VPhase

VPhase (VPHA), the company developing technology it says can save householders on their electricity bills has widened losses as it continues with its efforts.

The AIM-quoted minnow increased losses from £727,000 to £1.08m on sales that rose from £121,000 to £201,000 over the six months to June. The loss per share grew from 0.10p to 0.13p while cash burn of £187,000 per month (2010: £123,000) was reported. Net cash stood at £957,000.

In an interview with Growth Company Investor chief executive officer Rick Smith argued the company had a 'strong pipeline of order and tenders' noting that it had recently signed a deal with Enact Energy, a business that provides energy savings solutions to grocery giant Tesco.

Smith said a key goal for VPhase would be to build orders with social housing groups, noting that in the social housing market 'You are more likely to get large orders from one customer' and furthermore 'There is a desire to reduce fuel poverty by reducing bills.'

Analysts at house broker Panmure Gordon are forecasting pre-tax losses of £1.98m for the year to December 2011 on sales of £600,000. The broker is penciling in maiden profits of £968,000 (EPS: 0.1p) on turnover of £9.4m for 2013.

Trading at the microcap end of its sector, risks to the business include competition from the various companies in the market while VPhase itself has never made a profit. VPhase also had its product mentioned earlier this year in a Which? report entitled '10 eco products you don't need' in which the consumer group remarked that its device 'actually increased energy use' when used with an electric convection heater and described it as both 'pricey' and requiring 'a long time to pay for itself'.

Even at the current price just above the 52 week low we think the shares represent a value trap. Avoid for now.