Flowgroup switches boiler focus to Europe, may sell energy arm

Flowgroup fell to a new all-time low on Wednesday after deciding it was "uneconomic" to continue focusing on the UK market for its micro combined heat-and-power boiler and saying it might sell its energy business.

Instead, the AIM company, which has been left in the lurch by a withdrawal of government support for this energy efficient sub-sector, will now switch its focus to a full entry into mainland Europe, where financial support potentially favours microCHP.

"The next step in achieving this is for a series of microCHP boiler pilots to be rolled out in France, Germany, Italy and Belgium, where we are working with our identified partners," the company said in a statement.

Last year Flowgroup revealed it had partnered up with French utility giant Engie

It added that while conducting its strategic review, directors received "a number" of approaches from companies expressing interest in the Flow Energy business, which has annualised revenues running at over £127m and has performed well since being set up to support the boiler business in 2013.

The terms of the approaches for the energy business are being considered as they are felt likely to provide sufficient funding to take the microCHP business through to commercialisation in Europe.

"As a result, the Board has concluded that the disposal of Flow Energy is something that it should actively pursue. Any disposal of the Flow Energy business would be conditional on shareholder approval."

Having hit an 18-month peak in May after a government review was announced into the feed-in-tariff, shares in the company have been in free-fall.

The Department for Business, Energy and Industrial Strategy's consultation on whether to significantly reduce support for the microCHP FiT was expected to be decided by mid November but has been pushed back to at least at least April 2017.

On Wednesday, Flowgroup shares were down 17% to 5.1p just before the close.