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Flowgroup plc  
Annual Report and Accounts  
for the year ended 31 December 2015 
Stock code: FLOW.L
Delivering Energy  
for Life
Flowgroup plc  Annual Report and Accounts for the year ended 31 December 2015 24624.04   9 May 2016 12:55 PM Proof 14
Welcome
to the Flowgroup annual report
What we do
We have a thriving domestic energy supply business in the UK delivering rapid 
growth in revenue and customer numbers. We provide energy innovation in  
the form of ground-breaking domestic heating and microgeneration products.  
And we offer a growing suite of technology for the connected home.  
See Flowgroup at a 
Glance on page 04
How we do it
We offer the clever alternative, always looking for a new way of doing things.  
We challenge the status quo, break new ground, look to deliver more, create 
new offers in new spaces. We provide a range of products and services to take 
maximum advantage of the opportunities that our large core markets offer.  
See Our Business Model and 
Strategy on pages 16 and 17
Why we do it
We believe that the idea of an energy company is changing, that it can be made 
to mean much more than it ever has before, encompassing energy supply, 
products and services. We believe in delivering value in energy to customers 
in new and exciting ways, in helping them navigate the energy space to their 
advantage, in keeping them ahead of the game. We believe that the future of 
energy is very different to the past and that both individuals and society deserve 
energy companies that are striving to deliver more.  
Read about our Marketplace 
on pages 18 and 19
Why we are different
The energy and heating industries are often dominated by traditional thinking 
and business models. Areas of enterprise with obvious synergies are rarely joined 
together. We define the energy sphere as encompassing supply, heating, the 
connected home and more — because we believe that everything comes back to 
energy. This wider view of what energy can mean to customers, and what an energy 
company can be, helps us standout, we believe, in all of our markets.  
Read the Strategic 
Review on pages 26 to 31
Our annual 
report provides a 
summary of our 
achievements and 
finances in 2015. 
It explains 
developments 
in our business 
model and sets 
out our strategy 
for growth, both 
in the UK and 
internationally, 
over 2016 and 
beyond.   24624.04   9 May 2016 12:55 PM Proof 14
Contents
Chairman’s Statement:
Clare Spottiswoode, CBE
Products:
Game-changing heating and 
microgeneration technology
CEO Q&A:
Tony Stiff answers key questions about 
Flowgroup’s performance
Energy:
Award-winning home energy supply
Our Strategy
Energy for Life: energy products,  
services and customers for life
Strategic Review:
Analysis of Flowgroup’s performance
Strategic Report
Overview and Strategy
Flowgroup at a Glance 04
Highlights 05
Chairman’s Statement 06
Flow Energy 08
Flow Products 10
Flow Home 14
Our Business Model  
and Strategy 16
Marketplace 18
Our Performance
CEO Q&A 22
Strategic Review 26
Financial Review 32
Corporate Social  
Responsibility 36
Our Governance
Board of Directors 40
Directors’ Report 42
Directors’ Remuneration  
Report 47
Our Financials
Independent Auditors’  
Report (Group) 52
Group Income Statement 54
Group Statement of  
Financial Position 55
Group Statement of  
Changes in Equity 56
Group Statement of  
Cash Flows 57
Notes to the Group  
Financial Statements 58
Independent Auditors’  
Report (Company) 82
Company Balance Sheet 84
Company Statement of 
Changes in Equity 85
Notes to the Company  
Financial Statements 86
Shareholder Information
Advisers and Company 
Information 96
Find out more online:
Look out for these 
Our website,  
flowgroup.uk.com 
contains lots of 
additional information  
about our business 
including reports, presentations, videos 
and more.
This icon will point you to further 
information whenever you see it
06
10
22
08
16
26
www.flowgroup.uk.com Annual Report 2015 01 24624.04   9 May 2016 12:55 PM Proof 14
Flowgroup plc 02 24624.04   9 May 2016 12:55 PM Proof 14
Overview and Strategy
03 www.flowgroup.uk.com Annual Report 2015 24624.04   9 May 2016 12:55 PM Proof 14
Flowgroup at a Glance
Flow Products Flow Energy
  
Our Divisions
Flow Home
Post year end we launched our range of connected home 
products, Flow Home. The connected home market is growing 
rapidly with increasing adoption, and normalisation, of core 
products like smart thermostats. Our own range includes a 
smart thermostat, smart plugs and a smart power monitor, 
provided by Fifthplay, a Belgian smart home specialist. 
Flow Energy is our rapidly-growing  
domestic energy supply business. Between 
January 2015 and April 2016 we delivered 172% 
growth in customer fuel accounts. We believe  
that current energy market conditions and 
continuing modest investment in acquisition, 
service, people and brand could allow us to 
continue to deliver growth throughout  
2016 and beyond, creating an  
energy supply business of  
significant size.
Flow Products is built on the foundation of  
the game-changing, electricity-generating  
microCHP Flow boiler. We believe this product  
has the potential to become the de facto heating 
solution in all appropriate markets over time.  
Our strategy is to introduce the Flow boiler into 
the market while continuing to develop  
our technology platform. Meanwhile, we will 
expand our product range by selecting  
other innovative heating products 
 from carefully chosen partners to  
offer a solution to the whole  
of the market.
As a business, we believe in people and their potential and 
we have invested in our people significantly in 2015. We have 
grown our teams and enhanced their skills, putting us in the 
best possible position to take maximum advantage of the 
opportunities our markets offer.
Our brand vision is to change the way people think about
energy. Subverting customer expectation around energy
companies — high prices, poor service, a traditional customer
offer — we aim to be known for delivering consistently 
competitive prices, exceptional customer service and some 
much needed inspiration through our ground-breaking energy 
products and our insightful approach.
Our People
Our Brand
Flowgroup plc 04 24624.04   9 May 2016 12:55 PM Proof 14
Highlights
Financial Post Year End
•	
Revenue of £40.4m (2014: £33.4m)
•	
Operating loss of £17.1m (2014: £10.0m) 
reflecting increased investment in staffing 
levels and infrastructure in preparation for 
further growth across the business
•	
Cash at 31 December 2015 of £18.8m  
(31 December 2014: £8.4m)
Operational
•	
Signed Shell wholesale energy agreement 
in December for provision of gas and 
electricity with extended credit terms and 
without the requirement for cash security 
deposits
•	
52% growth in energy customer fuel 
accounts (66,000 to 100,000)
•	
Initial launch of Flow boiler with strong 
customer response
•	
Significant growth in Flow Brand 
Ambassador network delivered to create a 
national sales network
•	
Successful fundraise completed raising 
£21.3m (net of expenses) including an 
investment of £7.4m from Jabil
•	
Flow Energy grows by 80% to 180,000 
customer fuel accounts in the first  
four months
•	
First commercial installs of Flow  
boiler completed in customer homes
•	
Award of MCS Accreditation for the  
Flow boiler, meaning it attracts Feed-in 
Tariff payments for the electricity  
it generates
•	
Two agreements signed with Daikin  
Europe NV and its UK subsidiary  
for the provision of two additional  
cutting-edge heating products
•	
Letter of Intent signed with Italian 
consortium for assessment of Flow  
boiler for Italian market
•	
Flow Energy awarded Recommended 
Provider status by Which?, the consumer 
champion, for the quality of its customer 
service
•	
Launch of Flow Home, connected home 
product range
First 
commercial installs 
of electricity-
generating  
Flow boiler
£40.4m 
Revenue increased 
by 21.1% 
Deal 
signed for expanded 
product range
172%
growth in energy 
customer numbers  
Jan 2015 –  
April 2016
Flow 
Home
connected home 
product range 
launched
Read about Our Performance, 
starts on page 21
Revenue growth 
(£m)
2013
£13.8m
2014
£33.4m
2015
£40.4m
+55.6
Gross profit (£’000)
£3,458
Strategic Report — Overview and Strategy
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Chairman’s Statement
Strategy
Prior to 2015, Flowgroup had been 
almost exclusively focused on 
commercialising its electricity-generating 
Flow boiler. However, 2015 and the early 
part of 2016 saw a positive and prudent 
shift in strategic direction for the Group 
that the Board believes will allow it to 
deliver increased value for shareholders. 
The Group now believes it is in a 
position to be a successful energy 
services business consisting of a global 
microgeneration and heating innovation 
business, built on the foundation of its 
core microCHP technology plus carefully 
selected additional heating products and 
connected home products, as well as a 
growing UK energy supply business, each 
business delivering shareholder value in 
its own right. 
It is planned that these complementary 
businesses will deliver an overarching 
concept of Energy for Life. Energy 
for Life means the ability to offer any 
customer as complete a solution as 
possible in the energy space, including 
energy supply, microgeneration, smart 
heating and connected home (and in 
the future, more). It means being able to 
do this on an enduring basis – creating 
long term customer relationships based 
on trust and sound advice. It means 
delivering value in energy to customers 
in new ways, and increasing the value 
of those customers to the Group. 
We believe it is a foundation to drive 
significant growth and shareholder 
returns.
Business overview
The Group’s home energy business, 
Flow Energy, was launched in 2013 to 
support the microCHP boiler business 
by providing a ready-made pool of 
potential boiler customers. However, 
as the Group continued to monitor 
the market throughout 2014 and saw 
significant opportunities, the Board made 
the decision in 2015 to take advantage 
of attractive market conditions and grow 
Flow Energy. Therefore in December 
2015 Flow Energy signed a significant 
deal with Shell Energy Europe Ltd to 
provide access to wholesale gas and 
electricity on extended credit terms and 
without the requirement for cash security 
deposits. This effectively removed one 
of the biggest barriers to growth for any 
small supplier – the need to place large 
amounts of collateral with wholesalers 
when acquiring new energy customers. 
With around 100,000 customer fuel 
accounts at the end of 2015, Flow 
Energy subsequently rapidly grew to 
around 180,000 customer fuel accounts 
by the end of April 2016. The Group 
believes that further significant growth 
is achievable in the current market, 
particularly considering Flow Energy’s 
growing brand awareness and reputation 
for customer service – Flow Energy was 
awarded Which? Recommend Provider 
status for energy in January 2016, one of 
only two UK supply businesses to hold 
the accolade. 
In June 2015, the full launch of the 
game-changing Flow boiler was delayed 
by a European Court of Justice ruling 
that had the potential to increase the 
rate of VAT payable on the Flow boiler 
and its installation from 5% to 20%, 
an increase in costs for Flowgroup 
and our customers which would have 
been inconsistent with our ‘boiler that 
pays for itself’ launch model. In order 
to reduce this risk, we accelerated our 
cost reduction programme for the 
Flow boiler to reduce the effect of any 
potential rise in VAT, and made design 
and performance improvements in the 
same process. We returned to the market 
with a strengthened product in January 
2016 and completed our first commercial 
installations in April 2016. We now plan to 
progressively increase installations over 
the next six months, aiming for higher 
volume sales in winter 2016/17.
Sales will be primarily delivered through 
our disruptive Flow Brand Ambassador 
network. We have created a national 
sales network of high quality installers 
to promote Flow’s products in the home. 
We will provide our Brand Ambassadors 
with a cutting-edge digital in-home 
sales tool, Flow BiT, and crucially, we 
provide them with our heating products 
directly, cutting out wholesalers and 
improving margins. In an industry where 
2015 saw a positive and prudent shift  
in strategic direction for the Group.”
Clare Spottiswoode CBE 
Non-Executive Chairman
Flowgroup plc 06 24624.04   9 May 2016 12:55 PM Proof 14
wholesalers and distributors have 
traditionally wielded significant influence, 
this model has the potential to give us 
the flexibility and control that we need to 
take market share.
Concurrent with the first commercial 
installations of the Flow boiler, the 
European Commission published its 
VAT Action Plan which presented two 
options for modernising VAT rates which,  
the Directors believe, would both see 
the continuation of a reduced rate of 
VAT applying to Flow boiler sales and 
installations, which was positive news.
It is a key part of our strategy to 
supplement our Flow boiler offer with 
other innovative heating products. 
This will allow us to leverage our Brand 
Ambassador Network with a broader 
range of products and target more of the 
market more quickly as we continue to 
develop our core technology platform. 
Post year end we therefore signed two 
agreements with Daikin Europe NV and 
its UK subsidiary, under the terms of 
which Flow will be provided with two 
additional cutting edge products — a 
Hybrid which combines a gas boiler with 
heat pump technology to significantly 
reduce heating costs, and a range of 
Combination and System boilers that 
will be capable of remote diagnostics 
and can be controlled from a customer’s 
smartphone. Daikin Europe NV is a part 
of Daikin Industries Ltd, a world leader in 
heating and cooling technology 
Working with Fifthplay, a connected 
home specialist, we launched Flow Home 
in February 2016, a range of connected 
home products. Flow Home includes 
a smart thermostat, smart plugs and a 
smart power monitor. Our strategy is to 
provide as wide a range as possible of 
connected home products and we will 
continue to develop further relationships. 
Industry developments
The rate of change in the energy industry 
is accelerating as more and more 
customers switch away from the Big Six 
suppliers to new, challenger suppliers like 
Flow. Some industry predictions are that 
as many as 10m customer fuel accounts 
could switch to challenger suppliers by 
2020. We believe that with a reputation 
for high quality customer service, 
growing brand awareness and a strong 
management team in place, we are in a 
position to take advantage of current 
market conditions and grow Flow Energy 
to, potentially, many times its current 
size, delivering significant benefits to  
the Group.
The heating industry continues to see 
low levels of innovation. With traditional 
approaches and business models being 
the norm, the Group’s ground-breaking 
product range and disruptive Brand 
Ambassador model has the potential to 
allow the Group to experience significant 
growth. 
Board and 
management changes
Andrew Beasley, Managing Director 
of Flow Energy, joined the Board in 
December 2015, reflecting both his 
hard work in playing a key role in the 
development of our business, and the 
growing importance of our energy 
supply business. 
Alan Stevenson joined the Group as 
Sales Director of Flow Products in April 
2015 and was subsequently promoted 
to become Managing Director of Flow 
Products in March 2016. Alan brings with 
him a wealth of experience in the heating 
industry of bringing new products to 
market and growing sales.
Funding
On 18 May 2015, shareholders approved 
the firm placing and open offer raising 
£21.3m (net of expenses). Jabil, the 
Group’s manufacturing partner for the 
Flow boiler, invested £7.4m, illustrating 
its commitment to our business. The 
funds have been and will continue to be 
used to expand the scope of our core 
microgeneration platform (including a 
Combination version); reduce supply 
chain costs and upgrade systems to 
reduce production costs; continue to 
develop our national sales infrastructure 
for heating products; develop the 
connectivity capability of our heating 
products; and exploit intellectual 
property through licensing.
Business prospects
We believe that we have now created 
multiple channels for growth and that 
realigning our strategic vision to the 
changing reality of the market and 
leveraging our existing strengths should 
allow us to create a large, successful 
energy services organisation.
Clare Spottiswoode, CBE 
Non-Executive Chairman
29 April 2016
Read about Our Performance, 
starts on page 21
+21.1
Revenue (£’000)
£40,394
+172
Energy Customer Fuel 
Accounts April 2016
over
180,000
(January 2015)
Strategic Report — Overview and Strategy
www.flowgroup.uk.com Annual Report 2015 07 24624.04   9 May 2016 12:55 PM Proof 14
Flow Energy
We believe that the current domestic energy market is favourable to the 
growth of challenger suppliers, and that the value ascribed by the market 
to an energy customer is rising as the potential for cross-selling a wider 
variety of energy related products and services has increased. 
Revenue (£m) — 
Flow Energy
2013
£13.7m
2014
£33.3m
2015
£40.1m
Customer Fuel 
Accounts
2013
50,000
2014 2015
66,000
April
2016
100,000
180,000
Staff Numbers  
Growth
Jan
2015
95
March
2016
160
We therefore took the decision in late 2015 to 
significantly grow Flow Energy. With attractive 
market conditions and growing brand awareness 
and strength, we believe that Flow Energy is in 
a position to take advantage of a seismic shift 
in the UK domestic energy market and grow 
to become a leading player. This would deliver 
significant benefits to the Group including 
increased revenue, brand awareness and value 
prospects, and would provide a ready-made 
target market for the Group’s range of products.
Where we are
Flow Energy has already delivered strong 
revenue and customer growth and is now 
in a position, we believe, to accelerate its 
growth further. We are consistently amongst 
the cheapest suppliers in the market and we 
provide award-winning customer service, a key 
differentiator. We have invested and continue to 
invest in our customer service, energy trading, 
IT and marketing teams to support our growth. 
We are doubling our office space in Ipswich and 
recruiting up to 500 additional team members 
over the coming years.
Flow Energy strategy
While price is a key factor for customers in 
choosing an energy supplier, it isn’t the only 
factor. We believe in the importance of providing 
a holistically strong offer, delivering award-
winning customer service as well as some of the 
most competitive prices on the market, wrapped 
up in an attractive and appealing brand.
Price
Since price is the 
over-riding reason 
why customers switch 
energy supplier, we are 
consistently amongst 
the cheapest suppliers 
on the market.
Service
Another reason why 
customers choose one 
supplier over another 
is customer service 
reputation. We are proud 
to be recognised as a 
Which? Recommended 
Provider for energy 2016.
Brand
Pricing and service form 
the core of our brand, 
central concepts which 
are supplemented by our 
status as an intelligent, 
inspiring creator of low 
carbon innovation via  
the Flow boiler.  
Outlook
The domestic energy market is in a bigger state of flux now than at any 
point since privatisation. Huge numbers of customers are moving away 
from the Big Six suppliers and well-positioned challenger suppliers are 
seeing the benefit. Changes suggested by the recent Competition and 
Markets Authority investigation into the competitiveness of the energy 
market favour challenger suppliers, as does the Department of Energy 
and Climate Change’s extensive marketing campaign encouraging 
customers to switch. We believe that the rise of challenger suppliers will 
continue for the foreseeable future and that Flow Energy has the potential 
to be able to continue to grow at an accelerated rate in this market.
See our Business Model and Strategy 
on pages 16 and  17
Flowgroup plc 08 24624.04   9 May 2016 12:55 PM Proof 14
Shell
One of the biggest barriers to growth 
for any small energy supplier is the 
requirement to place relatively large 
amounts of collateral with wholesale 
providers when taking on a new 
energy customer. It ties up significant 
amounts of cash. Therefore, in order 
to allow Flow Energy to grow in a 
less cash-intensive way, we signed 
a five year agreement with Shell 
Energy Europe Ltd in December 2015 
which provides access to wholesale 
energy (gas and electricity) on 
extended credit terms and without 
the requirement for cash security 
deposits.
In return, Shell received a warrant 
to subscribe for shares (or the 
equivalent in cash at Shell’s call) in 
Flow Energy equivalent to 10% of 
the growth in value of Flow Energy 
from 9 December 2015 until after 
a liquidity event (asset sale, IPO 
or sale) or on termination of the 
supply agreement or default by Flow 
Energy. The agreement contains 
a number of financial covenants, 
representations and warranties given 
by Flow Energy and events of default 
as would usually be included in 
commercial banking arrangements. 
We believe that this agreement will 
be a key component of our growth 
strategy and will allow Flow Energy 
to grow with less restrictions and at 
greater speed, delivering increased 
value to the Group more quickly.
Customer service
While customers will always 
be interested in price, they are 
increasingly looking for indicators 
of good service when choosing an 
energy company to switch to, partly 
due to the fact that many of them 
have experienced poor service with 
their existing supplier.  
We invest heavily, and successfully, 
in our customer service offer.  In 
a recent survey of our customers 
just under 97% said they would 
recommend us. And in January 2016 
we were awarded Recommended 
Provider status for energy by Which? 
the consumer champion, for the 
quality of our customer service.  
Flow Energy was one of only two 
energy suppliers to be awarded 
Which? Recommended Provider 
status in 2016. It is a key indicator 
of energy company performance in 
the eyes of consumers and being 
a Which? Recommended Provider 
is an incredibly strong message for 
prospective customers around the 
level of service they should expect 
with Flow. The Group believes 
that being able to advertise Flow 
Energy’s Which? Recommended 
Provider status gives Flow Energy 
a distinct advantage over other 
energy suppliers and should allow 
the business to acquire more energy 
customers at a lower cost.
Customer service story
The essence of good customer service is 
the personal touch. Time and time again 
our customers say, when surveyed, that 
they rate Flow’s customer service highly 
because they are treated as individuals,  
not simply as account holders. 
They also appreciate honesty. One of our 
customer service mantras is ‘Tell it like it 
is.’ When things go wrong, whether it’s 
our fault or not, we explain exactly what 
happened and what we’ll try to do to put 
it right. We don’t dodge the issue or dress 
it up as something it’s not. We simply deal 
with it and let our customers know how  
and when we’re dealing with it.
Fundamentally, we care. We care about 
delivering the best outcome for the 
customer. We care about how they feel and 
what we can do to influence that for the 
good.  We care about them as individuals.  
This shows in the feedback we get from our 
customers and from awards like Which? 
Recommended Provider status.  It shows in 
the fact that 40% of our customers say that 
our reputation for good customer service 
influenced their decision to switch to us.  
We believe continuing to deliver the finest 
customer service will be a key part of our 
continuing success.
97% 
of customers would 
recommend us
There  
were over
6m 
energy switches  
in 2015
Source: Department of 
Energy and Climate 
Change
The Flow customer 
service centre
Strategic Report — Overview and Strategy
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Flow Products
Flow Products offers innovative heating and microgeneration products 
and delivers them into the market via a national network of high quality 
installers — Flow Brand Ambassadors.
Flow Products will offer a range of ground-breaking heating 
products. The electricity-generating Flow boiler, designed by 
Flow engineers, is currently being installed. It has the potential 
to revolutionise heating and energy markets by empowering 
customers to generate low cost, low carbon electricity in the home. 
The Flow boiler will be supplemented by other innovative heating 
products including a range of internet-connected Combination 
and System boilers and Hybrid heat pump technology supplied 
under the terms of two agreements with Daikin Europe NV and its 
UK subsidiary.  Daikin Europe NV is part of Daikin Industries Ltd, a 
world leader in heating and cooling technology.
Disruptive sales model
Flow’s sales model is designed to be disruptive. It has created a 
national sales network of Flow Brand Ambassadors, high quality, 
customer focused installers who will sell heating products as 
well as energy and connected home products in customer 
homes. Flow will provide heating products directly to its Brand 
Ambassador network, cutting out the wholesalers and increasing 
margins and flexibility. The combination of products and 
approach is powerful and could allow Flow to gain significant 
market share in the UK’s large, mature heating market.
Once established in the UK, Flow believes it has the opportunity 
to take both its products and its disruptive sales approach into 
other markets. It already has previously announced testing 
agreements for the Flow boiler in Europe and North America 
and in April 2016 signed a Letter of Intent for testing and 
commercialisation of the Flow boiler with Trillary Srl, part of an 
Italian heating consortium, to trial the Flow boiler for potential 
launch into the Italian market, Europe’s third biggest boiler market. 
The Group continues to pursue commercial agreements globally.
Read about Flow Home  
on pages 14 and 15
Flow microCHP boiler
First commercial installs completed April 2016 
The Flow boiler is game-changing technology. It hangs on  
the wall and installs and services just like a regular boiler.  
The big difference is that, while it’s using gas to heat a home, 
it employs patented technology to generate low cost, low 
carbon electricity at the same time. Generating this electricity 
efficiently in the home slashes a household’s electricity bills 
and carbon emissions. Crucially, the Flow boiler is significantly 
cheaper than other competing technologies, making this the 
first opportunity to develop microCHP technology for the  
mass market.
The Flow boiler passed MCS accreditation in April 2016 and the 
first commercial installs in customer homes were completed 
at the same time. We will continue to install gradually and 
prudently through the summer months before moving up to 
higher volumes in winter 2016, with sales delivered via our 
Brand Ambassador network.
See our Business Model and Strategy 
on pages 16 and 17
Flowgroup plc 10 24624.04   9 May 2016 12:55 PM Proof 14
A solution for  
the whole of  
the market
The launch version of the 
Flow boiler is targeted at 3–5 
bedroom homes with above 
average gas consumption. 
Once the launch version 
has been established 
in customer homes our 
technical and design teams 
will accelerate development 
of a Combination version to 
target more of the market.
To be able to offer a solution 
to the whole of the market 
more quickly, the Group has 
signed agreements with 
Daikin Europe NV and its UK 
subsidiary, and aims to sign 
further agreements, to offer 
additional ground-breaking 
heating products to  
its customers.
Boiler  
Market
Flow System 
boiler
Daikin Hybrid  
and Combi/System 
range
Flow Combi 
boiler
Additional 
ground-breaking 
heating products
The boiler that pays for itself —  
and other innovative payment models
The Flow boiler launched to the UK market under our ‘boiler that pays for itself’ model. 
Under this model, the customer can pay for their boiler or finance its cost with our 
finance partner, Zopa. They then agree to assign Feed-in Tariff payments to Flow for the 
electricity the boiler generates and also agree to switch their home energy to Flow for 
five years. Switching home energy alone could save the customer hundreds of pounds a 
year. However, on top of that saving, the customer then receives a fixed discount on their 
energy bill of £4,800 over five years, a saving which exceeds the cost of their boiler.  
It’s a model, we believe, that encourages customers to adopt a new technology.
While this is the launch model for the Flow boiler, we intend to offer different payment options 
and models in the future. We also intend to offer bundled products generally, combining 
other heating products and connected home devices with home energy to offer customers 
additional value.
Switching 
home energy 
alone could save 
the customer 
hundreds of 
pounds a year. 
Flow Home 
Strategic Report — Overview and Strategy
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Flow Products
Flow Brand Ambassadors
We have therefore created a national 
network of Flow Brand Ambassadors, 
high quality, forward-thinking Gas Safe 
registered heating engineers who will 
explain and promote Flow’s products in 
customer homes.
Flow’s products will be provided to 
Brand Ambassadors directly, cutting out 
the wholesalers. This increases margin 
on Flow’s products, since none is taken 
by a middleman, and gives us greater 
control and flexibility to set prices and 
incentivise Brand Ambassadors. This is 
a disruptive model which we believe will 
allow us easier entry into the market.
Cross-sell
The status of Flow Brand Ambassadors 
as trusted agents invited into the home 
means they have a unique opportunity 
to offer customers Flowgroup’s entire 
range of products. Therefore they will be 
able to offer customers home energy and 
connected home products from Flow as 
well as boilers.
Flow BiT
Our Brand Ambassadors will both 
survey the customer’s home and 
recommend a Flow product using Flow 
BiT, the Flow digital Business Integration 
Tool. Available to use on a range of 
tablets, Flow BiT will allow the Brand 
Ambassador to survey a customer’s 
home, recommend and sell a boiler, 
quote a customer for home energy and 
introduce finance products, all using the 
same application. It integrates easy-
to-complete forms with high definition 
images and video.  It is a powerful tool 
that delivers an engaging and seamless 
experience for the customer.
Customer experience
All Brand Ambassadors are extensively 
trained on both Flow’s products and 
on our expectations around customer 
experience. We believe the quality of the 
customer experience, alongside product 
quality and value, is the key to creating 
long term relationships with customers 
and that these long term relationships 
are the key to our success. A customer 
who remains engaged with Flow directly, 
or with Flow through their Brand 
Ambassador, is a customer who can be 
offered new products as they come on-
stream, who can be up-sold and cross-
sold. Therefore creating a memorable, 
consistently strong and engaging 
customer experience, particularly in an 
industry not characterised by a focus on 
the customer, is an extremely important 
part of the training programme our 
Brand Ambassadors go through.
This is the essence of our Energy for 
Life concept — creating a long term 
relationship based on trust and sound 
advice that can be leveraged to continue 
to deliver value to customers in new 
ways over time. 
Boilers are almost exclusively sold in the home by trusted tradespeople 
invited into the home by customers looking for help and advice on the 
purchase of a product which they often believe they themselves know 
little about. 
Q&A with 0800 Repair, one of the 
many Flow Brand Ambassador 
businesses
Q:  Why did you decide to join the Flow  
Brand Ambassador programme to offer 
the Flow boiler?
A: Flow’s Brand Ambassador programme focuses on 
providing affordable, appropriate and beneficial 
solutions to the customer and that chimes exactly 
with our ethos.  And Flow has a range of market 
leading products which provide a great differentiator 
for our business in this competitive industry to help  
us win more work.
Q:  Are you excited about the idea of offering 
a bundled package that includes home 
energy?
A: We believe that this bundled package is what makes 
the offer really different and we’re very excited at 
the prospect. Our own research with customers has 
already shown they like this.  Comments like “no 
brainer” were common!
Q:  Where do you see this relationship in  
2 or 3 years?
A: We would like to think that we would be a key player 
in Flowgroup’s Brand Ambassador network and a 
proven trusted partner. There is huge potential for the 
Flow boiler, for the rest of Flow’s product range and for 
bundled products – this could be industry-changing.
Flowgroup plc 12 24624.04   9 May 2016 12:55 PM Proof 14
Our design and production teams work closely with Jabil 
to continue to optimise the performance of the Flow 
boiler, and to reduce its cost. Our supply chain team 
continues to work closely with key suppliers to ensure 
availability of components and materials as we move 
towards volume manufacture. 
Jabil is active in a large range of countries around the 
world and enjoys a wealth of contacts which we believe 
will be invaluable as we expand our sales operations 
globally. They provide a deep pool of manufacturing 
experience and skill and their status as a large global 
business with all the benefits that brings for their 
partners continues to be a significant advantage to 
Flowgroup. We believe this is a long term, mutually 
beneficial relationship built on firm foundations.
The Flow boiler is manufactured in Livingston, Scotland by Jabil, one of 
the world’s biggest manufacturing partners. In our fundraise in May 2015 
Jabil took an equity stake in Flowgroup of around 8%, investing over £7.4m, 
further cementing our relationship.
Flow Products
Manufacturing with Jabil
All images are of the Jabil manufacturing facility in Livingston, Scotland
Strategic Report — Overview and Strategy
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Flow Home
In March 2016 we launched our connected home product range, Flow 
Home. We believe that the popularity of connected home products is 
increasing, and that energy-related products like smart thermostats and 
smart plugs are leading the way. We believe, like many commentators and 
analysts, that connectivity will soon be embedded into many household 
devices and that, therefore, being active in this space and building 
connectivity capability is an important part of our growth strategy.
Our connected home range comprises the following products:
Smart thermostat
Via an app, this device allows 
customers to control their central 
heating from their smartphone. 
This means they can turn their 
heating off if they’re going to 
be home late, so they’ll never 
heat their home unnecessarily. 
If everyone leaves the house 
and the heating is still on, it will 
automatically switch off to save 
even more money. A maximum temperature can be set on the 
app so that no-one (perhaps, children) can use the thermostat 
itself to turn the heat up to maximum. It comes with automatic 
frost protection too.
Smart plugs
Our smart plugs allow remote 
control and monitoring of 
any electrical device plugged 
into one.  So, for example, if a 
customer has left the house and 
they’re worried that they might 
have left an electrical device on, 
they can check on the app, see if 
it is indeed on and, if it is, switch 
it off. They can also receive alerts 
if a particular device is switched 
on at a particular time — for instance, if the TV in a child’s 
room goes on after a certain time. They can set schedules 
for lights (or even the TV) to switch on and off — for added 
security when they’re on holiday, or just to come home to a 
bright welcome. And their app will tell them exactly how  
much energy each device uses, great if they want to 
understand their energy use more, in order to reduce it.
Smart power monitor
Added to the customer’s fusebox, our smart power monitor 
monitors the entire electrical consumption of the home and 
displays it in an easy-to-understand graphical format in the 
app. By hour, week, day, month or year, a customer can see 
exactly how much energy they’re using to help them reduce 
their consumption and costs
The app
The app through which our Flow Home devices are controlled 
also comes with some additional useful functionality. Customers 
can set energy consumption budgets and enter meter readings 
to track their energy spend. They can view data on everything 
from the varying temperature of their house (from their 
thermostat) to how much television they watch (from a smart 
plug). The app is a powerful tool to help customers get as much 
out of their Flow Home devices as possible.
Fifthplay
Flow has partnered with Fifthplay for the initial launch 
of its smart home range. Fifthplay, part of Niko Group, 
is a Belgian smart home specialist. With a ready-made, 
tried and tested suite of connected home products, 
Fifthplay has allowed us to enter the market quickly and 
cost-effectively. We will continue to investigate additional 
opportunities to expand our smart home offer.
Flowgroup plc 14 24624.04   9 May 2016 12:55 PM Proof 14
The benefits of connected home
For customers
Many connected home products have cost control as an 
underlying benefit. Never heating their home unnecessarily, 
for example, will obviously save a customer money. However, 
these products are also sold on the extra levels of comfort, 
control and security they bring. 
For the Group
Flow Home opens a new revenue stream and positions us for 
growth in one of the most exciting markets around. We believe 
it will also allow us to create longer term relationships with  
our energy customers as customers enjoying the benefits of  
a range of products and services have more incentive to  
stay loyal.
Smart  
Phone Controlled
Electric car
Flow boiler
Smart 
Thermostat
Smart  
plugs
Smart 
lighting
Smart  
white 
goods
Smart 
home hub
Read about Flow Energy  
on pages 08 and 09
Read about Flow Products  
on pages 10 to 13
The future of connected home
The smart, connected home has long been a futurologists’ 
prediction but it is now fast becoming a reality. Smart 
thermostats have been a vanguard product, supported 
by large marketing campaigns from some well-known 
organisations. The benefits of connected home products 
are becoming clearer to customers as adoption increases 
and these products normalise in consumer consciousness. 
The future of the connected home is each home filled with 
connected devices, all able to communicate to one central 
hub, to the organisations that provide them, and to each 
other. Intelligence will take over with automatic operation and 
performance optimisation of every device, in line with metrics 
such as known user behaviour, current energy price and 
weather patterns. Microgeneration, such as that provided  
by the Flow boiler, will power many of these devices.  
The truly smart home of the very near future represents a 
huge opportunity for those organisations, like Flowgroup, 
that have positioned themselves for this development. 
Strategic Report — Overview and Strategy
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Our Business Model  
and Strategy
The Group believes that it can deliver a successful energy innovation and 
services business, offering a broad range of energy and energy-related 
products and services to its customers.
We call this concept Energy for Life. It means the ability to deliver value in energy to the customer on an enduring basis and in many 
different ways. Creating a bond of trust with the customer by delivering value in one aspect of energy, we believe the opportunity exists to 
deliver value in another way, and another way, cross-selling a range of products and services and becoming a go-to brand for energy, but 
also heating and the connected home — both of which markets are intimately linked to the idea of energy. We believe that an organisation 
that can become a trusted, consistent and engaging voice in the newly expanded energy space could have significant value.
Our strategic aims
2015 and post year  
end performance
•	
CE and MCS Accreditation awarded to the Flow boiler
•	
First commercial installs completed
•	
Relationship strengthened with manufacturing partner Jabil
•	
National Brand Ambassador sales infrastructure created
•	
Agreements signed for provision of additional 
innovative heating products
2015 and post year  
end performance
•	
Customer numbers increased by 172% January 2015–April 2016
•	
Revenue increased by 20.4% year on year
•	
Trading agreement signed with Shell for provision of 
wholesale energy with extended credit terms and without 
the requirement for cash security deposits
•	
Flow Energy awarded Which? Recommended Provider 
status for energy 2016
Future priorities
•	
Move to higher volume installations of the Flow boiler
•	
Launch additional heating products from partners
•	
Develop Flow microCHP Combination boiler
•	
Expand internationally
Future priorities
•	
Continue to grow customer base
•	
Initiate Brand Ambassador energy sales in the home
•	
Maintain reputation for good customer service
•	
Cross-sell product range to energy customers
Build a heating  
innovation business
Heating markets globally are large and mature and 
characterised by a lack of innovation. They represent a 
significant opportunity for Flow with its innovative product 
range and disruptive approach. We believe we can change the 
way people think about heating and engage them with the 
idea of new, innovative, appropriate and affordable solutions, 
building a successful global heating business as we do.
Build a large  
energy supply business
The UK energy industry is experiencing once in a generation 
change which represents a significant opportunity for 
challenger suppliers looking to grow. The Group believes that 
delivering a large energy supply business would have clear 
benefits, including increased revenue and value prospects 
and the creation of a ready-made customer base to whom to 
offer its heating and connected home product ranges.
Flowgroup plc 16 24624.04   9 May 2016 12:55 PM Proof 14
Combine heating, energy and connected home to deliver 
Energy for Life
Key partners
We have partnered with best-in-class organisations who share our vision for the future of energy. It is a testament to the potential 
of our business that our partners are succesful global organisations.
What Who Why
MicroCHP One of the world’s biggest manufacturers, $17.9 billion revenue, 
102 locations in 28 countries
Additional heating products World leader in heating and cooling technology. $17.9 billion revenue 
from 140 countries, 80 worldwide production bases
Wholesale energy
Shell Energy 
Europe Ltd
Operations across 20 European countries servicing 1,000+ clients. 
Part of one of the world’s largest companies
Channels drive in customers
in all appropriate markets
Flow Ambassadors
UK
Home
Energy
MicroCHP
technology
Connected
home
Insurance
& warranty
Heating 
innovation
Other
products
Other
utilities
Flow Ambassador 
engagement
Brand equity
Partners
North America
Offer  
new products
Increased revenue
Consumer website
Europe
Retention  
strategy
Customer loyalty
who take a range of products and services
on an enduring basis
delivering increased value
Now
Future
Potential
Strategic Report — Overview and Strategy
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Marketplace
The boiler market
The global boiler market is large and 
mature. There are around 1.6 million  
boiler sales in the UK annually and nearly  
9 million across Europe. The stability of 
sales volumes is mirrored in the consistent 
market share enjoyed by key players. It is 
not a market characterised by innovation 
or by obvious attempts by incumbents  
to grow. 
Flowgroup believes that this lack of 
innovation and ambition means boiler 
customers represent a significant 
opportunity for cross-selling a range  
of additional products and services  
that has previously been untapped. 
Disruption
With the rise of the internet and 
advances in the efficiency of design 
and manufacture, it is now more and 
more common for disruption to occur 
in markets which have traditionally seen 
little change. Flowgroup believes that its 
innovative product range and approach 
could allow it to gain significant market 
share, over time, in global boiler markets. 
Europe
Once launched and established in the 
UK, Flowgroup intends to expand into 
Europe. With 115 million boilers installed 
across Europe, the European market 
represents a huge opportunity.
Most countries across Europe face the 
same energy-related issues that the UK 
does — the need to meet demand for 
electricity while controlling costs and 
reducing emissions. Many European 
countries therefore provide support for 
microgeneration technologies like the 
Flow boiler and have a keen interest 
in developments in domestic energy 
technology. The Group believes that the 
European market could hold significant 
potential for the Flow boiler and, indeed, 
its other innovative products.  
There are around  
1.6m boiler 
sales in the UK 
annually and 
nearly 9m  
across Europe.
Flowgroup plc 18 24624.04   9 May 2016 12:55 PM Proof 14
The energy market
With growing numbers of customers 
switching energy supplier and increased 
awareness of the range of suppliers and 
tariffs available, the UK energy market 
provides significant opportunity for 
suppliers looking to grow.
The Big Six
The Big Six have traditionally been 
completely dominant in the domestic 
energy market. However, they have 
been losing customers to challenger 
suppliers in growing numbers since 2014. 
Some predictions are that the share of 
the domestic energy market controlled 
by the Big Six suppliers could fall from 
98% in 2013 to around 70% by 2020, a 
shift of about 10 million customer fuel 
accounts to challenger suppliers. Both 
the Government and the Competition 
and Markets Authority, who are currently 
investigating competition in the energy 
market, have highlighted the issue of 
many customers remaining on the most 
expensive standard variable tariffs with 
the Big Six. Potential remedies to alleviate 
this problem have the potential to benefit 
challenger suppliers. 
Challenger suppliers
It is challenger suppliers like Flow 
Energy who are driving change in the 
energy industry. Flow Energy provides a 
compelling mix of competitive prices  
and award-winning customer service.  
To illustrate the benefits offered by Flow 
Energy, a high usage customer currently 
with a Big Six supplier on a standard 
variable tariff would save over £300 a 
year by switching to Flow (illustration 
valid as of 13 April 2016). Flowgroup 
believes that challenger suppliers 
now have the opportunity to grow so 
significantly that some could become  
the bigger players of the not too  
distant future. 
What we think 
customers are  
looking for
We believe that challenger suppliers have 
to offer more than cheap prices in order 
to attract and, crucially, retain customers. 
Many customers have price as their 
main focus when switching supplier but 
other factors also play a role. In a survey 
of newly-switched customers that we 
conducted in 2015, 40% said that Flow’s 
reputation for good customer service 
played a part in their decision making 
and 51% said they switched to Flow even 
though ours wasn’t the cheapest tariff. 
We will continue to invest in service 
and brand awareness in order to give 
customers as many reasons as possible 
to switch to us and stay with us as well  
as competitive pricing.
Flow Energy 
provides a 
compelling mix 
of competitive 
prices and 
award-winning 
customer service.
Energy Customers —  
April 2016 
•
 Large suppliers          84.6%
•
 Challenger suppliers   15.4%
Source: Department of Energy  
and Climate Change
206,419
Number of 
customers switched 
to challenger 
suppliers in  
March 2016
Source: EnergyUK
Strategic Report — Overview and Strategy
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Flowgroup plc 20 24624.04   9 May 2016 12:55 PM Proof 14
Our Performance
21 www.flowgroup.uk.com Annual Report 2015 24624.04   9 May 2016 12:55 PM Proof 14
CEO Q&A
Our energy customer base  
has grown by 172%.”
T ony Stiff 
Group Chief Executive Officer
Q: What is your assessment of 2015  
for Flowgroup?
A: A mixed year. The delay in the 
launch of the Flow boiler was 
obviously disappointing. However, 
we achieved some significant 
milestones in 2015 and have 
continued this into 2016. The 
wholesale energy purchasing 
agreement we signed with Shell 
has helped us deliver rapid growth 
in Flow Energy, increasing revenue 
and brand awareness, and has 
positioned us to potentially continue 
this growth. Completing the first 
installs of the Flow boiler was great 
news. Launching Flow Home, our 
connected home product range, 
adds a new revenue stream and 
keeps us at the forefront of new 
technology for our customers. We 
strengthened our teams and made 
some sound strategic decisions that 
we believe should deliver enhanced 
growth for the Group in the future.
Q: On 18 May 2015, you raised £21.3m, 
what was this for and what have  
you done with the money?
A: The funds were raised to develop 
a range of Combination boilers to 
increase the addressable market, 
to help cost down the Flow System 
boiler, expand the sales team and 
infrastructure support, upgrade 
systems and processes to enable 
management of 3rd party boiler 
installers, grow the supply chain 
and engineering teams and exploit 
licensing opportunities. Due to the 
delay in the launch of the Flow 
mCHP boiler we put the design 
of the Combination boiler on 
hold but continued with outline 
specifications. We have the funds 
available for the development of 
the Combination boiler and will 
recommence the project later in 
2016. Other funds were spent on 
creating a seamless end to end 
process for our 3rd party Brand 
Ambassadors to equip them with 
state of the art software to sell a 
range of our products (including 
energy) in the home.
“We made 
sound strategic 
decisions that we 
believe should 
deliver enhanced 
growth for the 
Group in the 
future.”
Flowgroup plc 22 24624.04   9 May 2016 12:55 PM Proof 14
Q: Why have you decided to grow  
Flow Energy?
A: When we launched Flow Energy in 
April 2013, it was in a very different 
market. Challenger suppliers were 
still viewed with mixed feelings by 
customers and by the media and 
switching rates were still relatively 
low. So our energy business was 
initially designed to allow us to offer 
a bundled package of energy and 
heating to our boiler customers. 
However, the market changed 
significantly through 2014 and 
2015 as the benefits delivered by 
challenger suppliers gained traction 
with customers and the media, the 
Government launched its ‘Power 
to Switch’ campaign, and the price 
comparison sites grew in strength 
and visibility. It became clear that 
switching rates were accelerating 
and that many customers who did 
switch chose a challenger supplier. 
We therefore took the decision to 
grow Flow Energy and, so that we 
could do this in a way that was as 
positive as possible for our cash 
position, we pursued and signed 
an agreement with Shell Energy 
Europe Ltd for wholesale energy 
with extended credit terms and 
without the requirement for cash 
security deposits. Other energy 
supply companies have grown to 
significant size under the terms of 
similar deals — although this deal is 
only one of the building blocks of a 
large energy supply business and we 
will now need to invest in acquisition, 
systems and our teams. The fact 
that our energy customer base has 
increased by 172% from January 2015 
to April 2016 indicates the potential 
for growth that could be delivered.
23 www.flowgroup.uk.com Annual Report 2015
Strategic Report — Our Performance 24624.04   9 May 2016 12:55 PM Proof 14
Q: How much opportunity do you think 
there is in the energy market? 
A: We believe there is huge potential in 
the UK energy market. Independent 
analysis suggests that as many as 
10m customer fuel accounts could 
be switched away from the Big Six 
over the coming years. That would 
be a seismic shift which would 
change the shape of the energy 
market and create new large energy 
supply businesses. In many ways, we 
believe it’s a once in a generation 
opportunity. We believe that, with an 
existing strong reputation for both 
competitive pricing and excellent 
customer service, as well as the 
differentiated position we have 
created for ourselves courtesy of the 
Flow boiler, we have the potential to 
become one of those businesses.  
A large energy customer base would 
bring a range of benefits to the 
Group – increased revenue, increased 
brand awareness and a ready-made 
market for our product range.  
Q: How much opportunity do you think 
there is in the heating market?
A: The global heating market is 
characterised by a lack of innovation, 
many very similar products 
and incumbent players simply 
maintaining their positions.  
While many of the businesses 
already active in our target markets 
have their strengths, we believe 
that our disruptive approach and 
unique product range have the 
potential to allow us to gain market 
share. Our Brand Ambassador 
network, (our national network of 
high-quality, commercially-minded, 
customer-focused installers), is a key 
strength. We provide our products 
to them directly, circumventing the 
wholesalers who traditionally take 
fairly large margins. This approach 
gives us the flexibility, and our  
Brand Ambassadors the control  
and incentive, to drive growth on 
our terms.  
CEO Q&A
Flowgroup plc 24 24624.04   9 May 2016 12:55 PM Proof 14
Q: How many Flow boilers do you plan 
on installing in 2016?
A: Introducing any new technology 
comes with risks. To minimise these 
we plan to introduce the Flow 
boiler into the market in a prudent, 
measured way. We will therefore 
steadily increase installations 
through the next six months, aiming 
for higher volume installations in 
winter. This is the right approach.  
A game-changing technology like 
the Flow boiler has to be introduced 
sensibly and with some caution. 
This also gives us time to generate 
customer reviews and to continue to 
innovate on product design.
Q: What are your plans for international 
expansion?
A: The market for microCHP overseas 
is very attractive and we continue 
to work diligently on the previously 
announced testing contracts with 
NRG and a major global utility in 
Europe. We have also expanded this 
work now to cover opportunities in 
Italy with the recently announced 
Letter of Intent with Trillary Srl, and 
work is ongoing in Germany with 
announcements expected in due 
course.
Q: Which part of the Group do you 
believe will drive most growth?  
A: The quickest growth will 
undoubtedly come from Flow 
Energy. In the first three months 
of 2016, we had some days where 
we brought on 5,000–6,000 new 
customer fuel accounts. While this 
level of growth would be difficult 
to sustain, it shows how much 
potential for growth there could 
be for Flow Energy. On the Flow 
Products side of the business, our 
national sales network of Brand 
Ambassadors is a channel with 
significant capacity and potential. 
Initially offering only the Flow boiler, 
our recent deal with Daikin will 
allow our Brand Ambassadors to 
offer additional innovative heating 
products. Where the Flow boiler is 
appropriate, it will always be our 
first choice for install. But where it 
isn’t, we want to be in a position to 
offer an alternative solution, thereby 
addressing the entire UK heating 
market. It should be noted that our 
Brand Ambassadors won’t just sell 
boilers. They will also be offering 
home energy — both bundled with 
our products or as a standalone 
product — and our connected home 
product range. This combination 
of the different elements of our 
offer, delivering value to customers 
in a number of ways, is where 
our strength will be and it is in 
combining and bundling products 
that, we believe, we will ultimately 
drive most growth.
See our Business Model and Strategy 
on pages 16 and 17
25 www.flowgroup.uk.com Annual Report 2015
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Strategic Review
“We aim to 
deliver as 
comprehensive 
a solution as 
possible to 
customers in the 
energy space 
on an enduring 
basis.”
Energy for Life
In 2015, we began to evolve our strategy 
for the Group. Seeing a significant 
opportunity in the energy market we took 
the decision to grow our home energy 
business, Flow Energy. Believing that the 
national sales network we had created 
for the Flow boiler had the potential 
to deliver sales of a broader range of 
products, we pursued relationships with 
other, innovative manufacturers. Knowing 
that products were starting to play a 
growing role in the energy market, we 
launched our connected home range, 
Flow Home. Our strategy is Energy for 
Life. We aim to deliver as comprehensive 
a solution as possible to customers in 
the energy space on an enduring basis, 
generating more value, more quickly for 
the Group. This positive shift in strategy 
has already yielded good results and we 
believe it is a foundation for significant 
future growth.
Group performance
We delivered strong growth in Flow 
Energy in 2015 and post year end. 
Whilst still loss making, the growth 
in energy customers has reduced the 
costs to serve on a per customer basis, 
helping drive towards profitability. We 
completed the first commercial installs 
of the game-changing electricity-
generating Flow boiler in April 2016.  
We launched our connected home 
product range and invested in growing 
our teams and further strengthening  
our management. 
Flow Energy
Flow Energy performed extremely well 
in 2015 and in the early part of 2016. 
By the end of 2015 we had registered 
100,000 customer fuel accounts. By 
April 2016 we had already increased to 
180,000 customer fuel accounts. The 
accelerated growth we experienced 
followed our agreement with Shell 
Europe Energy Ltd in December 2015 
which provided access to wholesale gas 
and electricity on extended credit terms 
and without the requirement for cash 
security deposits. We believe that, by 
maintaining competitive pricing, growing 
our brand awareness and our reputation 
for good customer service, and modest 
investment in customer acquisition, 
systems and people, we can continue to 
add more customers.
Customer service
While price will always be a factor in a 
customer’s decision to switch energy 
supplier, according to our own research 
customer service is also a consideration 
for a significant proportion of people. 
That being the case, we were pleased 
to be awarded Which? Recommended 
Provider status for energy in January 
2016 following the annual Which? energy 
customer satisfaction survey. 
The results of this survey are a 
key indicator of energy company 
performance in the eyes of consumers. 
Flow Energy was one of only two 
energy suppliers to be awarded Which? 
Recommended Provider status this 
year and received the award following 
comprehensive analysis of Flow Energy’s 
policies, pricing, communications, 
customer service and complaint 
handling. The assessment process also 
included a survey of Flow Energy’s 
customers which generated a Which? 
customer score of 73%, significantly 
higher than the overall industry average 
of 53%. Flow Energy is now licensed to 
use the Which? Recommended Provider 
logo on its website and in its customer 
communications and the Group 
believes that being able to advertise 
Flow Energy’s Which? Recommended 
Provider status gives Flow Energy a 
distinct advantage over other energy 
suppliers and should allow the business 
to acquire more energy customers at a 
lower cost.
T ony Stiff 
Group Chief Executive Officer
Read about Flow Energy  
on pages 08 and 09
Flowgroup plc 26 24624.04   9 May 2016 12:55 PM Proof 14
Future prospects – 
energy
We believe that the current structure of 
the energy market is changing rapidly. 
Traditionally, there have been six big 
players and a raft of smaller, newer 
suppliers. However, it is now the case 
that several of the smaller suppliers 
have become big enough to be classed 
as mid-tier. Over time, we believe it 
may be possible that some of the Big 
Six lose enough customers that they 
drop into this mid-tier. We believe that 
we have put ourselves in a position to 
grow significantly in what is currently 
an extremely attractive marketplace. 
Mindful of the competitiveness of the 
marketplace and the growing propensity 
of customers to switch providers, we 
will continue to invest in price, service 
and customer experience to take up our 
position as one of the leading players in 
an industry in flux. 
Flow Home
We launched a range of connected 
home products post year end, initially 
targeted at our energy customer base. 
Called Flow Home, the range includes: 
a smart thermostat that lets customers 
control their central heating via an app 
on their smartphone, smart plugs that 
let customers turn electrical appliances 
off and on remotely and also monitor 
energy consumption of each device 
via the same app, and a smart power 
monitor that tracks overall electricity 
usage in the home to help customers 
understand more about their energy 
consumption, with a view to making 
changes and saving money.
Launching Flow Home has three main 
aims. Firstly, it keeps us competitive in 
an energy market where many of the 
major players offer a connected home 
range. Secondly, it opens a new revenue 
stream. And, thirdly, it allows us to 
create, closer, longer term relationships 
with our customers (a core element of 
our Energy for Life strategy). Where 
customers enjoy the benefits of a range 
of products and services, we believe 
they are more loyal and are less likely to 
switch to another energy provider.
Our connected home range is provided 
by Fifthplay, a Belgian connected home 
specialist which is part of Niko Group. 
We were introduced to them by our 
manufacturing partner, Jabil. We will 
continue to investigate alternative and 
additional partnerships in order to 
provide the most competitive connected 
home product range to our customers. 
The connected home is a market with 
huge potential and being active in this 
market with a core product range is an 
important first step. 
Read about Flow Home  
on pages 14 and 15
Flow Products
The first commercial installs of the Flow 
boiler were completed in April 2016. 
We now plan to progressively increase 
installations over the next six months, 
aiming for higher volume sales in winter 
2016/17.
Read about Flow Products  
on pages 10 to 13
Team members
While much of Flowgroup’s strength 
lies in its ability to innovate and in 
the quality of its ideas, its ability 
to collaborate with much larger 
organisations is also a fundamental 
building block of its success. 
Flow Products’ working relationship 
with Jabil is a good illustration of 
this. The Flow and Jabil teams have 
worked in ever closer union since the 
manufacturing process of the Flow 
boiler began, through several different 
stages of development of the project. 
Both have brought significant skills 
and experience to the project but it 
is when working together as closely 
as possible that the best results have 
been achieved.
The two organisations work in 
synchrony with one goal — to 
produce the most reliable, highest 
performing version of the Flow 
boiler possible. Jabil’s equity stake in 
Flowgroup is a reflection of in how 
high regard each organisation views 
the other. Both parties believe that 
this will be a long and profitable 
partnership.
27 www.flowgroup.uk.com Annual Report 2015
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Strategic Review
VAT ruling
We initially started installing boilers in 
mid 2015. However, on 4 June 2015 the 
European Court of Justice ruled that 
the UK’s reduced 5% rate of VAT on 
energy-saving products was in breach of 
EU laws. Since this had the potential to 
add £500 to the sale price of the Flow 
boiler and 15% to the installation cost for 
customers, potentially making our launch 
offer the ‘boiler that pays for itself’ 
unviable, we made the prudent decision 
to withdraw the Flow boiler from the 
market and work on accelerating our 
long-term cost reduction programme, 
working closely with Jabil, to ensure that 
customers would be as little affected as 
possible by any potential increase in VAT, 
and that, as a Group, we were exposed 
to as little risk as possible from any rise 
in VAT.
The risk we could have been exposed to 
was illustrated by the size of our supply 
chain exposure, which stood at £29m 
when we made our announcement in 
June. Working with our supply chain 
partners, who were accepting and 
supportive of our decision, we reduced 
this to just over £6m.
VAT resolution
Immediately following the first 
commercial installs of the Flow boiler, 
the European Commission published its 
VAT Action Plan which presented two 
options for the modernising of VAT rates. 
The Group believes that both options 
would see the continuation of a reduced 
rate of VAT applying to Flow boiler sales 
and installations. Any legislative changes 
arising from the VAT Action Plan are not 
expected to be implemented until 2017. 
The first installs were conducted with 
5% payable on the boiler and installation 
and the Group believes that it will be 
able to continue to install at this  
VAT level. 
CE certification and 
MCS accreditation
As part of our accelerated cost 
reduction programme, we made some 
further enhancements to the design of 
the boiler. This required us to reapply for 
CE Certification, which was granted in 
December 2015. 
The electricity 
the Flow boiler 
generates will 
qualify for the 
Feed-in Tariff 
scheme.
Flowgroup plc 28 24624.04   9 May 2016 12:55 PM Proof 14
MCS Accreditation was granted in April 
2016. This means that the electricity 
that the Flow boiler generates will 
qualify for the Feed-in Tariff scheme, 
a UK Government scheme that provides 
payments for the use of small-scale 
renewable or low-carbon electricity 
generation technologies in the home. 
MCS accreditation has been applied to 
the first stage production version of 
the Flow boiler. Planned improvements 
in the manufacturing process over the 
next six months will potentially increase 
performance and output. Current gross 
electrical output of the first stage 
production version is 970W with a target 
range of 1.1kW to 1.3kW as part of the 
continuous improvement programme 
and production optimisation. Achieving 
this level of electrical output would allow 
the Flow boiler to be targeted at a wider 
range of homes with lower run hours 
required to achieve payback.
Jabil
Our working relationship with Jabil has 
strengthened through the year and Jabil 
illustrated their ongoing commitment 
to the Group by taking an 8% equity 
stake in our business in 2015’s fundraise, 
investing £7.4m. Our teams are working 
closely together on our cost reduction 
programme and are continuing to 
optimise and improve the design of  
the Flow boiler. 
Combination boiler 
update
As we said in our half yearly statement, 
in order to ensure that the design 
process of the Combination version of 
the Flow boiler is as efficient as possible, 
we will not accelerate the development 
cycle for the Combination version until 
we have the System version of the boiler 
in full production and installed in a range 
of customer homes with electricity 
output optimised. Therefore, the timing 
for release of the Combination boiler 
project milestones will be determined 
and announced later in 2016.
VAT payable on 
Flow boiler and 
installation:
5%
Equity 
investment 
by Jabil in 
Flowgroup:
£7.4m
29 www.flowgroup.uk.com Annual Report 2015
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Expanded product 
range
While we believe that the Flow boiler 
has the potential to become the de facto 
heating system in appropriate global 
markets over time, we also know that 
the launch version is not appropriate 
for every home, and that customers, of 
course, like choice. So it is a key element 
of our product strategy to add additional 
innovative heating products to our 
portfolio, supplied by carefully chosen 
partners, in order to accelerate sales. 
We were therefore pleased to announce 
two agreements with Daikin Europe 
NV and its UK subsidiary to provide 
additional cutting-edge heating products.
The first is a Hybrid system which 
combines a System boiler with a heat 
pump and intelligently switches between 
the two technologies to minimise 
running costs. It also attracts Renewable 
Heat Incentive payments. The second 
is a range of System and Combination 
boilers that come cloud-enabled, 
offering remote control for consumers 
as standard and will be upgradeable in 
the future to offer remote diagnostics, 
to reduce call out costs. Both products 
fit perfectly with the Group’s focus on 
intelligently different technologies.
Flow Brand 
Ambassador Network – 
disruptive model
The Flow Brand Ambassador network 
is the cornerstone of our sales strategy. 
We have created a national sales network 
comprised of high quality, motivated 
and forward-thinking heating engineers 
who will offer the Flow boiler, and our 
expanded heating range, in customer 
homes. Selling in the home is the key to 
success in the heating industry where 
customers rely on sound advice from 
trusted tradespeople who they invite  
into their home to assist in what can  
be a complex decision. 
In order to assist our Brand Ambassadors 
in the sales process, we will supply 
them with Flow BiT, the Flow Business 
Integration Tool. This is a software 
package that gives each Brand 
Ambassador access to an application 
on a tablet which they can use to survey 
the customer’s home, provide product 
information in a range of formats, provide 
a product and installation quote and 
introduce finance. This is a cutting-edge 
solution that fits with our technologically 
advanced product range. Flow BiT can 
also be used to quote for home energy, 
something that Brand Ambassadors will 
offer in every customer home they visit, 
whether they make a boiler sale or not.
Our strategy is to provide our products 
directly to Brand Ambassadors, cutting 
out the wholesalers. This approach 
increases the available margin, since 
there is no middleman taking a cut, 
and it also provides both Flow and 
the Brand Ambassadors with a higher 
level of control. Operating outside the 
normal channels in the heating industry 
is a disruptive approach that we believe 
will make it easier to make gains in the 
marketplace. 
Sales potential
The Flow boiler is appealing to able-to-
pay customers looking for the clever 
alternative to a standard boiler, and a 
return on investment. It is also attractive 
to social housing landlords, as well as, 
we believe, developers and self-build. 
We have installed several boilers in social 
housing and believe that this represents 
a potentially attractive target market. 
Social housing landlords have both 
environmental and social obligations and 
the Flow boiler, with its ability to reduce 
both household bills and household 
carbon emissions, could therefore be an 
appropriate solution.
Launch model
Our launch model for the Flow boiler 
remains the same: to maximise customer 
acceptance of an innovative technology 
with the ‘boiler that pays for itself’ offer. 
Customers installing a Flow boiler are 
required to switch their home energy to 
Flow and assign Feed-in Tariff payments 
for the electricity the Flow boiler 
generates to Flow. In return, they receive 
a fixed monthly reduction in their home 
energy bill of £80, which equates to 
£960 a year, or £4,800 after the first five 
years. This more than covers the cost of 
the Flow boiler and represents a strong 
incentive for customers to choose to 
install one. In addition, since the home 
energy tariff linked to the boiler is one of 
the cheapest on the market, it could save 
a customer with above average energy 
consumption hundreds of pounds a year 
on top of the fixed £960 rebate. We 
believe this is a compelling launch offer.
Once the Flow boiler is established in 
the market we expect to offer a range 
of packages, from outright purchase to 
part-funded models.
Bundled packages
We believe that bundled packages 
combining home energy with our 
products are attractive to customers 
generally and we will therefore always 
aim to offer a bundle, delivering 
increased value to the customer and 
increasing the value of that customer  
to our business.
Strategic Review
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International expansion
The market for microCHP overseas 
is very attractive and we continue 
to work diligently on our previously 
announced testing contracts with NRG 
and a major global utility in Europe. We 
have also expanded this work to cover 
opportunities in Italy with the recently 
announced Letter of Intent with Trillary 
Srl and ongoing work in Germany. 
Updates on these initiatives are expected 
in due course.
Flow Battery
During the year Flow Battery completed 
projects at various sites carrying out a 
variety of refurbishment and replacement 
work, with a mixture of compressed air 
battery units and some conventional 
systems. Although revenue increased, 
sales have been lower than anticipated 
with action being taken by management 
to reduce the cost base accordingly.  
We continue to monitor performance 
and a strategic decision on the long term 
future of the business will be made in 
due course.
People
As in 2014, headcount across the Group 
increased significantly in 2015, primarily 
because we expanded our energy 
customer service department. We ended 
March 2016 with a total headcount across 
the Group of 265.
Our belief in the importance of the 
people who comprise our business still 
holds and we invest in the continuing 
development of all our teams.
Andrew Beasley, Managing Director 
of Flow Energy, joined the Board in 
December 2015, reflecting both his 
hard work in playing a key role in the 
development of our business, and the 
growing importance of our energy 
supply business. 
Alan Stevenson joined the Group as 
Sales Director of Flow Products in April 
2015 and was subsequently promoted 
to become Managing Director of Flow 
Products in March 2016. Alan brings with 
him a wealth of experience in the heating 
industry of introducing new products to 
market and growing sales.
Fundraising
On 18 May 2015 shareholders approved 
the firm placing and open offer raising 
£21.3m (net of expenses). Jabil, the 
Group’s manufacturing partner for 
the Flow boiler, invested over £7.4m, 
illustrating its commitment to our 
business. The funds have been and will 
continue to be used to expand the scope 
of our core microgeneration platform 
(including a Combination version); 
reduce supply chain costs and upgrade 
systems to reduce production costs; 
continue to develop our national sales 
infrastructure for heating products; 
develop the connectivity capability of our 
heating products; and exploit intellectual 
property through licensing.
Outlook
We believe that both the UK energy 
market and the global heating market 
represent significant opportunity for 
the Group. With our disruptive products 
and approach, strong partnerships and 
leadership in place and growing brand 
awareness, we believe that we can  
deliver growth in 2016 and beyond.  
The Directors and I would like to 
personally thank everybody at 
Flowgroup for their hard work and 
dedication over the past year.
Tony Stiff 
Group Chief Executive Officer
29 April 2016
On 
18 May 
2015 shareholders 
approved the firm 
placing and open  
offer raising
£21.3m  
(net of expenses)
31 www.flowgroup.uk.com Annual Report 2015
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Financial Review
Set out below is an extract of the Group Financial Statements for the years ended  
31 December 2015 and 2014 together with an analysis of the Group’s key 
performance indicators:
2015
£’000
2014
£’000
Revenue 40,394 33,359
Gross profit 3,458 2,222
Gross profit % 8.6% 6.7%
Operating loss (17,080) (9,963)
Loss before income tax (17,116) (10,096)
Loss attributable to equity shareholders (15,285) (9,439)
Intangible fixed assets 19,227 17,268
Tangible fixed assets 381 624
Cash at 31 December 18,844 8,357
Results
Revenue during the year ended  
31 December 2015 of £40,394,000 arose 
primarily from the energy business and 
compares to £33,359,000 during 2014, 
an increase of 21.1% year over year.
Gross margin during the year was 8.6% 
(2014: 6.7%) increasing due to more 
favourable energy market conditions.
Operating losses grew due to our 
increased investment in staffing levels 
and infrastructure as we prepare for 
further growth in our energy business, 
following the completion of the Shell 
deal in December 2015, and the launch 
of the Flow boiler during early 2016.
The Directors have produced business 
forecasts, which indicate that the Group 
has sufficient resources to operate for at 
least the next 12 months continuing the 
development of the energy services and 
energy supply businesses and taking the 
boiler from initial installations through to 
increasing sales during 2017. Accordingly, 
the Directors have adopted the going 
concern basis in the preparation of the 
Financial Statements.
Tax
The Group accounts for the receipt of 
tax relief on research and development 
expenditure when the amount to 
be received can be assessed with 
reasonable certainty. During 2015 
amounts received in respect of 2013 and 
receivable in respect of 2014 and 2015 
have been recognised. Tax credits on 
research and development expenditure, 
in 2015 were £1,831,000 (2014: 
£657,000).
Unrelieved trading tax losses of 
£50,411,000 (2014: £45,492,000) are 
being carried within the Group and 
remain available for offset against future 
taxable trading profits. No deferred tax 
asset has been recognised in respect 
of the losses as recoverability remains 
uncertain.
Loss for the year and 
loss attributable to 
equity shareholders
The loss attributable to equity holders of 
Flowgroup plc amounts to £15,285,000 
(2014: £9,439,000) giving a loss per 
share of 5.31p (2014: 3.94p).
Investment in 
intangible fixed assets
Investment in intangible assets 
representing the continued development 
costs of the microCHP boiler, amounted 
to £2,377,000 (2014: £3,162,000). 
These comprise internally generated 
development costs and the production 
and installation costs of the initial 
production standard Flow boilers. 
Nigel Canham 
Chief Financial Officer
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An additional £205,000 was spent on 
the development of computer software, 
mainly within the energy business.
Investment in property, 
plant and equipment
During the year £160,000 (2014: 
£400,000) was invested in property, 
plant and equipment.
The outsourcing arrangement with Jabil 
will enable the Group to minimise capital 
expenditure going forward. 
Working capital
Growth of the energy supply business 
has seen the level of trade and other 
receivables increase to £7,369,000 
(2014: £7,315,000). The level of trade 
receivables is closely monitored within 
the Group as it seeks to ensure a tight 
control of working capital requirements. 
Cash and cash 
equivalents
On 18 May 2015 shareholders approved 
a firm placing and open offer raising 
£21.3m after issue costs. The share issue 
was supported by our manufacturing 
partner Jabil who subscribed for 25.8 
million ordinary shares giving them an 
8.14% interest in the Company.
The funds raised are to be used to: 
•	
accelerate the development of a 
Combination boiler to increase the 
addressable market in the UK and 
provide early entry into European 
markets; 
•	
reduce supply chain costs and 
upgrade systems to reduce 
production costs;
•	
expand the sales team to turn 
installers into resellers — creating the 
Flow Brand Ambassador network;
•	
upgrade systems and processes to 
enable management of a wide range 
of UK boiler installers — development 
of the Flow BiT application;
•	
develop integrated smart home 
connectivity — to be included in the 
Combination boiler from the outset; 
and
•	
exploit intellectual property through 
licensing.
In the year ended 31 December 2015 we 
had invested £1.0m of the funds raised in 
these growth breakthroughs.
On 4 June 2015 the European Court 
of Justice ruled that the UK’s reduced 
5% rate of VAT on energy-saving 
products was in breach of EU laws. We 
subsequently made the prudent decision 
to withdraw the Flow boiler from the 
market and work on accelerating our 
long-term cost reduction programme, 
working closely with Jabil, to ensure that 
customers would be as little affected as 
possible by any potential increase in VAT, 
and that, as a Group, we were exposed 
to as little risk as possible from any rise 
in VAT.
The European Commission’s VAT Action 
Plan was published on 7 April 2016 and 
presents two options for modernising 
VAT rates which, we believe, would both 
see the continuation of a reduced rate 
of VAT applying to Flow boiler sales 
and installations. The first option is to 
amend the existing VAT directive while 
maintaining the current list of goods and 
services eligible for reduced rates, and 
regularly reviewing this list. The Flow 
boiler would be expected to qualify for 
the reduced rate as an energy-saving 
product. The second option is to abolish 
the list of goods and services that can 
benefit from reduced rates and instead 
give Member States direct control of the 
number and level of reduced rates. The 
Government has previously confirmed 
that energy-saving products, like the 
Flow boiler, will continue to benefit 
from the UK’s 5% reduced VAT rate.  As 
previously stated, the Group is installing 
Flow boilers with 5% VAT payable on 
both the boiler and installation.
This delay in the launch of the microCHP 
System boiler required us to re-evaluate 
the appropriate timing and allocation 
of our resources on this product 
development. Once the launch version 
of the microCHP System boiler has 
been further established in customer 
homes our technical and design 
teams will accelerate development of 
a Combination version of the boiler 
to target more of the market. We will 
communicate the status of this project 
later in 2016.
The Group funded the Products 
business during this time as it strove to 
decrease product costs to reduce any 
potential VAT rise as well as planned 
enhancements.  During the year the 
Energy business required minimal 
funding as it utilised the positive cash 
flow inherent in this business plus the 
return of energy related cash security 
deposits. The Group has managed its 
resources effectively while minimising 
risk and cost, by prudently managing 
expenditure.
At 31 December 2015 the Group had cash 
and cash equivalents of £18,844,000 
(2014: £8,357,000). 
During 2015 the Group managed 
funds effectively and, when necessary, 
dynamically re-allocated resources 
accordingly in response to the changing 
needs of the business and the impact 
outside influences might have on it.
Nigel Canham 
Chief Financial Officer
29 April 2016
33 www.flowgroup.uk.com Annual Report 2015
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Corporate Social  
Responsibility
35 www.flowgroup.uk.com Annual Report 2015 24624.04   9 May 2016 12:55 PM Proof 14
Corporate Social 
Responsibility
We want to 
change the way 
people think 
about energy 
and energy 
companies.
Overview
Even though they provide an essential 
and remarkably beneficial service, 
energy companies are traditionally 
viewed negatively by consumers.  
This is in no small part down to the 
real and perceived behaviour of more 
established suppliers. 
If energy customers continue to 
view energy companies negatively 
then it may prove to be difficult to 
effect the wholesale change that the 
energy industry needs to deliver as we 
move through to a renewable future. 
Customers need to be engaged with 
a positive idea of energy if they are to 
be willing to accept change. Therefore, 
a new perception of what an energy 
company is and can be needs to be 
created. This is one of the aims of the 
work we do around Corporate Social 
Responsibility. We want to change the 
way people think about energy — and 
energy companies. We want to subvert 
preconceived ideas of energy companies 
as profit-focused, environmentally 
unsound and delivering poor value. 
We want to reignite the wonder 
inherent in the idea of energy, to make 
people understand its true value. A big 
challenge. But one we relish.
Employees
One of our core corporate values is 
people. We believe in people and their 
potential. We understand clearly and 
acknowledge consistently that it is 
our people who drive the success of 
our business and that our people are 
indivisible from the idea of Flowgroup. 
We therefore invest significant time 
and resource in creating a physical 
environment and a workplace culture 
that promotes achievement. Flowgroup 
is a supportive organisation with several 
key initiatives in place to encourage 
innovation and personal development. 
We develop our people across teams 
and disciplines and can provide many 
examples of increased satisfaction and 
productivity gains from a member of 
staff who has found a new niche that 
suits them. 
Our teams are diverse and reflect our 
local communities. Naturally, we promote 
equality in all our operations and we 
are committed to the highest standards 
of Health and Safety in all areas of our 
business. We never forget that people 
are the most important part of our 
business.
Flowgroup plc 36 24624.04   9 May 2016 12:55 PM Proof 14
The game-
changing Flow 
boiler can reduce 
a household’s 
carbon emissions 
by up to 20%
Suppliers
As our supply chain has grown, we have 
ensured that we are doing business with 
recognised and reputable suppliers, 
primarily within the EU, who share our 
values. Our manufacturing partner 
Jabil has an extensive track record 
of manufacturing green technology 
products and has a keen focus on the 
environment. We will work together as 
we move forward to ensure that our 
manufacturing process, supply chain 
and products are as respectful to the 
environment as possible. We encourage 
our installation and distribution suppliers 
to adopt best practice in all relevant 
business areas. Their performance will  
be subject to ongoing assessment.
Environment
The Flow boiler has two main benefits: 
it reduces energy costs for consumers 
and it significantly reduces their carbon 
emissions — by up to 20% or 1000kg of 
CO
2
, the same as driving 4,000 miles 
less in the average UK car. It is a low 
carbon product which can play a key role 
in helping consumers achieve a lower 
carbon lifestyle. This low carbon principle 
is something that, as much as possible, 
we try to apply to our business. On a 
simple level, we recycle, we car share and 
we bike. We monitor the admittedly large 
amounts of energy our manufacturing 
and testing facilities use and continually 
look for more carbon-efficient ways 
to operate. Importantly, we actively 
encourage our energy customers to use 
less energy, leveraging our relationship to 
try to effect behavioural change. When 
it comes to the environment, we firmly 
believe we are part of the solution.
Communities
With offices in Ipswich, Chester and 
Preston Brook we have opportunities 
to engage with a range of local 
communities. From sponsorship of 
local awards celebrating environmental 
achievement to litter-picking, from 
charity work to involvement in cultural 
and educational events, we try, as 
much as we can, to be active in our 
communities. While we are very much 
outward looking in our business strategy 
and approach, we never forget where we 
come from. 
37 www.flowgroup.uk.com Annual Report 2015
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Our Governance
39 www.flowgroup.uk.com Annual Report 2015 24624.04   9 May 2016 12:55 PM Proof 14
Board of Directors
Executive Directors
T ony was Commercial Director of Bglobal plc 
(“Bglobal”), the AIM-listed smart-metering 
company. At Bglobal T ony helped prove the 
concept of their smart-metering products 
and was responsible for securing commercial 
contracts with leading energy suppliers. In 2000, 
T ony founded Atlantic Electric and Gas Limited, 
a business backed by US-based Sempra Energy, 
Inc. The business quickly became one of the 
UK’s leading independent energy suppliers, 
with over 300,000 customers. In 1994, T ony 
founded Webbins Limited (“Webbins”), in order 
to exploit the gap in the market for a software 
product that customers could use to evaluate 
energy contracts. Having grown Webbins into a 
company with over 100 staff and £10m turnover, 
T ony negotiated the sale of the company to MMT 
Computing plc, and continued to manage the 
business for three years afterwards.
From 2002 to 2014 Nigel held senior leadership 
positions within Danaher Corporation, the $20 
billion revenue NYSE listed global science and 
technology company. Before joining Flow Nigel 
was Finance Director of Fluke Corporation’s 
emerging markets group, helping drive revenue 
growth, increased profitability and improved 
working capital. Previous to that Nigel was 
Finance Director and EU Accounting Director 
for Gilbarco Veeder-Root, the manufacturer of 
fuel dispensers and fuelling solutions. 
From 2007 to 2009, Nigel was based in 
California as Finance Director for Kerr 
Corporation, Danaher’s leading dental 
consumables business. From 2002 to 2007 
he was Financial Controller of Linx Printing 
Technologies, a Danaher business in the coding, 
marking and industrial printing market. 
Nigel is a Fellow of the Chartered Institute of 
Management Accountants.
T ony Stiff 
Group Chief Executive Officer
Nigel Canham 
Chief Financial Officer
Andrew has held a number of senior roles in 
a range of energy businesses. From 2001 to 
2004 he was Commercial Director of Atlantic 
Electric and Gas. Between 2004 and 2009 he 
worked in a range of companies on systems 
provision for use in the energy industry. From 
2009 to 2011, he was Director of Technology 
and Procurement at Utilita, the ground-
breaking energy supply and smart metering 
business. From 2011 to 2012 he was Principal 
Consultant at Engage Consulting, the leading 
utilities consultancy. 
From 2012 to 2014 he was Managing Director 
of Flow Energy before moving to be Group 
Energy Services Director at EIC. He returned 
as Managing Director of Flow Energy later 
in 2014 and was subsequently appointed a 
director of Flowgroup plc in December 2015. 
Andrew stays active in national and regulatory 
energy forums and is an Alternate Director 
at Energy UK as well as being a member of 
their Strategic Policy Committee. He is also a 
member of the Institution of Engineering and 
Technology (IET).
Andrew Beasley 
Managing Director of 
Flow Energy
Flowgroup plc 40 24624.04   9 May 2016 12:55 PM Proof 14
Non-Executive Directors
Clare has considerable experience in the public 
sector, the energy markets and the financial 
services sector, as well as through setting up 
and managing her own businesses.
A mathematician and economist by training, 
Clare worked for the UK Treasury; Director 
General of Ofgas, the UK gas regulator; she 
was a policyholder advocate for Norwich 
Union’s with-profits policyholders at Aviva; a 
Non-Executive Director of Tullow Oil plc; and 
a member of the Independent Commission 
on Banking and the Future of Banking 
Commission. Her current roles include being 
a Non-Executive Director at G4S, Enquest, 
Energy Solutions Corp and Chairman of 
Magnox.
Clare Spottiswoode CBE 
Non-Executive Chairman
Dr Henry Cialone is President and CEO of 
EWI, North America’s leading independent 
materials joining technology organisation 
and a Founding Partner and Director of the 
American Lightweight Materials Manufacturing 
Institute.
Prior to joining EWI in 2005, Henry was an 
Executive at Battelle Memorial Institute, where 
he led the team developing the scrollbased 
Organic Rankine Cycle technology that 
underpins the Flow boiler.
Henry is a member of the Ohio State 
University College of Engineering Advisory 
Council; Trustee of the Manufacturing 
Institute in Washington, DC; Trustee of the 
Midwest Research Institute in Kansas City 
and a Non-Executive Director of BioSortia 
Pharmaceuticals.
Henry received his BS degree in Materials 
Engineering from Brown University, and his 
MS and PhD degrees in Materials Science, also 
from Brown, where his area of specialisation 
was hydrogen-enhanced fracture.
John was most recently Managing Director of 
Institutional Sales at Nomura Code from 2011 
to 2013. He was previously Director of Sales 
and Trading at Seymour Pierce from 2008 
to 2011. In 2003, he founded Revera Asset 
Management, where he oversaw an investment 
trust, a unit trust and a hedge fund, which he 
ran until 2007. He joined Legg Mason Investors 
for three years, from 2000 to 2003, as 
Director of Small Companies Technology and 
Venture Capital Trusts, having previously spent 
two years as Head of Small Companies with 
Murray Johnstone. From 1992 to 1997, John 
was Head of Small Companies at Scottish 
Amicable, before spending a year at Ivory and 
Sime, again as Head of Small Companies from 
1997 to 1998.
He began his investment career at the Royal 
Bank of Scotland in 1981, working in the 
Trustee and Investment department, before 
moving to General Accident in 1985, holding 
the position of Head of Retail Funds before his 
move to Scottish Amicable.
Dr Henry J Cialone A, R  
Non-Executive Director
David joined Grant Thornton in 1989 and 
qualified as a Chartered Accountant in 1992. In 
2000 David was appointed a Partner, one of 
the youngest partners in the firm, at the age 
of 31. David worked primarily in the Corporate 
Finance team but also acquired secondary 
audit responsibilities. David was integral to the 
flotation of Energetix in 2006 as Lead Partner 
and Reporting Accountant for the IPO.
In 2006, David was appointed National Head 
of Transaction Services, including oversight of 
the development of the Transaction Services 
offering across Grant Thornton International. 
David was then appointed in 2009 as Managing 
Partner for the North West practice of Grant 
Thornton, encompassing offices in Liverpool 
and Manchester which employ in excess of 
300 staff. David brings with him a wealth of 
experience and knowledge to the Board.
David established his own consultancy business 
in 2012 supporting growing and dynamic 
businesses in the achievement of their objectives.
David Grundy A(C), R 
Non-Executive Director
John Johnston A, R(C) 
Non-Executive Director
A = Audit Committee
R = Remuneration Committee
A(C) = Audit Committee Chairman
R(C) = Remuneration Committee Chairman
41 www.flowgroup.uk.com Annual Report 2015
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Directors’ Report
The Directors present their report and 
the audited Financial Statements for the 
year ended 31 December 2015.
Basis of preparation 
of the Financial 
Statements 
The Consolidated Financial Statements 
have been prepared in accordance 
with International Financial Reporting 
Standards (“IFRS”) as adopted by 
the European Union. In accordance 
with IFRS, the Financial Statements 
reflect the results of Flowgroup 
plc and its subsidiaries for the year 
ended 31 December 2015 and for the 
corresponding period in 2014. Further 
details on the basis of preparation are 
provided in note 2 to the Financial 
Statements.
Principal activities
Flowgroup plc and its subsidiaries are 
focused on the creation of shareholder 
value through the provision of a range of 
innovative energy technologies, energy 
supply and energy services.
Results and dividends
The loss for the year amounted to 
£15,285,000 (2014: £9,439,000).
The Directors do not recommend the 
payment of a dividend (2014: £Nil)
A detailed appraisal of business 
developments is given in the Chairman’s 
Statement and the Strategic Report on 
pages 06 to 37.
Risk Review
The principal business risks and 
uncertainties affecting the Group are: 
Availability of adequate 
funding 
The Group has tightly controlled costs 
during 2015 while continuing to invest 
prudently in the development of the 
business. Future cash requirements are 
regularly reviewed with appropriate 
funding agreements being secured for 
the business growth plans. Agreements 
with Shell, Jabil and additional partners 
for business development all have 
elements that reduce cash requirements. 
Having taken account of the Group’s 
strategy and the risks and opportunities 
facing the Group, the Group’s trading 
and cash flow forecasts show sufficient 
resources to continue operating for a 
period of at least 12 months from the 
date of approving the Annual Report. 
Accordingly the Directors have continued 
to adopt the going concern basis in 
preparing the Financial Statements.
Political, taxation 
and other regulatory 
factors
The Group may be adversely affected by 
changes in political, taxation and other 
regulatory factors such as Feed-in Tariff 
and Value Added Tax. These factors may 
particularly impact the returns on, and 
sales, of the Flow boiler.
The Group participates in industry bodies 
to be informed of any upcoming changes 
and to make appropriate representations. 
Where necessary business strategies can 
then be reviewed and adapted to meet 
the changed circumstances.
Strength of the Group’s 
bankers
In accordance with the Group’s treasury 
policy, funds are only lodged with UK-
based financial institutions with an “A” 
rating or better.
Product performance 
There is risk inherent in introducing any 
new product to market. The success of 
the Flow boiler is clearly linked to its 
performance, both in terms of reliability 
and its generation capability. Any other 
products that Flow offers will also be 
judged by their performance.
We work with globally-respected 
manufacturers for our current product 
range and intend to continue to do so as 
we expand. We conduct rigorous testing 
of all products and apply a continuous 
improvement approach to our core 
technology platform. 
Failure of suppliers of 
essential goods and 
services
The Group relies on a number of key 
component and service suppliers to 
support both the Flow Products and the 
Flow Energy business.
Jabil, our key manufacturing partner, is 
a large global business with significant 
resources and an 8% equity stake in our 
business. Working with Jabil we engage 
with our supply chain ensuring continuity 
of supply and quality control.
Shell, from whom we purchase wholesale 
energy, is one of the energy market’s 
biggest players. 
All suppliers of any size are assessed 
with regard to risk and appropriate 
controls put in place. 
Attraction and 
retention of key 
employees 
The Group believes that its people are 
the key to the success of its business. 
Many of the roles within the Group 
are highly specialised and require 
experienced and skilled employees.
Our recruitment strategy is a 
combination of direct recruitment and 
via agencies. In this way we are able to 
swiftly make contact with appropriately 
skilled and experienced potential 
employees. We monitor employee 
retention as a key metric within our 
business.
The Group depends on its Directors and 
other key employees and, whilst it has 
entered into contractual arrangements 
with these individuals with the aim of 
securing the services of each of them, 
retention of these services cannot be 
guaranteed.
Flowgroup plc 42 24624.04   9 May 2016 12:55 PM Proof 14
The Group has attempted to reduce this 
risk by offering competitive remuneration 
packages including the opportunity to 
participate in share option schemes and 
investment in training, development and 
succession planning.
The Group has a Save As You Earn 
share scheme in which all employees are 
invited to participate.
Control of intellectual 
property
A significant part of the Group’s future 
development and growth depends on 
its intellectual property. If intellectual 
property is inadequately protected, the 
Group’s future success could become 
adversely affected.
The Group continues to invest in 
the protection and expansion of its 
intellectual property portfolio. In addition, 
the Group has established internal 
procedures and controls to capture 
new intellectual property, to prevent 
unauthorised disclosure to third parties 
and protect the Group’s rights when 
dealing with supply chain partners.
Market acceptance of 
the Flow boiler
The Group’s unique technologies are 
sold via distribution channels to the end 
consumer, provided on long-term energy 
contracts, incorporated into the products 
or processes of third parties or supplied 
directly to industrial users. 
There can be no assurance that such 
products or processes will achieve 
commercial success or be an attractive 
alternative to conventional products 
or processes. If a mass market for any 
product or process fails to develop, or 
develops more slowly than anticipated, 
the Group may take longer to achieve 
profitability in respect of the technology 
associated with such products or 
processes.
The Group’s strategy of developing 
and producing products from existing 
components, enabling lower costs for 
early products, plus seeking specific 
distribution partnerships, for example 
through the Flow Brand Ambassador 
network, is designed to facilitate 
adoption of the products and to drive 
mass market uptake.
Market share of Flow 
Energy
The retail energy market within the 
UK is very competitive with a number 
of innovative rapidly growing smaller 
participants as well as the ongoing 
review by the Competition and Markets 
Authority.
Flow Energy through its market leading 
customer service and its innovative 
home products and pricing strategies is 
well differentiated within the UK retail 
energy market. It thus has a compelling 
customer offer and with the backing of 
the established funding facilities is well 
placed for significant growth. 
Research and 
development
The Group undertakes a significant 
amount of research and development to 
address opportunities in the alternative 
energy market. In 2015, the Group 
incurred research and development costs 
of £2,448,000 (2014: £3,299,000), of 
which £2,377,000 (2014: £3,162,000) has 
been capitalised in accordance with IAS 
38 ‘Intangible Assets’. See note 12 for 
an analysis of capitalised development 
costs.
Directors
The Directors who held office in the year 
and up to the date of this report are 
shown below:
•	
C Spottiswoode, Non-Executive 
Chairman
•	
AD Stiff, Group Chief Executive Officer 
•	
NP Canham, Chief Financial Officer 
•	
AJ Beasley, Executive Director 
(appointed 9 December 2015)
•	
Dr HJ Cialone, Non-Executive Director
•	
DK Grundy, Non-Executive Director
•	
JJ Johnston, Non-Executive Director 
Employees
Throughout the year, Directors of the 
Group provide relevant information to 
employees and engage in consultation 
with them to ensure that their views are 
considered.
Applications for employment by 
disabled persons are given full and 
fair consideration for all vacancies 
in accordance with their particular 
aptitudes and abilities. In the event of 
employees becoming disabled, every 
effort is given to retrain them in order 
that their employment with the Group 
may continue.
It is the policy of the Group that training, 
career development and promotion 
opportunities should be available to all 
employees.
Financial risk 
management 
objectives and policies 
Other than the proceeds from the 
issue of shares, the Group uses various 
financial instruments that include loans, 
cash and other items, including trade 
receivables, trade payables and forward 
energy purchase contracts arising 
directly from its operations. The main 
purpose of these financial instruments is 
to finance the Group’s operations.
The existence of these financial 
instruments exposes the Group to a 
number of financial risks, which are 
described in more detail below.
The main risks arising from the Group’s 
financial instruments are credit 
risk, currency risk, liquidity risk and 
commodity risk. The Directors review 
and agree policies for managing risk and 
these risk management policies have 
remained unchanged from previous years.
43 www.flowgroup.uk.com Annual Report 2015
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Directors’ Report
Liquidity risk
The Group seeks to manage financial 
risk by ensuring sufficient liquidity is 
available to meet foreseeable needs 
and to invest cash assets safely and 
profitably. The Group had cash balances 
of £18,844,000 as at 31 December 2015 
(2014: £8,357,000). 
On 18 May 2015 shareholders approved 
a firm placing and open offer raising 
£21.3m (net of expenses). The Directors 
have produced business forecasts which 
indicate that the Group has sufficient 
resources to operate for at least 12 
months from the date of approving this 
Annual Report.
The maturity of borrowings is set 
out in note 17 to the Group Financial 
Statements.
Currency risk
The Group purchases a number of 
components in foreign currencies. 
Presently, the Directors do not believe 
that the Group’s currency risk requires 
hedging; however, this situation will be 
monitored and amended if appropriate.
Credit risk
The Group’s principal financial assets are 
cash and trade receivables.
Although the credit risk associated with 
cash is limited, the Group’s treasury 
policy remains the same as in 2014 and is 
explained in more detail in note 20.
The credit risk associated with trade 
receivables is part mitigated by the 
policy to offer direct debit as the 
preferred customer payment method. 
The Group’s policy is to provide for 
doubtful debts based on estimated 
irrecoverable amounts determined by 
reference to specific circumstances and 
past default experience.
Commodity risk
As an energy supplier the Group has risk 
both in terms of the customer volumes 
and energy pricing. Volumes are taken 
from industry data with expected 
customer demand being derived from 
models taking account of seasonal 
variations. The resultant energy demand 
is then secured by forward fixed price 
energy purchase contracts. The Group 
does not take speculative positions 
on either price or volume, with all 
energy being purchased for anticipated 
customer requirements.
Supplier payment 
policy
It is the Group’s policy, in respect of all 
suppliers, to agree payment terms in 
advance of the supply of goods and 
services and to adhere to those payment 
terms. Trade payables of the Group at 
the year end as a proportion of amounts 
invoiced by suppliers during the year 
represent 70 days (2014: 57 days) and 
for the Company, represent 6 days 
(2014: 26 days).
Going concern
Having made reasonable enquiries, 
the Directors are of the opinion that 
the Group has sufficient resources to 
continue in operational existence for a 
period of at least 12 months from the 
date of approving this Annual Report and 
hence these Financial Statements have 
been prepared on a going concern basis. 
Further details are disclosed within note 
2.2 to the Financial Statements.
Major shareholdings
As at 25 April 2016 the Directors were 
aware of the following interests in 3% 
or more of the Company’s issued share 
capital:
%
Aviva Plc 19.45
Jabil Circuit Nederland BV 8.14
Hargreave Hale 5.79
Octopus Investments 3.60
Corporate Governance 
Statement
The Directors are committed to 
maintaining high standards of corporate 
governance. Under the rules of the 
London Stock Exchange AIM Market, the 
Group is not required to comply with 
the UK Corporate Governance Code. 
Nevertheless, the Group has taken steps 
to apply the principles insofar as the 
Directors consider appropriate given the 
current size and nature of the Group. 
This statement sets out how the Board 
has applied the principles of good 
corporate governance in its management 
of the business in the year ended 
31 December 2015.
Board of Directors
At 31 December 2015 the Board 
comprised three Executive (2014: two)
and four (2014: four) Non-Executive 
Directors. Biographies of the Directors 
are provided on pages 40 and 41 and 
set out the broad range of commercial, 
technical and financial expertise 
possessed by Board members. 
The combination of skills and experience 
ensures that strategic focus and sound 
commercial stewardship is available to 
the Group. The Non-Executive Directors 
are highly experienced, exercise 
independent judgement on issues arising 
and are able to challenge constructively 
the decisions of the Executive Directors.
The roles of Chairman and Chief 
Executive are separated ensuring an 
appropriate division of responsibilities at 
the head of the Group.
All Directors are subject to election by 
shareholders, and re-election thereafter is 
by rotation at intervals of not more than 
three years.
All Directors are offered an opportunity 
to request information and training 
relevant to their legal and other duties 
as Directors. They are also given written 
rules and guidelines setting out their 
responsibilities within an AIM-listed 
Flowgroup plc 44 24624.04   9 May 2016 12:55 PM Proof 14
Company. All Directors are able to take 
independent legal and professional 
advice, if required, at the expense of the 
Company. Directors have access at all 
times to the services of the Company 
Secretary, who is responsible to the 
Board for ensuring that all agreed 
policies and procedures are followed 
and all relevant rules and guidelines are 
complied with.
Meetings of the Board
The Board, which meets at least ten 
times per year, has overall responsibility 
for the strategic direction and 
management of the business. All key 
decisions affecting the Group are 
considered by the Board as a whole. 
The annual Group budget and business 
plan, trading and cash flow forecasts, 
material contracts, major items of capital 
expenditure and any other significant 
strategic actions all require Board 
approval.
Board meetings are subject to a formal 
agenda and reports are tabled on the 
performance of each of the Group’s 
businesses. Monthly management 
accounts that compare actual results 
with budget and prior year are subject 
to detailed review. Other strategic 
and commercial issues are considered 
as required. Board decisions are 
communicated on a timely basis to 
management to ensure that operational 
implementation occurs without delay.
Audit Committee
The members of the Audit Committee 
as at 31 December 2015 were DK 
Grundy (Chairman), Dr HJ Cialone 
and JJ Johnston. Executive Directors 
are permitted to attend meetings at 
the discretion of the Chairman of the 
Committee. The Committee meets 
at least twice a year and there is an 
opportunity for any meeting to be in 
private between the Non-Executive 
Directors and the Company’s auditor to 
consider any matter they wish to bring to 
the attention of the Committee.
The terms of reference and areas of 
delegated responsibility of the Audit 
Committee are in the consideration and 
approval of the following matters:
•	
monitoring the quality and 
effectiveness of the internal control 
environment, including the risk 
management procedures followed by 
the Group;
•	
reviewing the Group’s accounting 
policies and ensuring compliance with 
relevant accounting standards;
•	
reviewing the Group’s reporting and 
accounting procedures;
•	
ensuring that the financial 
performance of the business is 
properly measured and reported on;
•	
recommending the reappointment 
of the auditor and the level of their 
remuneration;
•	
considering reports from the 
auditor on the outcome of the 
audit process and ensuring that 
any recommendations arising are 
communicated to the Board and 
implemented on a timely basis;
•	
reviewing the Board’s statement on 
internal control in the Annual Report; 
and
•	
ensuring compliance with the relevant 
requirements of the AIM Rules.
Remuneration 
Committee
The members of the Remuneration 
Committee as at 31 December 2015 were 
JJ Johnston (Chairman), DK Grundy and 
Dr HJ Cialone. The Committee meets at 
least once a year and at such other times 
as its Chairman shall require. Its terms 
of reference and areas of delegated 
responsibility are:
•	
determining the terms and conditions 
of service of all Directors including 
their remuneration and the granting of 
share options;
•	
seeking professional advice, as 
required, in order to ensure that the 
Group’s remuneration arrangements 
are both competitive and appropriate 
to its scale and complexity by 
reference to other similar businesses; 
and
•	
ensuring that the Group complies with 
the relevant requirements of the AIM 
Rules.
Members of the Committee are not 
involved in any decisions relating to their 
own remuneration.
Communication with 
shareholders
The Board is committed to constructive 
dialogue with its shareholders. 
The Company uses the AGM as an 
opportunity to communicate with its 
shareholders. The AGM will be held at  
10 am on 23 June 2016 at South Kiln, 
Felaw Maltings, 42 Felaw Street, Ipswich, 
IP2 8SQ.
The Group’s website 
(www.flowgroup.uk.com) is the primary 
source of information on the Group.  
This includes an overview of the activities 
of the Group, information on the Group’s 
subsidiaries and details of all recent 
Group announcements.
Internal control
The Board has overall responsibility for 
ensuring that the Group maintains a 
system of internal control to provide it 
with reasonable assurance regarding the 
reliability of financial information used 
within the business and for publication. 
The Board is also responsible for 
ensuring that assets are safeguarded and 
risk is identified and managed as early 
as practicably possible. As noted, the 
Audit Committee has a significant role 
in this area. The internal control systems 
established are designed to manage, 
rather than completely eliminate risk, 
and can only provide reasonable and not 
absolute assurance against misstatement 
or loss.
45 www.flowgroup.uk.com Annual Report 2015
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Directors’ Report
The Group does not currently have 
an internal audit function and this 
will be kept under review as the 
Group progresses from technology 
development to commercial supply.
The Board reviews the effectiveness of 
the systems of internal control and its 
reporting procedures and augments and 
develops these procedures as required 
to ensure that an appropriate control 
framework is maintained at all times.
The principal control mechanisms 
deployed by the Group are:
•	
Board approval for all strategic and 
commercially significant transactions;
•	
detailed scrutiny of the monthly 
management accounts with all 
material variances investigated;
•	
executive review and monitoring of 
key decision-making processes at 
subsidiary board level;
•	
Board reports on business 
performance and commercial 
developments;
•	
periodic risk assessments at each 
business involving senior executive 
management;
•	
standard accounting controls and 
reporting procedures; and
•	
regularly liaising with the Group’s 
auditor and other professionals as 
required. 
Statement of Directors’ 
responsibilities
The Directors are responsible for 
preparing the Annual Report and the 
Financial Statements in accordance with 
applicable law and regulations.
Company law requires the Directors 
to prepare Financial Statements for 
each financial year. Under that law, 
the Directors have prepared Financial 
Statements for the Group in accordance 
with International Financial Reporting 
Standards as adopted by the European 
Union (“IFRSs”) and for the Parent 
Company Financial Statements in 
accordance with United Kingdom 
Generally Accepted Accounting Practice 
(United Kingdom Accounting Standards 
comprising Financial Reporting Standard 
102 The Financial Reporting Standard 
Applicable in the UK and Republic of 
Ireland (FRS 102) and applicable law). 
Under Company Law the Directors must 
not approve the Financial Statements 
unless they are satisfied that they give a 
true and fair view of the state of affairs of 
the Group and the Company and of the 
profit or loss of the Group for that period. 
In preparing these Financial Statements, 
the Directors are required to:
•	
select suitable accounting policies and 
then apply them consistently;
•	
make judgements and estimates that 
are reasonable and prudent;
•	
state whether IFRSs as adopted by 
the European Union and applicable 
UK Accounting Standards, comprising 
FRS 102, have been followed, subject 
to any material departures disclosed 
and explained in the Group and 
Parent Company Financial Statements 
respectively; and
•	
prepare the Financial Statements 
on the going concern basis unless 
it is inappropriate to presume that 
the Group and Parent Company will 
continue in business.
The Directors are responsible for keeping 
adequate accounting records that 
are sufficient to show and explain the 
Company’s transactions and disclose 
with reasonable accuracy at any time the 
financial position of the Company and 
enable them to ensure that the Financial 
Statements comply with the Companies 
Act 2006. They are also responsible for 
safeguarding the assets of the Company 
and hence for taking reasonable steps 
for the prevention and detection of fraud 
and other irregularities.
In so far as each of the Directors are 
aware:
•	
there is no relevant audit information 
of which the Company’s auditor is 
unaware; and
•	
the Directors have taken all steps that 
they ought to have taken to make 
themselves aware of any relevant 
audit information and to establish 
that the auditor is aware of that 
information.
The Directors are responsible for the 
maintenance and integrity of the 
corporate and financial information 
included on the Company’s website. 
Legislation in the United Kingdom 
governing the preparation and 
dissemination of financial statements 
may differ from legislation in other 
jurisdictions.
Independent auditor
A resolution to reappoint 
PricewaterhouseCoopers LLP as auditors 
of the Company and the Group will be 
proposed at the Annual General Meeting.
On behalf of the Board
Tony Stiff 
Group Chief Executive Officer
29 April 2016
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Directors’ Remuneration 
Report
This report to shareholders for the year 
ended 31 December 2015 sets out the 
Company’s remuneration policies as 
required by the AIM Rules. This report 
is presented to disclose the key policies 
under which the Executive and Non-
Executive Directors are remunerated and 
details of share interests of the Directors. 
The parts of the report which are subject 
to audit are clearly indicated. All other 
parts of the Directors’ Remuneration 
Report are unaudited.
Composition and role of the 
Remuneration Committee
Membership of the Remuneration 
Committee during the year consisted of:
John J Johnston (Chairman)
David K Grundy
Henry J Cialone 
The Committee met twice in 2015.
The Committee is responsible for 
determining, on behalf of the Board, an 
appropriate remuneration policy for the 
Executive Directors and for designing 
a remuneration framework for them 
that is consistent with that policy. The 
Committee also monitors remuneration 
practice amongst other senior Executives 
and determines the Chairman’s fee level 
and that of the other Non-Executive 
Directors in consultation with the Chief 
Executive. 
Remuneration structure 
for Executive Directors
Overview
The Remuneration Committee is 
committed to maintaining high standards 
of corporate governance and has taken 
steps to comply with best practice 
insofar as it can be applied practically, 
given the size of the Company and the 
nature of its operations.
Remuneration policy
The Committee aims to ensure that the 
total remuneration for the Executive 
Directors is reflective of performance, 
internally consistent, market competitive 
and aligned with the interests of 
shareholders.
No Director takes part in decisions 
regarding their personal remuneration.
To design a balanced package for 
the Executive Directors and senior 
management the Committee considers:
•	
the individual’s experience and the 
nature and complexity of their work 
in order to pay a competitive salary 
that attracts and retains management 
of the highest quality, while avoiding 
remunerating Directors more than is 
necessary;
•	
the link between the individual’s 
remuneration package and the 
Group’s long-term performance; and
•	
the need to provide employment-
related benefits including the 
provision of life assurance and medical 
insurance.
Basic salary
Salaries are reviewed annually and are 
benchmarked against businesses of a 
similar size and stage of development. 
The review process is undertaken having 
regard to the development of the Group 
and the contribution that individuals will 
continue to make as well as the need to 
retain and motivate individuals. In this 
respect, the Remuneration Committee 
may draw on findings of external salary 
surveys and undertakes its own research.
Benefits
Directors are provided with life assurance 
for themselves and private medical 
insurance for themselves and their 
families.
Pensions
Where appropriate the Company makes 
contributions into defined contribution 
pension arrangements for Directors.
Performance-related pay
Directors can earn a cash bonus of up 
to two times their annual basic salary, 
payable against meeting personal 
and business targets as set out by the 
Committee at the beginning of each year.
Executive share options
Executive share options are granted 
at the closing mid-market value of the 
Company’s ordinary shares on the day 
prior to grant. The vesting criteria can be 
that the shares vest after three years or 
such other time period as the Committee 
may decide or against specific business 
and/or market performance criteria.
As disclosed in note 8 to the Group 
Financial Statements, on 15 December 
2015, certain of the performance criteria 
attached to executive share options 
were amended. In addition, a number of 
options were released and replaced with 
a fresh grant of executive share options. 
Service contracts
Each Executive Director has a service 
contract with the Group which contains 
details regarding remuneration, 
restrictions and disciplinary matters. 
Executive Directors are appointed by the 
Group on contracts terminable on not 
more than six months’ notice.
Non-Executive Directors
The fees of the Chairman are determined 
by the Committee and the fees of the 
Non-Executive Directors by the Board 
following a recommendation from the 
Chairman. 
Non-Executive Directors are not eligible 
to participate in any of the Group’s 
incentive schemes other than by way of 
share options.
47 www.flowgroup.uk.com Annual Report 2015
Our Governance 24624.04   9 May 2016 12:55 PM Proof 14
Directors’ Remuneration 
Report
Directors’ emoluments for the year ended 31 December 2015 (audited):
Salary/fees/
bonus
£
Benefits
£
Total 
remuneration
£
Pension 
contributions
 £
Executive
Tony Stiff 353,641 1,846 355,487 —
Nigel Canham 228,703 1,745 230,448 7,687
Andrew Beasley (appointed 9 December 2015) 16,5 1 7 — 16,517 555
Non-Executive
Clare Spottiswoode 94,875 — 94,875 —
Henry Cialone 43,664 — 43,664 —
David Grundy 33,133 — 33,133 —
John Johnston 30,583 — 30,583 —
801,116 3,591 804,707 8,242
Directors’ emoluments for the year ended 31 December 2014 (audited):
Salary/fees/
bonus
£
Benefits
£
Total 
remuneration
£
Executive
Tony Stiff 509,100 2,046 511,146
Nigel Canham (appointed 10 December 2014) 9,231 — 9,231
Non-Executive
Clare Spottiswoode 97,917 — 97,917
Henry Cialone 44,906 — 44,906
David Grundy 91,625 — 91,625
John Johnston 31,500 — 31,500
784,279 2,046 786,325
The current year figures above include bonuses totalling £219,679 (2014: £300,000) which have been settled in cash.
As disclosed in note 24, the Directors’ emoluments of Clare Spottiswoode, Henry Cialone, John Johnston and David Grundy 
include amounts in respect of consultancy services provided to the Group.
Flowgroup plc 48 24624.04   9 May 2016 12:55 PM Proof 14
Directors’ share options (audited):
The share options held by the Directors in respect of the schemes summarised in note 8 are:
Number as at
1 January 
2015 or 
date of 
appointment Granted
Released / 
lapsed
Number as at
31 December 
2015
Exercise 
price (p) Exercise period
Clare Spottiswoode
1
4,001,787 — — 4,001,787 28.0 17 Oct 2012–16 Oct 2022
Tony Stiff
1
4,001,787 — — 4,001,787 28.0 17 Oct 2012–16 Oct 2022
Tony Stiff
1
1,325,056 — — 1,325,056 17.25 3 May 2013–2 May 2023
Tony Stiff
2
69,498 — (69,498) — 25.9 01 Aug 2017–01 Feb 2018
Tony Stiff
2
— 150,000 — 150,000 12.0 01 Sept 2019–01 March 2020
Tony Stiff
3
— 4,199,729 — 4,199,729 15.86 15 Dec 2017–14 Dec 2026 
Nigel Canham
1
1,000,000 — (1,000,000) — 43.75 11 Dec 2014–10 Dec 2024
Nigel Canham
2
— 150,000 — 150,000 12.0 01 Sept 2019–01 March 2020
Nigel Canham
3
— 3,000,000 — 3,000,000 15.86 15 Dec 2017–14 Dec 2026
Andrew Beasley
1
750,000 — (750,000) — 36.25 11 Sept 2014–10 Sept 2024
Andrew Beasley
3
— 1,850,000 — 1,850,000 15.86 15 Dec 2017–14 Dec 2026
Andrew Beasley
2
150,000 — — 150,000 12.0 01 Sept 2019–01 March 2020
Henry Cialone
1
412,500 — — 412,500 28.0 17 Oct 2012–16 Oct 2022
1. Performance criteria are attached
2. Options granted under the Flowgroup SAYE scheme
3. Vest in three annual instalments subject to performance criteria
No other Directors have been granted share options in the Company or other Group entities. As detailed in note 8 to the Group 
Financial Statements the performance criteria of certain share options have been varied and other options released with new 
replacement options granted.
Directors’ interests in shares (unaudited) are as follows:
As at 
31 December 
2015
As at 
31 December 
2014 
or date of 
appointment 
Clare Spottiswoode Ordinary shares of £0.05 each 752,287 608,787
Tony Stiff Ordinary shares of £0.05 each 2,615,746 2,194,428
Nigel Canham Ordinary shares of £0.05 each 68,400 —
Andrew Beasley Ordinary shares of £0.05 each 129,000 129,000
Henry Cialone Ordinary shares of £0.05 each 444,692 344,692
David Grundy Ordinary shares of £0.05 each 153,844 153,844
John Johnston Ordinary shares of £0.05 each 1,027,014 1,027,014
49 www.flowgroup.uk.com Annual Report 2015
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Our Financials
51 www.flowgroup.uk.com Annual Report 2015 24624.04   4 May 2016 10.35 AM Proof 14
Independent Auditors’ Report
to the members of Flowgroup plc
Report on the Group 
Financial Statements
Our opinion
In our opinion, Flowgroup plc’s Group 
Financial Statements (the “Financial 
Statements”):
•	
give a true and fair view of the state of 
the Group’s affairs as at 31 December 
2015 and of its loss and cash flows for 
the year then ended;
•	
have been properly prepared in 
accordance with International 
Financial Reporting Standards 
(“IFRSs”) as adopted by the European 
Union; and
•	
have been prepared in accordance 
with the requirements of the 
Companies Act 2006.
What we have audited
The Financial Statements, included within 
the Annual Report and Accounts (the 
“Annual Report”), comprise:
•	
the Group Statement of Financial 
Position as at 31 December 2015;
•	
the Group Income Statement for the 
year then ended;
•	
the Group Statement of Changes in 
Equity for the year then ended;
•	
the Group Statement of Cash Flows 
for the year then ended; and
•	
the notes to the Financial Statements, 
which include a summary of 
significant accounting policies and 
other explanatory information.
Certain required disclosures have been 
presented elsewhere in the Annual 
Report, rather than in the notes to the 
Financial Statements. These are cross-
referenced from the Financial Statements 
and are identified as audited.
The financial reporting framework that 
has been applied in the preparation of 
the Financial Statements is applicable 
law and IFRSs as adopted by the 
European Union.
In applying the financial reporting 
framework, the Directors have made 
a number of subjective judgements, 
for example in respect of significant 
accounting estimates. In making such 
estimates, they have made assumptions 
and considered future events.
Opinion on other 
matter prescribed by 
the Companies Act 
2006
In our opinion, the information given in 
the Strategic Report and the Directors’ 
Report for the financial year for which 
the Financial Statements are prepared is 
consistent with the Financial Statements.
Other matters on which 
we are required to 
report by exception
Adequacy of information and 
explanations received
Under the Companies Act 2006 we 
are required to report to you if, in our 
opinion, we have not received all the 
information and explanations we require 
for our audit. We have no exceptions to 
report arising from this responsibility. 
Directors’ remuneration
Under the Companies Act 2006 we 
are required to report to you if, in our 
opinion, certain disclosures of Directors’ 
remuneration specified by law are not 
made. We have no exceptions to report 
arising from this responsibility. 
Responsibilities for the 
financial statements 
and the audit
Our responsibilities and those of 
the Directors
As explained more fully in the Statement 
of Directors’ Responsibilities on page 
46, the Directors are responsible for the 
preparation of the Financial Statements 
and for being satisfied that they give a 
true and fair view.
Our responsibility is to audit and express 
an opinion on the financial statements 
in accordance with applicable law and 
International Standards on Auditing (UK 
and Ireland) (“ISAs (UK & Ireland)”). 
Those standards require us to comply 
with the Auditing Practices Board’s 
Ethical Standards for Auditors.
This report, including the opinions, 
has been prepared for and only for 
the Company’s members as a body in 
accordance with Chapter 3 of Part 16 
of the Companies Act 2006 and for no 
other purpose. We do not, in giving these 
opinions, accept or assume responsibility 
for any other purpose or to any other 
person to whom this report is shown 
or into whose hands it may come save 
where expressly agreed by our prior 
consent in writing.
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What an audit of Financial 
Statements involves
We conducted our audit in accordance 
with ISAs (UK & Ireland). An audit 
involves obtaining evidence about the 
amounts and disclosures in the financial 
statements sufficient to give reasonable 
assurance that the Financial Statements 
are free from material misstatement, 
whether caused by fraud or error. This 
includes an assessment of: 
•	
whether the accounting policies 
are appropriate to the Group’s 
circumstances and have been 
consistently applied and adequately 
disclosed; 
•	
the reasonableness of significant 
accounting estimates made by the 
Directors; and 
•	
the overall presentation of the 
Financial Statements.  
We primarily focus our work in these 
areas by assessing the Directors’ 
judgements against available evidence, 
forming our own judgements, and 
evaluating the disclosures in the financial 
statements.
We test and examine information, using 
sampling and other auditing techniques, 
to the extent we consider necessary to 
provide a reasonable basis for us to draw 
conclusions. We obtain audit evidence 
through testing the effectiveness of 
controls, substantive procedures or a 
combination of both. 
In addition, we read all the financial 
and non-financial information in the 
Annual Report to identify material 
inconsistencies with the audited 
Financial Statements and to identify 
any information that is apparently 
materially incorrect based on, or 
materially inconsistent with, the 
knowledge acquired by us in the 
course of performing the audit. If we 
become aware of any apparent material 
misstatements or inconsistencies we 
consider the implications for our report.
Other matter
We have reported separately on the 
Company Financial Statements of 
Flowgroup plc for the year ended 
31 December 2015.
Haz el	Macnamar a		
(Senior	S ta tut ory	A udit or)	
for and on behalf of 
PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory 
Auditors 
Manchester
29 April 2016
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Group Income Statement
for the year ended 31 December 2015
Note
Y ear	ended
31	Dec ember
2015
£’000
Year ended
31 December
2014
£’000
Revenue 3 40,394 33,359
Cost of sales (36,9 36) (31,137)
Gr os s	pr ofit 3,458 2,222
Administrative expenses (20 ,5 38) (12,185)
Oper a ting	los s (17 , 080) (9,963)
Finance income 5 24 24
Finance costs 5 (60) (157)
L os s	bef or e	inc ome	tax 4 (17 , 116) (10,096)
Income tax 9 1,831 657
L os s	f or	the	y ear (15,285) (9,439)
A ttributable	t o:	
Equity holders of the Company (15,285) (9,439)
Basic	and	dilut ed	los s	per	shar e	 11 (5.31)p (3.94)p
The Group has no items of other comprehensive income in the current or prior year and consequently no statement of other 
comprehensive income has been presented.
The notes on pages 58 to 81 are an integral part of these Group Financial Statements.
54 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
Group Statement of Financial Position
as at 31 December 2015
Note
As	a t
31	Dec ember
2015
£’000
As at
31 December
2014
£’000
A S Set S
Non-curr ent	as sets
Intangible assets 12 19,227 17,268
Property, plant and equipment 13 381 624
19,608 17,892
Curr ent	as sets
Inventories 14 473 160
Trade and other receivables 15 7,369 7,315
Current tax receivable 1,075 416
Cash and cash equivalents 16 18,844 8,357
27,761 16,248
t otal	as sets 47,369 34,140
LiABiLitieS
Non-curr ent	liabilities
Borrowings 17 1,982 1,135
1,982 1,135
Curr ent	liabilities
Borrowings 17 200 1,024
Trade and other payables 18 16,198 9,960
16,398 10,984
t otal	liabilities 18,380 12, 1 1 9
equitY
Capital and reserves attributable to equity holders of the Company
Share capital 21 15,876 1 1 ,975
Share premium 59,238 41,850
Accumulated losses (4 7 ,990) (32,705)
Reverse acquisition reserve (821) (821)
Other reserves 2,686 1,722
t otal	shar eholders’	equity 28,989 22,021
t otal	equity	and	liabilities 47,369 34,140
The notes on pages 58 to 81 are an integral part of these Group Financial Statements.
These Financial Statements on pages 54 to 81 were approved by the Board of Directors and authorised for issue on 29 April 2016 
and were signed on its behalf by:
Nigel	Canham	
Chief	Financial	Offic er
Flowgroup plc 
Registered number: 5819555
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Group Statement of  
Changes in Equity
for the year ended 31 December 2015
Share capital
£’000
Share 
premium
£’000
Accumulated
losses
£’000
Reverse 
acquisition 
reserve
£’000
Other
reserves
£’000
Total 
shareholders’ 
equity
£’000
Balance at 1 January 2014 11,968 41,827 (23,266) (821) 1,030 30,738
Proceeds from shares issued 7 23 — — — 30
Share-based payments — — — — 692 692
Transactions with owners for the year 7 23 — — 692 722
Loss for the year and total comprehensive loss — — (9,439) — — (9,439)
Balance at 31 December 2014 11,975 41,850 (32,705) (821) 1,722 22,021
Proceeds from shares issued 3,901 18,339 — — — 22,240
Share issue costs — (951) — — — (951)
Share-based payments — — — — 964 964
Transactions with owners for the year 3,901 17,388 — — 964 22,253
Loss for the year and total comprehensive loss — — (15,285) — — (15,285)
Balanc e	a t	31	Dec ember	20 15 15,876 59,238 (4 7 ,990) (821) 2,686 28,989
Reverse acquisition reserve
The reverse acquisition reserve relates to the reverse acquisition between Energetix (Europe) Limited and Energetix Group plc 
(now Flowgroup plc) on 8 August 2006.
Other reserves
Other reserves comprise share-based payments for the cost of options granted to employees, Non-Executive Directors and the 
Company Secretary. 
The notes on pages 58 to 81 are an integral part of these Group Financial Statements.
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Group Statement of Cash Flows
for the year ended 31 December 2015
Note
Y ear	ended
31	Dec ember
2015
£’000
Year ended
31 December
2014
£’000
Cash	flo w s	used	in	oper a ting	activities
Cash consumed by operations 22 (8, 084) (5,242)
Cash	flo w s	used	in	in v es ting	activities
Expenditure on intangible assets (2,582) (3,416)
Purchases of property, plant and equipment (160) (400)
Finance income received 24 24
(2, 7 18) (3,792)
Cash	flo w s	fr om	financing	activities
Net proceeds from the issue of ordinary shares 21,289 30
21,289 30
Net increase / (decrease) in cash and cash equivalents 10,487 (9,004)
Cash and cash equivalents at the beginning of the year 8,357 1 7,3 6 1
Cash	and	cash	equiv alents	a t	the	end	of	the	y ear 18,844 8,357
The notes on pages 58 to 81 are an integral part of these Group Financial Statements.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
1. General information
Flowgroup plc (the “Company”) and its subsidiaries (together the “Group”) provide a range of innovative energy technologies, 
energy supply and energy services. The addresses of its registered office and principal place of business are disclosed on page 96 
of the Annual Report. Flowgroup plc is a public limited company incorporated in England and Wales. Flowgroup plc’s shares are 
quoted on the AIM Market of the London Stock Exchange.
2. Summary of significant accounting policies
The principal accounting policies consistently applied in the preparation of these Group Financial Statements are set out below.
2.1 Standards and interpretations effective in the current period
The following new standards, and amendments to standards, have been adopted by the Group for the first time for the financial 
year beginning on 1 January 2015:
•	
Annual improvements 2011-2013
•	
IFRIC 21, ‘Levies’ (effective 1 January 2014) (endorsed 17 June 2014)
The adoption of these new standards has had no material impact on the Group’s Financial Statements.
2.2 Statement of compliance and basis of preparation
The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards (‘‘IFRSs”) as 
adopted by the European Union, IFRS IC interpretations and the Companies Act 2006. 
The Group Financial Statements have been prepared under the historical cost convention, except that they have been modified to 
include the revaluation of certain non-current liabilities at fair value through profit and loss.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set 
out in the Chairman’s Statement, Strategic Review, and Directors’ Report on pages 06, 26 and 42. The financial position of the 
Group, its cash flows and liquidity position are described in the Financial Review on page 32. In addition, note 20 to the Financial 
Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management 
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
In May 2015, the Group issued additional share capital raising further funds of £21.3m, The Group’s manufacturing partner Jabil 
Circuit Inc participated in this fundraising investing £7.4m resulting in a shareholding of 8.14%. In December 2015, the Group 
entered a wholesale energy supply agreement with Shell Energy Europe Limited which provides funding, by way of extended 
credit facilities, and energy purchase capacity for the anticipated growth of the energy supply business. The Shell agreement also 
released working capital for further deployment within the Group as the level of required cash security deposits was significantly 
reduced. Accordingly, at 31 December 2015 the Group had cash and cash equivalents of £18,844,000. 
The Directors have produced trading and cash flow forecasts for the Group which reflect management’s expectations for the 
continued growth in the energy services and energy supply businesses as well as the launch of boiler installations and sales in 
2016, with increasing sales through 2017. The cash flow forecasts take account of the facilities available to the Group under both 
current agreements and those expected to be available through the forecast period.
Having taken account of the Group’s strategy, the risks and opportunities facing the Group, and the trading and cash flow 
forecasts described above, the Group will have sufficient resources to continue operating for a period of at least 12 months from 
the date of approving the Annual Report. Accordingly, the Directors have continued to adopt the going concern basis in preparing 
the Group Financial Statements.     
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2. Summary of significant accounting policies continued
2.3 Critical accounting estimates and judgements
The preparation of the Group Financial Statements in conformity with IFRSs as adopted by the European Union requires the use 
of certain critical accounting estimates. It also requires management to exercise their judgement in the process of applying the 
Group’s accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including 
expectations of future events that are believed to be reasonable under the present circumstances.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the 
Group Financial Statements, are disclosed below.
Impairment of intangible assets
Management have assessed indicators of impairment and conducted an impairment review of intangible assets. They have made 
judgements as to the likelihood of them generating future cash flows, the period over which those cash flows will be received and 
the costs which are attributable against them. The recoverable amount is determined using the value in use calculation. The use 
of this method requires the estimation of future cash flows and the selection of a suitable discount rate in order to calculate the 
present value of cash flows.
In support of the assumptions, management use a variety of sources. In addition, management have undertaken scenario analyses, 
including a reduction in sales forecasts, which would not result in the value in use being less than the carrying value of the 
intangible assets. However, if the business model is not successful, the carrying value of the intangible assets may be impaired and 
may require writing down.
Management have exercised judgement in selecting the appropriate discount rate for application to cash flows when carrying out 
impairment calculations and have applied 19.1% (2014: 14.2%) representing the best estimate of the current cost of capital to the 
Group; see note 12.
Revenue recognition
Revenue from the supply of energy is recognised using customer tariff rates and industry settlement data specific to the energy 
business net of estimated supplies that are not billable based on historical patterns. Industry settlement data is the estimated 
quantity that the relevant system operator deems individual suppliers to have supplied. In determining the revenue recognised 
management have estimated the amounts likely to be billed following the reconciliation of industry settlement data to customer 
meter read data.
Impairment of trade receivables
Impairments against trade receivables are recognised where a loss is probable. Within the energy business management have 
based their assessment of the level of impairment applicable to trade receivables on prior industry experience as well as the 
collection rates being experienced. The estimates and assumptions used to determine the level of provision are regularly reviewed 
and such reviews could lead to changes in the assumptions, which may impact the income statement in future periods.
Financial liabilities
Management have considered the terms of the agreement with Battelle Memorial Institute and consider the obligation for future 
repayments based on a percentage of mainstream sales to be an item which is inherently linked to the business model. Due to the 
instrument containing an embedded derivative, the Group has designated the entire instrument as fair value through profit or loss 
(“FVTPL”); see note 17.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
2. Summary of significant accounting policies continued
2.4 Basis of consolidation
The Group controls an entity when the Group has power over an entity, is exposed to, or has rights to, variable returns from its 
involvement with the entity and has the ability to affect these returns through its power over the entity. Subsidiaries are fully 
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control 
ceases. 
The accounting periods of subsidiary undertakings are co-terminous with those of the Company. Inter-company transactions, 
balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated 
unless the transaction provides evidence of an impairment of the asset transferred. Subsidiaries’ accounting policies have been 
changed, where necessary, to ensure consistency with the policies adopted by the Group.
2.5 Intangible assets
Intangible assets are stated at cost less accumulated amortisation.
The carrying values of intangible assets are tested for impairment, when events or changes in circumstances indicate that the 
carrying amount may not be recoverable or when accounting standards require it.
Intellectual property costs are included at cost and amortised on a straight-line basis over their useful economic lives from the 
date of acquisition over a period not exceeding 20 years or the remaining life of the patent if shorter.
Development costs capitalised (note 2.13), which form part of the Group’s intangible assets, are amortised on a straight-line 
basis over a period not exceeding 10 years, starting from the point that those products resulting from the development activity 
commence mainstream sales.
The Flow microCHP boiler is deemed to still be in the development phase and accordingly no amortisation has been charged to 
the Group Income Statement for the microCHP development asset. Management deem that mainstream sales commenced in June 
2009 for the compressed air battery and consequently, amortisation of development costs capitalised until this date began 
from then.
Amortisation charges are recognised in the Group Income Statement within administrative expenses.
An impairment loss is recognised in the Group Income Statement within administrative expenses for the amount by which an 
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market 
conditions less costs to sell, and value in use based on an internal discounted cash flow. Intangible assets are subsequently 
reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if 
the asset’s recoverable amount exceeds its carrying amount. The impairment review of intangible assets is analysed in note 12. 
2.6 Property, plant and equipment
Leasehold improvements are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-
line method and is charged over the remaining period of the lease.
Plant and equipment, and furniture, fittings and equipment are stated at historical cost less accumulated depreciation. 
Depreciation of assets is calculated using the straight-line method to allocate their cost over their estimated useful lives as follows:
•	
Plant and equipment 3 years
•	
Furniture, fittings and equipment 3 years
Cost includes the original purchase price of the asset and the costs attributable, where applicable, to bringing the asset to its 
current condition and use.
Residual values and useful lives are reviewed and where appropriate, adjusted annually. Gains and losses on disposal are 
determined by comparing net proceeds with the carrying amount. These are included in the Group Income Statement.
Depreciation charges are recognised within the Group Income Statement within administrative expenses.
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2. Summary of significant accounting policies continued
2.7 Financial assets
Financial assets are classified into the following specified category: “loans and receivables”. The classification depends on the 
nature and purpose of the financial assets and is determined at the time of initial recognition.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently held at amortised cost. 
Trade receivables are amounts due from customers for energy and goods sold in the ordinary course of business. These are 
carried at original invoice amount less any provision for impairment. Allowances are made where there is evidence of risk of 
non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable 
is determined to be uncollectable it is written off, firstly against any allowance available and then to the Income Statement. 
Subsequent recoveries of amounts previously provided for are credited to the Income Statement.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is 
objective evidence that as a result of one or more events that occurred after initial recognition of the financial asset, the estimated 
cash flows of the asset have been impacted.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are 
subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could 
include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past 
the average credit period, as well as observable changes in national or local economic conditions that correlate with default on 
receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount 
and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception 
of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is 
considered uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off 
are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the Group 
Income Statement.
2.8 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of ordinarily interchangeable items are assigned using 
the first-in, first-out cost formula. Net realisable value represents the estimated selling price for inventories less all estimated costs 
of completion and costs necessary to make the sale.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits.
2.10 Trade payables
Trade payables are recognised initially at fair value and are subsequently measured at amortised cost using the effective interest 
method.
The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of allocating interest 
income/expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash 
receipts/payments through the expected life of the financial asset/liability, or, where appropriate, a shorter period.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
2. Summary of significant accounting policies continued
2.11 Other financial liabilities
Other financial liabilities including borrowings, as detailed in note 17, are recognised and valued at fair value through profit or loss.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at 
least 12 months after the reporting date.
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
2.12 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary 
course of the Group’s activities, excluding VAT and trade discounts. 
Energy
Revenue arising from the supply of energy and related services is recognised as the related costs are incurred and is stated net 
of value added tax. Revenue is derived from end user consumption extracted from industry settlement data and contractual tariff 
rate net of any supplies that are not billable. 
Sale of goods
Revenue is recognised when all the following conditions have been satisfied:
•	
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods, which is when the goods 
have been installed;
•	
the Group retains neither continuing managerial involvement to the degree usually associated with ownership, nor effective 
control over the goods sold;
•	
the amount of revenue can be measured reliably;
•	
it is probable that the economic benefits associated with the transaction will flow to the Group; and
•	
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Finance income
Interest is recognised using the effective interest method which calculates the amortised cost of a financial asset and allocates the 
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts 
through the expected life of the asset to the net carrying amount of the financial asset.
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2. Summary of significant accounting policies continued
2.13 Research and development
Research costs are charged against income as incurred. Certain development costs are capitalised as intangible assets when they 
meet the criteria discussed below. Such intangible assets are amortised on a straight-line basis from the point at which the asset is 
ready for use over the period of the expected benefit, and are reviewed for impairment at each reporting date or when events or 
changes in circumstances indicate that the carrying value may not be recoverable. Other development costs are charged against 
income as incurred since the criteria for their recognition as an asset are not met.
The criteria for recognising expenditure as an asset are:
•	
completion of the intangible asset is technically feasible so that it will be available for use or sale;
•	
the Group intends to complete the intangible asset and use or sell it;
•	
the Group has the ability to use or sell the intangible asset;
•	
the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market 
for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in 
generating such benefits;
•	
that the Group has available to it adequate technical, financial and other resources to complete the development and to use or 
sell the intangible asset; and
•	
that the Group can reliably measure the expenditure attributable to the intangible asset during its development.
The costs of an internally generated intangible asset comprise all directly attributable costs necessary to create, produce, 
and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include 
employee (other than Directors) costs incurred on technical development, testing and certification, materials consumed and 
any relevant third party costs. In accordance with IAS 36, until completion of the development project the assets are subject to 
impairment testing.
Judgement by the Directors is applied when deciding whether the recognition requirements for development costs have been 
met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical 
problems at the time of recognition. Judgements are based on the information available at each reporting date, which includes 
progress with field trials, testing and certification and progress on, for example, establishment of commercial arrangements with 
third parties. In addition, all internal activities related to research and development of new products are continuously monitored by 
the Directors.
2.14 Operating leases
The Group’s buildings and fixtures and fittings leases are regarded as operating leases and the payments made under them are 
charged to the Income Statement on a straight-line basis over the lease term. Lease incentives are spread over the term of the lease.
2.15 Current tax
The tax currently payable is based on taxable profits for the year. Taxable profit differs from profit as reported in the Group 
Income Statement because it excludes/includes items of income and expense that are taxable or deductible in other years and it 
further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that 
have been enacted or substantively enacted by the reporting date.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
2. Summary of significant accounting policies continued
2.16 Deferred tax
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on 
the difference between the carrying amounts of assets and liabilities and their tax bases. Deferred tax is not provided on the initial 
recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. T ax losses 
available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets. 
Deferred tax liabilities that are recognised are provided in full. Deferred tax assets are recognised to the extent that it is probable 
that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred 
tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided 
they are enacted or substantively enacted at the reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Group Income Statement except 
where they relate to items that are charged or credited directly to equity, in which case the related deferred tax is also charged or 
credited directly to equity.
2.17 Employee benefits
Share-based payments
The Group issues equity-settled share-based payments to certain employees (including Directors).
All goods and services received in exchange for the grant of share-based payment are measured at their fair values. Where 
employees are rewarded using share-based payments the fair values of employees’ services are determined indirectly by reference 
to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes the impact 
of non-market vesting conditions (for example, profitability and sales growth targets).
Share options are valued at the date of grant using the Black–Scholes option pricing model for options with non-market vesting 
conditions attached and a simulation model for options with market vesting conditions attached, and are charged to operating 
profit over the vesting period of the award with a corresponding credit to Other Reserves.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period based on the best 
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication 
that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting 
is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately 
exercised are different to those estimated on vesting.
Where share options granted are cancelled prior to the end of the vesting period, any fair value expense not previously charged to 
profit or loss is recognised in full at the date of cancellation.
Where performance conditions attached to options are modified within the performance period the fair value of the options 
granted is reassessed at the date the modification takes place. The fair value of the options is calculated based on both the 
original and modified performance conditions with any incremental fair value arising from the modification being recognised as an 
additional cost over the remaining performance period.
Upon exercise of share options the proceeds received, net of attributable transaction costs, are credited to share capital and, 
where appropriate, share premium account.
Bonus plans
The Group operates discretionary staff bonus schemes for its employees and Directors which are paid in cash. The maximum annual 
bonus payable under the scheme is two times the relevant employee’s basic annual salary (plus social security costs). Payments in 
excess of 10% of an employee’s annual basic salary can be settled by the allocation of equity at the Company’s discretion.
64 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
2. Summary of significant accounting policies continued
2.18 Foreign currency
The individual financial statements of each Group company are presented in the currency of the primary economic environment 
in which it operates (its functional currency). For the purpose of the Consolidated Financial Statements, the results and 
financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company 
and the presentation currency for the Consolidated Financial Statements. In preparing the financial statements of the individual 
companies, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing 
on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies 
are retranslated at the rates prevailing on the reporting date. Non-monetary items that are measured in terms of historical cost in 
foreign currency are not retranslated. Exchange differences, arising on the settlement of monetary items and on the retranslation 
of monetary items, are included in profit or loss for the year.
For the purpose of presenting the Group Financial Statements, the assets and liabilities of the Group’s foreign operations are 
translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange 
rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date 
of the transactions are used. Such translation differences are recognised as income or as expenses in the period in which the 
operation is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and 
liabilities of the foreign entity and translated at the closing rate.
2.19 Operating segments
In accordance with IFRS 8, operating segments are reported in a manner consistent with the internal reporting provided to the chief 
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance 
of the operating segments, has been identified as the Group Board of Directors. The Group’s operating segments comprise:
•	
products for distributed generation and load shifting – these are the microCHP products from Flow Products;
•	
energy supply and services by Flow Energy; and
•	
products for power quality and reliability – these comprise the compressed air battery products of Flow Battery.
These are consistent with those businesses reported in the Group’s management accounts used by the Board of Directors as the 
primary means for analysing trading performance and allocating resources.
2.20 Share capital
Shares are classified as equity and any incremental costs directly attributable to the issue of new shares are shown in equity as a 
deduction net of tax, from the proceeds.
2.21 Derivatives and other financial instruments
Commodity price risk arises from the forward purchase of energy. When contracts have been entered into as part of the normal 
business activity the Group classifies them as “own use” contracts and outside the scope of IAS 39. 
The use of derivatives and other financial instruments is governed by the Group’s policies and approval by the Board. Derivatives 
and financial instruments are not used for speculative purposes. 
2.22 Finance costs
Finance costs are recognised in the income statement in the period in which they are incurred.
2.23 Pension costs
The Group operates defined contribution pension schemes covering certain employees. The assets of these schemes are held in 
separately administered funds from the Group. The pension charge represents contributions payable by the Group to the funds.
65 www.flowgroup.uk.com Annual Report 2015
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
2. Summary of significant accounting policies continued
2.24 New accounting standards and IFRIC interpretations
The following standards have been published but are not yet effective and have not been early adopted by the Group but could 
have a material impact on the Group Financial Statements:
•	
IFRS 9 ‘Financial instruments’ (effective 1 January 2018)
•	
IFRS 15 ‘Revenue from contracts with customers’ (effective 1 January 2018)
•	
IFRS 16 ‘Leases’ (effective 1 January 2019)
Management are currently assessing the impact of adopting these new or amended standards and interpretations.
A number of further new standards and amendments to standards have been issued which will be effective for accounting periods 
beginning after 1 January 2016, none of which are expected to have a material impact on the Group Financial Statements.
3. Segmental information
The Group’s operating segments have been identified based on internal management reporting information that is regularly 
reviewed by the chief operating decision-maker, as set out in note 2.19. These operating segments are monitored and strategic 
decisions are made on the basis of adjusted segment operating results.
The segment results for the year ended 31 December 2015 are as follows:
Flo w	Pr oducts
£’000
Flo w	Ba tt ery
£’000
Flo w	ener gy
£’000
t otal
£’000
R e v enue
From external customers — 315 40,079 40,394
Segment revenues — 315 40,079 40,394
Operating loss (10 , 005) (679) (4, 126) (14,810)
Finance costs (23) — (3 7) (60)
Loss before income tax (10 , 0 28) (679) (4, 16 3) (14,8 7 0)
Income tax credit 1,831 — — 1,831
Loss for the year (8, 19 7) (679) (4, 16 3) (13, 0 3 9)
Depreciation/amortisation (56 7) (10) (3 56) (9 33)
Other non-cash movements (23) — — (23)
66 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
3. Segmental information continued
The segment results for the year ended 31 December 2014 are as follows:
Flow Products
£’000
Flow Battery
£’000
Flow Energy
£’000
Total
£’000
R e v enue
From external customers — 82 33,277 33,359
Segment revenues — 82 33,277 33,359
Operating loss (5,955) (524) (2,514) (8,993)
Finance costs (135) — (22) (157)
Loss before income tax (6,090) (524) (2,536) (9,150)
Income tax credit 657 — — 657
Loss for the year (5,433) (524) (2,536) (8,493)
Depreciation/amortisation (540) (2) (263) (805)
Other non-cash movements (135) — — (135)
The totals presented for the Group’s operating segments reconcile to the entity’s key financial figures as presented in its financial 
statements as follows:
2015
£’000
2014
£’000
R e v enue	fr om	oper a tions
Total segment revenues from operations 40,394 33,359
Group revenues from operations 40,394 33,359
L os s	fr om	oper a tions
Segment operating loss from operations (14,810) (8,993)
Other expenses not allocated (4,64 7) (4,132)
Capitalised development costs (note 12) 2,377 3,162
Gr oup	oper a ting	los s	fr om	oper a tions (17 , 080) (9,963)
Net finance costs (note 5) (36) (133)
Group loss before income tax from continuing operations (17 , 116) (10,096)
 Other expenses not allocated represent unallocated Group costs and amortisation of intangible assets. Revenue from external 
customers can be summarised as follows:
2015
£’000
2014
£’000
Sale of power quality and reliability products 315 82
Energy supply 40,079 33,277
40,394 33,359
All revenue, profit, assets and liabilities arise from the Group’s operations, all of which are domiciled in the UK.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
4. Loss before income tax
Loss before income tax is stated after charging:
2015
£’000
2014
£’000
Amortisation (note 12) 623 813
Depreciation (note 13) 403 312
Employee benefit expense (note 7) 10,231 6,742
Research and development costs (not capitalised) 71 137
Operating lease rentals:
— buildings 516 401
Impairment allowance on trade receivables (note 15) 1,241 1,008
Services provided by the Company’s auditor: 
— fees payable to the Company’s auditor for the audit of the Parent Company and Group Financial 
Statements 12 10
— fees payable to the Company’s auditor for other services 28 10
— the audit of the Company’s subsidiaries 58 45
Foreign exchange differences 1 1
5. Net finance costs
2015
£’000
2014
£’000
Financ e	inc ome
Bank interest 24 24
Financ e	c os ts
Fair value adjustment of long-term borrowings attributable to interest rate risk (note 17) (23) (135)
Interest payable (3 7) (22)
(60) (157)
Net finance costs (36) (133)
6. Directors’ remuneration
2015
£’000
2014
£’000
Dir ect ors’	emoluments
Aggregate emoluments 813 786
A detailed breakdown of Directors’ emoluments and Directors’ share options which have been audited is given on pages 48 and 
49 as part of the Directors’ Remuneration Report.
Highest paid Director
The above includes remuneration of the highest paid Director as follows:
2015
£’000
2014
£’000
Aggregate emoluments 355 511
68 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
7. Employee benefit expense
2015
£’000
2014
£’000
Wages and salaries 8,395 5,375
Social security costs 799 631
Other pension costs 73 44
Share-based payments 964 692
10,231 6,742
The analysis above includes employee benefits capitalised in the development asset totalling £1,376,000 (2014: £1,525,000).
Monthly average number of persons employed (including Directors):
2015
Number
2014
Number
Finance, administration and management 182 110
Research and development 29 27
211 137
8. Share-based payments
Employee arrangements
The Company established, in June 2006, two share option schemes in relation to ordinary shares, namely the Flowgroup 
Unapproved Share Option Scheme 2006 and the Flowgroup Enterprise Management Incentive Scheme 2006.
In August 2010, the Group established the Flowgroup “SAYE” scheme open to all employees.
In September 2010, the Company established individual “CSOPs” for a number of senior employees.
In October 2012, the Company established the Flowgroup Enterprise Management Incentive Scheme.
The Group grants options over the ordinary shares of the Company with an exercise value of not less than the market value of the 
Company’s ordinary shares on the date of grant with the exception of the “SAYE” scheme due to the timing difference between 
making the offer and issuing the option.
The vesting period is generally three to four years. With the exception of SAYE options which have a life of 3 years 6 months, if 
the option remains unexercised after a period of ten years from the date of grant, the options expire. The Group has no legal or 
constructive obligation to repurchase or settle the options in cash. The movement in the number of share options is set out below:
20 15	
Number
W eight ed	
a v er age	
e x er cise	pric e	
(penc e )
2014 
Number
Weighted 
average 
exercise price 
(pence)
Number of outstanding share options at 1 January 16,682,023 28.2 12,979,080 26.2
Granted during the year 19,313,429 14.7 4,791,792 32.6
Exercised during the year — — (125,216) 23.0
Lapsed during the year (3,340 ,805) 24.2 (963,633) 23.8
Released during the year (3,382,676) 35.2 — —
Number of outstanding share options at 31 December 29,271,971 19.0 16,682,023 28.2
As at 31 December 2015, 106,574 share options were capable of being exercised (2014: 232,287) with a weighted average exercise 
price of 33.1 pence (2014: 43.0 pence).
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Notes to the 
Group Financial Statements
for the year ended 31 December 2015
8. Share-based payments continued
For the share options outstanding at 31 December 2015 the range of exercise prices are between 12.0 pence and 43.8 pence. 
There was an average remaining contractual life of 8 years 4 months.
Share options are valued at the date of grant using the Black–Scholes option pricing model for options with non-market vesting 
conditions attached and a simulation model (Monte Carlo) for options with market vesting performance conditions, and are 
charged to operating profit over the vesting period of the award with a corresponding credit to other reserves. This resulted in 
a fair value charge of £964,000 (2014: £692,000) recognised in administrative expenses and a corresponding credit to other 
reserves.
Assumptions
Date of grant
Exercise 
price 
(pence)
Ordinary 
shares
under 
option
Share price 
at date 
of grant 
(pence)
Expected 
volatility
Risk-free 
interest 
rate
Life of 
option 
(years)
Expected 
dividends
Vesting 
requirements
21 January 2009 105.5 412,500 39.5 38.7% 4.50% 1 Nil 1
7 September 2009 41.5 72,289 41.5 42.7% 4.50% 3 Nil 2
31 August 2010 23.0 491,472 29.5 40.8% 4.50% 3 Nil 2
29 September 2010 43.8 182,854 43.8 38.7% 4.50% 3 Nil 2
20 May 2011 21.3 1,954,650 18.5 38.7% 4.50% 3 Nil 1
10 October 2011 29.8 1,954,650 31.5 38.7% 4.50% 3 Nil 1
17 October 2012 28.0 12,415,761 31.4 58.6% 0.86% 3 Nil 3
17 October 2012 28.0 1,748,063 31.4 58.6% 0.86% 3 Nil 4
2 May 2013 17.3 1,325,056 17.3 61.0% 0.86% 3 Nil 3
16 August 2013 14.5 362,068 14.5 61.0% 0.86% 3 Nil 4
20 December 2013 16.25 500,000 17.6 59.1% 0.86% 3 Nil 4
23 June 2014 25.9 1,321,677 32.5 51.8% 1.80% 3 Nil 5
3 July 2014 30.25 1,000,000 28.2 51.8% 1.80% 3 Nil 4
11 September 2014 36.25 750,000 36.25 51.8% 1.80% 3 Nil 4
12 November 2014 28.8 720,125 36.0 51.8% 1.80% 3 Nil 5
11 December 2014 43.75 1,000,000 43.75 51.8% 1.80% 3 Nil 4
1 July 2015 12.0 5,738,700 14.25 57.0% 2.00% 3 Nil 5
15 December 2015 15.86 1 3,574,729 16.12 57.0% 2.00% 3 Nil 6
1. Options have been modified with criteria 4 (Black–Scholes model)
2.  No performance criteria are attached and may be exercised until the tenth anniversary following their grant (Black–Scholes model)
3.  Options may be exercised at any time following their grant equally in three tranches, subject to certain commercial performance criteria 
(Monte Carlo model)
4.  Options may be exercised at any time following their grant subject to certain commercial performance criteria (Monte Carlo model)
5. Options granted under SAYE option scheme (Black–Scholes model)
6.  Options may be exercised in three equal annual instalments on the anniversary of grant subject to satisfaction of non market performance criteria 
(Black–Scholes model)
On 15 December 2015 the performance criteria attached to the grant of 8,416,074 shares on 17 October 2012 at 28.0 pence and 
1,325,015 shares on 17 October 2013 at 17.3 pence were revised to reflect operational milestones. In accordance with the Group’s 
accounting policy the change in performance conditions has been treated as a modification. The fair value of the options subject 
to the modification has therefore been re-measured with the incremental fair value arising from the modification being recognised 
within the Group’s share based payment charge over the remaining performance period.
On 15 December 2015 options in respect of 3,382,676 shares at an average price of 32.5p were released and replaced with options 
in respect of 9,375,000 shares at 15.86 pence. In respect of the release of options for 1,850,000 shares and the grant of options 
over 4,850,000 shares the change in valuation has been treated as a modification and is being charged over the expected vesting 
period. The cancellation of the remaining options and the grant of new options has been accounted for as a cancellation and grant 
of new share options. 
70 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
8. Share-based payments continued
The middle market price of ordinary shares on 31 December 2015 was 15.50 (2014: 43.75) pence. The high and low market prices 
during the year were 47.5 (2014: 47.5) pence and 10.1 (2014: 13.0) pence respectively.
Expected volatility is derived from observation of the historic volatility of the Company’s shares from 2006 to date of grant.
The expected life used in the model has been adjusted based on management’s best estimate, for the effects of 
non-transferability, exercise restrictions and behavioural conditions.
National insurance is payable on gains made by employees on exercise of share options granted to them.
Arrangements with Shell Energy Europe Limited
Under the terms of the energy purchase arrangements entered into in December 2015 Shell Energy Europe Limited holds a 
warrant to subscribe for shares (or the equivalent in cash at their call) in Flow Energy Limited. The value is equivalent to 10% of 
the growth in value of Flow Energy Limited between the inception of the arrangements and the date of exercise. This arrangement 
is being accounted for as a cash settled share-based payment arrangement with the estimated final value being accrued over the 
5 year life of the energy supply arrangements. Accruals of the anticipated settlement value will commence in January 2016.
9. Income tax
2015
£’000
2014
£’000
Current tax 427 —
Credit in respect of prior years 1,404 657
Total income tax 1,831 657
Both the current tax and the credit in respect of prior years arises from tax credits on research and development expenditure.
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the weighted average rate 
applicable to losses of the Group entities as follows:
2015
£’000
2014
£’000
Loss before income tax (17 , 116) (10,096)
Loss before income tax multiplied by rate of corporation tax in the UK of 20.25% (2014: 21.5%) (3,465) (2,171)
Adjustment for tax rate differences 40 140
Adjustment for non-deductible expenses 170 147
Movement in deferred tax not provided 3,255 1,884
Research and development tax credits (1,831) (657)
Total income tax (1,831) (657)
Unrelieved tax losses of £50,411,000 (2014: £45,492,000) remain available to offset against future taxable trading profits. 
jNo deferred tax asset has been recognised in respect of the losses as recoverability is uncertain.
Changes to the UK corporation tax rates were announced on 8 July 2015. These changes were substantively enacted as part the 
Finance Bill 2015 on 26 October 2015 and include reductions to the main rate to 19% from 1 April 2017 and to 18% from 1 April 2020. 
On 16 March 2016 further changes to the UK corporation tax rate were announced including a further reduction in the UK corporation 
tax rate to 17% from 2020, which supersedes the change enacted on 26 October 2015. However, this further change was not 
substantively enacted as at 31 December 2015 and has not therefore been reflected in these Financial Statements. As the Group 
currently has no recognised deferred tax assets the change in tax rates has had no impact on the Group Financial Statements.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
10. Deferred tax
The unprovided deferred taxation asset is calculated at a tax rate of 18% (2014: 20%) and is set out below:
2015
£’000
2014
£’000
Depreciation in excess of capital allowances (280) (179)
Share-based payments — —
Other short-term temporary differences 2,011 2,518
Trade losses (9 , 0 7 4) (9,098)
(7 ,343) (6,759)
11. Loss per ordinary share
The loss per ordinary share is based on the loss of £15,285,000 (2014: £9,439,000) and 288,024,829 (2014: 239,449,617) ordinary 
shares of 5 pence each being the weighted average number of shares in issue during the year.
All shares have been included in the computation based on the weighted average number of days since issuance.
2015 2014
Loss for the year (£’000) (15,285) (9,439)
Diluted average number of ordinary shares (including share options) 306,230,589 253,016,595
Weighted average number of ordinary shares in issue 288,024,829 239,449,617
Basic and diluted loss per share (pence) (5.31) (3.94)
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares to assume conversion of all 
potentially dilutive ordinary shares arising from awards made under the Group’s share option schemes, and where performance 
criteria are involved the number of shares expected to be issued against such criteria. As the diluted loss per share is less than the 
basic loss per share the share option awards are considered anti dilutive and have been ignored.
12. Intangible assets
Intellectual 
property 
£’000
MicroCHP 
development 
asset 
£’000
Compressed 
air battery 
development 
asset 
£’000
Other 
intangible 
assets 
£’000
Total 
£’000
Cost
At 1 January 2014 5,787 10,708 2,046 725 19,266
Additions — 3,162 — 254 3,416
A t	31	Dec ember	20 14 5,787 13,870 2,046 979 22,682
Additions — 2,377 — 205 2,582
A t	31	Dec ember	20 15 5,787 16,247 2,046 1,184 25,264
A c cumula t ed	amortisa tion
At 1 January 2014 2,554 — 1,795 252 4,601
Charge for the year 336 — 251 226 813
A t	31	Dec ember	20 14 2,890 — 2,046 478 5,414
Charge for the year 336 — — 287 623
A t	31	Dec ember	20 15 3,226 — 2,046 765 6,037
Net	book	v alue	
A t	31	Dec ember	20 15 2,561 16,247 — 419 19,227
At 31 December 2014 2,897 13,870 — 501 17,268
At 31 December 2013 3,233 10,708 251 473 14,665
Additions in respect of the micoCHP development asset during the year arise from internal development.
72 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
12. Intangible assets continued
Intangible assets comprise internally generated product development costs capitalised in accordance with IAS 38 and purchased 
intellectual property held at cost less amortisation following the disposal of Energetix Micropower Limited. Other intangible assets 
relate to purchased software.
Intellectual property
On 16 April 2004, the Group disposed of its 60% investment in Energetix Micropower Limited to a third party for an initial 
consideration of £1,031,400 on completion of the transaction, deferred consideration of £4,200,000, of which £900,000 was due 
as at 16 April 2006, and contingent consideration of £600,000 (based upon the sale of 60,000 units by the acquirer). 
The deferred consideration was discounted at 6.75% from the date of disposal to the anticipated settlement date. Initially, the 
discount was recorded as finance costs of £846,000.
On 16 April 2006, the third party indicated that they would not pay the Group the deferred consideration for Energetix 
Micropower Limited that was originally sold in April 2004. The terms of the original Sale and Purchase Agreement contained 
clauses that anticipated this eventuality and accordingly resulted in the return of the intellectual property into a new subsidiary 
of the Group (Energyboost Limited (now Flow Products Limited)) formed for the purpose.
The agreement also made provision for the original partner to Energetix Micropower Limited to participate in the new subsidiary 
with their original 40% equity holding.
The Group agreed that its original partner in this venture received a £3,000,000 preference debt in the new subsidiary in lieu 
of any entitlement to equity (see note 17). The preference debt has been discounted at 10.0% from the date of assuming the 
preference debt until the anticipated settlement date. This preference debt will be paid out of the future earnings of the new 
subsidiary.
In accordance with IAS 38 the intellectual property has been capitalised at the discounted value of the deferred consideration 
foregone plus the value of debt assumed by the Company.
£’000
Current receivable foregone as at 16 April 2006 900
Discounted value of deferred consideration foregone 2,378
Discounted value of preference debt given for 40% of the equity 2,509
Cost of intellectual property included in intangible assets 5,787
The remaining amortisation period as at December 2015 of the intellectual property is eight years.
Capitalised product development costs
The Group currently has internally generated intangible assets from development of its microCHP module and compressed air 
battery. All other development costs have been written off as incurred where the criteria for recognition as an asset are not met.
Development costs are capitalised by the Group until the commencement of mainstream sales. Management determined that such 
sales began in Flow Battery Limited in June 2009 and, consequently, capitalisation of development costs ceased and amortisation 
of the carrying amount of the development assets began at that time. Development costs continue to be capitalised under IFRS 
for the microCHP module as mainstream sales are yet to commence.
Following the commencement of mainstream sales in Flow Battery, development costs relating to products in existence at  
1 January 2010 that are now being sold are expensed to the Income Statement and are no longer capitalised. Subsequent to the 
commencement of mainstream sales, Flow Battery Limited incurred £71,000 (2014: £137,000) of development costs that have 
been expensed to the Group Income Statement in relation to these products.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
12. Intangible assets continued
Impairment review
The Group has undertaken an impairment review by cash generating unit. The Group determines that the following cash 
generating units exist and that their individual costs of capital are:
t echnology Subsidiary C os t	of	capital
t otal	intangible	as set	
carrying	v alue	
£’000
MicroCHP Flow Products Limited 19.1% 18,808
Following a review of the CGU, the Directors do not believe the carrying value of the Group’s intangible assets to be impaired and, 
hence, no charge has been made.
Key assumptions
MicroCHP
The recoverable amount of a CGU is primarily determined based on value in use calculations. These calculations use pre-tax cash 
flow projections based on financial budgets, covering five years with an extrapolation assuming no further growth for an additional 
five years, which are approved by the Board. The cash flow projections include a number of key assumptions which reflect the 
stage of development of the microCHP boiler. The key assumptions included within the cash flow projections are:
•	
Unit sales volumes;
•	
Unit sales prices;
•	
Unit cost prices;
•	
Sales support and warranty costs.
Unit cost prices are determined from discussion with the Group’s manufacturing partner. Selling prices have been estimated on 
management’s best margin and cost estimates taking into account market conditions. Sales support and warranty costs have been 
extrapolated on previous experience of similar products.
The Directors have considered cash flows and thus value in use over a ten year period reflecting the minimum period expected 
to benefit from the microCHP technology. Sales volumes and margins have been held constant beyond the initial five year period. 
The value in use derived from management’s cash flow forecasts over this period exceeded £42,500,000 with the carrying value 
being recovered over a five year period.
The pre-tax discount rate used within the value in use calculation was 19.1% (2014: 14.2%) and is based upon the weighted average 
cost of capital reflecting specific principal risks and uncertainties applicable to the CGU. The discount rate takes into account, 
amongst other things, the risk free rate of return (derived from a 10 year government bond price), the market risk premium, 
specific to the markets in which the Group operates, and the Beta factor for the Group, all of which are used in deriving the cost  
of equity. 
As part of the impairment review, the Directors have considered reasonably possible changes in key assumptions and the impact 
these would have on projected cash flows and the carrying value of the CGU. The discount rate applied could be increased to in 
excess of 39%, assuming no change in other assumptions, before an impairment would be required. 
However, given the stage of development of the Flow boiler the key risk within the projections is the successful execution of 
the Group’s business model and therefore uptake and unit sales of the Flow Boiler. Should the Group’s business model not be 
successfully implemented, and unit sales not reach the levels forecast by management, the carrying value of the CGU may need to 
be impaired in the future. Based on the cash flow forecasts prepared by the Directors, a 40% reduction in forecast long term unit 
sales would give rise to a potential impairment in the carrying value of the CGU, assuming no change in other assumptions.
74 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
13. Property, plant and equipment
Leasehold 
improvement 
£’000
Plant and 
equipment 
£’000
Furniture, 
fittings and 
equipment 
£’000
Total 
£’000
Cost
At 1 January 2014 117 797 453 1,367
Additions 150 22 228 400
A t	31	Dec ember	20 14 267 819 681 1,767
Additions 12 24 124 160
A t	31	Dec ember	20 15 279 843 805 1,927
A c cumula t ed	depr ecia tion
At 1 January 2014 88 470 273 831
Charge for the year 35 156 121 312
A t	31	Dec ember	20 14 123 626 394 1,143
Charge for the year 61 161 181 403
A t	31	Dec ember	20 15 184 787 575 1,546
Net	book	v alue
A t	31	Dec ember	20 15 95 56 230 381
At 31 December 2014 144 193 287 624
At 31 December 2013 29 327 180 536
14. Inventories
2015
£’000
2014
£’000
Raw materials 473 160
No impairment provisions have been recognised within the value of inventories. 
15. Trade and other receivables
2015
£’000
2014
£’000
Trade receivables 4,565 3,264
Other receivables 1,883 3,743
Prepayments and accrued income 921 308
At 31 December 7,369 7,315
The average credit period on sales of goods and services is 41 days (2014: 34 days). No interest is charged on trade receivables. 
The ageing of trade receivables at the balance sheet date was:
2015
£’000
2014
£’000
0 to 30 days 3,820 2,066
31 to 60 days 799 1,183
61 to 90 days 456 554
More than 91 days 2,141 871
7,216 4,674
Impairment allowance (2,651) (1,410)
4,565 3,264
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
15. Trade and other receivables continued
Trade receivables are amounts due from customers for energy sold in the ordinary course of business. These are carried at 
original invoice amount less any allowance for impairment. Allowances are made where there is evidence of risk of non-payment, 
taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be 
uncollectable it is written off, firstly against any allowance available and then to the Income Statement. Subsequent recoveries of 
amounts previously provided for are credited to the Income Statement.
Give the number and nature of the Group’s customers it has no concentration of credit risk. The Directors consider the fair value to 
be equal to the carrying value given the short term nature of the trade and other receivables.
The Group does not hold any collateral as security.
There is no impairment allowance within other categories of receivables.
16. Cash and cash equivalents
2015
£’000
2014
£’000
Cash at bank and in hand 18,844 8,357
All cash at bank and in hand is held by UK banks meeting the criteria set out in the Directors’ Report on page 42.
17. Financial liabilities — borrowings
2015
£’000
2014
£’000
Curr ent
Financial liabilities designated at fair value through profit or loss 200 1,024
200 1,024
Non-curr ent
Financial liabilities designated at fair value through profit or loss 1,982 1,135
2,182 2,159
The maturity of non-current borrowings is as follows:
2015
£’000
2014
£’000
Between 1 and 2 years 1,736 1,135
Between 2 and 5 years 246 —
1,982 1,135
In July 2006, Energetix (Europe) Limited and Flow Products Limited entered into an arrangement with Battelle Memorial Institute 
(“Battelle”) under which Battelle agreed to waive all rights to subscribe for 40% of the share capital of Flow Products Limited in 
exchange for a £3,000,000 preference debt in Flow Products Limited. The preference debt has been discounted at 10% (2014: 
10%) from the date of assuming the preference debt until the anticipated settlement date, giving rise to a non-current liability of 
£1,982,000 (2014: £1,135,000) and a current liability of £200,000 (2014: £1,024,000). The terms are that it is not interest bearing, 
that £500,000 was repaid over the two years ending August 2008 and that the balance will be repaid by (i) an amount equal 
to 10% of any license fees paid to Flow Products Limited by any third party and (ii) 2% of amounts received by Flow Products 
Limited in respect of all mainstream sales. The obligation for future repayments based on a percentage of mainstream sales is 
considered an embedded derivative. During the year, £Nil (2014: £Nil) was repaid and the discounting of future repayments at 
10% (2013: 10%) has resulted in a £23,000 increase (2014: £135,000 increase) to the carrying value of the liability. The amount 
contractually repayable at 31 December 2015 was £2,500,000 (2014: £2,500,000).
76 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
17. Financial liabilities — borrowings continued
Financial liabilities are recognised when the Group becomes party to the contractual agreement of the instrument. All interest-
related charges and changes in an instrument’s fair value are reported in the Group Income Statement and are shown within 
finance cost.
The change in value of the financial liability is derived from the level of mainstream sales expected to be obtained and, as such,  
is not attributable to changes in the credit risk of the liability.
The wholesale energy agreement with Shell Energy Europe Limited entered into during December 2015 contains a number of 
financial covenants, warranties and representations and in particular includes security over the business and assets of Flow Energy 
Limited and a charge over the shareholding in Flow Energy Limited held by Flowgroup plc. There was no indebtedness under 
these arrangements on 31 December 2015.
There are no other borrowing facilities or arrangements in place for the Group as at 31 December 2015 and 31 December 2014.
18. Trade and other payables
2015
£’000
2014
£’000
Trade payables 2,472 523
Social security and other taxes 153 220
Accrued expenses 13,573 9,217
16,198 9,960
The Directors consider the fair value to be equal to the carrying value given the short term nature of the trade and other payables.
19. Compensation of key management personnel
The remuneration of Directors and other members of key management during the year was as follows:
2015
£’000
2014
£’000
Short-term employee benefits 1,250 786
Share-based payments 713 468
1,963 1,254
The remuneration of Directors is determined by the Remuneration Committee having regard to performance of individuals and 
market trends detailed in the Remuneration Report on pages 47 to 49.
20. Financial instruments
20.1 Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern, whilst maximising 
the return to stakeholders. The Group’s overall strategy remains unchanged from 2014 and seeks to minimise costs and liquidity 
risk giving priority to security then to liquidity and then to yield; and to preserve the principal value of the investment by investing 
surplus funds only with institutions of a high credit standing.
The capital structure of the Group consists of debt, which includes borrowings of £2,182,000 (2014: £2,159,000) as disclosed 
in note 17, cash and cash equivalents of £18,844,000 (2014: £8,357,000) and equity attributable to equity holders of the Parent 
Company, comprising issued capital, reserves and retained earnings.
The Group manages the capital structure, and makes adjustments to it, in the light of changes in economic conditions and the risk 
characteristics of the underlying assets. In order to maintain or adjust the capital structure the Group may in future adjust 
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
20. Financial instruments continued
20.2 Significant accounting policies
Details of significant accounting policies and methods adopted — including the criteria for recognition, the basis of measurement 
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity 
instrument — are disclosed in note 2 to the Financial Statements.
20.3 Categories of financial instruments
2015
£’000
2014
£’000
Financial	as sets
Loans and receivables (including cash and cash equivalents) 23,409 11,621
Financial	liabilities
Designated at fair value through profit or loss 2,182 2,1 59
Amortised cost 16,198 9,960
The carrying amount reflected above represents the Group’s maximum exposure to credit risk for such loans and receivables.
Currently, the Group does not undertake a significant number of transactions denominated in foreign currencies. Nevertheless, the 
Directors are aware of the benefits of hedging currency transactions and will implement such procedures when the number and/
or scale of such transactions makes such a course of action appropriate.
For commentary on credit risk, liquidity risk and currency risk, see note 2 and the financial risk management objectives and 
policies disclosed in the Directors’ Report on page 43.
Furthermore, as detailed in note 17, there exists the obligation for future payments based on a percentage of mainstream sales by 
Flow Products Limited against the preference debt. The maximum outstanding against this debt is capped at £2,500,000 (2014: 
£2,500,000). Payments are dependent upon mainstream sales with a consequent inflow of funds to the Group. Given the cash 
resources available to the Group, the Directors maintain that the liquidity risk inherent in this contingent liability can be adequately 
managed.
Contractual undiscounted cash flows in respect of financial liabilities are as follows:
As	a t	31	Dec ember	20 15
0–60	da y s	 	
£’000
6 1	da y s	—	
6	months	
£’000
7	months	—	
12	months	
£’000
13	months	—	 	
2	y ears	
£’000
Gr ea t er	than	 	
2	y ears	up	t o	
5	y ears	
£’000
t otal
£’000
Trade and other payables 16,198 — — — — 16,198
Total excluding derivatives 16,198 — — — — 16,198
Financial liability held at FVTPL — — 220 2,100 180 2,500
16,198 — 220 2,100 180 18,698
As at 31 December 2014
0–60 days  
£’000
61 days — 
6 months 
£’000
7 months — 
12 months 
£’000
13 months —  
2 years 
£’000
Greater than  
2 years up to 
5 years 
£’000
Total
£’000
Trade and other payables 9,960 — — — — 9,960
Total excluding derivatives 9,960 — — — — 9,960
Financial liability held at FVTPL — 35 1,092 1,373 — 2,500
9,960 35 1,092 1,373 — 12,460
78 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
20. Financial instruments continued
20.4 Fair value hierarchy
The following table presents financial assets and liabilities measured at fair value in the Statement of Financial Position in 
accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels, based on the 
significance of inputs used in measuring the fair value of the financial assets and liabilities.
The fair value hierarchy has the following levels:
•	
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
•	
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly 
(i.e. as prices) or indirectly (i.e. derived from prices); and
•	
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the 
fair value measurement.
The financial liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy 
as follows:
31	Dec ember	20 15 Note
L e v el	1	
£’000
L e v el	2	
£’000
L e v el	3	
£’000
t otal	
£’000
Liabilities
Designated at fair value through profit or loss 17 — — 2,182 2,182
Net	f air	v alue — — 2,182 2,182
There have been no transfers between levels during the year.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous 
reporting year.
Fair value measurement in Level 3
The Group’s financial liabilities classified in Level 3 use valuation techniques based on significant inputs that are not based on 
observable market data. The financial instruments within this level can be reconciled from beginning to ending balances as follows:
2015
£’000
2014
£’000
Opening balance 2,159 2,024
Loss recognised in profit or loss for the year and presented in finance costs 23 135
Closing balance 2,182 2,159
The Group measures its fair value liability using a discounted cash flow model based on future sales. The Group has determined 
the applicable discount rate as 10%.
The Group has determined future sales used in the model from agreed forecasts and, where such forecasts are not available, 
prudent extrapolations of such forecasts. Using alternative forecasts changes the fair value of the liability as follows:
Alternative sales forecast
F air	v alue	a t	
31	Dec ember	
20 15	
£’000
Change in fair 
value 
£’000
£2.0m reduction in 2016 2,186 (6)
£4.0m reduction in 2017 2,186 (6)
Given the above, management believe that the fair value presented in these Group Financial Statements is appropriate.
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Notes to the  
Group Financial Statements
for the year ended 31 December 2015
20. Financial instruments continued
20.5 Liquidity risk
Liquidity risk is the risk arising from the Group not being able to meet its obligations. The Group manages its liquidity needs by 
monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows 
due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity 
analysis in note 20.3. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as 
on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified 
monthly. Net cash requirements are compared to available facilities in order to determine headroom or any shortfalls.
The Group’s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a 
minimum. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and 
the ability to sell long-term financial assets. The Group does not have instruments that include accelerated repayment terms (for 
example, in the event of a downgrade in credit rating).
The Directors maintain that, given the cash resources available to the Group, the liquidity risk inherent in the above is adequately 
managed. Further details are contained in note 2.2 of the Financial Statements.
20.6 Interest rate sensitivity
The following table illustrates the sensitivity of the loss for the year and equity to a reasonably possible change in interest rates 
of 1% (2014: 1%) with effect from the beginning of the year. These changes are considered to be reasonably possible based on an 
observation of current market conditions. The calculations are based on the Group’s cash and cash equivalents held at the Balance 
Sheet date. All other variables are held constant:
2015
£’000
2014
£’000
+1% -1% +1% -1%
Loss for the year 188 (188) 84 (84)
Equity 188 (188) 84 (84)
20.7 Commodity risk
As an energy supplier, the Group has risk both in terms of the customer volumes and energy pricing. Volumes are taken from 
industry data with expected customer demand being derived from models taking account of seasonal variations. The resultant 
energy demand is then secured by forward fixed price energy purchase contracts. The Group does not take speculative positions 
on either price or volume, with all energy being purchased for anticipated customer requirements. As at 31 December 2015 the 
Group had forward contracts for energy delivery through 2016 of £15,089,000 (2014: £10,866,000).
21. Share capital 
31	Dec ember	20 15 31 December 2014
Number	of	
shar es
Shar e	capital	
£’000
Number of 
shares
Share capital 
£’000
is sued	and	fully	paid	–	or dinary	shar es
As at 1 January 239,492,478 11,975 239,367,262 11,968
Shares issued (19 May 2015) 78,036,600 3,901 — —
Shares issued (10 April 2014) — — 78,260 4
Shares issued (24 April 2014) — — 7,826 1
Shares issued (26 June 2014) — — 39,130 2
As at 31 December 317,529,078 15,876 239,492,478 11,975
On 19 May 2015, the Company issued 78,036,600 ordinary shares of 5 pence at 28.5 pence per share. 
80 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
22. Cash consumed by operations
2015
£’000
2014
£’000
C ontinuing	oper a tions
Loss before income tax (17 , 116) (10,096)
Adjustments for:
— Depreciation 403 312
— Amortisation 623 813
— Finance income (2 4) (24)
— Finance costs 23 135
— Share-based payments 964 692
— Tax received 1,172 241
Movements in working capital
— Increase in inventories (313) (145)
— Increase in trade and other receivables (54) (2,974)
— Increase in trade and other payables 6,238 5,804
Cash consumed by continuing operations (8, 084) (5,242)
23. Operating lease commitments — minimum lease payments
The future aggregate minimum lease payments under non-cancellable lease arrangements are:
2015
£’000
2014
£’000
Within 1 year 243 250
Within 2–5 years 280 522
523 772
No sublease payments or contingent rent payments were made or received; neither do the Group’s operating lease agreements 
contain any contingent rent clauses, renewal or purchase options or escalation clauses.
24. Related party transactions
The subsidiaries of Flowgroup plc are Flow Products Limited, Flow Battery Limited, Energetix Europe Limited, Flow Energy 
Limited, Kingston Energy Limited, Energetix Technologies Inc., Thermetica Limited, Energetix (Nominees) Limited, Energetix Laser 
Technologies Limited, Energetix Group Limited, Flow Finance Limited, Flow Installations Limited, Energetix Genlec Limited and 
Circuit Energy Supply Limited. These have been included in the Group Financial Statements.
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on 
consolidation and are not disclosed in this note.
Clare Spottiswoode has provided additional consultancy services to the Group. The amount paid during the year ended  
31 December 2015 was £18,000 (2014: £Nil)
242 Associates LLP, of which David Grundy is a partner, charges Flowgroup plc for his additional consultancy services provided to 
the Group. The amount paid during the year ended 31 December 2015 was £Nil (2014: £66,000).
Henry J Cialone has provided additional technical consultancy services to the Group. The amount paid during the year ended  
31 December 2015 was £13,414 (2014: £24,406).
John Johnston has provided additional consultancy services to the Group. The amount paid during the year was £2,000 
(2014: £11,000).
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Independent Auditors’ Report
to the members of Flowgroup plc
Report on the Parent 
Company Financial 
Statements
Our opinion
In our opinion, Flowgroup plc’s Company 
Financial Statements (the “Financial 
Statements”):
•	
give a true and fair view of the state of 
the Company’s affairs as at 
31 December 2015;
•	
have been properly prepared in 
accordance with United Kingdom 
Generally Accepted Accounting 
Practice; and
•	
have been prepared in accordance 
with the requirements of the 
Companies Act 2006.
What we have audited
Flowgroup plc’s Financial Statements 
comprise:
•	
the Company Balance Sheet as at 
31 December 2015; 
•	
the Company Statement of Changes 
in Equity for the year then ended; and
•	
the notes to the Financial Statements, 
which include a summary of 
significant accounting policies and 
other explanatory information.
Certain required disclosures have been 
presented elsewhere in the Annual 
Report, rather than in the notes to the 
Financial Statements. These are cross-
referenced from the Financial Statements 
and are identified as audited.
The financial reporting framework that 
has been applied in the preparation 
of the Financial Statements is United 
Kingdom Accounting Standards, 
comprising FRS 102 “the Financial 
Reporting Standard applicable in the UK 
and Republic of Ireland”, and applicable 
law (United Kingdom Generally Accepted 
Accounting Practice).
In applying the financial reporting 
framework, the Directors have made 
a number of subjective judgements, 
for example in respect of significant 
accounting estimates. In making such 
estimates, they have made assumptions 
and considered future events.
Opinion on other 
matter prescribed by 
the Companies Act 
2006
In our opinion, the information given in 
the Strategic Report and the Directors’ 
Report for the financial year for which 
the Financial Statements are prepared is 
consistent with the Financial Statements.
Other matters on which 
we are required to 
report by exception
Adequacy of accounting 
records and information and 
explanations received
Under the Companies Act 2006 we 
are required to report to you if, in our 
opinion:
•	
we have not received all the 
information and explanations we 
require for our audit; or
•	
adequate accounting records have not 
been kept by the Company, or returns 
adequate for our audit have not been 
received from branches not visited by 
us; or
•	
the financial statements are not 
in agreement with the accounting 
records and returns.
We have no exceptions to report arising 
from this responsibility.
Directors’ remuneration
Under the Companies Act 2006 we 
are required to report to you if, in our 
opinion, certain disclosures of Directors’ 
remuneration specified by law are not 
made. We have no exceptions to report 
arising from this responsibility. 
82 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
Responsibilities for the 
financial statements 
and the audit
Our responsibilities and those of 
the Directors
As explained more fully in the Statement 
of Directors’ Responsibilities on page 
46, the Directors are responsible for the 
preparation of the Financial Statements 
and for being satisfied that they give a 
true and fair view.
Our responsibility is to audit and express 
an opinion on the Financial Statements 
in accordance with applicable law and 
International Standards on Auditing 
(UK and Ireland) (“ISAs (UK & Ireland)”). 
Those standards require us to comply 
with the Auditing Practices Board’s 
Ethical Standards for Auditors.
This report, including the opinions, 
has been prepared for and only for 
the Company’s members as a body in 
accordance with Chapter 3 of Part 16 
of the Companies Act 2006 and for no 
other purpose. We do not, in giving these 
opinions, accept or assume responsibility 
for any other purpose or to any other 
person to whom this report is shown 
or into whose hands it may come save 
where expressly agreed by our prior 
consent in writing.
What an audit of 
financial statements 
involves
We conducted our audit in accordance 
with ISAs (UK & Ireland). An audit 
involves obtaining evidence about the 
amounts and disclosures in the Financial 
Statements sufficient to give reasonable 
assurance that the financial statements 
are free from material misstatement, 
whether caused by fraud or error. 
This includes an assessment of: 
•	
whether the accounting policies 
are appropriate to the Company’s 
circumstances and have been 
consistently applied and adequately 
disclosed; 
•	
the reasonableness of significant 
accounting estimates made by the 
Directors; and 
•	
the overall presentation of the 
Financial Statements. 
We primarily focus our work in these 
areas by assessing the Directors’ 
judgements against available evidence, 
forming our own judgements, and 
evaluating the disclosures in the financial 
statements.
We test and examine information, using 
sampling and other auditing techniques, 
to the extent we consider necessary to 
provide a reasonable basis for us to draw 
conclusions. We obtain audit evidence 
through testing the effectiveness of 
controls, substantive procedures or a 
combination of both. 
In addition, we read all the financial 
and non-financial information in the 
Annual Report to identify material 
inconsistencies with the audited 
Financial Statements and to identify 
any information that is apparently 
materially incorrect based on, or 
materially inconsistent with, the 
knowledge acquired by us in the 
course of performing the audit. If we 
become aware of any apparent material 
misstatements or inconsistencies we 
consider the implications for our report.
Other matter
We have reported separately on 
the Group Financial Statements of 
Flowgroup plc for the year ended 
31 December 2015.
Haz el	Macnamar a		
(Senior	S ta tut ory	A udit or)
for and on behalf of 
PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory 
Auditors 
Manchester 
29 April 2016
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Company Balance Sheet
as at 31 December 2015
Note
As	a t	 	
31	Dec ember
2015
£’000
As at  
31 December
2014
£’000
Fix ed	as sets 	
Tangible assets C3 82 146
Investments C4 672 421
754 567
Curr ent	as sets
Debtors C5 872 8,196
Cash at bank and in hand 17,142 6,920
18,014 15,116
Creditors: amounts falling due within one year C6 (2, 0 3 9) (6,096)
Net	curr ent	as sets 15,975 9,020
Net	as sets 16,729 9,587
Capital	and	r eserv es
Called up share capital C8 15,876 11,975
Share premium account 59,238 41,850
Other reserves 2,686 1,722
Profit and loss account (6 1, 0 7 1) (45,960)
Shar eholders’	funds 16,729 9,587
The notes on pages 86 to 93 are an integral part of the Company’s Financial Statements.
These Financial Statements on pages 84 to 93 were approved by the Board of Directors and authorised for issue on 29 April 2016 
and were signed on its behalf by:
Nigel	Canham	
Chief	Financial	Offic er
Flowgroup plc 
Registered number: 5819555
84 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
Company Statement of Changes in 
Equity
for the year ended 31 December 2015
Called up
share capital
£’000
Share 
premium
£’000
Other reserves
£’000
Profit and loss 
acccount
£’000
Total 
shareholders’ 
equity
£’000
Balance at 1 January 2014 11,968 41,827 1,030 (34,011) 20,814
Proceeds from shares issued 7 23 — — 30
Share-based payments — — 692 — 692
Transactions with owners for the year 7 23 692 — 722
Loss for the year and total comprehensive loss — — — (11,949) (11,949)
Balance at 31 December 2014 11,975 41,850 1,722 (45,960) 9,587
Proceeds from shares issued 3,901 18,339 — — 22,240
Share issue costs — (951) — — (951)
Share-based payments — — 964 — 964
Transactions with owners for the year 3,901 17,388 964 — 22,253
Loss for the year and total comprehensive loss — — — (15,111) (15,111)
Balanc e	a t	31	Dec ember	20 15 15,876 59,238 2,686 (6 1, 0 7 1) 16,729
Other reserves
Other reserves comprise share-based payments for the cost of options granted to employees, Non-Executive Directors and the 
Company Secretary. 
The notes on pages 86 to 93 are an integral part of the Company’s Financial Statements.
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Notes to the  
Company Financial Statements
for the year ended 31 December 2015
C1. Principal accounting policies — UK GAAP
The principal accounting policies of the Company have been consistently applied to all the years presented and are set out below.
Statement of compliance and basis of preparation
The Company Financial Statements of Flowgroup plc have been prepared in compliance with United Kingdom Accounting 
Standards, including Financial Reporting Standard 102, ‘‘The Financial Reporting Standard applicable in the United Kingdom and 
the Republic of Ireland’’ (‘‘FRS 102’’) and the Companies Act 2006.
The Company Financial Statements are prepared on a going concern basis under the historical cost convention. 
Exemptions taken
The entity satisfies the criteria of being a qualifying entity as defined in FRS 102. Its Financial Statements are consolidated 
into the Group Financial Statements of Flowgroup plc which are included within this Annual Report. The shareholders of the 
Company were notified of the exemptions to be taken by way of an RNS announcement on 18 April 2016 and the shareholders 
have not objected to the use of the exemptions taken. The Company has taken advantage of the disclosure exemptions set out in 
paragraph 1.12 of FRS 102 specifically in relation to the Company not preparing its own cash flow statement and the disclosure of 
transactions between companies within the same group.
In addition, the Company has taken the exemption available in paragraph 408 of the Companies Act 2006 to not disclose its own 
profit and loss account. The loss recorded by the Company in the year ended 31 December 2015 totalled £15,111,000 
(2014: £11,949,000).
Going concern
In May 2015, the Group issued additional share capital raising further funds of £21.3m. The Group’s manufacturing partner Jabil 
Circuit Inc participated in this fundraising investing £7.4m resulting in a shareholding of 8.14%. In December 2015, the Group 
entered a wholesale energy supply agreement with Shell Energy Europe Limited which provides funding, by way of extended 
credit facilities, and energy purchase capacity for the anticipated growth of the energy supply business. The Shell agreement also 
released working capital for further deployment within the Group as the level of required cash security deposits was significantly 
reduced. Accordingly, at 31 December 2015 the Group had cash and cash equivalents of £18,844,000. 
The Directors have produced trading and cash flow forecasts for the Group which reflect management’s expectations for the 
continued growth in the energy services and energy supply businesses as well as the launch of boiler installations and sales in 
2016, with increasing sales through 2017 The cash flow forecasts take account of the facilities available to the Group under both 
current agreements and those expected to be available through the forecast period.
Having taken account of the Group’s strategy, the risks and opportunities facing the Group, and the trading and cash flow 
forecasts described above, the Group will have sufficient resources to continue operating for a period of at least 12 months from 
the date of approving the Annual Report. Accordingly, the Directors have continued to adopt the going concern basis in preparing 
the Financial Statements. 
Estimation techniques
The preparation of Financial Statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also 
requires management to exercise their judgement in the process of applying the Company’s accounting policies. The areas involving 
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements 
are,:-
The Company has conducted an impairment review of investments and as such, has had to make judgements as to the likelihood 
of them generating future cash flows, the period over which those cash flows will be received and the costs which are attributable 
against them. The recoverable amount is determined using the value in use calculation. The use of this method requires the 
estimation of future cash flows and the selection of a suitable discount rate in order to calculate the present value of these 
cash flows. In support of the assumptions, management uses a variety of sources including third party published reports and 
knowledge from discussions with partners and potential partners in both the supply and distribution channels.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including 
expectations of future events that are believed to be reasonable under the circumstances.
86 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
C1. Principal accounting policies — UK GAAP continued
Tangible assets and depreciation
Tangible assets are stated at cost net of depreciation and any provision for impairment.
Depreciation is calculated to write down the cost less estimated residual value of all tangible fixed assets by equal annual 
instalments over their estimated useful economic lives as follows:
•	
Leasehold improvements remainder of lease term
•	
Plant and machinery three years
Cost includes the original purchase price of the asset and the costs attributable, where applicable, to bringing the asset to its 
current condition and use.
Residual values and lives are reviewed and, where appropriate, adjusted annually. Gains and losses on disposal are determined by 
comparing net proceeds with the corresponding amount.
Cash
Cash comprises cash in hand and deposits repayable on demand.
Investments
Investments are stated at cost, less amounts provided for impairment.
Current tax
The current tax charge is based on the result for the year and is measured at the amounts to be paid based on the tax rates and 
laws substantively enacted by the Balance Sheet date.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date 
where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to 
receive more tax, with the following exception: deferred tax assets are recognised only to the extent that the Directors consider 
that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing 
differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing 
differences reverse, based on tax rates and laws enacted or substantively enacted at the Balance Sheet date.
Equity-settled share-based payments
The Company issues equity-settled payments to certain employees (including Directors).
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where 
employees are rewarded using share-based payments the fair values of employees’ services are determined indirectly by reference 
to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes the impact 
of non-market vesting conditions (for example, profitability and sales growth targets).
Share options are valued at the date of grant using the Black–Scholes option pricing model for options with non-market vesting 
conditions attached and a simulation model for options with market vesting conditions attached, and are charged to operating 
profit over the vesting period of the award with a corresponding credit to Other Reserves.
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C1. Principal accounting policies — UK GAAP continued
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period based on the best 
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication 
that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting 
is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately 
exercised are different to those estimated on vesting.
Where share options granted are cancelled prior to the end of the vesting period, any fair value expense not previously charged to 
profit or loss is recognised in full at the date of cancellation.
Where performance conditions attached to options are modified within the performance period the fair value of the options 
granted is reassessed at the date the modification takes place. The fair value of the options is calculated based on both the 
original and modified performance conditions with any incremental fair value arising from the modification being recognised as an 
additional cost over the remaining performance period.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital and where 
appropriate share premium account.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings is treated as a 
capital contribution. The fair value of the service received, measured by reference to the grant date fair value, is recognised over 
the vesting period as an increase to investment in subsidiary undertakings with a corresponding credit to reserves.
C2. Share-based payments
The Company established, in June 2006, two share option schemes in relation to ordinary shares, namely the Flowgroup 
Unapproved Share Option Scheme 2006 and the Flowgroup Enterprise Management Incentive Scheme 2006.
In August 2010, the Group established the Flowgroup “SAYE” scheme open to all employees.
In September 2010, the Company established individual “CSOPs” for a number of senior employees.
In October 2012, the Company established the Flowgroup Enterprise Management Incentive Scheme.
The Group grants options over the ordinary shares of the Company with an exercise value of not less than the market value of the 
Company’s ordinary shares on the date of grant with the exception of the “SAYE” scheme due to the timing difference between 
making the offer and issuing the option.
The vesting period is generally three to four years. With the exception of SAYE options which have a life of 3 years 6 months, if 
the option remains unexercised after a period of ten years from the date of grant, the options expire. The Group has no legal or 
constructive obligation to repurchase or settle the options in cash. The movement in the number of share options is set out below:
20 15	
Number
W eight ed	
a v er age	
e x er cise	pric e	
(penc e )
2014 
Number
Weighted 
average 
exercise price 
(pence)
Number of outstanding share options at 1 January 16,682,023 28.2 12,979,080 26.2
Granted during the year 19,313,429 14.7 4,791,792 32.6
Exercised during the year — — (125,216) 23.0
Lapsed during the year (3,340 ,805) 24.2 (963,633) 23.8
Released during the year (3,382,676) 35.2 — —
Number of outstanding share options at 31 December 29,271,971 19.0 16,682,023 28.2
As at 31 December 2015, 106,574 share options were capable of being exercised (2014: 232,287) with a weighted average exercise 
price of 33.1 pence (2014: 43.0 pence).
Notes to the  
Company Financial Statements
for the year ended 31 December 2015
88 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
C2. Share-based payments continued
For the share options outstanding at 31 December 2015 the range of exercise prices are between 12.0 pence and 43.8 pence.  
There was an average remaining contractual life of 8 years 4 months.
Share options are valued at the date of grant using the Black–Scholes option pricing model for options with non-market vesting 
conditions attached and a simulation model (Monte Carlo) for options with market vesting performance conditions, and are 
charged to operating profit over the vesting period of the award with a corresponding credit to Other Reserves.
Assumptions
The following assumptions are used to determine the fair value of share options at the respective date of grant:
Date of grant
Exercise 
price 
(pence)
Ordinary 
shares 
under 
option
Share price 
at date 
of grant 
(pence)
Expected 
volatility
Risk-free 
interest 
rate
Life of 
option 
(years)
Expected 
dividends
Vesting 
requirements
21 January 2009 105.5 412,500 39.5 38.7% 4.50% 1 Nil 1
7 September 2009 41.5 72,289 41.5 42.7% 4.50% 3 Nil 2
31 August 2010 23.0 491,472 29.5 40.8% 4.50% 3 Nil 2
29 September 2010 43.8 182,854 43.8 38.7% 4.50% 3 Nil 2
20 May 2011 21.3 1,954,650 18.5 38.7% 4.50% 3 Nil 1
10 October 2011 29.8 1,954,650 31.5 38.7% 4.50% 3 Nil 1
17 October 2012 28.0 12,415,761 31.4 58.6% 0.86% 3 Nil 3
17 October 2012 28.0 1,748,063 31.4 58.6% 0.86% 3 Nil 4
2 May 2013 17.3 1,325,056 17.3 61.0% 0.86% 3 Nil 3
16 August 2013 14.5 362,068 14.5 61.0% 0.86% 3 Nil 4
20 December 2013 16.25 500,000 17.6 59.1% 0.86% 3 Nil 4
23 June 2014 25.9 1,321,677 32.5 51.8% 1.80% 3 Nil 5
3 July 2014 30.25 1,000,000 28.2 51.8% 1.80% 3 Nil 4
11 September 2014 36.25 750,000 36.25 51.8% 1.80% 3 Nil 4
12 November 2014 28.8 720,1 25 36.0 51.8% 1.80% 3 Nil 5
11 December 2014 43.75 1,000,000 43.75 51.8% 1.80% 3 Nil 4
1 July 2015 12.0 5,738,700 14.25 57.0% 2.00% 3 Nil 5
15 December 2015 15.86 1 3,574,729 16.12 57.0% 2.00% 3 Nil 6
1. Options have been modified with criteria 4 (Black–Scholes model)
2. No performance criteria are attached and may be exercised until the tenth anniversary following their grant (Black–Scholes model)
3. Options may be exercised at any time following their grant equally in three tranches, subject to certain commercial performance criteria  
(Monte Carlo model)
4. Options may be exercised at any time following their grant subject to certain commercial performance criteria (Monte Carlo model)
5. Options granted under SAYE option scheme (Black–Scholes model)
6. Options may be exercised in three equal annual instalments on the anniversary of grant subject to satisfaction of non market performance criteria 
(Black–Scholes model)
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C2. Share-based payments continued
On 15 December 2015 the performance criteria attached to the grant of 8,416,074 shares on 17 October 2012 at 28.0 pence and 
1,325,015 shares on 17 October 2013 at 17.3 pence were revised to reflect operational milestones. This change in performance 
conditions has been treated as a modification. The fair value of the options subject to the modification has therefore been re-
measured with the incremental fair value arising from the modification being recognised within the Group’s share based payment 
charge over the remaining performance period.
On 15 December 2015 options in respect of 3,382,676 shares at an average price of 32.5p were released and replaced with options 
in respect of 9,375,000 shares at 15.86 pence. In respect of the release of options for 1,850,000 shares and the grant of options 
over 4,850,000 shares the change in valuation has been treated as a modification and is being charged over the expected vesting 
period. The cancellation of the remaining options and the grant of new options has been accounted for as a cancellation and grant 
of new share options. 
The middle market price of ordinary shares on 31 December 2015 was 15.50 (2014: 43.75) pence. The high and low market prices 
during the year were 47.5 (2014: 47.5) pence and 10.1 (2014: 13.0) pence respectively.
Expected volatility is derived from observation of the historic volatility of the Company’s shares from 2006 to date of grant.
The expected life used in the model has been adjusted based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural conditions.
National insurance is payable on gains made by employees on exercise of share options granted to them.
C3. Tangible fixed assets
Leasehold 
improvement 
£’000
Plant and 
equipment 
£’000
Total 
£’000
Cost
At 1 January 2015 57 404 461
Additions — 21 21
A t	31	Dec ember	20 15 57 425 482
A c cumula t ed	depr ecia tion
At 1 January 2015 49 266 315
Charge for the year 2 83 85
A t	31	Dec ember	20 15 51 349 400
Net	book	v alue
A t	31	Dec ember	20 15 6 76 82
At 31 December 2014 8 138 146
Notes to the  
Company Financial Statements
for the year ended 31 December 2015
90 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
C4. Investments
Total
£’000
Cost
At 1 January 2015 2,234
Additions 251
A t	31	Dec ember	20 15 2,485
Pr o visions	f or	impairment
At 1 January 2015 1,813
Provision for the year —
A t	31	Dec ember	20 15 1,813
Net	book	v alue
A t	31	Dec ember	20 15 672
At 31 December 2014 421
The investments comprise:
Principal	activity
P er c entage	
held
Thermetica Limited Non-trading 100% 
Flow Battery Limited Backup power solutions 99%
Energetix Laser Technologies Limited Non-trading 60%
Energetix (Europe) Limited Holding company 100%
Flow Products Limited Next generation heating system 100%
Flow Energy Limited Energy supply 100%
Kingston Energy Limited Non-trading 100%
Energetix (Nominees) Limited Holding company 100%
Energetix Genlec Limited Non-trading 100%
Circuit Energy Supply Limited Non-trading 100%
Energetix Group Ltd Holding Company 100%
Flow Installations Limited  Non-trading 100%
Flow Finance Limited Non-trading 100%
Energetix Technologies Inc. Non-trading 100%
The Directors believe that the carrying values of the investments are supported by their underlying net assets.
All companies with the exception of Flow Finance Limited and Flow Installations Limited are directly owned and all are registered 
in England and Wales with the exception of Energetix Technologies Inc. which is registered in Delaware, United States.
All companies with the exception of Flow Battery Limited, Flow Products Limited, Flow Energy Limited, Kingston Energy Limited 
and Exergetix (Europe) Limited are dormant and exempt from audit.
C5. Debtors
2015
£’000
2014
£’000
Amounts owed by subsidiary undertakings 704 8,056
Other debtors 28 40
Prepayments and accrued income 140 100
872 8,196
Amounts owed by subsidiary undertakings are unsecured, interest free, repayable on demand, have no fixed repayment date and 
are stated at amortised cost.
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C6. Creditors: amounts falling due within one year
2015
£’000
2014
£’000
Trade creditors 28 110
Amounts owed to subsidiary undertakings 1,068 5,110
Taxation and social security 230 197
Accruals 713 679
2,039 6,096
Amounts owed to subsidiary undertakings are unsecured, interest free, repayable on demand, have no fixed repayment date and 
are stated at amortised cost.
C7. Deferred taxation
The unprovided deferred taxation asset calculated at a tax rate of 18% (2014: 20%) is set out below:
2015
£’000
2014
£’000
Depreciation in excess of capital allowances (5 2) (58)
Trade losses (1,433) (1,167)
(1,485) (1,225)
Unrelieved tax losses of £6,621,000 (2013: £4,954,000) remain available to offset against future taxable trading profits.  
No deferred tax asset has been recognised in respect of the losses as recoverability is uncertain.
C8. Called up share capital 
31	Dec ember	20 15 31 December 2014
Number	of	
shar es
Shar e	capital	
£’000
Number of 
shares
Share capital 
£’000
is sued	and	fully	paid	–	or dinary	shar es
As at 1 January 239,492,478 11,975 239,367,262 11,968
Shares issued (19 May 2015) 78,036,600 3,901 — —
Shares issued (10 April 2014) — — 78,260 4
Shares issued (24 April 2014) — — 7,826 1
Shares issued (26 June 2014) — — 39,130 2
As at 31 December 317,529,078 15,876 239,492,478 11,975
On 19 May 2015, the Company issued 78,036,600 ordinary shares of 5 pence at 28.5 pence per share. 
C9. Operating lease commitments — minimum lease payments
The future aggregate minimum lease payments under non-cancellable lease arrangements are:
2015
£’000
2014
£’000
Within 1 year 156 163
Within 2–5 years 177 332
333 595
No sublease payments or contingent rent payments were made or received; neither do the Company’s operating lease 
agreements contain any contingent rent clauses, renewal or purchase options or escalation clauses.
Notes to the  
Company Financial Statements
for the year ended 31 December 2015
92 Flowgroup plc 24624.04   4 May 2016 10.35 AM Proof 14
C10. Related party transactions
The Company has taken advantage of the exemptions in FRS 102 and has not disclosed transactions with wholly owned subsidiary 
undertakings.
Clare Spottiswoode has provided additional consultancy services to the Company. The amount paid during the year ended  
31 December 2015 was £18,000 (2014: £Nil)
242 Associates LLP, of which David Grundy is a partner, charges Flowgroup plc for his additional consultancy services provided to 
the Company. The amount paid during the year ended 31 December 2015 was £Nil (2014: £66,000).
Henry J Cialone has provided additional technical consultancy services to the Company. The amount paid during the year ended  
31 December 2015 was £13,414 (2014: £24,406).
John Johnston has provided additional consultancy services to the Company. The amount paid during the year was £2,000 
(2014: £11,000).
C11. Contingent liabilities
In the ordinary course of business, the Company has given guarantees of certain of the obligations of subsidiary companies to 
suppliers and bankers.
The wholesale energy agreement with Shell Energy Europe Limited entered into during December 2015 contains a charge over the 
shareholding in Flow Energy Limited held by Flowgroup plc. There was no indebtedness under these arrangements on  
31 December 2015.
C12. Transition to FRS 102
This is the first year the Company has presented its Financial Statements under FRS 102. The last Company Financial Statements 
prepared under the previous UK GAAP were for the year ended 31 December 2014. The date of transition to FRS 102 was  
1 January 2014. 
No material adjustments arose in the transition to FRS 102 and accordingly no reconciliation statements are presented.
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Flowgroup plc 94 24624.04   4 May 2016 10.35 AM Proof 14
Shareholder  
Information
95 www.flowgroup.uk.com Annual Report 2015 24624.04   6 May 2016 11:33 AM Proof 8
Advisers and Company Information
Company registration number 5819555
Registered office 
Castlefield House  
Liverpool Road 
Castlefield 
Manchester 
M3 4SB
Principal place of business 
North Kiln 
Felaw Maltings 
46 Felaw Street 
Ipswich 
IP2 8PN
Directors
C Spottiswoode (Non-Executive Chairman) 
AD Stiff (Group Chief Executive Officer)  
NP Canham (Chief Financial Officer) 
AJ Beasley (Executive Director) 
Dr HJ Cialone (Non-Executive Director)  
DK Grundy (Non-Executive Director) 
JJ Johnston (Non-Executive Director)
Company Secretary
PM Barry
Nominated adviser/broker
CENKOS Securities Limited 
6.7.8 Tokenhouse Yard 
London 
EC2R 7AS
Bankers
HSBC Bank plc 
4 Hardman Square  
Spinningfields  
Manchester 
M3 3EB
Solicitors 
Atticus Legal LLP  
Castlefield House 
Liverpool Road 
Castlefield 
Manchester 
M3 4SB
Independent auditor
PricewaterhouseCoopers LLP 
Chartered Accountants & Statutory Auditors 
101 Barbirolli Square 
Lower Mosley Street 
Manchester 
M2 3PW
Public relations advisers
Walbrook PR Ltd 
4 Lombard Street 
London 
EC3V 9HD
Registrars
Neville Registrars Limited 
Neville House 
18 Laurel Lane  
Halesowen  
West Midlands  
B63 3DA
96 Flowgroup plc 24624.04   9 May 2016 12:55 PM Proof 14
Flowgroup plc
North Kiln 
Felaw Maltings 
46 Felaw Street 
Ipswich
IP2 8PN
t I 020 3137 4466
e I info@flowgroup.uk.com
Flowgroup plc  Annual Report and Accounts for the year ended 31 December 2015