Flowgroup plc DECC FiT consultation & Flow Energy growth update (5793Z)
27 May 2016 - 11:57PM
UK Regulatory
TIDMFLOW
RNS Number : 5793Z
Flowgroup plc
27 May 2016
Flowgroup plc
("Flowgroup" or the "Company")
DECC consultation published for review of mCHP Feed-in-Tariffs
scheme
& Update on Flow Energy's continued growth
Flowgroup plc (AIM: FLOW), which provides a range of innovative
energy technologies, energy supply and energy services, notes the
Department of Energy and Climate Change (DECC) consultation
document published yesterday which includes a review of the support
for Feed-in-Tariffs (FiT) for mCHP. In August 2015, DECC indicated
their continuing support for mCHP, reaffirming the FiT rate and the
30,000 unit limit on eligible installations which may benefit from
the FiT. However, whilst this new consultation does not propose to
change the FiT rate, it does now propose the introduction of a cap
of 1,560 units in 2017, 1,560 units in 2018 and 390 units in
2019.
Flowgroup is disappointed with this proposed change to the FiT
as the Company expects to manufacture and sell mCHP boilers in
volumes that would far exceed the proposed new annual caps. The
Company will provide a strong argument to maintain the previously
agreed levels throughout the consultation period that ends on 7
July 2016. The Company will continue to analyse the effect that the
proposed change to annual caps could have on the mCHP element of
Flowgroup's business in the United Kingdom and will review
opportunities to mitigate any effect, one of which could be to
accelerate expansion into international markets, where subsidies
are more favourable. Flowgroup will provide an update to the market
in due course. If the proposed changes are introduced, the
effective date would be 1 January 2017.
Flowgroup continues to grow its home energy business, Flow
Energy, and is planning the launch of the recently announced Flow
smart boiler business, in partnership with Daikin. These businesses
are unaffected by the proposed change and contributed GBP40.4m in
revenues for the year ended December 2015. Flow Energy has
currently over 200,000 customer fuel accounts registered or being
processed through the switching cycle, up from 100,000 at the start
of the year, illustrating the continuing potential for growth and
generating annualised revenues of over GBP100m. The Flow Brand
Ambassador network, the Company's national network of heating
engineers who will act as both sales agents and installers, now
stands at over 160 companies, representing a direct route to market
for Flowgroup's growing range of heating products.
The recently announced exclusive relationship with Daikin has
now progressed and Brand Ambassadors have installed several Daikin
Hybrid and Combination boilers as part of a short trial before the
launch phase.
The Company continues to believe that there is significant value
to be realised from developing a large scale home energy and smart
heating business and believes that it has the resources and
agreements in place to deliver this.
Tony Stiff, CEO of Flowgroup, commented: "This is a surprising
and extremely disappointing announcement from DECC, and it's one
that we will challenge vigorously. We believe that our shareholders
can take comfort from the fact that we have a strong portfolio of
products and services which are already successful or which show
significant potential. We are no longer a one product company and
considerable value has already been created in our Flow Energy
business. Flow Energy continues to see rapid growth and our
agreement with Daikin will give us the opportunity to leverage our
Brand Ambassador network to sell a range of smart heating products.
We aim to supplement the Daikin product range with additional
products to accelerate growth and will make further announcements
about this in due course."
Flowgroup plc www.flowgroup.uk.com
Tony Stiff, Group Chief Executive Tel: +44 (0)20 3137 4525
Officer
Nigel Canham, Chief Financial Officer
Cenkos Securities plc (NOMAD and Tel: +44 (0)20 7397 8900
Broker)
Stephen Keys / Christopher Golden
(Corporate Finance)
Julian Morse (Sales)
Walbrook PR Ltd (Media Relations) Tel: +44 (0)20 7933 8780 or flowgroup@walbrookpr.com
Paul McManus Mob: +44 (0)7980 541 893
Nick Rome Mob: +44 (0)7748 325 236
This information is provided by RNS
The company news service from the London Stock Exchange
END
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