Flowgroup reduces boiler installations in wake of court ruling

Flowgroup has cuts its boiler installations for the remainder of 2015, opting to focus on cutting costs after the European Court of Justice's ruling that it had breached EU laws with its UK sales tax reduction on energy saving products.

The domestic energy technology developer warned that reaching profitability would take longer than originally anticipated in the wake of the ruling. As such, it pushed back its forecast for a net generative cash flow from the fourth quarter of 2015, to the first quarter of 2016.

With Flowgroup's reduced rate of 5% UK sales tax reduction on energy saving products breached EU laws VAT deemed unlawful, the group will have to accelerate its cost reduction programme to offset the usual 20% rate.

"Clearly this is a short-term blow to Flowgroup and the UK's green energy plan and we now have to wait to see how the government will interpret this and how they will react," said Tony Stiff, chief executive.

"That said, we are confident that the government will still seek to promote energy-efficient products and we still expect that Flow customers will benefit from this," he added.

The company insisted that the EU ruling would not impact its rollout plans for its Flow boiler, which produces both heat and electricity for homes.

As of 11:45 BST, Flowgroup was trading 36.7% lower at 15.4p.