365.L Regulatory News (365)

8 Apr 2008 07:01

VPhase PLC08 April 2008 Press Release 8 April 2008 VPhase plc ("VPhase" or "the Group") Preliminary Results for the year ended 31 December 2007 VPhase plc (AIM: VPHA), a leading developer of energy saving devices for thehome and small commercial/retail applications, announces its preliminary resultsfor the year ended 31 December 2007: Operational and financial highlights:• re-admission to AIM via reversal into Flightstore Group plc and change of name to VPhase plc; • cash balance of £551,000;• financial performance in line with the Group's expectations;• achieved all key development and performance testing targets planned for Q4 2007;• VPhase plc's voltage control device showing c.10% energy savings in laboratory test;• appointment of Dr. Lee Juby as CEO, who started in January 2008. 2008 activities:• installation of VPhase voltage control unit in a test house March 2008;• to complete the design for manufacture of the first product and achieve certification;• to design unit to work at 120 volts for US configured markets;• to select manufacturing partner. Commenting on the results, Adrian Hutchings, Chairman, said: "VPhase technologyhas tremendous potential and presents a great opportunity to create a range ofproducts that are low cost and simple to install allowing both homeowners andsmall businesses to save money and help combat climate change. The business hasonly been on the AIM market for a short period of time and, already, it hasgenerated significant interest from a wide range of influential groups,including power utilities, social housing providers, electrical equipmentmanufacturers and government influencers." For further information please contact:VPhase plcDr Lee Juby, Chief Executive Officer Tel: +44 (0)151 339 8799Richard Smith, Chief Financial Officer Tel: +44 (0)151 348 2116 www.energetixgroup.com Zimmerman Adams Tel: +44 (0)207 060 1760Graeme ThomCharity Walmsley www.zimmint.com Novum Securities Limited Tel: +44 (0)20 7562 4700Michael BrennanHenry Turcan www.novumsecurities.com Media enquiries:Abchurch CommunicationsMonique Tsang Tel: +44 (0)20 7398 7712Justin Heath Tel: +44 (0)20 7398 7781monique.tsang@abchurch-group.com www.abchurch-group.com Chairman's statement We are pleased to present your Group's first results following our reverseacquisition of Flightstore Group plc and also to welcome our new shareholders.Since the reverse acquisition in September 2007, we have made excellent progressin the development of the VPhase voltage control product, a low cost energyefficiency device for domestic and small commercial properties. In particular,the Group has: • achieved all the key development and performance testing targets planned for Q4 of 2007;• entered into discussions with potential suppliers, routes to market and major utilities;• recruited a high calibre Chief Executive, Dr. Lee Juby, who was appointed on 1 January 2008; and• since March 2008, been running a device in a test house. The product platform developed by the Group maintains incoming voltage to aproperty to a set point. Whilst electricity is provided by generators to anominal specification (in the UK this is 230 volts and in North America it is120 volts), the actual voltage received can vary significantly. In the UK it islegally permissible for domestic electricity to be delivered anywhere between207 volts and 253 volts, and in North America between 114 volts and 126 volts,with resulting effects on device performance and reliability. The majority of electrical devices do not derive any benefits from excessvoltage, instead they convert the additional energy into wasted heat and in somecases, such as light bulbs, the excess voltage can result in a shortenedoperational life. The Group's voltage control device has consistently demonstrated savings of 10%or greater of the electricity used by products such as fridges/freezers,televisions, computers, vacuum cleaners, lights and central heating pumps byensuring that they run closer to the voltage for which they were designed. The device, which can fit into the consumer unit or be installed as a standalone unit, controls the incoming voltage to a set point of 220 volts. This isslightly higher than the minimum design point for household electrical items inEurope. The initial product is aimed at the new-build and refurbishment marketsalthough a retrofit device will soon follow, as will a 120 volt versiontargeting the North American market. It is the intention of the Group to builda range of products based on the core technology. The Group is in active discussions with manufacturers of consumer units, metersand electrical appliances as well as utility companies. It is expected that thefirst product will be launched in the second half of 2008. Future activities planned for 2008 include completing the design for manufactureand achieving certification of the first product and the design and introductionof a 120 volt variant for the US market. The business has maintained its cost controls during the year resulting ingreater cash resources at the end of the year than had been internally forecast.The cash and bank balances at the end of the year were £551,000 (2006: £nil). At this stage of the Group's development, the Board is not recommending adividend in respect of the year to 31 December 2007. Investment in property, plant and equipment in the year totalled £1,000 (2006:£500). We are delighted with the excellent progress VPhase has made in 2007 and lookforward with confidence to continued progress in 2008 and in delivering value toour shareholders. We would like to thank all management and staff for theirdedication and commitment without which this progress would not have beenpossible. A C Hutchings Chairman 8 April 2008 Financial review The Group's financial performance for the year and the loss were in line withinternal projections. The loss for the year was £727,000 (2006: £26,000)reflecting the increased commercialisation activity and the costs, in excess ofthe fair value assets received, of the reverse acquisition of the Group on 25September 2007 by Energetix Voltage Control Limited which amounted to £542,000.Further details are disclosed in note 5. Research and development costs of £93,000 (2006: £26,000) were incurred in theyear. These costs have been charged to the income statement as the Directors donot believe that all the criteria of IAS38 "Intangible Assets" have been met. Capital expenditure in the year totalled £1,000 (2006: £500). The Group maintains its focus on strong cash management and at the year end thecash and bank balance totalled £551,000 (2006: £nil). During the year the Group raised £71,000 through the issue of new ordinaryshares of 0.25 pence each. Its subsidiary Energetix Voltage Control Limitedraised £600,000 by the issue of new shares to a minority investor and £115,000by the issue of a share to Energetix Group plc. The Group's policy for investing in deposit accounts with UK banks, in line withour strategy of maximising interest earnings whilst maintaining sufficient fundsfor operations, has generated £6,000 (2006: £nil). Cash utilised by the Group during the year on operating activities was £258,000(2007 £nil), our gain from investing activities was £35,000 (2006: £nil) and theissue of shares generated £774,000 (2006: £nil). The resultant cash inflow inthe period was £551,000. During the year, the Group entered into an agreement to pay the annual fees ofits broker in new ordinary shares of 0.25 pence each. Whilst no shares wereissued in the period a share based payment charge amounting to £20,000 has beencreated in other reserves with a corresponding charge to the income statement inrespect of services received to 31 December 2007. R Smith Chief Financial Officer 8 April 2008 Group Income Statementfor the year ended 31 December 2007 Year ended 31 December Note 2007 2006 £ £ Revenue - -Cost of sales - -Gross profit - -Administrative expenses (733,615) (26,061)Operating loss (733,615) (26,061)Finance income 6,332 -Loss before income tax (727,283) (26,061)Income tax expense - -Loss for the year (727,283) (26,061) Attributable toEquity holders of the Company (727,283) (26,061) Loss per share attributable to the equity holders of the Company during the year: Total and continuing - Basic and diluted 3 (0.14)p (0.01)p All costs originate from continuing activities. Group statement of changes in shareholders' equityfor the year ended 31 December 2007 Attributable to equity holders of the Company Share Share Merger Capital Retained Reverse Other Total premium relief redemption earnings acquisition reserves capital reserve reserve reserve equity £ £ £ £ £ £ £ £ Balance at 1 January 2006 1 - - - (30,075) - - (30,074) Total recognised loss for year - - - - (26,061) - - (26,061)As previously reported inEnergetix Voltage ControlLimited as at 31 December 2006 1 - - - (56,136) - - (56,135) Total recognised loss for theyear - - - - (727,283) - - (727,283) Share based payment - - - - - - 20,200 20,200 Share issuesShares issued by legalsubsidiary before reverseacquisition - 4 May 2007 99 - - - - - - 99 - 28 August 2007 - 115,009 - - - - - 115,009 - 3 September 2007 33 599,967 - - - - - 600,000Share issue expenses - (12,005) - - - - - (12,005)Cost of reverse acquisition - - - - - 572,272 - 572,272(note 5)Reallocation of reserves on 1,460,168 698,021 1,149,737 993,726 - (4,254,374) (47,278) -reverse acquisitionShares issued by legal parentafter reverse acquisition - 26 September 2007 100,000 57,000 - - - - - 157,000 - 19 October 2007 2,500 - - - - - - 2,500Share issue expenses - (88,493) - - - - - (88,493) Balance at 31 December 2007 1,562,801 1,369,499 1,149,737 993,726 (783,419) (3,682,102) (27,078) 583,164 Total recognised income and expense recognised directly to equity amounts to£nil (2006: £nil) representing the cost of the reverse acquisition. Merger relief reserve Merger relief reserve represents the premium on the shares issued to acquireEnergetix Voltage Control Limited. Capital redemption reserve Capital redemption reserve represents the cancellation of 100,376,460 deferredshares at 0.99 pence each on 24 September 2007. Reverse acquisition reserve As disclosed in note 2, the reverse acquisition reserve relates to the reverseacquisition between Energetix Voltage Control Limited and VPhase plc on 25September 2007. Other reserves Other reserves comprise of a share based payment granted to the Group's brokerin payment for services received from 25 September to 31 December 2007. Thisrequires the issue of 1,248,240 new ordinary shares. In addition, other reserves comprise an investment in own shares amounting to£47,278 which comprises of the shares held by FG Employee Trustee CompanyLimited. These shares were originally purchased to satisfy options under theFlightstore Group plc's Employee Share Option Trust. As at 31 December 2007,there are no options over the Ordinary Shares in the Company which have beengranted under any option scheme and which are capable of exercise, all suchoptions having lapsed, been cancelled or waived. At 31 December 2007, 4,491,344(2006: 4,491,344) shares in Flightstore Group plc were held by FG EmployeeTrustee Company Limited. The market value of these shares at 31 December 2007was £179,654 (2006: £12,576). Group Balance Sheetat 31 December 2007 As at 31 December 2007 2006 £ £ASSETSNon-current assetsProperty, plant and equipment 1,134 520 1,134 520Current assetsTrade and other receivables 62,437 859Cash and cash equivalents 551,477 - 613,914 859 Total Assets 615,048 1,379 LIABILITIES Current liabilitiesTrade and other payables 31,884 57,514Total liabilities 31,884 57,514 EQUITYCapital and reserves attributable to equity holdersof the CompanyShare capital 1,562,801 1Share premium 1,369,499 -Merger relief reserve 1,149,737 -Capital redemption reserve 993,726 -Retained earnings (783,419) (56,136)Reverse acquisition reserve (3,682,102) -Other reserves (27,078) -Total shareholders' equity 583,164 (56,135) Total equity 583,164 (56,135) Total equity and liabilities 615,048 1,379 Group Cash Flow Statementfor the year ended 31 December 2007 Year ended 31 December Note 2007 2006 £ £Cash flows from operating activitiesCash consumed by operations 6 (258,031) 519 Cash flows from investing activitiesPurchases of property, plant and equipment (934) (520)Cash acquired on reverse acquisition 30,000 -Interest received 6,332 - 35,398 -Cash flows from financing activitiesNet proceeds from the issue of ordinary shares 774,110 1 Net increase in cash and cash equivalents 551,477 - Cash and cash equivalents at the beginning of theyear - - Cash and cash equivalents at the end of the year 551,477 - Notes 1. Basis of preparation The preliminary results for the year ended 31 December 2007 have been extractedfrom the audited accounts which have not yet been delivered to the Registrar ofCompanies. The financial information set out in this announcement does notconstitute statutory accounts for the year ended 31 December 2007 or 31 December2006. The financial information for the year ended 31 December 2007 wasunqualified and did not contain a statement under section 237 of the CompaniesAct 1985. The statutory accounts for the year ended 31 December 2006 have beendelivered to the Registrar, while the statutory accounts for the year ended 31December 2007 will be delivered to the Registrar following the Company's AnnualGeneral Meeting. First time adoption of International Financial Reporting Standards During the year, the Group has adopted for the first time InternationalFinancial Reporting Standards as adopted by the European Union. The preliminary results have been prepared under the historical cost conventionand in accordance with IFRS1 "First-time Adoption of International FinancialReporting Standards". VPhase plc's preliminary results statements were preparedin accordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31 December 2006. The date of transition toIFRS was 1 January 2006. The disclosures required by IFRS 1 concerning thetransition from United Kingdom Generally Accepted Accounting Practice toInternational Financial Reporting Standards as adopted by the European Union areexplained in note 7. Critical accounting estimates and judgements The preparation of financial statements in conformity with IFRS as adopted bythe European Union requires the use of certain critical accounting estimates. Italso requires management to exercise its judgement in the process of applyingthe Group's accounting policies. The areas involving a higher degree ofjudgement or complexity, or areas where assumptions and estimates aresignificant to the preliminary results are disclosed below. Estimates and judgements are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that arebelieved to be reasonable under the present circumstances. Re-admission and placing costs Management have reviewed the expenditure related to its re-admission and placingon AIM and, where appropriate, made judgements as to how much of the expenditurerelated to the placing of existing shares, and should therefore be charged tothe Group Income Statement, and how much related to the placing of new shares,and should therefore be charged against share premium. Research and development activities Management have reviewed the Group's research and development activities andhave made estimates and judgements on the amount of development expenditure itis appropriate to capitalise. No research and development costs have beencapitalised as the Directors do not believe that all the criteria of IAS38 "Intangible Assets" have been met. Share based paymentsDuring the year, the Group has issued shares to its broker for annual servicesrendered up to September 2008. These shares have been valued at their fairvalue as the services are received and are charged to the income statement witha corresponding credit to equity. Reversal of Energetix Voltage Control Limited Management consider that the share for share exchange between VPhase plc andEnergetix Voltage Control Limited to be a reverse acquisition, as EnergetixVoltage Control Limited is the acquirer as outlined in reverse acquisitionmethodology. The difference between the fair value of the cost of thecombination and the fair value of the net assets acquired has been charged tothe Group income statement as a cost of listing. Further details of the basisof consolidation are outlined in note 2. Taxation Management have not provided for deferred tax in relation to unrelieved taxlosses as the recoverability is currently uncertain. 2. Basis of consolidation Reverse acquisition On 26 September 2007, the Company changed its name to VPhase plc and the Companybecame the legal holding company of Energetix Voltage Control Limited via ashare for share exchange, see note 5. The share for share exchange has been accounted for as a reverse acquisition.Although these preliminary results has been issued in the name of the legalparent, the Company it represents in substance is a continuation of thefinancial information of the legal subsidiary, Energetix Voltage Control Limitedbecause after the transaction former Energetix Voltage Control Limitedshareholders hold 55.1% of the share capital of the legal parent which at thattime had no business as defined under reverse acquisition methodology. Thefollowing accounting treatment has been applied in respect of the reverseacquisition: a) the asset and liabilities of the legal subsidiary, Energetix Voltage Control Limited are recognised and measured in the Group financial statements at the pre-combination carrying amounts, without reinstatement to fair value;b) the retained (loss)/earnings and other equity balances recognised in the Group financial statements reflect the retained (loss)/earnings and other equity balances of Energetix Voltage Control Limited immediately before the businessc) combination, and the results of the period from 1 January 2007 to the date of the business combination are those of Energetix Voltage Control Limited. However, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent, including the equity instruments issued under the share for share exchange to effect the business combination;d) comparative numbers presented in the Group financial statements are those reported in the financial statements of the legal subsidiary, Energetix Voltage Control Limited for the year ended 31 December 2006.e) the cost of the combination has been determined from the perspective of Energetix Voltage Control Limited. The fair value of Energetix Voltage Control Limited has been determined from the issue of shares to a third party on 3 September 2007 for £600,000. An implied value has been ascertained based on the number of new shares Energetix Voltage Control Limited would have had to issue such that its shareholders hold the appropriate post combination ratio. The difference between the fair value of the cost of the combination and the fair value of the net assets acquired has been charged to the Group income statement as a cost of listing. The Company had no significant assets, other than cash nor liabilities orcontingent liabilities of its own at the time that the share for share exchangetook effect and no cash consideration was paid in respect of the businesscombination. Transaction costs of equity transactions relating to the issue andlisting of the Company's shares are accounted for as a deduction from equitywhere it relates to the issue of new shares and listing costs are charged to theIncome Statement as an administrative expense. The Group accounting policies used in the preliminary results are consistentwith those applied in its most recent annual financial statements other thanwhere noted below: Early adoption of new accounting standards The Group has adopted IFRIC 11 IFRS 2 Group and treasury share transactions. Theadoption of this interpretation has resulted in the fair value charge foroptions given to subsidiary employees being added to the Company's investment inthose subsidiaries and the resulting cost charged to the subsidiaries incomestatement. 3. Segmental information The business of the Group comprises one segment, energy efficiency, and as suchno segmental information is provided. The Group currently operates entirelywithin the United Kingdom. 4. Loss per share The loss per share is based on the loss of £727,283 (2006: loss of £26,061) and532,238,143 (2006: 500,105,004) ordinary shares of 0.25p each, being theweighted average number of shares in issue during the period. The weightedaverage number of ordinary shares for the period ended 31 December 2006 assumesthat the 500,105,004 ordinary shares issued in relation to the reverseacquisition of Energetix Voltage Control Limited existed for the entire period.VPhase plc shares have been included since 25 September 2007, the date of thereverse acquisition, and all shares have been included in the computation basedon the weighted average number of days since issue. Year ended 31 December 2007 2006 Loss attributable to equity holders of the Group (£) (727,283) (26,061) Weighted average number of ordinary shares in issue 532,238,143 500,105,004 Basic and diluted loss per share (pence) 0.14 0.01 The share options in issue are anti-dilutive in respect of the basic loss pershare calculation and have therefore not been included. 5. Acquisition On 25 September 2007, VPhase plc acquired the whole of the issued share capitalof Energetix Voltage Control Limited in exchange for the issue of ordinaryshares. This has been accounted for as a reverse acquisition as explained innote 2. As a result of the reverse acquisition cash of £30,000 was acquired. Thedifference between the cost of the business combination of £572,272 and the fairvalue of net assets acquired amounting to £30,000 has consequently been chargedto the Group Income Statement. The cost of the combination has been determined from the perspective ofEnergetix Voltage Control Limited. The fair value of Energetix Voltage ControlLimited has been determined from the issue of shares to a third party on 3September 2007 for £600,000. An implied value has been ascertained based on thenumber of new shares Energetix Voltage Control Limited would have had to issuesuch that its shareholders hold the appropriate post combination ratio. Thedifference between the fair value of the cost of the combination and the fairvalue of the net assets acquired has been charged to the Group income statementas a cost of listing. 6. Cash consumed by operations Year ended 31 December 2007 2006 £ £ Loss before income tax (727,283) (30,075) Adjustments for: - Depreciation 320 - - Other income (6,332) - - Share based payment 20,200 - Cost of reverse acquisition (note 5) 542,272 - Changes in working capital: - - Trade and other receivables (61,578) 30,594 - Trade and other payables (25,630) - Cash consumed by operations (258,031) 519 The difference between the cost of the business combination of £572,272 and thefair value of net assets acquired amounting to £30,000 has consequently beencharged to the Group Income Statement. 7. Explanation of transition to IFRS As stated in basis of preparation, these are the Group's first Group financialstatements prepared in accordance with IFRS as adopted by the European Union. As stated in note 2 to the preliminary results, the Company became the legalholding company of Energetix Voltage Control Limited via a share for shareexchange. As this business combination occurred post transition to IFRS, theshare for share exchange has been accounted for as a reverse acquisition. Onthis basis, the preliminary results have been issued in the name of the legalparent VPhase plc (formerly Flightstore Group plc), however the company itrepresents in substance is a continuation of the financial information of thelegal subsidiary, because after the transaction the former Energetix VoltageControl Limited shareholders hold 55.1% of the share capital of the legal parentwhich at that time had no business as defined under reverse acquisitionmethodology. As a consequence, the comparative numbers represented in the Groupfinancial statements are those reported in the financial statements of the legalsubsidiary, Energetix Voltage Control Limited for the year ended 31 December2006. An explanation on how the transition from UK GAAP to IFRS has affected theGroup's financial position, financial performance and cash flows is set outbelow for Energetix Voltage Control Limited: The adoption of IFRS in relation to the VPhase plc legal subsidiary EnergetixVoltage Control Limited has resulted in some reordering of the presentation ofcertain balances within both the Group Income Statement and balance sheet.However, there has been no impact on previously reported equity (pre reverseacquisition), liabilities or assets at 31 December 2006. 8. Availability of financial statements Copies of the full statutory accounts will be available from the registeredoffice at Steam Packet House, 76 Cross Street, Manchester, M2 4JU from 25 April2008 and will also be available from the Group's website at www.vphase.com 9. Annual General Meeting The Annual General Meeting will be held at 12pm on 21 May 2008 at the Company'sregistered office, Steam Packet House, 76 Cross Street, Manchester, M2 4JU. This information is provided by RNS The company news service from the London Stock Exchange