Flowgroup : Progress Update

Flowgroup plc

(the "Company")

Progress Update

Flowgroup plc (AIM: FLOW), which develops and commercialises alternative and efficient energy technology products, provides an update on progress as the Company moves to volume production of the Flow microCHP boiler.  The production line for the Flow mCHP boiler is expected to be operational by the end of the year, as planned.  Full scale volume production is expected to commence in the first quarter of 2015.

Volume Production Planning

Working closely with Jabil, Flowgroup's world-class manufacturing partner, the Company has completed the detailed planning phase prior to commencing volume production.  As part of this process, a number of new European suppliers have been sourced to improve component quality and secure volume capacity.  Significant orders have already been placed with a range of these suppliers and Jabil has ordered production line and end of line testing equipment for its 130,000 square feet production facility in Livingston, Scotland.

The Board believes the planning phase has indicated that, with the introduction of the new and improved components into the process, it would be prudent to allow more time to install the production facility and achieve CE status for the production line. It is therefore now expected that the production line will begin to operate in the second half of this calendar year, as previously estimated, and full production will now commence in the first quarter of 2015.

Financial prospects

The Board's expectations for the overall Group's trading performance in the current financial year remain in line with market expectations, with a revised mix. The Board continues to believe the Company has sufficient cash resources to take it through to cash generation in 2015.

Tony Stiff, Flowgroup CEO, says:

"The Flow boiler is a game-changing product for the UK heating market.  We are also involved in a number of discussions with potential partners to exploit the opportunity of the Flow boiler internationally.  We are delighted with the level of interest that our low cost Flow mCHP boiler is generating and considering the scale of the opportunity it represents, it is essential to customers, and indeed shareholders, to produce the very highest quality product when we move into volume production. Securing new component suppliers, beginning production in H2 2014 and moving to volume production in Q1 2015 will allow us to do this. Placing orders with our suppliers, as well as Jabil ordering production line equipment, shows that our plans are firmly in place for delivery of this unique product to the UK market and then beyond."    

David Kipling, Senior Director Corporate Investment for Jabil, adds :

"Jabil has many years of experience of manufacturing products that are new to market.  It is essential that sufficient testing of the production line is planned and conducted prior to launch and we have advised Flowgroup on best practice in this area.  We have ordered production and testing equipment for our facility in Livingston and we look forward to putting the production line into service later this year and moving to full production soon after in Q1 2015."

Cautionary statement

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Flowgroup's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are: increased competition, the loss of or damage to one or more key customer relationships, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, or the failure to retain key management. Flowgroup undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.