of Robinson Limited.
3. Duncan Sedgwick
Non-Executive Director
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.
4. Nicholas Moss
Non-Executive Director
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.
1 .  V a n d a  
Murray OBE
2 .  R i c h a r d  
Smith
3 .  D u n c a n  
Sedgwick
4 .  N ic ho l a s  
Moss VPhase plc Group Financial Statements 2011 16
www.vphase.co.uk
Corporate Responsibility
ETHICS
We are committed to ensuring that our business is conducted to the 
highest ethical and professional standards.
We recognise that trust and reputation are key elements in our business 
and make every effort to protect them. 
CUSTOMERS
We aim to build a long term relationship with each customer based on 
mutual trust and in support of our corporate values.
We have developed a One Page Strategy to identify practical strategies 
which support our key values. 
PEOPLE
We recognise that our reputation is dependent on the skill and 
professionalism of everyone within our business. We aim to achieve 
sustainable growth through attracting, developing and retaining skilled 
and motivated people.
We promote equality in all areas of our operations. 
HEALTH & SAFETy
We are 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. 
COMMUNITIES
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. 
ENVIRONMENT
We take our environmental responsibilities seriously and aim to minimise 
our environmental impact. We are developing an Environmental 
Management System to control and improve our environment.
We work with our suppliers to ensure that their environmental approach 
is consistent with our own. 
ENERGy
We recognise that we use significant amounts of energy within our 
operations, including supply chain, manufacture and distribution.
We aim to reduce the amount of energy we use by improving the 
efficiency of our operations and infrastructure 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 seek to ensure that they meet our own 
standards of Corporate Responsibility. VPhase plc Group Financial Statements 2011 17
www.vphase.co.uk
VPhase units save up to 
12% of your electricity 
consumption –
dramatically reducing 
energy consumption 
and environmental 
damage www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 18
Scope of Report
The Directors’ Remuneration Report sets out the Company’s 
remuneration policy and particularly its approach for Directors. As 
the Company’s shares are listed on the AIM market of the London 
Stock Exchange, this report is set out in accordance with the 
remuneration disclosure requirements of the AIM rules.
This Report has been prepared by the Remuneration Committee and 
has been approved by the Board for submission to shareholders. 
The Board accepted the Report of the Remuneration Committee 
without change.
Composition and role of the Committee
The Remuneration Committee is made up entirely of Non-Executive 
Directors, Duncan Sedgwick (Chairman), Vanda Murray OBE and 
Nick Moss. Their biographical details appear on page 15.
The Remuneration Committee operates within agreed terms of 
reference and meets as required. In 2011 the Committee met 4 
times.
The Remuneration Committee is responsible for determining on 
behalf of the Board, an appropriate remuneration policy for the 
Executive Director(s) and for designing a remuneration framework for 
(him/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 other Non-Executive 
Directors in consultation with the Chief Executive. No member of the 
Committee participates in discussions concerning their own 
remuneration.
Remuneration Structure
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 Remuneration Committee has adopted a remuneration policy 
designed to:
•	 Attract, retain and motivate the high calibre professional, 
managerial and technological expertise necessary to realise the 
Group’s business objectives without paying excessively;
•	 Consider an individual’s experience and the nature and 
complexity of their work in order to pay a competitive salary within 
the market in which the Group operates; and
•	 Link the individual remuneration package with the correct balance 
between individual and business performance so as to effectively 
align the interests of directors and senior management with those 
of shareholders, particularly that of enhancing shareholder value.
Elements of Remuneration
The Executive Directors’ remuneration package consists of the 
following elements:
•	 Basic salary;
•	 Benefits in kind;
•	 Performance related annual bonus;
•	 Medical health care and life assurance; and
•	 Share options.
Basic Salary
Basic salaries for the Executive Director 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 
Directors’ Remuneration Report
development of the Group and the contribution that individual will 
continue to make as well as the need to retain and motivate. In this 
respect the Remuneration Committee draws on findings of external 
salary surveys and undertakes its own research.
Benefits in Kind
The Executive Director is provided with life assurance for himself and 
private medical insurance for him and his family.
Performance Related Pay
The Executive Director can earn an annual bonus of up to fifty per 
cent of his annual basic salary payable against meeting personal and 
business targets as set out by the Remuneration Committee at the 
beginning of each year. In addition the Remuneration Committee can 
award a further bonus of up to another 50% of basic salary for 
exceptional performance.
Payment of more than 10% of basic salary can be in cash or shares 
at the discretion of the Company. All bonus awards above 50% have 
that proportion paid in shares.
Share Options
The Company operates two share option schemes. The VPhase EMI 
option scheme 2011 and the VPhase unapproved option scheme 2007 .
Share options are granted at the closing mid-market value of the 
Company’s ordinary shares on the day prior to grant.
Options granted under the plan are exercisable between three and 
ten years from the award. The operator of the schemes is subject to 
ongoing review by the Remuneration Committee with regard to the 
level of allocation and frequency of issue of options taking into 
account the practice of comparable companies. Where necessary 
the Company will take independent advice.
The Remuneration Committee determines the requirement, if any, for 
performance targets each time options are granted. The options 
granted on 7 July 2010 to Richard Smith are exercisable in tranches 
of a third on achievement of breakeven; £100 million market valuation; 
and £300 million market valuation. Half the options granted on 7 July 
2010 to Vanda Murray OBE are exercisable in tranches of a third on 
achievement of breakeven; £100 million market valuation; and £300 
million market valuation. The other half are exercisable in tranches of 
a third after years one, two and three from the grant date.
Service Contracts and Notice Periods
The Executive Director has a service contract with the Company 
which is not of fixed duration and which is terminable by either party 
giving six months written notice. The service contract allows the 
Company to terminate the employment of the Executive Director 
without notice by making a payment in lieu of notice calculated to 
compensate the Executive Director for salary and contractual benefits 
over the unexpired period of notice, although the Company is not 
obliged to exercise its right to make a payment in lieu of notice. A copy 
of the service contract is available for inspection prior to and during the 
Annual General Meeting to be held on 21 May 2012.
Non-Executive Directors
The fees of the Chairman are determined by the Remuneration 
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 discussion or 
decisions about their own remuneration. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 19
The annual fee levels at 31 December were:
2011
£
2010
£
Chairman 60,000 60,000
Non-Executive Director 25,000 25,000
In addition, the Non-Executive Directors are entitled to £3,000 per annum for each committee they chair. In 2011 these fees were waived and 
not claimed by any Director.
On 5 December 2011 each Non-Executive Director entered into an agreement with the Company where they agreed they would receive 
shares of 0.25 pence each in lieu of the net director’s fees that they would have received in cash. The quantities of shares received are 
calculated based on the net fees after tax and national insurance being satisfied by the number of shares based on the closing mid-point price 
for the shares on the day before the relevant director’s fees are due. This agreement will terminate on 4 December 2012.
Vanda Murray OBE, Chairman, has been appointed on a contract which is not fixed in duration and which is terminable by either party giving 
six months’ written notice. Nick Moss, Non-Executive Director, has been appointed on a contract which is not fixed in duration and which is 
terminable by either party giving three months’ notice in writing. Duncan Sedgwick is on a fixed term contract for three years which can be 
extended for a second term of three years. This contract can be terminated without notice by either party at any time.
Directors’ emoluments for the year ended 31 December 2011
Salary/fees/
bonus
£
Benefits
£
Share based 
payments
£
Total
£
Executive
Richard H Smith 175,000 1,500 32,692 209,192
Adrian C Hutchings (resigned 7 July 2010) – – – –
Lee Juby (resigned 28 September 2010) – – – –
Non-Executive
Vanda Murray OBE 60,000 – 32,692 92,692
Nick Moss 25,000 – – 25,000
Duncan Sedgwick 18,750 – – 18,750
278,750 1,500 65,384 345,634
Directors’ emoluments for the year ended 31 December 2010
Salary/fees/
bonus
£
Benefits
£
Share based 
payments
£
Total
£
Executive
Richard H Smith 111,000 – 72,000 183,000
Adrian C Hutchings (resigned 7 July 2010) 16,000 – – 16,000
Lee Juby (resigned 28 September 2010) 95,000 – 19,000 114,000
Non-Executive
Vanda Murray OBE 29,000 – 72,000 101,000
Nick Moss 12,000 – – 12,000
Duncan Sedgwick – – – –
263,000 – 163,000 426,000
This has been prepared in accordance with Rule 19 of the AIM rules for companies. This has been disclosed in note 6. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 20
Directors’ Interest in Share Options (audited)
As at 
1 January
 2011 Granted
As at 
31 December
 2011
Exercise Price
(pence)
Exercise
Period
Richard H Smith 
(1)
10,507,944 – 10,507,944 2.38 7 Jul 2010 – 6 Jul 2020
Vanda Murray OBE 
(2)
10,507,944 – 10,507,944 2.38 7 Jul 2010 – 6 Jul 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.
Directors’ Interest in Shares (unaudited)
As at 
31 December 
2011
As at 
31 December 2010
Richard H Smith ordinary shares of £0.0025 each 13,944,149 12,909,666
Vanda Murray OBE ordinary shares of £0.0025 each 1,950,504 1,260,504
Nick Moss ordinary shares of £0.0025 each 5,377,905 4,688,250
Duncan Sedgwick ordinary shares of £0.0025 each 689,700 –
Duncan Sedgwick
Chairman of Remuneration Committee
19 March 2012
Directors’ Remuneration Report continued www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 21
The Directors present their report and the audited financial statements of VPhase plc (the ‘Company’) and its subsidiaries (together the 
‘Group’) for the financial year ended 31 December 2011.
Principal Activities
VPhase plc is focussed 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 £1,863,000 (2010: £1,711,000). The Directors do not recommend the payment of a dividend.
Business Review and Future Developments
The Chairman’s Statement on page 8, the Chief Executive’s Review on pages 10 to 11, the Financial and Business Review on page 12 and  
the Principal Risks and Uncertainties on page 14 provide a detailed review of the Group’s activities, likely future developments and principal 
risks and uncertainties. All the information detailed in these pages is incorporated by reference into this report and is deemed to form part of 
this report.
Since 31 December 2011 the Group has entered into an exclusive distribution agreement with Energy Home Solutions Pty Limited (“EHS”) for 
the supply and installation of the VPhase VX1 product in Australia.
Under this arrangement, which is for an initial period of five years (and then continuing unless terminated by either party) EHS agrees to 
purchase a minimum quantity of the VX1 product in each year of the agreement. The agreement anticipates achieving minimum volumes to 
a value of £12.4 million over the initial five year period. The volumes are not spread evenly but scale up over the term of the agreement.
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 is 76% higher in 2011 than 2010 and the order book at the end of the year is at £178,000 (2010: £Nil).
Product Margins Margins eased in the year from 39% to 34% and product pricing was amended. With increasing volumes scale economies 
are expected to help mitigate any further price pressure.
Warranty Claims Warranty claims have been managed to an acceptable level in 2011 and opportunities to reduce them further in 2012 
identified and implemented.
Research and 
Development Costs
Research and development expenditure in 2011 totalled £168,000 (2010: £81,000) of which £110,000 was capitalised 
under IAS38 (2010: £Nil). The Group is committed to enhancing the VPhase product and developing further energy 
efficiency innovations through its dedicated development team.
Administrative 
Expenses
Administrative expense has increased in line with the business development plan as the Group has invested in the 
resources necessary to grow the business.
Capital Expenditure Intangible assets of £110,000 (2010: £Nil) were capitalised in the year as noted in research and development costs above.
Tangible assets of £76,000 (2010: £36,000) were purchased during 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 within 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 to create substantial shareholder value.
The principal risks and uncertainties of the Group are outlined on page 14.
Directors’ Report
For the year ended 31 December 2011 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 22
Directors’ Report continued
For the year ended 31 December 2011
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.
Credit Risk
The Group’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.
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 
£2,148,000 as at 31 December 2011 (2010: £2,078,000).
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.
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 these payment terms. Trade payable of the Group at the year end 
as a proportion of amounts invoiced by suppliers during the year 
represent 44 days (2010: 58 days).
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 
2011, relevant to the Group’s size and complexity.
Whilst the Group is not required under the AIM Rules for Companies 
to comply with the provisions set out in the 2010 UK Corporate 
Governance Code that was issued by the Financial Reporting 
Council (the “Code”) and this statement is not intended to meet the 
disclosure requirements of the Code, the Board recognises the value 
of the Code and has chosen to make selected disclosures which it 
believes are necessary or may be of value to shareholders.
Board of Directors
During the period under review the Board comprised of three Non-
Executive and one Executive Director. Biographies of the Directors are 
provided on page 15 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.
Major Shareholders
As at 19 March 2012 the Company has 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:
%
Henderson Global Investors 27.33
Energetix (Europe) Limited 26.97
Blackrock Investment Management 10.92
Southern Fox Investments Ltd 6.19
Blackrock UK Smaller Companies Fund 5.49
Plumbing Pensions (UK) Ltd 5.43
Close Asset Management Ltd 3.21
Legal and General plc 4.71
Research and Development
The Group undertakes research and development to address 
opportunities in the alternative energy market. In 2011 the Group 
invested £110,000 (2010: £Nil) which was capitalised under IAS38 
‘Intangible Assets’. Research and development costs charged to the 
Income Statement amounted to £58,000 (2010: £81,000).
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 Group Financial Statements.
Directors
The Directors who held office in the year are shown below. Each 
director served throughout the period unless otherwise indicated:
V Murray OBE – Non Executive Chairman
R H Smith – Chief Executive Officer
N A Moss – Non Executive Director
D Sedgwick – Non Executive Director – appointed 1 April 2011
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 retain 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 has 
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. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 23
The Board considers that both Duncan Sedgwick and Nick Moss  
are independent and each is free from any business or other 
relationships that might materially interfere with his exercise of 
independent judgment. The Non Executive Chairman, Vanda Murray 
OBE, may not be regarded as strictly independent in terms of  
the Code, due to her having been granted options in July 2010. 
However the Board in valuing her contribution considers that she 
acts independently and professionally at all times and brings a wide 
experience at a senior level of business operations and strategy and 
has an expanse of knowledge and expertise gained from other areas 
of business and public life.
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 members of the Audit Committee as at 31 December 2011 were 
Vanda Murray OBE (Chairman), Duncan Sedgwick 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 members of the Remuneration Committee as at 31 December 
2011 were Duncan Sedgwick (Chairman), Vanda Murray OBE and 
Nick Moss. All are Non-Executive Directors. The Committee meets 
at least two times a year.
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 18 to 20.
The full Board acts as the Nominations Committee and together 
considers the identification of candidates with the skills and 
experience that are needed for the next stage of the Board’s and the 
Company’s development. It is also mindful of succession plans and 
considers the possible internal candidates for future Board roles. 
Before making any appointment, the Board evaluates the balance of 
skills, knowledge and experience on the Board and prepares a 
description of the role and capabilities required for a particular 
appointment. External recruitment professionals are also engaged 
where necessary to assist in identifying suitable candidates.
Communication with shareholders
The Board is committed to constructive dialogue with its 
shareholders.
The Company uses the AGM as an opportunity to communicate 
with its shareholders. The AGM will be held at 12.00pm on Monday 
21 May 2012 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. www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 24
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 elected to 
prepare the Group financial statements in accordance with 
International Financial Reporting Standards as adopted by the 
European Union and the parent company statements in accordance 
with United Kingdom generally accepted accounting practice (United 
Kingdom Accounting Standards and applicable laws). 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 judgements and accounting estimates that are reasonable 
and prudent;
•	 state whether applicable IFRS’s/UK Accounting Standards have 
been followed, subject to any material departures disclosed and 
explained in the financial statement; and
•	 prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Company will 
continue in business.
The Directors are responsible for keeping 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 sector 489 of the Companies Act 2006.
On behalf of the Board
Richard H Smith
Chief Executive Officer
19 March 2012
Directors’ Report continued
For the year ended 31 December 2011 www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 25
Independent Auditor’s Report
We have audited the financial statements of VPhase plc for the year ended 31 December 2011 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 24 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 2011 
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 matters 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.
Carl Williams
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Manchester
19 March 2012 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 26
Group Income Statement
for the year ended 31 December 2011
Note
Year ended 
31 December
2011
£’000
Year ended 
31 December
 2010
£’000
Revenue 440 266
Cost of sales (290) (162)
Gross profit 150 104
Administrative expenses (2,118) (1,817)
Operating loss (1,968) (1,713)
Finance income 5 2 2
Loss before income tax 4 (1,966) (1,711)
Income tax 9 103 –
Loss for the year (1,863) (1,711)
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 (0.24)p
All revenue and costs originate from continuing activities.
The loss for the year is also the total comprehensive loss for the year and consequently no separate statement of comprehensive loss  
is presented.
The notes on pages 30 to 41 are an integral part of these Group Financial Statements. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 27
Group Statement of Changes in Equity
for the year ended 31 December 2011
Attributable to equity holders of the Company
Share  
capital
£’000
Share 
premium 
£’000
Merger
relief
reserve
£’000 
Capital 
redemption 
reserve
£’000
Retained 
earnings
£’000
Reverse 
acquisition 
reserve
£’000
Warrant
reserve
£’000
Other
reserves
£’000
Total
equity
£’000
Balance at 1 January 2010 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
Transaction with owners 2,005 6,138 1,150 994 (2,529) (3,682) 105 299 4,480
Loss for the year and total
comprehensive loss – – – – (1,711) – – – (1,711)
Balance at 31 December 2010 2,005 6,138 1,150 994 (4,240) (3,682) 105 299 2,769
Share-based payments – – – – – – – 98 98
Proceeds from placing 1,175 1,175 – – – – – – 2,350
Placing costs – (230) – – – – – – (230)
Lapsed Warrants – 105 – – – – (105) – –
Lapse of share-based payments – – – – 147 – – (147) –
Transactions with owners 3,180 7,188 1,150 994 (4,093) (3,682) – 250 4,987
Loss for the year and total
comprehensive loss – – – – (1,863) – – – (1,863)
Balance at 31 December 2011 3,180 7,188 1,150 994 (5,956) (3,682) – 250 3,124
Total recognised income and expense recognised directly to equity amounts to £Nil (2010: £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.
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 was calculated using the Black-Scholes model at the time of grant and 
was charged to the share premium account. At 31 December 2011, all warrants had lapsed.
Other reserves 
Other reserves comprise of share-based payments for the fair value of options granted.
At 31 December 2011, 179,653 (2010: 179,653) shares in VPhase plc were held by FG Employee Trustee Company Limited. The market value 
of these shares at 31 December 2011 was £1,000 (2010: £4,000). FG Employee Trustee Company has been consolidated within the Group 
Financial Statements.
The notes on pages 30 to 41 are an integral part of these Group Financial Statements.  www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 28
Note
As at 
31 December
2011
£’000
As at 
31 December
2010
£’000
ASSETS
Non-current assets
Intangible assets 12 311 281
Property, plant and equipment 13 83 63
394 344
Current assets
Inventories 14 670 362
Trade and other receivables 15 263 334
Cash and cash equivalents 16 2,148 2,078
3,081 2,774
Total assets 3,475 3,118
LIABILITIES
Current liabilities
Trade and other payables 17 351 349
Total liabilities 351 349
EQUITY
Equity attributable to equity holders of the Company
Share capital 19 3,180 2,005
Share premium 7,188 6,138
Merger relief reserve 1,150 1,150
Capital redemption reserve 994 994
Retained earnings (5,956) (4,240)
Reverse acquisition reserve (3,682) (3,682)
Warrant reserve – 105
Other reserves 250 299
Total equity 3,124 2,769
Total equity and liabilities 3,475 3,118
The notes on pages 30 to 41 are an integral part of these Group Financial Statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 19 March 2012 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 2011 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 29
Note
Year ended
31 December
2011
£’000
Year ended
31 December
2010
£’000
Cash flows from operating activities
Net cash consumed by operating activities 20 (1,969) (1,471)
Taxation
Tax received 103 –
Cash flows from investing activities
Expenditure on intangible assets 12 (110) –
Purchases of property, plant and equipment 13 (76) (36)
Interest received 2 2
(184) (34)
Cash flows from financing activities
Net proceeds from the issue of ordinary shares 2,120 1,906
Net increase in cash and cash equivalents 70 401
Cash and cash equivalents at the beginning of the year 2,078 1,677
Cash and cash equivalents at the end of the year 16 2,148 2,078
The notes on pages 30 to 41 are an integral part of these Group Financial Statements.
Group Statement of Cash Flows
for the year ended 31 December 2011 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 30
Notes to the Group Financial Statements
for the year ended 31 December 2011
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 49 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) as adopted by the European Union. The Group Financial 
Statements have been prepared under the historical cost convention.
Going concern
The Group’s business activities, together with the factors likely to 
affect its future development, performance and position are set out 
in the Directors’ Report on pages 21 to 24. The financial position of 
the Group, its cash flows and liquidity position are described in the 
Chief Executive’s Review and Financial and Business Review on 
pages 10 to 12. 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 growing demand and interest in the product 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.
The Group’s forecasts and projections, which have been prepared 
for the period to 31 December 2015 and taking account of 
reasonably possible changes in performance in relation to sales 
volumes and the ability of the Group to factor its debtors 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 judgements 
Share-based incentive arrangements 
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.
Capitalisation of development assets
Development costs are capitalised when they meet certain criteria, 
note 2.11. Management exercise judgement as to whether the 
relevant criteria has been met. 
Taxation 
Management have not recognised a deferred tax asset in relation to 
unrelieved tax losses as the recoverability is currently uncertain.
Critical accounting estimates
Amortisation 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. 
Additional development costs have been incurred during the year 
ended 31 December 2011 £110,000 (2010: £Nil).
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 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 when events  
or changes in circumstances indicate that the carrying amount may 
not be recoverable.
Development costs capitalised (note 2.12), which form part of the 
Group’s intangible assets, are amortised on a straight line basis 
over a period 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. 
Development costs capitalised since this date are in relation to  
new products that are being developed. Amortisation charges  
are recognised in the Group Income Statement within  
administrative expenses. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 31
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.
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. 
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 as is cash and cash equivalents. 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.
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 Warranty
A provision of £33,000 (2010: £Nil) has been recognised for 
expected warranty claims on products sold during the last three 
years. It is expected this expenditure will be incurred within five years 
after the reporting date. This has been included with accruals.
2.11 Revenue recognition 
Revenue comprises the fair value of the consideration received or 
receivable for the sale of goods and services in the ordinary course 
of the Group’s activities excluding VAT and trade discounts. Revenue 
is recognised as follows: 
Sales of goods 
Revenue from the sales of goods is 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.
In addition during the period, other revenue was recognised, 
amounting to £57,000 relating to prize fund awards and Cert Funding 
for reduction of CO
2
 emissions.
2.12 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 
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. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 32
Notes to the Group Financial Statements continued
for the year ended 31 December 2011
2. Summary of significant accounting policies continued
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 judgement 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.
2.13 Current tax
The tax currently payable is based on taxable profit for the year. 
Taxable profit differs from profit as reported in the Group Income 
Statement because it excludes/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. 
2.14 Deferred tax
Deferred income taxes are calculated using the liability method on 
temporary differences. Deferred tax is generally provided on the 
difference between the carrying amounts of assets and liabilities and 
their tax bases. Deferred tax is not provided on the initial recognition 
of goodwill, or on the initial recognition of an asset or liability unless 
the related transaction is a business combination or affects tax or 
accounting profit. Tax losses available to be carried forward as well 
as other income tax credits to the Group are assessed for 
recognition as deferred tax assets.
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 or equity in which case the related deferred 
tax is also charged or credited directly to other comprehensive 
income or equity as appropriate. 
2.15 Employee benefits
Share-based payments
All share-based payment arrangements granted after 7 November 
2002 that had not vested prior to 1 January 2005 are recognised in 
the Group Financial Statements.
All goods and services received in exchange for the grant of any 
share-based payment are measured at their fair values. Where 
employees are rewarded using share-based payments the fair values 
of employees’ services are determined indirectly by reference to the 
fair value of the instrument granted to the employee. This fair value is 
appraised at the grant date and excludes the impact of non-market 
vesting conditions (for example profitability and sales growth targets). 
Share options are valued at the date of grant using the Black-
Scholes option pricing model 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. 
2.16 Other share-based payments 
Warrants relating to the Company’s placing and admission to AIM 
have been provided to certain third parties. Warrants are fair valued  
at the date of grant using the Black-Scholes option pricing model 
and were charged to share premium with a corresponding credit to 
‘warrant reserve’ as this represented a share issue cost. During the 
year these warrants have lapsed and have been credited to share 
premium account. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 33
2.17 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. 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.
•	 IFRS 9 Financial Instruments (effective 1 January 2015)
•	 IFRS 10 Consolidated Financial Statements (effective  
1 January 2013)
•	 IFRS 11 Joint Arrangements (effective 1 January 2013)
•	 IFRS 12 Disclosure of Interests in Other Entities (effective 
1 January 2013)
•	 IFRS 13 Fair Value Measurement (effective 1 January 2013)
•	 IAS 19 Employee Benefits (Revised June 2011) (effective  
1 January 2013)
•	 IAS 27 (Revised), Separate Financial Statements (effective  
1 January 2013)
•	 IAS 28 (Revised), Investments in Associates and Joint Ventures 
(effective 1 January 2013)
•	 Disclosures – Transfers of Financial Assets – Amendments to 
IFRS 7 (effective 1 July 2011)
•	 Deferred Tax: Recovery of Underlying Assets – Amendments to 
IAS 12 Income Taxes (effective 1 January 2012)
•	 Presentation of Items of Other Comprehensive Income – 
Amendments to IAS 1 (effective 1 July 2012)
•	 Disclosures – Offsetting Financial Assets and Financial Liabilities 
– Amendments to IFRS 7 (effective 1 January 2014)
•	 Offsetting Financial Assets and Financial Liabilities – Amendments 
to IAS 32 (effective 1 Janury 2014)
•	 Mandatory Effective Date and Transition Disclosures – 
Amendments to IFRS 9 and IFRS 7 (effective 1 January 2015)
•	 IFRIC 20 Stripping Costs in the Production Phase of a Surface 
Mine (effective 1 January 2013)
2.18 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 £383,000 (2010: 
£217,000) and other revenue of £57,000 (2010: £49,000).
Geographic analysis of revenue:
2011
£’000
2010
£’000
UK 424 266
European 1 –
Rest of World 15 –
Total 440 266
All Group non-current assets are located within the UK.
The information below shows customers that constituted in excess 
of 10% of Group revenues: 
Customer A Products for Energy Efficiency £87,000 or 23%
Customer B Products for Energy Efficiency £57,000 or 15%
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. 
2011
£’000
2010
£’000
Depreciation (note 13) 56 34
Amortisation (note 12) 80 90
Employee benefit expense (note 7) 911 668
Research costs (not capitalised) 58 81
Inventories recognised as an expense 39 13
Audit remuneration:
– fees payable to Company auditors 
for the audit of Parent Company and 
Group Financial Statements 4 4
Non-audit services:
– audit of the Company’s subsidiaries 10 10
– other services pursuant to legislation 3 3
– tax compliance services 5 3
– tax advisory services 21 –
Other services pursuant to legislation relate to the interim review 
(2010: £3,000).
The above standards and interpretations are not expected to have a 
material impact on the Group’s financial statements. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 34
5. Finance income
2011
£’000
2010
£’000
Loans and receivables (including cash and cash equivalents) 2 2
6. Directors’ remuneration
 2011
£’000
2010
£’000
Directors’ emoluments
Aggregate emoluments 279 263
Paid as follows:
Emoluments 273 251
Fees to third parties 6 12
279 263
Further information has been disclosed in the Directors’ Remuneration Report pages 18 to 20.
Highest paid Director
The above includes remuneration of the highest paid Director as follows:
2011
£’000
2010
£’000
Emoluments 175 111
Remuneration of key management personnel
The remuneration of key management personnel of the Group, is set out below: 
2011
£’000
2010
£’000
Short term employee benefits 514 326
Share-based payments 76 148
 590 474
7. Employee benefit expense
 2011
£’000
2010
£’000
Wages and salaries 802 602
Social security costs 109 66
911 668
Average number of persons employed:
 2011
No
2010
No
Finance and administration 11 10
Research and development 4 3
15 13
Notes to the Group Financial Statements continued
for the year ended 31 December 2011 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 35
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:
 2011
No
2010
No
Number of outstanding share options at 1 January 36,959,315 15,943,427
Lapsed during the year (15,603,001) –
Granted during the year 8,400,000 21,015,888
Number of outstanding share options at 31 December 29,756,314 36,959,315
As at 31 December 2011, no share options were capable of being exercised. The weighted average exercise price of share options 
outstanding at 31 December 2011 was 2.10 pence (2010: 2.20 pence). During the year 15,603,001 options lapsed, no options were exercised, 
forfeited or expired.
The share options existing at the beginning of the year and granted during the year, including vesting conditions are:
As at
1 January
2011 Granted Lapsed
As at 
31 December
2011
Exercise
price
Exercise
period
Richard Smith
(1)
10,507,944 – – 10,507,944 2.38 7 Jul 2010 – 6 Jul 2020
Vanda Murray OBE
(2)
10,507,944 – – 10,507,944 2.38 7 Jul 2010 – 6 Jul 2020
Lee Juby
(3)
15,603,001 – (15,603,001) – 1.88 1 Jan 2011 – 31 Dec 2020
Other
(4)
340,426 – – 340,426 5.88 7 Sep 2012 – 7 Sep 2019
Other
(5)
– 4,300,000 – 4,300,000 1.17 27 Jun 2011 – 26 Jun 2021
Other
(5)
– 4,100,000 – 4,100,000 1.24 4 Jul 2011 – 3 Jul 2021
36,959,315 8,400,000 (15,603,001) 29,756,314
(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 as he left the Company.
(4) No performance criteria are attached.
(5) Options are exercisable immediately following the first period of three consecutive calendar months the Group does not make a loss (prepared under UKGAAP).
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 £98,000 (2010: £170,000) and a 
corresponding credit to other reserves. 
The weighted average exercise price of share options granted in the year was 1.20 pence (2010: 2.40 pence). www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 36
8. Share-based payments continued
Assumptions 
The following assumptions are used to determine the fair value of share options at the respective date of grant: 
Date of grant
Exercise 
price
(pence)
Ordinary 
shares
under option
Share price
at date 
of grant 
(pence) Volatility Interest rate
Option
(years) Dividends 
1 Jan 2008 1.88 15,603,001 1.88 42.3% 5.50% 3 Nil
7 Sep 2009 5.88 340,426 5.88 49.0% 4.50% 3 Nil
7 Jul 2010 2.38 21,015,888 2.12 49.5% 4.50% 3 Nil
27 Jun 2011 1.17 4,300,000 1.18 54.7% 4.50% 3 Nil
4 Jul 2011 1.24 4,100,000 1.24 49.6% 4.50% 3 Nil
The middle market price of ordinary shares on 31 December 2011 was 0.58 pence. The high and low market prices during the year were 3.17 
pence and 0.55 pence respectively. 
Expected volatility is derived from observation of the volatility of shares, within the AIM sector. 
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
2011
£’000
2010
£’000
Current tax:
Prior year adjustment 103 –
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 2008 and 2009.
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:
 2011
£’000
2010
£’000
Loss before income tax (1,966) (1,711)
Loss before income tax multiplied by rate of corporation tax in the UK of 26.5% (2010: 28.0%) (521) (479)
Adjustments in respect of prior periods for current tax (103) –
Adjustment for non-deductible expenses 27 118
Adjustment for tax rate differences 112 –
Movement in deferred tax not provided 382 361
Current tax (103) –
Unrelieved tax losses relating to the current trade of £4,864,000 (2010: £3,210,000) 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 25% (2010: 28%) is set out below:
 2011
£’000
2010
£’000
Accelerated capital allowances (31) (11)
Other short-term temporary differences 78 79
Share-based payments (9) (10)
Trade losses (1,216) (899)
(1,178) (841)
Notes to the Group Financial Statements continued
for the year ended 31 December 2011 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 37
11. Loss per ordinary share 
The loss per ordinary share is based on the loss of £1,966,000 (2010: loss £1,711,000) and 835,689,813 (2010: 719,426,982) 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.
 2011 2010
Loss attributable to equity holders of the Company (£’000) (1,966) (1,711)
Weighted average number of ordinary shares in issue (‘000) 835,690 719,427
Basic and diluted loss per share (pence) (0.24) (0.24)
The share options and warrants in issue are anti-dilutive in respect of the diluted loss per share calculation and have therefore not been included. 
12. Intangible assets
£’000
Year ended 31 December 2010
Opening net book value 371
Amortisation (90)
Closing net book value 281
Year ended 31 December 2011
Opening net book value 281
Additions 110
Amortisation (80)
Closing net book value 311
At 31 December 2011
Cost or valuation 508
Accumulated amortisation (197)
Closing net book value 311
At 31 December 2010
Cost or valuation 398
Accumulated amortisation (117)
Closing net book value 281
All additions during the year arise from internal development.
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. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 38
Notes to the Group Financial Statements continued
for the year ended 31 December 2011
13. Property, plant and equipment
£’000
Year ended 31 December 2010 
Opening net book value 61
Additions 36
Depreciation charge (34)
Closing net book value 63
Year ended 31 December 2011
Opening net book value 63
Additions 76
Depreciation charge (56)
Closing net book value 83
At 31 December 2011
Cost 205
Accumulated depreciation (122)
Closing net book value 83
At 31 December 2010
Cost 129
Accumulated depreciation (66)
Closing net book value 63
14. Inventories
2011
£’000
2010
£’000
Components 172 61
Finished goods 498 301
670 362
In 2011, £39,000 inventories were included in the Group Income Statement as an expense (2010: £13,000). No write downs have been 
incurred during the year and no inventories are pledged as securities for liabilities.
15. Trade and other receivables
2011
£’000
2010
£’000
Trade receivables 140 48
Amounts owed by related parties 19 179
Prepayments 71 59
Other receivables 33 48
263 334
All amounts are short term. The net carrying value of the above receivables is considered a reasonable approximation of fair value.
The average credit period on sales of goods is 132 days (2010: 65 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 (2010: £Nil) which are past due at the 
reporting date. None of the other receivables are past due.
  www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 39
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 2011 (2010: £Nil). 
An impairment loss of £Nil has been recognised on trade receivables (2010: £7,000) 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
2011
£’000
2010
£’000
Cash at bank and in hand 2,148 2,078
17. Trade and other payables 
2011
£’000
2010
£’000
Trade payables 190 159
Amounts owed to related party 18 85
Social security and other taxes 34 47
Accrued expenses 109 58
351 349
All amounts are short term. The carrying values of all payables are considered to be a reasonable approximation of fair value.
Trade payables of the Group at the year end as a proportion of amounts invoiced during the year represent 44 days (2010: 58 days).
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 2010 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 £2,148,000 (2010: £2,078,000) 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
2011
£’000
2010
£’000
Financial assets 
Loans and receivables (including cash and cash equivalents) 2,340 2,353
Financial Liabilities 
Amortised cost 317 302
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 Directors’ Report on page 22, and the disclosures within this note.  www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 40
Notes to the Group Financial Statements continued
for the year ended 31 December 2011
18. Financial instruments continued
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% (2010: 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.
2011 2010
£’000
+1%
£’000
-1%
£’000
+1%
£’000
+1%
Loss for the year 21 (21) 21 (21)
Equity 21 (21) 21 (21)
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 are as follows:
Current Non-current
Within
6 months
£’000
6 to 12 
months
£’000
1 to 
5 years
£’000
Later than 
5 years
£’000
31 December 2011
Trade and other payables 315 2 – –
31 December 2010
Trade and other payables 302 – – –
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
of shares
 No.
Share
capital
£’000
Authorised
At 1 January 2011 and 31 December 2011 1,600,000,000 4,000
Issued and fully paid up
At 1 January 2011 802,210,361 2,005
Shares issued 5 December 2011 470,000,000 1,175
At 31 December 2011 1,272,210,361 3,180
Issue of shares
On 5 December 2011, the Company issued 470,000,000 ordinary shares of 0.25p each at 0.5 pence per share via a placing. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 41
19. Share capital and reserves continued
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. These warrants were capable of being exercised over the three year period from the date of grant and lapsed during the year.
Date granted
Number of
warrants
Exercise
price
(pence)
Weighted 
average 
remaining 
contractual life
At 1 January 2011 3,500,000 5 5 months
Lapsed (3,500,000) – –
At 31 December 2011 – – –
No warrants were outstanding or capable of exercise at 31 December 2011 (2010: 3,500,000).
Lapses of £105,000 (2010: £Nil) resulted in a charge to warrant reserve and a credit to share premium account.
20. Cash consumed by operations
 2011
£’000
2010
£’000
Loss before income tax (1,966) (1,711)
Adjustments for:
– Depreciation 56 34
– Amortisation 80 90
– Finance income (2) (2)
– Share-based payments 93 170
– Other share-based payments 5 –
Changes in working capital:
– (Increase)/Decrease in inventories (308) 13
– Decrease/(Increase) in trade and other receivables 71 (148)
– Increase in trade and other payables 2 83
Cash consumed by operations (1,969) (1,471)
21. Related party transactions 
The wholly owned subsidiaries are VPhase Smart Energy Limited, Flightstore Inflight Retailing Limited and FG Employee Trustee Company 
Limited. These have been included in consolidated accounts.
Within the year, the Group incurred fees of £160,000 (2010: £212,000) payable to Energetix Group plc a group that owns 27.01% of VPhase 
plc for administrative services. As at 31 December 2011, £18,000 (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 £7,000 (2010: £64,000) including expenses 
for Non-Executive Director services and marketing consultancy. At 31 December 2011, £Nil remained outstanding (2010: £5,000).
22. Off balance arrangements
At 31 December 2011, 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. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 42
Company Balance Sheet
as at 31 December 2011
Note
2011
£’000
2010
£’000
Fixed assets
Investments 26 2,427 2,427
Current assets
Debtors 27 5,531 3,379
Cash at bank and in hand 28 2,010 1,949
7,541 5,328
Creditors: amounts falling due within one year 30 (1,541) (1,102)
Net current assets 6,000 4,226
Total assets less current liabilities 8,427 6,653
Net assets 8,427 6,653
Capital and reserves
Called up share capital 31 3,180 2,005
Share premium account 34 7,188 6,138
Merger relief reserve 35 1,150 1,150
Capital redemption reserve 36 994 994
Warrant reserve 33 – 105
Other reserves 37 250 299
Profit and loss account 38 (4,335) (4,038)
Shareholders’ funds 39 8,427 6,653
The notes on pages 43 to 48 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 19 March 2012 and were signed on its 
behalf by:
Richard H Smith
Chief Executive Officer
VPhase plc
Company number: 4958332 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 43
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). 
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 impairment. 
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. During the year all warrants in issue lapsed.
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’. During the year all warrants in issue lapsed. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 44
24. Directors’ remuneration
2011
£’000
2010
£’000
Directors’ emoluments
Aggregate emoluments 65 163
Paid as follows:
Emoluments – –
Share-based payments 65 163
65 163
Salary costs of the Directors are borne by the main trading subsidiary VPhase Smart Energy 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:
2011
No
2010
No
Finance, administration and management 4 3
The aggregate payroll costs of these persons were as follows:
2011
£’000
2010
£’000
Wages and salaries – –
Share-based payments (including National Insurance) 98 163
98 163
26. Investments 
£’000
Cost and net book value at 31 December 2011 and 31 December 2010 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 
Specialises in Domestic Voltage optimisation 100% 1 pence each 13,334
Flightstore Inflight Retailing Limited
1 
Dormant 100% 1 pence each 2,115,170
FG Employee Trust Company Limited
1 
Holds shares in VPhase plc on behalf of employees
 
100% 100 pence each 2
1 Directly owned subsidiaries
At 31 December the companies had the following capital and reserves:
2011 2010
Capital and 
reserves 
£’000
Profit/(loss) 
for the year 
£’000
Capital and 
reserves 
£’000
Profit/(loss) 
for the year 
£’000
VPhase Smart Energy Limited (3,253) (1,450) (1,803) (1,105)
Flightstore Inflight Retailing Limited (1,496) – (1,496) –
FG Employee Trust Company Limited (99) – (99) –
Notes to the Company Balance Sheet continued www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 45
27. Debtors
2011
£’000
2010
£’000
Amounts owed by subsidiary companies 5,505 3,316
Amounts owed to related parties 6 40
Other debtors 20 23
5,531 3,379
28. Cash at bank and in hand
2011
£’000
2010
£’000
Cash at bank and in hand 2,010 1,949
29. Deferred taxation
The unprovided deferred taxation asset calculated at a tax rate of 25% (2010: 28%) is set out below:
2011
£’000
2010
£’000
Trade losses 336 268
Share-based payments 9 10
345 278
Unrelieved losses of £1,345,000 (2010: £956,000) remain available to offset against future taxable trading profit. No deferred tax asset has 
been recognised in respect of these losses as recoverability is uncertain.
30. Creditors – amounts falling due within one year
2011
£’000
2010
£’000
Trade creditors 49 6
Amounts owed to related parties 18 19
Amounts owed to subsidiary undertakings 1,439 1,043
Accruals 35 34
1,541 1,102
31. Share Capital
Ordinary
Number
of shares No.
Share capital 
£’000
Authorised
At 1 January 2010 and 31 December 2011 1,600,000,000 4,000
Issued and fully paid up
At 1 January 2011 802,210,361 2,005
Shares issued 5 December 2011 470,000,000 1,175
At 31 December 2011 1,272,210,361 3,180
Issue of shares
On 5 December 2011, the Company issued 470,000,000 ordinary shares of 0.25p each at 0.5 pence per shares via a placing. www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 46
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
1 January
2011 Granted Lapsed
As at 
31 December
2011
Exercise
price
Exercise
period
Richard Smith
(1)
10,507,944 – – 10,507,944 2.38 7 Jul 2010 – 6 Jul 2020
Vanda Murray OBE
(2)
10,507,944 – – 10,507,944 2.38 7 Jul 2010 – 6 Jul 2020
Lee Juby
(3)
15,603,001 – (15,603,001) – 1.88 1 Jan 2011 – 31 Dec 2020
Other
(4)
340,426 – – 340,426 5.88 7 Sep 2012 – 7 Sep 2019
Other
(4)
– 4,300,000 – 4,300,000 1.17 27 Jun 2011 – 26 Jun 2021
Other
(5)
– 4,100,000 – 4,100,000 1.24 4 Jul 2011 – 3 Jul 2021
36,959,315 8,400,000 (15,603,001) 29,756,314
(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 as he left the Company.
(4) No performance criteria are attached.
(5) Options are exercisable immediately following the first period of three consecutive calendar months the Group does not make a loss (prepared under UKGAAP).
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 £98,000 (2010: £170,000) and a 
corresponding credit to other reserves.
The weighted average exercise price of share options granted in the year was 1.20 pence (2010: 2.40 pence).
Assumptions 
The following assumptions are used to determine the fair value of share options at the respective date of grant: 
Date of grant
Exercise 
price
(pence)
Ordinary 
shares
under option
Share price at
date of grant (pence) Volatility
Interest
rate
Option
(years) Dividends 
1 Jan 2008 1.88 15,603,001 1.88 42.3% 5.50% 3 Nil
7 Sep 2009 5.88 340,426 5.88 49.0% 4.50% 3 Nil
7 Jul 2010 2.38 21,015,888 2.12 49.5% 4.50% 3 Nil
27 Jun 2011 1.17 4,300,000 1.18 54.7% 4.50% 3 Nil
4 Jul 2011 1.24 4,100,000 1.24 49.6% 4.50% 3 Nil
The middle market price of ordinary shares on 31 December 2011 was 0.58 pence. The high and low market prices during the year were 3.17 
pence and 0.55 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.  www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 47
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. These warrants were capable of being exercised over the three year period from the date of grant and lapsed during the year.
Date granted
Number of
warrants
Exercise
price (pence)
Weighted 
average 
remaining 
contractual 
life
At 1 January 2011 3,500,000 5 5 months
Lapsed (3,500,000) – –
At 31 December 2011 – – –
No warrants were outstanding or capable of exercise at 31 December 2011 (2010: 3,500,000).
Lapses of £105,000 (2010: £Nil) resulted in a charge to warrant reserve and a credit to share premium account.
34. Share premium account
 2011
£’000
2010
£’000
At 1 January 6,138 4,486
Shares issued via placing 1,175 1,750
Placing costs (230) (134)
Lapsed warrants 105 –
Subscription of shares – 36
At 31 December 7,188 6,138
35. Merger relief reserve
2011
£’000
2010
£’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.
36. Capital redemption reserve
2011
£’000
2010
£’000
At 1 January and 31 December 994 994
37. Other reserves
2011
£’000
2010
£’000
At 1 January 299 129
Lapsed share-based payments (147) –
Share-based payments 98 170
At 31 December 250 299 www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 48
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 2011 was 179,653 (2010: 179,653).
At 31 December 2011, 179,653 (2010: 179,653) shares in VPhase plc were held by FG Employee Trustee Company Limited. The market value 
of these shares at 31 December 2011 was £1,000 (2010: £4,000).
In compliance with UITF 38 Accounting for ESOP Trusts, Company shares at a cost of £47,000 (2010: £47,000) held by FG Employee Trustee 
Company Limited have been included in the Company Balance Sheet as a reduction in shareholders’ funds. A cash balance held by FG 
Employee Trustee Company £2,000 (2010: £2,000) has also been aggregated into the 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 £444,000 (2010: loss £516,000).
2011
£’000
2010
£’000
At 1 January (4,038) (3,522)
Lapsed share-based payments 147 –
Loss for the year (444) (516)
At 31 January (4,335) (4,038)
39. Shareholders’ funds
2011
£’000
2010
£’000
Loss for the year (444) (516)
Shares issued in the year, net of expenses 2,120 1,866
Subscription of shares – 40
Share-based payments 98 170
Increase in shareholders’ funds 1,774 1,560
Shareholders’ funds at 1 January 6,653 5,093
Shareholders’ funds at 31 December 8,427 6,653
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 £160,000 (2010: £212,000) payable to Energetix Group plc a group that owns 27.01% of 
VPhase plc for administrative services. As at 31 December 2011, the Company owed Energetix Group plc £19,000 (2010: £18,000), but was 
owed £6,000 in relation to VAT payment received by Energetix Group plc when VPhase plc was included in the same VAT Group (2010: 
£35,000). The above amounts are unsecured and are repayable on demand.
Walnut Management (UK) Limited, a company of which Nick Moss is Managing Director, invoiced £7,000 (2010: £64,000) including expenses 
for Non-Executive Director services and marketing consultancy. At 31 December 2011, £Nil remained outstanding (2010: £5,000).
Notes to the Company Balance Sheet continued www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 49
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 Murray OBE (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
Panmure Gordon
155 Moorgate
London
EC2M 6XB
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 www.vphase.co.uk
VPhase plc Group Financial Statements 2011 50
Notes VPhase plc Group Financial Statements 2011 51 www.vphase.co.uk www.vphase.co.uk
VPhase plc Group Financial Statements 2011 52
Notes FSC LOGO TO GO HERE Brand new thinking on domestic energy saving
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