Friday 19 January 2018 ShareProphets: The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares

Flowgroup – energy supply business disposal & microCHP boiler production updates

By Steve Moore | Friday 24 March 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Writing last month on Flowgroup (FLOW) I noted the shares down below 6p, having been 25p+ less than a year ago. Having fallen further, to sub 4p, they have currently recovered to 5p following a couple of recent announcements.

Today the company has sought to reassure that, whilst its manufacturing partner, Jabil’s Livingston facility is now anticipated to close at the end of the year, it holds a global manufacturing service agreement with Jabil, not tied to any one specific manufacturing location, and “continues to work with Jabil under the agreement to optimise the production of its microCHP boiler”.

Meanwhile, a Flowgroup update last month noted consideration of funding options – and that, following indicative approaches for the company’s ‘Flow Energy’ (energy supply) business which “could, if completed, provide sufficient funding for the microCHP business through to the point at which the technology is commercialised in Europe… the board has concluded that the disposal of Flow Energy is something that it should actively pursue”.

The company has now updated that, following that announcement, it received a number of indicative offers and now has selected a preferred bidder with which it has entered into an exclusivity agreement. A further announcement is expected to be made “in the coming weeks”, though “the directors continue to consider alternative funding options for the group should the disposal of Flow Energy Limited not conclude”.

I previously though noted that, as the UK shows, financial support in Europe which “potentially favours microCHP through various installation incentives that are available” can change – and there thus looks to remain both funding and jam-tomorrow uncertainty here. I currently continue to avoid.

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