Flowgroup follows energy flow as boilers await verdict on state support

Interim results from Flowgroup showed its second stream as an energy reseller is surging, while its original core business as a boiler developer hangs in the balance ahead of a government decision over feed-in tariffs (FIT).

The group more than doubled sales to £41.8m in the six months to 30 June, almost entirely from the energy business growing customer fuel accounts by 120% since January to over 220,000.

Flow Energy's underlying business is expected to become profitable in 2017 but group operating losses for the half year grew to £8m from £6.9m a year ago, as the development of the micro combined-heat-and-power (microCHP) boiler, which has been ongoing since before the company floated on AIM as Energetix in 2006, as well as its Flow Battery businesses both are still chewing up cash.

In May, the Department of Energy and Climate Change (DECC), since folded into the new Department for Business, Energy and Industrial Strategy (BIES), revealed government support for the microCHP FIT scheme would be subject to consultation, with the result of a review to be announced in the fourth quarter of this year.

Chief executive Tony Stiff, who plans to grow the energy business to 1m customers within three years, has been sourcing boiler deals with other boiler manufacturers to bolster the energy business's offer with Flow-branded energy-efficient products in case the BIES announcement is unfavourable.

Indeed if the FIT support is not maintained at the previous guaranteed level, Stiff said the company will have to review the microCHP business, which would be "extremely disappointing and, we believe, a stain on the Government's record of supporting early-stage energy efficient technology".

The group had cash of £14.3m at the period end, of which £2.9m in energy trading account, down from £18.8m six months before, and by 1 September this was £13.2m with £1.6m in the trading account.

Whichever way the government decision goes, Stiff is resolute: "We believe that we have a unique customer proposition and can redefine what an energy company means for customers, and what can be delivered to customers. Our customer numbers are up, our brand awareness is increasing and we continue to attract the interest of major global players who want to do business with Flow. We believe we have put ourselves in the best possible position to deliver a successful business even in the face of potential change."

Investors remain unsure, with the shares up 2% to 12.15p by late afternoon on Monday, but less than half their 25p in April and 45p at the turn of 2015.