Flowgroup Annual Report 2014.compressed

Flowgroup plc
Annual Report and Accounts for the year ended 31 December 2014
Stock code: FLOW.L
Energy reimagined
Welcome to our report

Our Annual Report provides a summary of our achievements and finances
in 2014. It explains the benefits of our patented technology platform and
sets out our strategy for growth and for value creation both in the UK and
internationally over the coming years.
Welcome to Flow
Why were different
Flowgroup is a new kind of energy company.

By delivering affordable microCHP technology into
the mass market for the first time, empowering
millions of customers to generate their own low-cost,
low-carbon electricity, well change the way people
think about energy.
Patented technology platform providing the

worlds first electricity-generating boiler with
the potential to be priced for the mass market
In the UK we provide competitive home energy

alongside our patented electricity-generating
microCHP boiler. In international markets were
leveraging our microCHP technology platform to
create partnerships and alliances with a vision of
delivering over 1m sales a year, globally.
In achieving our goals we live our values. We believe
in people and their potential, the power of inspiration,
creating the clever alternative, the importance of
changing the game and in delivering clear benefits
for customers, society, the environment and our
shareholders.
Close relationship with partner Jabil,

leveraging their manufacturing expertise,
global market access and product knowledge
UK home energy brand with significant
potential for growth
Close, utility-based relationship with
customers, facilitating potential cross-sell of
additional products and services
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Contents
Our Business and Strategy
02
Group Overview Highlights
04
Group Overview Our Organisation
06
Group Overview Value Creation
08
Chairmans Statement
HOW WE CREATE VALUE
STRATEGY
10
Marketplace
11
Strategy
F
or consumers, society
and our shareholders
Energy, microgeneration,
efficient products
Our Performance
12
Strategic Report
19
Corporate Social Responsibility
Our Governance
20
Board of Directors
22
Directors Report
Directors Remuneration Report
MARKETPLACE
OUR ORGANISATION
27
U
K market and global
opportunities
Delivering success
across our Group
Our Financials
OPERATING REVIEW
CSR
2
014 was a year of
achievement
F
lowgroup is a valuesdriven organisation
29
Independent Auditors Report (Group)
30
Group Income Statement
31
Group Statement of Changes in Equity
32
Group Statement of Financial Position
33
Group Statement of Cash Flows
34
Notes to the Group Financial Statements
59
Independent Auditors Report (Company)
60
Company Balance Sheet
61
Notes to the Company Balance Sheet
Shareholder Information
69
Advisers and Company Information
70
Shareholder Notes
Clare Spottiswoode, Chairman of Flowgroup. said:
Following the launch of our electricity-generating

Flow boiler we believe we are now in a position
to take advantage of the commercial possibilities
that this game-changing product presents.
We believe we are well set for a year of good
progress in 2015.
Annual Report 2014
www.flowgroup.uk.com
02
03
Group overview
Highlights
Financial
Operational
Post year end
Revenue of 33.4m (2013: 13.8m)
Awarded CE Certification from the

British Standards Institution (BSI), for
the Flow boiler
Market launch of the Flow boiler during

January 2015
Operating loss of 10.0m (2013:

7.7m) reflecting infrastructure and
resource costs to support business
growth and commercialisation
Cash at 31 December 2014 of 8.4m
(31 December 2013:17.4m)
Increased the number of Flow

boilers covered by our exclusive
manufacturing agreement with Jabil
from 390,000 to 500,000, and agreed
to collaborate on future product
development
Opened dedicated installer training
school with the capacity to train 3,000
installers a year
Boiler production line received CE Type

Approval during April 2015
Re-entered the energy market with the
Connect tariff
Raised 21.3m (net) in equity
fundraise, including 7.4m from Jabil,
to accelerate future growth
Signed agreements with Zopa for the

provision of personal finance to Flow
customers and ongoing discussions
with partners for national surveying and
installation services
Re-launched Flows home energy
proposition, growing the customer
base to around 66,000 customer fuel
accounts at year end
Installed Flow Battery products in North
American with Trane Canada and in the
UK with National Grid UK
Operational
Manufacturing of the Flow boiler by

Jabil began in Livingston, just outside
Edinburgh, in November 2014.
Flowgroup signed testing agreements

with NRG Energy in the US and with a
large global utility for potential expansion
into key international markets.
Post year-end, the Flow boiler launched

to the UK market in January 2015,
supported by regional PR and marketing
campaigns.
Flowgroup plc
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Future benefits
Delivering microCHP
technology into the mass
market in the UK has the
potential to completely
change the heating industry
Leveraging our technology

internationally, we can
create an organisation of
global scope
Creation of large
customer base allows
the potential to cross-sell other
energy-efficient products
Growing our energy

business in the UK would
deliver significant benefits
to the Group
Becoming a trusted brand

for these products allows
growth in one of the most
exciting markets around
Powering the connected future

Flowgroup is a new kind of energy company and our vision reflects that. We want to change the way people think about energy by
bringing them closer to it, by making them a part of it, by making energy real, understandable and valuable to consumers.
To achieve their full potential, energy companies need to move beyond the simple provision of power to the provision of a broader
range of products and service. Thats why we believe the Flow boiler is so important. The electricity-generating Flow boiler will provide
both heat and electricity, and in doing so it will become the heart of the home. In providing that product, we believe Flowgroup will be
in the perfect position to then provide other energy-related products that offer comfort, safety and efficiency the connected home
products that are now beginning to gain traction. This is the future of energy homes powered by microgeneration and optimised with
a broad suite of energy products, adopted by customers who are genuinely engaged with the idea of energy. This is what we believe
Flowgroup can deliver.
Smart
Phone Controlled
Flow boiler
Electric car
Smart
white goods
Smart
Thermostat
Smart
home hub
Annual Report 2014
Smart
lighting
Smart
plugs
04
05
Group overview
Our Organisation
Flowgroup comprises Flow Products, Flow Energy and Flow Battery.
Flow Products is behind the development of the Groups groundbreaking microCHP technology
platform. Flow Energy is the Groups UK domestic energy supply business. Flow Battery provides
award-winning compressed air backup power products to the data centre and telecoms markets.
Although these are separate entities, both the Groups home energy and microCHP offers are
provided under the same brand, simply Flow.
Flow
Products
Flow
Energy
Flow
Battery
The game-changing,
electricity-generating
Flow boiler has now
launched in the UK
Flow Energy increased

its UK home energy
customer base by
32%, maintaining one
of the industrys best
reputations for customer
service in the process
Flow Battery installed

product in North
America, with Trane
Canada, and in the UK
under its three year
framework agreement
with National Grid UK
Manufacturing began
November 2014
Boiler launched
January 2015
Grew to c.66,000
customer fuel accounts
Generated revenue
of 33.3m
Replaced existing
batteries in 29 National
Grid substations
Flowgroup plc
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
The Flow Boiler

How the Flow boiler works
Flue out
MicroCHP comes of age

Uses Organic Rankine
Cycle technology quieter
operation
Scroll is
driven
Fuel burns
in the
combustion
chamber
Natural gas
or LPG
goes in
Electricity
out
Cost reduction in key scroll

technology allows affordable
product
Hot water
out
Can generate around 40%

of the electricity a larger
household needs
Heating
System
Reduces household carbon

emissions by up to 20%
Return
Generates at peak making

its generation potentially
much more valuable
Innovative launch offer the boiler that pays for itself
To support the launch of the Flow boiler in the UK we have designed two packages
that effectively provide a Flow boiler to our customers at no cost. This means
the financial risk of installing a new technology is removed, so customers can
concentrate on the benefits of the technology.
Flow Finance
Flow Freedom
Customers can completely avoid the

cost of a Flow boiler with our innovative
Flow Finance package
Customers buying a boiler with Flow

Freedom also effectively receive the
Flow boiler at no cost over five years
Annual Report 2014
Our
partners
Jabil world-class
manufacturing partner
Zopa innovative peerto-peer finance provider
06
07
Group overview
Value creation
UK home
energy
offer
Customer
UK
microCHP
boiler offer
Boiler generates
International
microCHP
Boilerboiler
paysoffer
Wider efficient
energy
product
Flow
keepsoffer
01
02
03
04
Designed and manufactured

in the UK, the Flow boiler
generates low-cost, low-carbon
electricity in the home, slashing
electricity bills and household
carbon emissions.
We will design bespoke versions

of the Flow boiler for international
markets and also provide our
core technology to partners
to incorporate in their own
products, significantly increasing
our potential market size.
Flows position as a utility, with the

close customer relationship that
creates, facilitates the provision of
not only the microCHP boiler but
a wider suite of energy-efficient
products for the home.
In some countries, the gas used by

the Flow boiler to generate electricity
is similar in price to the UK market but
electricity prices are much higher. This
gives the electricity the boiler generates
even more value in those countries.
Wherever the Flow boiler is installed, it
will play the same key role in reducing
home energy bills and household
carbon emissions.
Many countries provide support to the
uptake of microCHP technology via
similar mechanisms to the UKs Feed-in
Tariff system.
Connected, energy-efficient
products have the potential to save
customers significant sums of money
on their energy bills by reducing
consumption, increasing control and
enhancing understanding of energy
use.
Intelligent thermostats, smart
lighting, smart plugs and more can
also provide additional comfort and
convenience to users. Being able to
remotely control home heating, for
example, is a significant benefit.
These products can be offered
under innovative finance solutions,
potentially allowing uptake with no
outlay.
The UK market is large, with 1.7m

installations a year, but the European
market is much larger, with 8m installs
a year.
Asian and US markets provide further
significant opportunity.
Making our technology available to
these markets expands the potential
scale of our business.
The sale of energy-efficient products

provides several potential revenue
streams for the Group from their
sale, lease and service.
All the key international target markets

for the Flow boiler share the same
energy-related issues that the UK
experiences: rising bills, the need to
reduce emissions, the difficulty of
meeting demand.
As in the UK, the Flow boiler can help
alleviate many of these problems.
Increases home energy efficiency

and reduces bills and emissions,
benefitting the economy and the
environment.
Widespread adoption of these types
of products normalises energy
efficiency, playing an important role in
reducing overall energy consumption.
Joins Flow
electricity
Flowgroup is a leading
competitor in the UK home
energy market with its Flow
Energy brand, and bundles the
Flow boiler with home energy
in a unique package.
01
02
for itself
the customer
03
04
Customer value created

Flow Energy provides some of the
best priced home energy in the UK
energy market, saving customers
significant sums compared to the
standard variable tariffs of the Big
6 suppliers.
Flow maintains an excellent
reputation for customer service,
giving it a strong competitive
advantage over other players.
Bundling home energy with
Flows microCHP boiler allows the
customer to receive a Flow boiler at
effectively no cost over five years.
Flows special launch offer returns 4,800

to each customer who installs a Flow boiler,
through a fixed monthly reduction of 80 in
their home energy bills, every month for five
years. This is more than the cost of the boiler,
providing a strong incentive for the customer
and removing any financial risk for them.
After five years, the Flow boiler can continue
to reduce a customers home energy bills by
up to 500 a year for the lifetime of the boiler
(this includes the value of the generation and
Feed-in Tariff payments).
The Flow boiler can reduce a customers
household carbon emissions by up to 20%.
This is one of the biggest reductions a
household can make by installing a single
product.
The deal effectively allows the customer to
avoid the cost of one of the biggest single
purchases they will make as a homeowner.
Flowgroup value created

Flow Energy generated revenues
of 33.3m in 2014. Growing the
energy customer base further
would increase revenue and
create a larger pool of customers
to whom to market both the Flow
boiler and other energy-efficient
products.
The provision of the Flow boiler
and bundled home energy over
five and potentially up to ten
years creates a long term energy
customer.
Flow earns margin on home energy supply,

the installation and sale of the boiler and on
the electricity the boiler generates. We also
retain Feed-in Tariff payments.
We will also provide competitive warranty
and servicing packages, a key revenue
generator.
Longer term, we will earn additional revenue
from the provision of parts for repair through
our installation network.
Creating a successful UK home heating
brand in our large and mature market will
generate brand equity for the Group.
Providing a broad suite of these

types of products cements the
relationship between the customer
and Flow, potentially making it more
likely to continue.
Wider stakeholder value created

As a small supplier looking
to grow, Flow increases the
competitiveness of the UK energy
supply market. It saves customers
money and improves the
industrys reputation by providing
excellent customer service.
Generating low-cost, low-carbon electricity

in the home at times of peak demand is a
significant benefit for the UK energy system,
taking strain off the National Grid and helping
the UK meet its carbon emission reduction
targets.
Empowering customers to generate their
own electricity engages them with the
energy industry, something they have long
felt divorced from.
Flowgroup plc
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
UK launch model the boiler that pays for itself

Our model for introduction of the Flow boiler into the UK market is under an innovative proposition where the
financial risk of adopting a new technology is removed from the customer and where the customer could
effectively avoid the cost of a new boiler entirely.
This model, where the customer receives back 4,800 over five years in reduced home energy bills, more than
the cost of the boiler, encourages adoption and delivers a long term, profitable customer to Flow. Research shows
that one of the biggest barriers to adoption of microCHP technology in the past has been a combination of price
and customer concern about the new technology. While we have reduced the price of a microCHP boiler far below
its previous level, we also needed to address customer concern. Our model does this.
Two launch packages

Flow Finance
Flow Freedom
Customer avoids the upfront

cost of a boiler by financing it
Customer buys the

Flow boiler
Customer switches their home energy to Flow and

assigns Feed-in Tariff payments to Flow for five years
Customer pays the finance

payment every month but receives
a fixed 80 reduction in their home
energy bill, totalling 4,800 after
five years
Customer also receives a fixed

80 reduction in their home
energy bill every month, equalling
4,800 after five years
This exceeds the sale price of the boiler, representing an

excellent deal for the customer
After the initial five year period, the customer will receive a reduction in their
home energy bill every month based on the amount of electricity their boiler
generates, rather than by a fixed amount, for the lifetime of their boiler
Annual Report 2014
08
09
Chairmans Statement
We believe that our technology

will allow us to take maximum
advantage of change in the
energy industry, both in the UK
and internationally.
Clare Spottiswoode
Executive Chairman
2014 saw one of the most important

moments in the history of the Group as
the Flow boiler went into manufacture in
Jabils facility in Livingston, Scotland. This
was closely followed by the launch of the
Flow boiler in early 2015. Developing a
genuinely game-changing technology is
by no means easy and a huge amount
of time and resource has rightly been
invested in this project. That we now
have the worlds first affordable electricitygenerating boiler and the first genuine
opportunity to commercialise microCHP
technology for the mass market, both in
the UK and internationally, is a testament
to the dedication and expertise of all our
teams and I would like to thank them
for all their effort in leading up to this
pivotal moment. Following a successful
equity fundraise post-year end we believe
we are in a position to accelerate our
growth plans in 2015 and to achieve
significant success for the Group and for
shareholders.
Industry developments
We believe that our microCHP technology
platform puts us at the forefront of two
global shifts in the way energy industries
work. The first is that, as with many
industries, energy is becoming something
people do rather than just corporations.
This drive towards personal power - local,
small scale solutions for the production
of lower cost, lower carbon electricity
- perfectly suits our technology. Our
aim of allowing our customers to play
an active role in the energy industry, by
generating electricity in the home, chimes
exactly with the growing expectation
of empowerment from consumers
everywhere.
The second shift is that energy companies
are moving beyond the simple supply
of energy to a broader offer which
includes products. The reality of the
connected, efficient, tech-powered home
is drawing closer and is in part driven
by the relatively large scale adoption of

intelligent thermostats by consumers.
However, we believe that our technology
platform has the potential to put us in a
stronger position than those companies
simply offering more accurate control of
heating systems. By embedding such
a fundamental product as a boiler in
a customers home, and one with the
capability to generate electricity and
play an important part in powering that
customers life, Flow becomes, even in an
energy industry that is in flux, something
entirely new. Both heating and powering
a customers home creates a strong
bond of trust which, we believe, has the
potential to deliver a close and enduring
customer relationship. We therefore
believe that our technology will allow us
to take maximum advantage of change
in the energy industry, both in the UK
and internationally, delivering the clever
alternative to customers and significant
benefits for our shareholders.
Flowgroup plc
Our Business
and Strategy
Business overview
While initiating both manufacturing
and sales of the Flow boiler were
undoubtedly our biggest achievements,
we also expanded our manufacturing
agreement with Jabil. Exclusivity with
Jabil has been increased from 390,000
to 500,000 units. Both parties also
formalised a plan to collaborate on future
product development. The relationship
between our two companies was further
strengthened when during the recent
fundraising Jabil invested 7.4m to take
an 8.14% shareholding.
In addition, we signed testing agreements
for the US market with NRG Energy Inc.
and for the European market with one of
the worlds biggest utilities. A successful
conclusion of these trials has the
potential to deliver ongoing commercial
relationships.
Flow Energy re-entered the energy market
in April 2014. Growing organically rather
than paying commission for acquisitions
we increased our customer base by
around 32%, taking revenues for the
year to 33.3m. We maintained our allimportant reputation for customer service,
regularly delivering one of the lowest
levels of complaints across the UK energy
industry.
Flow Battery built its infrastructure base
in anticipation of increased business and
installed two units in Canada for a large
telecommunications client through Trane
Canada, further growing its position in
the high power and North American
markets. Battery also completed its
first installations under its National Grid
framework agreement.
Our
Performance
Our
Governance
Board and management

changes
During the year I became Non Executive
Chairman reflecting the increased
executive resource now available to the
Group. Nigel Canham joined the Group as
Chief Financial Officer in December 2014
from Danaher Corporation where he was
Finance Director of several of Danahers
businesses. He has brought leadership
experience from across a broad range
of businesses in both developed and
emerging global markets and has the
skills and experience to help us grow our
business both in the UK and abroad.
Funding
On 18 May 2015 shareholders approved
the firm placing and open offer raising
21.3m (net of expenses). The funds
raised are to be used to: accelerate
product development of the combination
boiler to increase the addressable market
in the UK from the current 400,000 to
1.7m units per year and provide early
entry into European markets; reduce
supply chain costs and upgrade systems
to reduce production costs; expand the
existing sales team to turn installers into
resellers; upgrade systems and processes
to enable management of a wide range
of UK boiler installers; develop integrated
smart home connectivity, to be included
in the combination boiler from the outset;
and exploit intellectual property through
licensing.
Our
Financials
Shareholder
Information
500,000
Manufacturing exclusivity
to Jabil increased from
390,000 to 500,000
Flow boilers
US &
EUROPE
The markets in which we
have initiated technology
testing agreements
Business prospects
Following the launch of our electricitygenerating Flow boiler we believe we
are now in a position to take advantage
of the commercial possibilities that this
game-changing product presents. We
believe we are well set for a year of good
progress in 2015.
Clare Spottiswoode
26 May 2015
Annual Report 2014
10
11
Marketplace
Flowgroup sees significant changes in the global energy market, with a move towards local, smallscale electricity generation and mass market adoption of a new generation of in-home energyefficient devices. The Group believes its experience and position in the UK home energy market, its
patented microgeneration technology platform and its relationship with its manufacturing partner,
Jabil, who can provide access to a broad suite of additional products, puts it in a strong position to
take advantage of these changes.
UK ENERGY
MARKET
GLOBAL BOILER
MARKET
Represents significant
opportunities for standalone
growth as the market recalibrates
towards smaller suppliers
Traditionally a market with low

levels of innovation, the Flow boiler
represents a new generation of
home heating technology
Targeting potentially
significant growth of
energy business
1.7m UK
boiler sales
per annum
Flowgroup plc
8m European
boiler sales
per annum
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Strategy
The Group has a three-pronged strategy.
Leverage its
patented
technology
platform
Offer a wider
energy-efficient
product
suite
Grow its energy

business in
the UK
Firstly, to leverage its patented technology

platform wherever a market for home
heating exists. The Group will continue
to target the UK market and will deliver
bespoke versions of its technology for
other key markets and also create a Flow
inside model, where its technology can
be incorporated into its partners existing
products. Combining the creation of
additional products with an aggressive
cost reduction programme will allow
the Groups technology the opportunity
to flourish as a mass market product
globally.
Secondly, to offer a wider energy-efficient

product suite to existing home energy
and boiler customers. As a utility and
an existent provider of energy-efficient
technology, the Group believes it is well
placed to curate additonal products for its
customer base. The Groups relationship
with Jabil, one of the worlds leading
manufacturing solutions partners, gives
it access to existing products and allows
the potential to design and build new
ones, with a clear route to market.
Thirdly, to grow its energy business in the

UK. Some estimates suggest that small
suppliers could capture nearly a third of
the UK home energy market by 2020.
This represents an opportunity to create
a domestic supply business of significant
size, creating both strong revenue and
a large database of customers to whom
to market the Flow boiler and additional
products.
Strategic aim
Performance
Future priorities
Leverage the Groups patented technology Launched in the UK and signed testing
platform in the UK and international
agreements in the US and European
markets
markets. Produced a clear product
roadmap
Accelerate cost reduction and product

development programmes in conjunction
with Jabil
Offer a broad energy-efficient product suite Agreement with Jabil on a closer product
to our customers
relationship and work begun on first
additional product
Deliver a product plan and innovative

customer offers to encourage adoption
Potentially grow the UK home energy

supply business with favourable wholesale
arrangements in place
Accelerate growth while continuing to

invest in customer service provision
Annual Report 2014
Added 32% more customers in 2014,

relaunched with a competitive tariff post
year-end in April 2015
12
13
Our Performance
Strategic Report
CEO Q&A
There is no other microCHP
product available anywhere in

the world at a price near ours.
Tony Stiff
Group Chief Executive Officer
Q: What is your assessment of 2014 for

Flowgroup?
A: I believe we have hit our major

milestones. We started the year with
a central goal of creating a production
model of the Flow boiler which can be
manufactured and sold. We have done
that. We wanted to launch the boiler
to the market and we achieved that in
early 2015. We built our installation and
servicing infrastructure and opened our
principal installer training school in the
North West of the UK. We have a clear
product road map for future expansion
that allows us to grow both in the UK and
abroad. We grew Flow Energy and Flow
Battery. All in all, it was a good year.
Q: Have you delivered your pays for

itself boiler proposition?
A: The provision of a boiler that pays

for itself has always been a key part of
our strategic plan and with our launch
packages customers can now effectively
receive a Flow boiler at no cost and with
no risk. Under our finance proposition,
customers effectively wont pay a penny
for their Flow boiler. Alternatively, if a
customer wants to buy a Flow boiler and
opts for our Freedom package, theyll
receive back more than its cost in fixed
reductions in their home energy bills over
five years. These are attractive packages

to encourage adoption of our groundbreaking technology. They are explained in
detail on our website www.flowenergy.
uk.com
Q: Is this product a genuine worlds first?

A: We believe it is. There is no other
microCHP product available anywhere in
the world at a price anywhere near ours.
Many fuel cells retail in excess of 15,000.
Stirling engine technology has its
traditional issues of large size with noise
and vibration and is priced at around
7,000. We plan to continue to develop
and expand our product offering with the
launch of our combination boiler in 2016.
This will allow our microCHP technology
Flow boiler to become a genuinely mass
market product.
Q: What routes to market do you have

for your ground-breaking boiler?
A: The majority of customers rely on

their local installer when looking for a
new boiler. Thats why we dedicated
significant time and resource to building
our installer infrastructure and opening our
training school in July 2014. We expect
the majority of our sales to come from
our Flow trained installer network where
we will have hundreds of installers going
out on a daily basis and recommending
the Flow boiler to their customers. We are

also in negotiations with several leading
brands around partnership opportunities.
While direct sales are not traditional in
this industry, our in-house boiler sales
team continue to secure orders from the
significant levels of traffic our contact
centre and website now receive.
Q: Why have there been delays?

A: When creating and developing
ground-breaking technology you will
always be faced with unique challenges
and we have broken new ground probably
hundreds of times. Every time you do
that, every time you push the boundaries
of what has been done before, you are
essentially stepping into the relative
unknown and that can regularly throw
up new challenges. So there have been
delays, as there are in the development
of any revolutionary technology. But this
is not a short term proposition and the
size of the opportunity is immense. Our
technology will change the heating and
energy markets in the UK, and around the
world. Therefore, while short term delays
can be frustrating, they should be seen
in the light of what we are achieving, and
our ability to deliver our strategy remains
unchanged.
Flowgroup plc
Our Business
and Strategy
Q: Some might say youre taking a

cautious approach. Do you think thats fair?
A: I do. The temptation is to get this

ground-breaking technology into the
market as quickly as possible and go
for huge sales volumes from the outset.
But the sensible thing to do is ensure
that everything is absolutely right before
we start to install, and to gradually build
towards volume installs that will occur
in the latter part of 2015, with the winter
period being the demand peak in what
is a relatively cyclical demand curve.
This gives us the opportunity to bed in
our installation and sales processes and
build capability so that were running as
efficiently and effectively as possible in
preparation for winter 2015.
Q: How is your relationship with Jabil

developing?
A: Our relationship with Jabil is very

strong as we work together on the
current boiler model, and drive together
to our volume sales targets. At the
same time, we are leveraging Jabils
advanced technology teams, utilising
Our
Performance
Our
Governance
their experience and skills as we work

on developing various product platforms
and maximising efficiencies in production
costs. Jabil has also invested 7.4m in the
recent fundraising and now owns 8.14%
of Flow. Jabil is a valued manufacturing
partner and a key investor in the Group as
we move forward.
Q: How many boilers do you plan on

installing in 2015?
A: Our plan is to expand our sales

network during this year, so we will
be in a strong position for the winter
months when customers look again to
replacement of their boilers. 2015 is a
critical year for us as we establish the
Flow boiler in the market place. Although
the installation programme has been held
back as the initial production boilers were
subject to rigorous testing the business
has challenging internal targets particularly
during Q4 2015. This is why we have
placed so much emphasis on establishing
our training centre and signing up
installers, getting them accredited as both
surveyors and installers to support our
installation plans.
Our
Financials
Shareholder
Information
Q: What is your product strategy?

A: We are developing additional product
types to address more of the UK market
and the larger European boiler market. We
are working on several combination boiler
models and also an additional condensing
boiler. These new products will enable us
to target a larger market share and bring
in new smart technologies at the same
time. We are also exploring the Flow
inside concept, where other heating
manufacturers could use our technology
under licence in their products.
We are not looking to have a large number
of varying products; instead we are
managing our product range to allow us
to address the largest market share with a
limited number of Flow boiler variants. We
are also investigating smart thermostats,
wireless control, optimised room heating,
integration with Solar Thermal systems
and other complementary energy saving
products.
Case study
Flow Energy customer service case study
The energy industry has always been infamous for the overall level
of customer service it provides. Flow always set out to buck that
trend and we have delivered on that goal. Despite rapid growth
in our first year and continuing growth since we have consistently
delivered one of the most impressive customer service records
in the industry. In every quarter in 2014 we recorded one of the
lowest levels of customer complaints, receiving up to 90% less
complaints per 100,000 customers compared to other suppliers.
We intend on continuing to supply this level of service as we grow
our energy business and ensure it remains a strong differentiator in
this competitive marketplace.
Annual Report 2014
Flow Finance success story
14
15
Our Performance
Strategic Report
continued
Initiating
manufacturing
with Jabil
was a major
achievement.
The first
production
boiler came off
the assembly line
in November.
Group performance
2014 saw us build towards our ultimate
goal of the launch of the game-changing
Flow boiler, which we achieved just after
year end in January 2015. This was a
significant achievement for the Group
although our success was not confined to
the Products side of our business Flow
Energy performed well and Flow Battery
made progress.
Flow Products
Manufacture of the Flow boiler began
in Jabils Livingston facility in November
2014. Receiving product CE Certification
earlier in the year, along with BSI G83/2
compliance for the boilers in-house
power electronics control system,
allowed us to move forward with plans
for production with Jabil. We completed
a detailed planning phase in which we
sourced several new European suppliers
to improve component quality and secure
volume capacity. We then moved into the
manufacturing phase.
Initiating manufacturing with Jabil was a
major achievement. The first production
boiler came off the assembly line in
November, thus proving the end to end
manufacturing process. As a late addition
to this process we took the long-term
view that Jabil should also build the scroll
assembly, requiring additional work at this
stage, but strategically the right decision.
It was necessary to initiate a limited initial
build to gain CE Type Approval for the
production line and the boilers, which
we duly obtained in April 2015. However,
this did not delay the launch of the Flow
boiler to consumers in January 2015. This
was a soft launch where we published full
details of our boiler packages, including
prices, on our website and started to take
reservations for the Flow boiler in advance
of receiving CE Type Approval.
Following CE Type Approval, 50 preproduction models were produced on the
line and were subject to verification and
validation testing. This is, appropriately,

an extremely rigorous process which
is taking longer than expected but
must be satisfactorily completed
before Flow boilers are released for
customer installations.The testing is now
approaching completion and the first
customer installations will take place
during June 2015.
We are now building towards peak period
capability in the later months of this year.
Our sales forecast remains heavily loaded
towards the end of the current year in the
peak boiler sales period of September
onwards, allowing us to build further
capacity on the sales and installation
side, refine processes following our first
installs and continue to grow, develop and
strengthen our teams.
Earlier in the year, we had further
cemented our relationship with Jabil by
expanding our exclusive manufacturing
agreement from 390,000 to 500,000 Flow
boilers and agreeing to collaborate closely
on both future product development and
our cost reduction programmes. We
believe this will continue to be our most
important strategic relationship as we look
to create new products and expand into
additional markets.
The development teams have
concentrated on production readiness
of the current boiler over the last few
months. The additional equity fundraising
allows us to accelerate the development
of the combination boiler and bring
forward its launch from H2 2017 to H2
2016.
International expansion
Our goal of international expansion was
brought closer as we signed testing
agreements in the US and Europe.
Signing an agreement with NRG Energy
represents the first step into the US retail
energy market, linking up with one of the
leading players in US energy, a company
with considerable vision for the energy
businesses of the future and one which
Flowgroup plc
Our Business
and Strategy
has already demonstrated leadership

in this sector. Following the successful
conclusion of NRGs testing of our
technology, we would expect to move to
commercial discussions.
We also signed a similar agreement with
one of the worlds biggest utilities with
a focus on the European market. The
European market is a key target for the
Group and conducting this initial test and
evaluation of a Flow boiler with a major
energy player, at their facility, supports the
objective of launching the Groups unique
electricity-generating products across
Europe. The market for gas fired heating
products in Europe is around 8 million
units per year, with many key markets
such as Germany, Italy, France and the
Netherlands providing incentives and
regulations for low carbon heating. This
results in attractive market conditions for
microCHP in these geographies.
Discussions with other interested parties
are ongoing. Our goal is to create
partnerships with a range of providers in
international markets, both by providing
bespoke versions of our boiler to
organisations to retail to their customer
base and by providing our technology to
augment existing heating products a
Flow inside approach.
UK installer network
While we are pleased to be making
progress internationally, the focus of the
business remained on the UK. One of
the key routes to market for any boiler
is via installers, who the majority of
customers go to for advice on home
heating. In July 2014 we opened our
state of the art training facility in Cheshire
where Gas Safe registered engineers
now undertake surveying, installation
and aftercare training programmes to
become accredited installers of the Flow
boiler. The 9,000 square foot centre is
strategically placed just off the M56, close
to the junction with the M6 at Preston
Brook, Runcorn. The training facility has
the capacity to train up to 64 installers
Annual Report 2014
Our
Performance
Our
Governance
a week, allowing in excess of 3,000

installers to be accredited on an annual
basis.
In order to attract installers to work
with Flow, we put together a dedicated
installer sales team who visit installers
across the country, generating significant
interest in our product and brand and
creating an engaged network of installers
who will both install the Flow boiler and
act as sales agents. It is these brand
ambassadors who under the leadership
of our industry experienced Sales Director
will help drive Flow boiler sales and we are
investing significant time and resource in
ensuring they are of the highest quality.
Partnership development
The creation of a strong surveying,
installation and service / aftercare
infrastructure is important to the future
growth of the business. We are working
with a number of installer networks
across the UK in order to broaden our
capability. We have a memorandum of
understanding with both Mears Group
and Entu but also took the decision to
go direct to the larger installer groups
in the UK which will further facilitate the
infrastructure and fulfilment capability
once completed.
We have contracted with Zopa Limited,
Europes largest peer-to-peer lending
platform, to provide finance to our Flow
boiler customers. It is a key part of our
strategy to enable customers to finance
the cost of a Flow boiler with a personal
loan and to have a fixed reduction in their
home energy bill, thus the agreement with
Zopa was an important one. Both Flow
and Zopa share a belief in the necessity
of innovating and providing an enhanced
customer offering in order to drive growth
so we believe this is a natural partnership.
In order to allow this partnership to
function most effectively, we also applied
for and were granted FCA authorisation
for limited scope credit broking.
Our
Financials
Shareholder
Information
Boiler that pays for itself model

The plan for the Flow boiler was always
to launch it under a model which entirely
removed the financial risk of adopting a
new technology. We achieved that with
our Flow Finance and Flow Freedom
packages. Flow Finance allows the
customer to avoid the upfront cost of
the Flow boiler completely by taking a
personal loan through Zopa and then
receiving every month a fixed reduction
in their home energy bill that exceeds the
monthly finance payment. Flow Freedom
requires the customer to pay for their
boiler, they then receive the same monthly
discount on their home energy which, in
total after five years, exceeds the amount
they paid for their boiler. We believe
that no other boiler package returns as
much to a customer as ours and these
packages achieve our aim of removing
any financial risk for our customer in
installing a Flow boiler. These packages
perfectly complement our innovative
technology and we believe were the right
way to enter the market.
Launch of the Flow boiler

We started to take actionable sales
enquiries at the end of January 2015,
when we published our prices and full
details of our packages on our website.
We significantly expanded our customer
services operation, creating a dedicated
Flow boiler sales team, who initially
targeted the database of customers
who had previously expressed interest
in our boiler. We then began to drive
new enquiries via regional marketing
campaigns initially focused on the North
West. We have taken customer confirmed
reservations for Flow boilers in line with
our sales plan for April and May and our
first installs will occur in June. We will
move to volume sales through our installer
network as we move through summer
2015 in preparation for the winter sales
period.
16
17
Our Performance
Strategic Report
continued
The creation of a
strong surveying,
installation and
service / aftercare
infrastructure is
important to the
future growth of
the business.
Technology
In order to maximise the potential of
our technology platform, we will now
move forward with a structured cost
reduction and product development
programme. This will allow us to reduce
the cost of the Flow boiler and to create
different versions, both for the UK and for
international markets.
Flow Energy
After the significant success we enjoyed in
2013 with the launch of our home energy
business, we entered the market again in
April 2014. However, we took a different
approach. In 2013 we grew quickly by
paying commissions to price comparison
sites for new customers (the traditional
route to growth for energy businesses).
In 2014 we did not pay commissions and
instead attracted customers organically
through general visibility for our competitive
tariff thus growing the customer base
without any acquisition costs. We grew our
energy business to over 66,000 customer
fuel accounts and generated revenues for
the year of 33.3m.
While delivering growth we retained
our excellent reputation for customer
service. The energy industry releases
quarterly complaint statistics which show
the number of complaints per 100,000
customers. We consistently reported
amongst the lowest levels of complaints
in the entire industry, receiving 90% fewer
complaints than some of our competitors.
This is important. As the truly competitive
domestic energy market continues to
mature, and prices begin to converge,
factors such as service begin to play
a key role in attracting customers. Our
reputation for good service, as well as
our ability to deliver keen prices and the
brand benefits that come from association
with our low carbon microgeneration
technology, puts us in a strong position
to win customers in a market that looks
attractive. We therefore believe that
opportunities may exist to grow the
business from the current level to over

800,000 customer fuel accounts in the
next three years. In order to achieve
this, Flow Energy would need to enter
into a contractual relationship with an
energy trading party where the current
high level of trading collateral lodged per
customer would be reduced significantly.
We are exploring options for a new energy
purchasing contract whereby security
is provided by a charge taken over our
energy customers. Growing our energy
customer base would increase revenue
and create a large pool of customers to
whom to market both the Flow boiler and
other energy efficient products.
Flow Battery
Flow Battery continued to develop its
customer base and established the
infrastructure to service its anticipated
growth as relationships, in particular with
National Grid, mature through 2015.
In March 2014, Flow Battery received an
initial order for two compressed air battery
units from Trane Canada. Trane, a world
leader in air conditioning systems, is part
of Ingersoll Rand, a global company with
revenues of $14 billion. The units were
procured by Trane for a major Canadian
telecommunications company. The units
were installed in a telephone exchange
outside Toronto, part of the companys
extensive national network. This order
further strengthened Flow Batterys
position within the high power market
and within the North American market,
where we believe excellent sales potential
exists. Developing a relationship with
Trane, a large company that embraces
new technology solutions, should
also, we believe, open up many more
opportunities.
2014 also saw the first installs under the
National Grid UK framework agreement,
announced in late 2013. The brief is to
replace lead-acid backup power units
as they reach the end of their service
life in National Grids network of 303
Flowgroup plc
Our Business
and Strategy
substations in England and Wales. Flow

Battery has now replaced time expired
equipment in 29 National Grid installations
with a mixture of compressed air battery
units and some conventional systems.
With a number of sites already being
surveyed for replacement systems, we
expect to receive additional work under
this agreement as we move through 2015
and beyond.
People
Headcount across the Group increased
significantly as we strengthened many
of our teams, taking headcount at the
end of the year to just below 200. We
invested heavily in our people on both the
product and energy sides of the business,
ensuring we have the people in place who
share and can deliver our vision.
We firmly believe in people and their
potential, and as well as recruiting
experienced specialists we also ensure
that career progression is a genuine
possibility within our organisation. We
have many examples of team members
moving across departments to develop
their skills and we will continue to develop
the most important part of our business
our people.
2014 has been a year of progress which
would not have been achieved without the
commitment of all who work within the
Group. The Directors appreciate all the
efforts of our employees and look forward
to working with them as the business
strengthens and grows through 2015.
Our
Performance
The funds raised are to be used to:

accelerate product development of
the combination boiler to increase the
addressable market in the UK from the
current 400,000 to 1.7m units per year
and provide early entry into European
markets; reduce supply chain costs and
upgrade systems to reduce production
costs; expand the existing sales team
to turn installers into resellers; upgrade
systems and processes to enable
management of a wide range of UK
boiler installers; develop integrated smart
home connectivity, to be included in
the combination boiler from the outset;
and exploit intellectual property through
licensing.
The Directors have produced business
forecasts, which indicate that the Group
has sufficient resources to operate for
the foreseeable future continuing the
development of the energy services and
backup power businesses and taking
the boiler through from initial installations
during Summer 2015 to volume sales
with cash generation in Q4 2015 and
profitability during Q1 2016. Accordingly,
the Directors have adopted the going
concern basis in the preparation of the
Financial Statements.
Financial Review
Set out below is an extract of the Group
Financial Statements for the years ended
31 December 2014 and 2013 together
with an analysis of the Groups key
performance indicators
Fundraising
the firm placing and open offer raising
21.3m after share issue costs. This
share issue was supported by our
manufacturing partner Jabil who
subscribed for 25.8m ordinary shares
giving them an 8.14% interest in the
Company.
Annual Report 2014
Our
Governance
Revenue
Gross profit
Gross profit %
Operating loss
Loss before income tax
Loss attributable to
equity shareholders
Intangible fixed assets
Tangible fixed assets
Cash at 31 December
2014
000
33,359
2,222
6.7%
(9,963)
(10,096)
2013
000
13,790
1,808
13.1%
(7,675)
(10,240)
(9,439)
17,268
624
8,357
(10,032)
14,665
536
17,361
Our
Financials
Shareholder
Information
Results
Revenue during the year ended
31 December 2014 of 33,359,000 arose
primarily from the energy business and
compares to 13,790,000 during 2013.
Gross margin during the year was 6.7%
(2013: 13.1%) with a reduction in margins
arising from weather variations and energy
market conditions during the year.
Operating losses continued to increase
due to increased staffing levels within all
business areas as they geared up for the
forecast growth in 2015 and the launch of
the Flow boiler during January 2015.
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 2014 amounts received
in respect of 2011 and receivable in
respect of 2012 have been recognised.
Further claims are in preparation, and in
accordance with the Groups accounting
policy will be recognised when receipt can
be assessed with reasonable certainty.
Trading losses of 45,492,000 (2013:
32,522,000) are being carried within the
Group and are available for offset against
future taxable trading profits.
Loss for the year and

loss attributable to equity
shareholders
The loss attributable to equity holders of
Flowgroup plc amounts to 9,439,000
(2013: 10,032,000) giving a loss per
share of 3.94p (2013: 7.43p).
Investment in intangible fixed

assets
Investment in intangible assets being
the continued development costs of
the microCHP boiler, amounted to
3,162,000 (2013: 3,232,000). These
comprise capitalised internally generated
development costs and the production
and installation costs of the initial
production standard Flow boilers.
18
19
Our Performance
Strategic Report
continued
An additional 254,000 was spent on

the development of computer software,
mainly within the energy business.
Investment in property, plant and

equipment
During the year 400,000 (2013: 437,000)
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 services business
has seen the level of trade and other
receivables increase to 7,315,000
(2013: 4,341,000). The level of trade
receivables is closely monitored within the
Group as it seeks to ensure a tight control
of working capital requirement.
Cash and cash equivalents

The Group manages its capital to ensure
that all entities are able to continue as
going concerns while minimising risk and
cost.
At 31 December 2014 the Group had
cash and cash equivalents of 8,357,000
(2013: 17,361,000).
Business risks
A summary of the key business risks is set
out in the Directors Report on page 22.
Business outlook
Flow Energy took advantage of market
conditions within the retail energy market
and launched a market leading tariff
during April 2015. This has been well
received securing a significant number
of customers without the need to pay
commissions. As well as being price
competitive the customer growth within
the energy business will be supported
by the sourcing of innovative smart
technologies which will further differentiate
the retail product offer.
The Flow boiler is the first affordable
microCHP domestic heating boiler and
gives the Group a unique opportunity to
change domestic energy markets and
achieve significant growth particularly
with a combination version. The initial
production boilers are now completing
the rigorous internal validation and
verification checks with a number of minor
modifications. Accordingly a number of
the initial production units will be released
for installation in customer homes during
June 2015. Available production will
increase over the coming months with a

corresponding increase in the marketing
of the Flow boiler to support projected
sales for the late 2015 peak period
and beyond. These increased volumes
will see the boiler business move to
cash generation during Q4 2015 and
profitability during Q1 2016. The current
international agreements provide the initial
platform for medium term growth into
the key European and North American
markets.
During 2015 the Group has the clear
opportunity to begin to revolutionise
the home heating and home energy
markets. All Group businesses will be
taking advantage of the commercial
opportunities available in their respective
market places.
Tony Stiff
26 May 2015
Flowgroup plc
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Corporate Social
Responsibility
Overview
We want to change the way that people
think about energy via the application of
our game-changing technology. In doing
so, we want to be seen to provide a
clever alternative to conventional products
and services, and this idea permeates the
business to do things differently and to
do things intelligently.
As we go about turning this vision into
reality, we are committed to conducting
ourselves in a way that reinforces our
customers perception of us as clever,
trustworthy and innovative. While we
create products and services that will
make a genuinely positive difference to
consumers, society and the environment,
we will apply the highest ethical and
professional standards to everything we
do, from the way we treat our people to
the way we build our supply chain. Every
member of the team understands our
vision and values and works every day to
make sure we never deviate from them.
Employees
More than ever, we rely on our people to
deliver success within our business. We
have instituted a new recruitment process
that concentrates on a combination
of skills, experience and a match with
our values as a business. Recruiting
candidates who share our belief in our
ability to do things differently ensures
that our team are entirely able to play
an important role in maintaining and
enhancing our reputation. We attract
those candidates with a strong employer
brand, the inspiring opportunity Flow
represents and a flexible benefits
package. Of course, we promote equality
in all areas of our operations.
Annual Report 2014
The Group is committed to the highest

standards of Health and Safety in all areas
of our business, to minimise the risks to
our employees, our customers and the
general public.
To both provide an ever-increasing skills
base to the Group, and to aid personal
development, we encourage our staff
to continuously develop their relevant
skills and knowledge, as well as allowing
them the space and time to grow in new
directions. We support staff in achieving
both formal qualifications and vocational
training goals.
Environment
Our technology platform has at its core
the production of low carbon electricity,
which benefits consumers in terms of
lower bills and the environment and
society in the form of lower carbon
emissions. It is therefore important to
us that our business operations are
designed to make as low an impact on
the environment as possible and that our
suppliers share our approach.
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 product 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.
Communities
With our technical facility in Capenhurst,
Preston Brook training centre and our
energy business in Ipswich, we are
rooted in three communities and have
the opportunity to positively affect them.
Our staff participate actively in charitable
events and as our business matures we
will look to create strong community links
from all our sites.
We recognise that we do use significant

amounts of energy within our operations,
including supply chain, manufacture
and distribution. We aim to reduce the
amount of energy we use by improving
the efficiency of existing buildings
and processes and by adopting less
environmentally harmful alternatives where
available.
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
20
21
Our Governance
Board
of Directors
Clare Spottiswoode CBE

Non-Executive Chairman
Tony Stiff
Nigel Canham
Chief Financial Officer
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.
Tony was Commercial Director of Bglobal

plc (Bglobal), the AIM-listed smartmetering company. At Bglobal Tony helped
prove the concept of their smart-metering
products and was responsible for securing
commercial contracts with leading energy
suppliers. In 2000, Tony founded Atlantic
Electric and Gas Limited, a business
backed by US-based Sempra Energy, Inc.
The business quickly became one of the
UKs leading independent energy suppliers,
with over 300,000 customers. In 1994, Tony
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, Tony 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 $19B revenue NYSE listed
global science and technology company.
Before joining Flow he was Finance Director
of Fluke Corporations 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.
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
Unions 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.
From 2007 to 2009, Nigel was based

in California as Finance Director for Kerr
Corporation, Danahers 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.
Before joining Danaher Nigel held positions
with Vinten Broadcast and two businesses
supported by investment from Permira
private equity, Dialight Plc and Strand
Lighting. Nigel is an Associate member
of the Chartered Institute of Management
Accountants.
Flowgroup plc
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Dr Henry J Cialone
Non-Executive Director
David Grundy
John Johnston
Dr Henry Cialone is President and CEO of

EWI, North Americas leading independent
materials joining technology organisation.
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.
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.
Prior to joining EWI in 2005, Henry was an

Executive at Battelle Memorial Institute,
where he led the commercial energy
business and served on the governing
board of the National Renewable Energy
Laboratory. While at Battelle, Henrys
team developed the scroll-based Organic
Rankine Cycle technology that underpins
the Flow boiler.
Henry is a member of the Ohio State
University College of Engineering
Advisory Council and the Miami University
Research Advisory Council; Trustee of the
Manufacturing Institute in Washington, DC;
Trustee of the Midwest Research Institute
in Kansas City; a Non-Executive Director
of Algaeventure Systems in Ohio; and
a former Non-Executive Director of the
NanoSteel Company, a venture-backed
spinout from Idaho National Laboratory.
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.
Annual Report 2014
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.
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.
22
23
Our Governance
Directors
Report
The Directors present their report and the
audited Financial Statements for the year
ended 31 December 2014.
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 2014 and
for the corresponding period in 2013.
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 home
energy and the supply of clean energy
products for energy supply and reliable
backup power.
Results and dividends

The loss for the year amounted to
9,439,000 (2013: 10,032,000). The
Directors do not recommend the payment
of a dividend.
the production line have received CE

approval. Initial installation of the Flow
boiler will commence during June 2015.
The issue of additional share capital which
was approved by the shareholders on
18 May 2015 raised further funding of
21.3m . This has secured the Groups
cash requirements for the acceleration of
the development of a combination boiler,
production efficiency programmes and
the investment in staff and processes to
support the anticipated expansion of the
business.
In December 2014 the Manufacturing
Services Agreement with Jabil Circuit Inc
was extended to cover the production of
up to 500,000 units. Subsequently Jabil
participated in the May 2015 fundraising
investing 7.4m and now have a
shareholding of 8.14%.
The Directors have produced business
forecasts which indicate that the Group
has sufficient resources to operate for
the foreseeable future continuing the
development of the energy services and
backup power businesses and taking
the boiler through from initial installations
during Summer 2015 to cash generation
during Q4 2015 and profitability during Q1
2016.
Strength of the Groups bankers
A detailed appraisal of business

developments is given in the Chairmans
Statement and the Strategic Report on
pages 8 to 18.
In accordance with the Groups treasury

policy, funds are only lodged with UKbased financial institutions with an A
rating or better.
Risk review
Failure of suppliers of essential

goods and services
The principal business risks and

uncertainties affecting the Group are set
out below:
Funding requirements
In January 2015 the Group launched the
Flow boiler. Subsequently there has been
significant market interest in both the
Flow boiler and the initial sales proposition
with there now being a number of
confirmed sales orders. The Flow boiler
is in production and both the boiler and
The Group has an established

manufacturing partner in Jabil Circuit Inc
and wherever practical the Group seeks
to dual source its key components and
services. Each supplier is assessed and,
where necessary, strategies to manage
and protect supply to the Group are put
in place.
Attraction and retention of key

employees
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.
The Group has attempted to reduce this
risk by offering competitive remuneration
packages including the opportunity to
participate in a share option scheme and
investment in training, development and
succession planning.
The Group has established a Save As You
Earn share scheme in which all employees
are invited to participate.
Intellectual property
A significant part of the Groups future
development and growth depends on its
intellectual property. If intellectual property
is inadequately protected, the Groups
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
Groups rights when dealing with supply
chain partners.
Market acceptance
The Groups technologies are either
incorporated into the products or
processes of third parties, sold via
distribution channels to the end
consumer, provided on long-term energy
contracts 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
Flowgroup plc
Our Business
and Strategy
processes. If a mass market for any

product or process fails to develop or
develops more slowly than anticipated,
the Group may fail to achieve profitability
in respect of the technology associated
with such products or processes.
The Groups strategy of developing
and producing products from existing
components, enabling lower costs for
early products, plus seeking specific
channel partnerships which cover defined
market applications and geographical
focus, is designed to facilitate adoption
of the products and to drive mass market
uptake.
Research and development

The Group undertakes a significant
amount of research and development to
address opportunities in the alternative
energy market. In 2014, the Group
incurred research and development costs
of 3,299,000 (2013: 3,288,000), of
which 3,162,000 (2013: 3,232,000) 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
(appointed 10 December 2014)
Dr HJ Cialone, Non-Executive Director
DK Grundy, Non-Executive Director
JJ Johnston, Non-Executive Director
Annual Report 2014
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Employees
Liquidity risk
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.
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 8,357,000
as at 31 December 2014 (2013:
17,361,000).
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.

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 the foreseeable
future.
It is the policy of the Group that training,

career development and promotion
opportunities should be available to all
employees.
The maturity of borrowings is set out

in note 18 to the Group Financial
Statements.
Financial risk management

objectives and policies
The Group purchases a number of

components in foreign currencies.
Presently, the Directors do not believe
that the Groups currency risk requires
hedging; however, this situation will be
monitored and amended if appropriate.
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
and trade payables and forward energy
purchase contracts arising directly from
its operations. The main purpose of these
financial instruments is to finance the
Groups operations.
The existence of these financial
instruments exposes the Group to a
number of financial risks, which are
described in more detail below.
Currency risk
Credit risk
The Groups principal financial asset is
cash. Although the credit risk associated
with cash is limited, the Groups treasury
policy remains the same as in 2013 and is
explained in more detail in note 21.
The main risks arising from the Groups

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.
24
25
Our Governance
Directors
Report continued
Commodity risk
Major shareholdings
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 19 May 2015 the Directors were

aware of the following interests in 3%
or more of the Companys issued share
capital:
Supplier payment policy
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 2014, relevant to the
Groups size and complexity.
It is the Groups 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 57 days (2013: 54 days) and for
the Company, represent 26 days (2013:
42 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 the foreseeable
future 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.
Aviva Plc
Jabil Circuit Nederland BV
Hargreave Hale
Standard Life Investments
Octopus Investments
%
19.69%
8.14%
6.02%
3.46%
3.21%
Corporate Governance
Statement
Board of Directors
During the period under review the
Board comprised two Executive and four
Non-Executive Directors. Biographies
of the Directors are provided on pages
20 and 21 and set out the broad range
of commercial, technical and financial

expertise possessed by Board members.
The combination of skills and talents
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
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.
Flowgroup plc
Our Business
and Strategy
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, 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 Groups
businesses. Monthly management
accounts that compare actual results with
budget 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 2014 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 Companys auditor to
consider any matter they wish to bring to
the attention of the Committee.
Annual Report 2014
Our
Performance
Our
Governance
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 Groups accounting
policies and ensuring compliance with
relevant accounting standards;
reviewing the Groups 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 Boards 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 2014 were
Dr HJ Cialone (Chairman), DK Grundy
and JJ Johnston. The Committee meets
at least once a year and at such other
Our
Financials
Shareholder
Information
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
Groups 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 for Companies.
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 30 June 2015 at the Companys
registered office: Castlefield House,
Liverpool Road, Castlefield, Manchester
M3 4SB.
The Groups 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 Groups
subsidiaries and details of all recent Group
announcements.
26
27
Our Governance
Directors
Report continued
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 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 but not absolute assurance
against misstatement or loss.
regularly liaising with the Groups

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.
The principal control mechanisms

deployed by the Group are:
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
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:
Board approval for all strategic and

commercially significant transactions;
select suitable accounting policies and

then apply them consistently;
detailed scrutiny of the monthly

management accounts with all material
variances investigated;
make judgements and estimates that

are reasonable and prudent;
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.
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
state whether IFRSs as adopted by

the European Union and applicable
UK Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the Group and Parent Company
Financial Statements respectively; and
The Directors are responsible for keeping

adequate accounting records that
are sufficient to show and explain the
Companys 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 Companys 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 Companys 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
26 May 2015
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.
Flowgroup plc
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Directors
Remuneration Report
This report to shareholders for the year
ended 31 December 2014 sets out the
Companys remuneration policies as
required by the AIM Rules. This report
is presented to disclose the key policies
under which the Executive and NonExecutive 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.
Remuneration policy
Performance-related pay
The Committee aims to ensure that the

total remuneration for the Executive
Directors is soundly based, internally
consistent, market competitive and
aligned with the interests of shareholders.
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.
No Director takes part in decisions

regarding their personal remuneration.
Executive share options
Composition and role of the

Remuneration Committee
the individuals 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;
Membership of the Remuneration

Committee during the year consisted of:
Henry J Cialone (Chairman)
David K Grundy
John J Johnston
The Committee met twice in 2014.
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 Chairmans fee level
and that of the other Non-Executive
Directors in consultation with the Chief
Executive. No member of the Committee
participates in discussions concerning
their own remuneration.
To design a balanced package for

the Executive Directors and senior
management the Committee considers:
the link between the individuals

remuneration package and the Groups
long-term performance; and
the need to provide employmentrelated benefits including the provision
of life assurance and medical
insurance.
Basic salary
Remuneration structure for

Executive Directors
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.
Overview
Benefits
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.
Directors are provided with life assurance

for themselves and private medical
insurance for themselves and their
families.
Annual Report 2014
Executive share options are granted

at the closing mid-market value of the
Companys 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 part settlement of the bonus due
to Tony Stiff for the year ended
31 December 2014, the Remuneration
Committee has proposed that nil cost
options to a value of 90,000 will be
granted during June 2015.
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. The Chairman and NonExecutive Directors are not involved in any
discussions or decisions about their own
remuneration.
Non-Executive Directors are not eligible to
participate in any of the Groups incentive
schemes other than by way of share
options.
28
29
Our Governance
Directors
Remuneration Report continued
Directors emoluments for the year ended 31 December 2014 (audited):
Salary/fees/
bonus
Executive
Tony Stiff
Nigel Canham (appointed 10 December 2014)
Non-Executive
Clare Spottiswoode
Henry Cialone
David Grundy
John Johnston
Total
Benefits remuneration
509,100
9,231
2,046
511,146
9,231
97,917
44,906
91,625
31,500
784,279
2,046
97,917
44,906
91,625
31,500
786,325
Directors emoluments for the year ended 31 December 2013 (audited):

Salary/fees/
bonus
Compensation
for loss of office
Benefits
Total
remuneration
100,000
16,667
136,167
538,968
150,000
261,034
1,548
100,000
166,667
397,201
540,516
47,754
89,845
8,037
937,438
411,034
1,548
47,754
89,845
8,037
1,350,020
Executive
Clare Spottiswoode
Adrian Hutchings (resigned 11 February 2013)
Peter Richardson (resigned 30 April 2013)
Tony Stiff
Non-Executive
Henry Cialone
David Grundy
John Johnston (appointed 9 August 2013)
The current year figures above include bonuses totalling 300,000 (2013: 334,968) of which 90,000 is to be settled in share
options.
As disclosed in note 25, the Directors emoluments of Henry Cialone and David Grundy include amounts in respect of consultancy
services provided to the Group.
Directors share options (audited):

The share options held by the Directors in respect of the schemes summarised in note 8 are:
Clare Spottiswoode1
Tony Stiff1
Tony Stiff1
Tony Stiff2
Nigel Canham1
Henry Cialone1
Number as at
1 January
2014
4,001,787
4,001,787
1,325,056
412,500
Granted
69,498
1,000,000
Number as at
31 December
2014
4,001,787
4,001,787
1,325,056
69,498
1,000,000
412,500
Exercise price
28.0
28.0
17.25
25.9
43.75
28.0
Exercise period
17 Oct 201216 Oct 2022
17 Oct 201216 Oct 2022
3 May 2013 2 May 2023
01 Aug 2017 01 Feb 2018
11 Dec 201410 Dec 2024
17 Oct 201216 Oct 2022
1. Performance criteria are attached

2. Options granted under the Flowgroup SAYE scheme
No other Directors have been granted share options in the Company or other Group entities. None of the terms and conditions of the
share options were varied in the year.
Directors interests in shares (unaudited) are as follows:
Clare Spottiswoode
Tony Stiff
Nigel Canham
Henry Cialone
David Grundy
John Johnston
Ordinary shares of 0.05 each

As at
31 December 2014
608,787
2,194,428
344,692
153,844
1,027,014
Flowgroup plc
As at
31 December 2013 or
date of appointment
608,787
1,469,018
319,692
153,844
724,014
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Independent Auditors Report

to the members of Flowgroup plc
Report on the Group Financial
Statements
Our opinion
In our opinion, Flowgroup plcs Group
Financial Statements (the financial
statements):
give a true and fair view of the state of
the Groups affairs as at 31 December
2014 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
Flowgroup plcs financial statements
comprise:
the Group Statement of Financial
Position as at 31 December 2014;
the Group Income Statement for the
year then ended;
the Group Statement of Cash Flows for
the year then ended;
the Group 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 crossreferenced 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
Annual Report 2014
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
26, 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 Boards Ethical
Standards for Auditors.
This report, including the opinions,
has been prepared for and only for
the Companys 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 Groups
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 2014.
Hazel Macnamara
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory
Auditors
Manchester
26 May 2015
30
31
Our Financials
Group Income
Statement
for the year ended 31 December 2014
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Finance income
Finance costs
Impairment of investment
Income tax
Loss for the year
Attributable to:
Equity holders of the Company
Basic and diluted loss per share
From continuing operations
Note
3
5
5
14
4
9
Year ended
Year ended
31 December 31 December
2014
2013
000
000
33,359
13,790
(31,137)
(11,982)
2,222
1,808
(12,185)
(9,483)
(9,963)
(7,675)
24
44
(157)
(39)
(2,570)
(10,096)
(10,240)
657
208
(9,439)
(10,032)
(9,439)
11
(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 34 to 58 are an integral part of these Group Financial Statements.
Flowgroup plc
(10,032)
(7.43)p
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Information
Group Statement
of Changes in Equity
Balance at 1 January 2013

Proceeds from shares issued
Share issue costs
Share-based payments
Transactions with owners for the year
Loss for the year and total comprehensive loss
Balance at 31 December 2013
Proceeds from shares issued
Transactions with owners for the year
Loss for the year and total comprehensive loss
Balance at 31 December 2014
Share capital
000
6,626
5,342
5,342
11,968
7
11,975
Share
premium
000
30,794
12,023
(990)
11,033
41,827
23
23
41,850
Accumulated
losses
000
(13,234)
(10,032)
(23,266)
(9,439)
(32,705)
Reverse
acquisition
reserve Other reserves
000
000
(821)
482
548
548
(821)
1,030
692
692
(821)
1,722
Total
shareholders
equity
000
23,847
17,365
(990)
548
16,923
(10,032)
30,738
30
692
722
(9,439)
22,021
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.
Annual Report 2014
32
33
Our Financials
Group Statement
of Financial Position
As at
31 December
2014
Note
000
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and cash equivalents
As at
31 December
2013
000
12
13
17,268
624
17,892
14,665
536
15,201
15
16
160
7,315
416
8,357
16,248
34,140
15
4,341
17,361
21,717
36,918
17
Total assets
LIABILITIES
Non-current liabilities
Borrowings
18
1,135
1,135
1,917
1,917
Current liabilities
Borrowings
Trade and other payables
18
19
1,024
9,960
10,984
12,119
107
4,156
4,263
6,180
22
11,975
41,850
(32,705)
(821)
1,722
22,021
34,140
11,968
41,827
(23,266)
(821)
1,030
30,738
36,918
Total liabilities
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital
Share premium
Accumulated losses
Reverse acquisition reserve
Other reserves
Total shareholders equity
Total equity and liabilities
These Financial Statements on pages 30 to 58 were approved by the Board of Directors and authorised for issue on 26 May 2015 and
were signed on its behalf by:
Tony Stiff
Flowgroup plc
Registered number: 5819555
Flowgroup plc
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Group Statement
of Cash Flows
Year ended
31 December
2014
Note
000
Cash flows used in operating activities
Cash consumed by operations
Cash flows used in investing activities
Expenditure on intangible assets
Purchases of property, plant and equipment
Investments
Finance income received
Cash flows from financing activities
Net proceeds from the issue of ordinary shares
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
23
Year ended
31 December
2013
000
(5,242)
(7,102)
(3,416)
(400)
24
(3,792)
(3,608)
(437)
(59)
44
(4,060)
30
30
(9,004)
17,361
8,357
16,375
16,375
5,213
12,148
17,361
Annual Report 2014
34
35
Our Financials
Notes to the Group

1. General information
Flowgroup plc (the Company) and its subsidiaries (together the Group) develop and commercialise alternative and efficient energy
products and supply home energy. The addresses of its registered office and principal place of business are disclosed on page 69 of
the Group Financial Statements. Flowgroup plc is a public limited company incorporated in England and Wales.
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 standards have been adopted by the Group for the first time for the financial year beginning on 1 January 2014:
IFRS 10 Consolidated financial statements (effective 1 January 2013) (endorsed 1 January 2014)
IFRS 11 Joint arrangements (effective 1 January 2013) (endorsed 1 January 2014)
IFRS 12 Disclosures of interests in other entities (effective 1 January 2013) (endorsed 1 January 2014)
IAS 27 (revised 2011) Separate financial statements (effective 1 January 2013) (endorsed 1 January 2014)
IAS 28 (revised 2011) Associates and joint ventures (effective 1 January 2013) (endorsed 1 January 2014)
Amendments to IFRS 10,11 and 12 on transition guidance (effective 1 January 2013) (endorsed 1 January 2014)
Amendments to IFRS 10, 12 and IAS 27 on consolidation for investment entities (effective 1 January 2014)
Amendments to IAS 32 on Financial instruments asset and liability offsetting (effective 1 January 2014)
Amendment to IAS 36 Impairment of assets on recoverable amount disclosures (effective 1 January 2014)
Amendment to IAS 39 Financial instruments: Recognition and measurement, on novation of derivatives and hedge accounting
(effective 1 January 2014)
IFRIC 21 Levies (effective 1 January 2014) (endorsed 17 June 2014)
The adoption of these standards has had no material impact on the Groups Financial Statements
2.2 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 and investments at fair value through profit and loss.
Going concern
The Groups business activities, together with the factors likely to affect its future development, performance and position are set out
in the Chairmans Statement, Strategic Report and Directors Report on pages 08, 12 and 22. The financial position of the Group, its
cash flows and liquidity position are described in the Strategic Report. In addition, note 21 to the Financial Statements includes the
Groups 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.
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2. Summary of significant accounting policies continued

Going concern continued
In January 2015 the Group launched the Flow boiler. Subsequently there has been significant market interest in both the Flow boiler
and the initial sales proposition with there now being a number of confirmed sales orders. The Flow boiler is in production and both
the boiler and the production line have received CE approval. Initial installation of the Flow boiler will commence during June 2015.
The issue of additional share capital which was approved by the shareholders on 18 May 2015 raised further funding of 21.3m. This
has secured the Groups cash requirements for the acceleration of the development of a combination boiler, production efficiency
programmes and the investment in staff and processes to support the anticipated expansion of the business.
In December 2014 the Manufacturing Services Agreement with Jabil Circuit Inc was extended to cover the production of up to
500,000 units. Subsequently Jabil participated in the May 2015 fundraising investing 7.4m and now have a shareholding of 8.14%.
The Directors have produced business forecasts which indicate that the Group has sufficient resources to operate for the foreseeable
future continuing the development of the energy services and backup power businesses and taking the boiler through from initial
installations during Summer 2015 to cash generation during Q4 2015 and profitability during Q1 2016. Accordingly, the Directors have
adopted the going concern basis in the preparation of the Financial Statements.
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 its judgement in the process of applying the Groups
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 these 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 cash
generating unit. 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 intangible assets when carrying
out impairment calculations and have applied 14.2% (2013: 16.4%) to represent the best estimate of the current cost of capital to the
Group; see note 12.
Annual Report 2014
36
37
Our Financials
Notes to the Group

Financial Statements continued

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. As the energy business has a short trading history
there is little historical evidence available to assess the likely level of bad debts and management have therefore based their
assessment of the level of impairment on prior industry experience as well as the collection rates being experienced. The estimates
and assumptions used to determine the level of provision will be regularly reviewed and such a review could lead to changes in the
assumptions, which may impact the income statement in future periods.
Financial liabilities
Management have considered the terms of 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 18.
2.4 Basis of consolidation

Consolidation model
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 Group has applied IFRS 10 retrospectively in accordance with the transition provisions of IFRS 10 which had no impact on the
Group Financial Statements.
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.
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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 Groups intangible assets, are amortised on a straight-line basis
over a period not exceeding 15 years, starting from the point that those products resulting from the development activity commence
mainstream sales.
Flow Products Limited is deemed to still be in the development phase and accordingly no amortisation has been charged to the
Group Income Statement for this subsidiary. Management deem that mainstream sales commenced in June 2009 for Flow Battery
Limited and consequently, amortisation of development costs capitalised until this date began from this point.
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 the assets
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 assets
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 as follows:
Leasehold improvements
4 years
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.
Annual Report 2014
38
39
Our Financials
Notes to the Group


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 Groups 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 assets carrying amount and
the present value of estimated future cash flows, discounted at the financial assets 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.
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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.
2.11 Other financial liabilities

Other financial liabilities including borrowings, as detailed in note 18, 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 Groups 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 Groups 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.
Annual Report 2014
40
41
Our Financials
Notes to the Group


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 Groups 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 Groups liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
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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. Tax 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

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 BlackScholes 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 that estimated on vesting.
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 employees basic annual salary (plus social security costs). Payments in
excess of 10% of an employees annual basic salary can be settled by the allocation of equity at the Companys discretion.
Annual Report 2014
42
43
Our Financials
Notes to the Group


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 entitys 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 Groups 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 Groups 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 Groups 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 Groups 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.
Flowgroup plc
Our Business
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Financials
Shareholder
Information

2.23 Pension costs
The Group operates defined benefit 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.
2.24 New accounting standards and IFRIC interpretations

The following standards have been published and are mandatory for accounting periods beginning on or after 1 January 2015 but
have not been early adopted by the Group or Company and could have a material impact on the Group and Company financial
statements:
IFRS 9 Financial instruments (effective 1 January 2018)
IFRS 15 Revenue from contracts with customers (effective 1 January 2017)
Management are currently assessing the impact of adopting these new or amended standards and interpretations.
3. Segmental information
The Groups 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 2014 are as follows:
Revenue
From external customers
Segment revenues
Operating loss
Finance costs
Income tax credit
Loss for the year
Depreciation/amortisation (excluding intangible assets)
Other non-cash movements
Flow
Products
000
Flow Battery
000
Flow Energy
000
Total
000
(5,955)
(135)
(6,090)
657
(5,433)
(540)
(135)
82
82
(524)
(524)
(524)
(2)
33,277
33,277
(2,514)
(22)
(2,536)
(2,536)
(263)
33,359
33,359
(8,993)
(157)
(9,150)
657
(8,493)
(805)
(135)
Flow Products
000
Flow Battery
000
Flow Energy
000
Total
000
(4,785)
(39)
(4,824)
208
(4,616)
(452)
(39)
45
45
(349)
(349)
(349)
(2)
13,745
13,745
(1,826)
(1,826)
(1,826)
(175)
13,790
13,790
(6,960)
(39)
(6,999)
208
(6,791)
(629)
(39)
The segment results for the year ended 31 December 2013 are as follows:
Revenue
From external customers
Segment revenues
Operating loss
Finance costs
Income tax credit
Loss for the year
Depreciation/amortisation (excluding intangible assets)
Other non-cash movements
Annual Report 2014
44
45
Our Financials
Notes to the Group

3. Segmental information continued

The totals presented for the Groups operating segments reconcile to the entitys key financial figures as presented in its financial
statements as follows:
Revenue from operations

Total segment revenues from operations
Group revenues from operations
Loss from operations
Segment operating loss from operations
Other expenses not allocated
Capitalised development costs (note 12)
Group operating loss from operations
Net finance (costs)/income (note 5)
Impairment of investment (note 14)
Group loss before income tax from continuing operations
2014
000
2013
000
33,359
33,359
13,790
13,790
(8,993)
(4,132)
3,162
(9,963)
(133)
(10,096)
(6,960)
(3,947)
3,232
(7,675)
5
(2,570)
(10,240)
Other expenses not allocated represent unallocated Group costs and amortisation of intangible assets. Revenue from external
customers can be summarised as follows:
Sale of power quality and reliability products

Energy supply
2014
000
82
33,277
33,359
2013
000
45
13,745
13,790
2014
000
813
312
6,742
137
2013
000
892
181
5,515
56
401
154
10
10
45
1
9
8
26
10
All of the above revenue is derived from the UK.
4. Loss before income tax

Loss before income tax is stated after charging:
Amortisation (note 12)

Depreciation (note 13)
Employee benefit expense (note 7)
Research and development costs (not capitalised)
Operating lease rentals:
buildings
Services provided by the Companys auditor:
fees payable to the Companys auditor for the audit of the Parent Company and Group Financial Statements
fees payable to the Companys auditor for other services:
the audit of the Companys subsidiaries
Foreign exchange differences
Flowgroup plc
Our Business
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Performance
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Financials
Shareholder
Information
5. Net finance costs

Finance income
Loans and receivables (including cash and cash equivalents)
Finance costs
Fair value adjustment of long-term borrowings attributable to interest rate risk (note 18)
Interest payable
Net finance (costs)/income
2014
000
2013
000
24
44
(135)
(22)
(157)
(133)
(39)
(39)
5
2014
000
2013
000
786
1,350
6. Directors remuneration
Directors emoluments
Aggregate emoluments
A detailed breakdown of Directors emoluments and Directors share options which have been audited is given on page 28 as part of
the Directors Remuneration Report.
Highest paid Director

The above includes remuneration of the highest paid Director as follows:
Aggregate emoluments
2014
000
511
2013
000
541
2014
000
5,375
631
44
692
6,742
2013
000
4,438
529
548
5,515
7. Employee benefit expense

Wages and salaries
Social security costs
Other pension costs
Share options granted to employees
The analysis above includes employee benefits capitalised in the development asset totalling 1,525,000 (2013: 1,048,000).
Monthly average number of persons employed (including Directors):
Finance, administration and management

Research and development
Annual Report 2014
2014
Number
110
27
137
2013
Number
61
21
82
46
47
Our Financials
Notes to the Group

8. 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
Companys 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. 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:
Number of outstanding share options at 1 January

Granted during the year
Exercised during the year
Lapsed during the year
Number of outstanding share options at 31 December
2014
Number
12,979,080
4,791,792
(125,216)
(963,633)
16,682,023
Weighted
average
exercise
price
(pence)
26.2
32.6
23.0
23.8
28.2
2013
Number
14,910,439
2,187,124
(4,118,483)
12,979,080
Weighted
average
exercise
price
(pence)
28.1
16.6
27.9
26.2
As at 31 December 2014, 232,287 share options were capable of being exercised (2013: 629,225) with a weighted average exercise
price of 43.0 pence (2013: 31.1 pence).
For the share options outstanding at 31 December 2014 the range of exercise prices are between 14.5 pence and 43.75 pence.
There was a remaining contractual life of 7 years 5 months.
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 the other reserves. This resulted in a fair value
charge of 692,000 (2013: 548,000) recognised in administrative expenses and a corresponding credit to other reserves.
Flowgroup plc
Our Business
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8. Share-based payments continued

Assumptions
The following assumptions are used to determine the fair value of share options at the respective date of grant:
Date of grant
21 January 2009
7 September 2009
31 August 2010
29 September 2010
20 May 2011
10 October 2011
17 October 2012
17 October 2012
2 May 2013
16 August 2013
20 December 2013
23 June 2014
3 July 2014
11 September 2014
12 November 2014
11 December 2014
Exercise
price
(pence)
105.5
41.5
23.0
43.8
21.3
29.8
28.0
28.0
17.3
14.5
16.25
25.9
30.25
36.25
28.8
43.75
Ordinary
shares
under
option
412,500
72,289
491,472
182,854
1,954,650
1,954,650
12,415,761
1,748,063
1,325,056
362,068
500,000
1,321,677
1,000,000
750,000
720,125
1,000,000
Share price
at date
of grant
(pence)
39.5
41.5
29.5
43.8
18.5
31.5
31.4
31.4
17.3
14.5
17.6
32.5
28.2
36.25
36.0
43.75
Expected
volatility
38.7%
42.7%
40.8%
38.7%
38.7%
38.7%
58.6%
58.6%
61.0%
61.0%
59.1%
51.8%
51.8%
51.8%
51.8%
51.8%
Risk-free
interest
rate
4.50%
4.50%
4.50%
4.50%
4.50%
4.50%
0.86%
0.86%
0.86%
0.86%
0.86%
1.80%
1.80%
1.80%
1.80%
1.80%
Life of
option
(years)
1
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
Expected
Vesting
dividends requirements
Nil
1
Nil
2
Nil
2
Nil
2
Nil
1
Nil
1
Nil
3
Nil
4
Nil
3
Nil
4
Nil
4
Nil
5
Nil
4
Nil
4
Nil
5
Nil
4
1. Options have been modified with criteria 4 (BlackScholes model)

2. No performance criteria are attached and may be exercised until the tenth anniversary following their grant (BlackScholes model)
3. The options may be exercised at any time following their grant equally in three tranches, subject to certain commercial performance criteria (Monte Carlo model)
4. The 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 (BlackScholes model)
The middle market price of ordinary shares on 31 December 2014 was 43.75 (2013: 16.25) pence. The high and low market prices
during the year were 47.5 (2013: 35.18) pence and 13.0 (2013: 9.98) pence respectively.
Expected volatility is derived from observation of the historic volatility of the Companys shares from 2006 to date of grant.
The expected life used in the model has been adjusted based on managements 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.
Annual Report 2014
48
49
Our Financials
Notes to the Group

9. Income tax
2014
000
657
657
Current tax
Credit in respect of prior years
Total income tax
2013
000
208
208
The adjustment in respect of prior years originates from a tax credit received in cash arising from research and development activities.
The tax on the Groups 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:
2014
000
(10,096)
(2,171)
140
147
1,884
(657)
(657)

Loss before income tax multiplied by rate of corporation tax in the UK of 21.5% (2013: 23.25%)
Adjustment for tax rate differences
Adjustment for non-deductible expenses
Movement in deferred tax not provided
Credit in respect of prior years
Total income tax
2013
000
(10,240)
(2,381)
693
980
708
(208)
(208)
Unrelieved tax losses of 45,492,000 (2013: 32,522,000) 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.
10. Deferred tax

The unprovided deferred taxation asset is calculated at a tax rate of 20% (2013: 20%) and is set out below:
2014
000
(179)
2,518
(9,098)
(6,759)
Depreciation in excess of capital allowances

Other short-term temporary differences
Trade losses
2013
000
(190)
(1)
2,191
(6,504)
(4,504)
11. Loss per ordinary share

The loss per ordinary share is based on the loss of 9,439,000 (2013: 10,032,000) and 239,449,617 (2013: 134,994,040) 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.
2014
(9,439)
253,016,595
239,449,617
(3.94)
Loss for the year (000)

Diluted average number of ordinary shares (including share options)
Weighted average number of ordinary shares in issue
Basic and diluted loss per share (pence)
2013
(10,032)
148,915,509
134,994,040
(7.43)
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 Groups share option schemes, and where performance criteria
are involved the number of shares expected to be issued against such criteria.
On 19 May 2015 the Group issued 78,036,600 new ordinary shares for a gross consideration of 22,240,000. The issue of these new
ordinary shares would have significantly impacted the number of shares used in calculating both basic and diluted earnings per share,
had the share issue taken place during the reporting period.
Flowgroup plc
Our Business
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12. Intangible assets
Cost
At 1 January 2013
Additions
At 31 December 2013
Additions
At 31 December 2014
Accumulated amortisation
At 1 January 2013
Charge for the year
At 31 December 2013
Charge for the year
At 31 December 2014
Net book value
At 31 December 2014
At 31 December 2013
At 31 December 2012
Intellectual
property
000
MicroCHP
development
asset
000
Compressed
air battery
development
asset
000
Other
intangible
assets
000
Total
000
5,787
5,787
5,787
7,476
3,232
10,708
3,162
13,870
2,046
2,046
2,046
349
376
725
254
979
15,658
3,608
19,266
3,416
22,682
2,218
336
2,554
336
2,890
1,403
392
1,795
251
2,046
88
164
252
226
478
3,709
892
4,601
813
5,414
2,897
3,233
3,569
13,870
10,708
7,476
251
643
501
473
261
17,268
14,665
11,949
Additions in respect of micoCHP development asset during the year arise from internal development.
Intangibles include 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 be paying 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 18). 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.
Annual Report 2014
50
51
Our Financials
Notes to the Group

12. Intangible assets continued

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
900
2,378
2,509
5,787
Current receivable foregone as at 16 April 2006

Discounted value of deferred consideration foregone
Discounted value of preference debt given for 40% of the equity
Cost of intellectual property included in intangible assets
The remaining amortisation period as at December 2014 of the intellectual property is nine 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 within these businesses began this month. 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 137,000 (2013: 23,000) of research costs that have been
expensed to the Group Income Statement in relation to these products.
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:
Technology
MicroCHP
Subsidiary
Flow Products Limited
Cost of capital
14.2%
Total intangible
carrying value
000
16,767
Following a review of the CGU, the Directors do not believe the carrying value of any of the Groups assets to be impaired and, hence,
no charge has been made.
Key assumptions
MicroCHP
In determining value in use, financial and business forecasts have been prepared by management and approved by the Board for the
five years following the reporting date. In addition, a third party has reviewed the business model and devised their own independent
forecasts. These independent forecasts also indicate growth rates that increase by various rates throughout the forecast period.
Management have performed a sensitivity analysis around the above assumptions with the conclusion that no reasonably possible
changes in the financial and business assumptions would result in the value in use being less than the carrying value of the cash
generating unit. However, if the business model is not successfully implemented, the carrying value of the intangible may be impaired
and may require writing down.
Flowgroup plc
Our Business
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12. Intangible assets continued

Cost of capital
The Capital Asset Pricing Model (CAPM) has been used to arrive at the costs of capital. The components of this calculation were
determined as follows:
Risk-free rate: lower range of UK Gilts as provided by the website of the Debt Management Office (http://www.dmo.gov.uk/).
Market-return rate: taken as the annual return on the Industrial Engineering and Electronics and Electrical Equipment sectors within
AIM for each year from 2 January 2004 to 31 December 2014.
Beta: taken from MoneyAM (http://www.moneyam.com).
13. Property, plant and equipment
Cost
At 1 January 2013
Additions
At 31 December 2013
Additions
At 31 December 2014
Accumulated depreciation
At 1 January 2013
Charge for the year
At 31 December 2013
Charge for the year
At 31 December 2014
Net book value
At 31 December 2014
At 31 December 2013
At 31 December 2012
Leasehold
improvement
000
Plant and
equipment
000
Furniture,
fittings and
equipment
000
Total
000
96
21
117
150
267
517
280
797
22
819
317
136
453
228
681
930
437
1,367
400
1,767
82
6
88
35
123
364
106
470
156
626
204
69
273
121
394
650
181
831
312
1,143
144
29
14
193
327
153
287
180
113
624
536
280
2014
000
2013
000
2,511
59
(2,570)
14. Investments
Carrying value
At 1 January
Share capital subscribed
At 31 December
The Groups investment in Iafyds plc was impaired in full during the year ended 31 December 2013.
Annual Report 2014
52
53
Our Financials
Notes to the Group

15. Inventories
Raw materials
2014
000
160
2013
000
15
2014
000
3,264
3,743
308
7,315
2013
000
1,258
2,957
126
4,341
16. Trade and other receivables

Trade receivables
Other receivables
Prepayments and accrued income
At 31 December
The average credit period on sales of goods and services is 34 days (2013: 10 days). No interest is charged on trade receivables.
The ageing of trade receivables at the balance sheet date was:
2014
000
2,066
1,183
554
871
4,674
(1,410)
3,264
0 to 30 days
31 to 60 days
61 to 90 days
More than 91 days
Impairment allowance
2013
000
888
495
202
76
1,661
(403)
1,258
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 Groups 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 movement in the impairment allowance is made up of additional allowances recognised during the year.
The Group does not hold any collateral as security.
17. Cash and cash equivalents

2014
000
8,357
Cash at bank and in hand
All cash at bank and in hand is held by UK banks meets the criteria set out in the Directors Report on page 22.
Flowgroup plc
2013
000
17,361
Our Business
and Strategy
Our
Performance
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Governance
Our
Financials
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Information
18. Financial liabilities borrowings

Current
Financial liabilities designated at fair value through profit or loss
Non-current
Financial liabilities designated at fair value through profit or loss
2014
000
2013
000
1,024
1,024
107
107
1,135
2,159
1,917
2,024
2014
000
1,135
1,135
2013
000
1,396
521
1,917
The maturity of non-current borrowings is as follows:
Between 1 and 2 years

Between 2 and 5 years
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% (2013: 10%)
from the date of assuming the preference debt until the anticipated settlement date, giving rise to a non-current liability of 1,135,000
(2013: 1,917,000) and a current liability of 1,024,000 (2013: 107,000). 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 licence
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 (2013: Nil) was repaid and the discounting of future repayments at 10% (2013: 10%) has resulted in a
135,000 increase (2013: 39,000 increase) to the carrying value of the liability. The amount contractually repayable at 31 December
2014 was 2,500,000 (2013: 2,500,000).
Financial liabilities are recognised when the Group becomes party to the contractual agreement of the instrument. All interest-related
charges and changes in an instruments fair value are reported in the Group Income Statement and are shown within finance cost.
There are no other borrowing facilities or arrangements in place for the Group as at 31 December 2014 and 31 December 2013.
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.
19. Trade and other payables

Trade payables
Social security and other taxes
Accrued expenses
2014
000
523
220
9,217
9,960
2013
000
810
91
3,255
4,156
The Directors consider the fair value to be equal to the carrying value given the short term nature of the trade and other payables.
Annual Report 2014
54
55
Our Financials
Notes to the Group

20. Compensation of key management personnel

The remuneration of Directors and other members of key management during the year was as follows:
2014
000
786
468
1,254
Short-term employee benefits

2013
000
1,350
452
1,802
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 27 and 28.
21. Financial instruments

21.1 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 Groups overall strategy remains unchanged from 2013 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 2,159,000 (2013: 2,024,000) as disclosed in note
18, cash and cash equivalents of 8,357,000 (2013: 17,361,000) 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.
21.2 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.
21.3 Categories of financial instruments

Financial assets
Loans and receivables (including cash and cash equivalents)
Financial liabilities
Designated at fair value through profit or loss
Amortised cost
2014
000
2013
000
11,621
18,619
2,159
9,960
2,024
4,156
The carrying amount reflected above represents the Groups 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 23.
Flowgroup plc
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21. Financial instruments continued

Furthermore, as detailed in note 18, 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 (2013:
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 at 31 December 2014
Total excluding derivatives
Financial liability held at FVTPL
As at 31 December 2013
Total excluding derivatives
Financial liability held at FVTPL
0 60 days
000
9,960
9,960
9,960
61 days
6 months
000
35
35
7 months
12 months
000
1,092
1,092
13 months
2 years
000
1,373
1,373
Greater than
2 years up to
5 years
000
Total
000
9,960
9,960
2,500
12,460
0 60 days
000
4,156
4,156
4,156
61 days
6 months
000
7 months
12 months
000
118
118
13 months
2 years
000
1,689
1,689
Greater than
2 years up to
5 years
000
693
693
Total
000
4,156
4,156
2,500
6,656
21.4 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 December 2014
Liabilities
Designated at fair value through profit or loss
Net fair value
Note
18
Level 1
000
Level 2
000
Level 3
000
Total
000
2,159
2,159
2,159
2,159
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.
Annual Report 2014
56
57
Our Financials
Notes to the Group


Fair value measurement in Level 3
The Groups 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:
2013
000
1,985
39
2,024
2014
000
2,024
135
2,159
Opening balance
Loss recognised in profit or loss for the year and presented in finance costs
Closing balance
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:
Fair value at
31 December
2014
000
2,156
2,159
Alternative sales forecast

2.0m reduction in 2015
4.0m reduction in 2016
Change in fair
value
000
(3)
Given the above, management believe that the fair value presented in these Group Financial Statements is appropriate.
21.5 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 21.3. 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 Groups 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.
21.6 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% (2013: 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 Groups cash and cash equivalents held at the Balance
Sheet date. All other variables are held constant:
2013
000
2014
000
Loss for the year
Equity
+1%
84
84
-1%
84
84
Flowgroup plc
+1%
172
172
-1%
172
172
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21.7 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 2014 the Group had forward
contracts for energy delivery through 2015 of 10,866,000 (2013: 16,304,000).
22. Share capital and reserves

31 December 2014
Number of Share capital
shares
000
Issued and fully paid
As at 1 January
Shares issued (10 April 2014)
Shares issued (26 June 2014)
Shares issued (20 December 2013)
As at 31 December
239,367,262
78,260
7,826
39,130
239,492,478
11,968
4
1
2
11,975
31 December 2013
Number of
Share capital
shares
000
132,505,606
17,795,000
89,066,656
239,367,262
6,626
890
4,452
11,968
2014
000
2013
000
(10,096)
(10,240)
312
813
(24)
135
692
241
181
892
(44)
39
548
208
2,570
(145)
(2,974)
5,804
(5,242)
(2)
(4,006)
2,752
(7,102)
On 10 April 2014, the Company issued 78,260 ordinary shares of 5 pence at 23 pence per share.
On 26 June 2014, the Company issued 39,130 ordinary shares of 5 pence at 23 pence per share.
23. Cash consumed by operations

Continuing operations
Adjustments for:
Depreciation
Amortisation
Finance income
Finance costs
Tax received
Movements in working capital
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash consumed by continuing operations
Annual Report 2014
58
59
Our Financials
Notes to the Group

24. Operating lease commitments minimum lease payments

The future aggregate minimum lease payments under non-cancellable lease arrangements are:
2014
000
250
522
772
Within one year

Within 25 years
2013
000
137
279
416
No sublease payments or contingent rent payments were made or received; neither do the Groups operating lease agreements
contain any contingent rent clauses, renewal or purchase options or escalation clauses.
25. 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 Consolidated 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.
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 2014 was 66,000 (2013: 64,845).
Henry J Cialone has provided additional technical consultancy services to the Group. The amount paid during the year ended
31 December 2014 was 24,406 (2013: 27,754).
John Johnston has provided additional consultancy services to the Group. The amount paid during the year was 11,000 (2013: Nil).
Flowgroup plc
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Independent Auditors Report

to the members of Flowgroup plc
Report on the Parent Company
Other matters on which we are

required to report by exception
Our opinion
In our opinion, Flowgroup plcs Company
Financial Statements (the financial
statements):
give a true and fair view of the state of
the Companys affairs as at
31 December 2014;
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 plcs financial statements
comprise:
the Company Balance Sheet as at
31 December 2014; 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
United Kingdom Accounting Standards
(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.
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.
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.
Annual Report 2014
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
26, 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 Boards Ethical
Standards for Auditors.
This report, including the opinions,
has been prepared for and only for
the Companys 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 Companys
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 2014.
Hazel Macnamara
(Senior Statutory Auditor)
for and on behalf of
Chartered Accountants and Statutory
Auditors
Manchester
26 May 2015
60
61
Our Financials
Company
Balance Sheet
as at 31 December 2014
As at
31 December
2014
Note
000
Fixed assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Capital and reserves
Called up share capital
Share premium account
Other reserves
Profit and loss account
Shareholders funds
As at
31 December
2013
000
C3
C4
146
421
567
117
267
384
C5
8,196
6,920
15,116
(6,096)
9,020
9,587
8,438
16,581
25,019
(4,589)
20,430
20,814
11,975
41,850
1,722
(45,960)
9,587
11,968
41,827
1,030
(34,011)
20,814
C6
C8
C9
C10
C11
C12
The notes on pages 61 to 68 are an integral part of the Companys Financial Statements.
These Financial Statements on pages 60 to 68 were approved by the Board of Directors and authorised for issue on 26 May 2015 and
were signed on its behalf by:
Tony Stiff
Flowgroup plc
Registered number: 5819555
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Balance Sheet
C1. Principal accounting policies UK GAAP

Basis of preparation
The Financial Statements have been prepared on a going concern basis under the historical cost convention and in accordance with
the Companies Act 2006 and applicable UK accounting standards (United Kingdom Generally Accepted Accounting Practice).
The principal accounting policies of the Company have remained unchanged from the previous year and are set out below.
Going concern
In January 2015 the Group launched the Flow boiler. Subsequently there has been significant market interest in both the Flow boiler
and the initial sales proposition with there now being a number of confirmed sales orders. The Flow boiler is in production and both
the boiler and the production line have received CE approval. Initial installation of the Flow boiler will commence during June 2015.
The issue of additional share capital which was approved by the shareholders on 18 May 2015 raised further funding of 21.3m. This
has secured the Groups cash requirements for the acceleration of the development of a combination boiler, production efficiency
programmes and the investment in staff and processes to support the anticipated expansion of the business.
In December 2014 the Manufacturing Services Agreement with Jabil Circuit Inc was extended to cover the production of up to
500,000 units. Subsequently Jabil participated in the May 2015 fundraising investing 7.4m and now have a shareholding of 8.14%.
The Directors have produced business forecasts which indicate that the Group has sufficient resources to operate for the foreseeable
future continuing the development of the energy services and backup power businesses and taking the boiler through from initial
installations during Summer 2015 to cash generation during Q4 2015 and profitability during Q1 2016. Accordingly, the Directors have
adopted the going concern basis in the preparation of the Financial Statements.
Tangible fixed assets and depreciation

Tangible fixed 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.
Annual Report 2014
62
63
Our Financials

Balance Sheet continued
C1. Principal accounting policies UK GAAP continued

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 nonmarket vesting conditions (for example, profitability and sales growth targets).
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 the 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 that estimated on vesting.
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.
Estimation techniques
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.
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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.
The Company established, in October 2012, an additional Flowgroup Enterprise Management Incentive Scheme.
The Group grants options over the ordinary shares of the Company at not less than the market value of the Companys 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. 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:
Number of outstanding share options at 1 January

Granted during the year
Exercised during the year
Lapsed during the year
Number of outstanding share options at 31 December
2014
Number
12,979,080
4,791,792
(125,216)
(963,633)
16,682,023
Weighted
average
exercise
price
(pence)
26.2
32.6
23.0
23.8
28.2
2013
Number
14,910,439
2,187,124
(4,118,483)
12,979,080
Weighted
average
exercise
price
(pence)
28.1
16.6
27.9
26.2
As at 31 December 2014, 232,287 share options were capable of being exercised (2013: 629,225) with a weighted average exercise
price of 43.0 pence (2013: 31.1 pence).
For the share options outstanding at 31 December 2014 the range of exercise prices are between 14.5 pence and 43.8 pence. There
was a remaining contractual life of 7 years 5 months.
conditions attached and a simulation model for options with market vesting conditions, and are charged to operating profit over the
vesting period of the award with a corresponding credit to the other reserves.
Annual Report 2014
64
65
Our Financials

C2. Share-based payments continued

Assumptions
The following assumptions are used to determine the fair value of share options at the respective date of grant:
Date of grant
21 January 2009
7 September 2009
31 August 2010
29 September 2010
20 May 2011
10 October 2011
17 October 2012
17 October 2012
2 May 2013
16 August 2013
20 December 2013
23 June 2014
3 July 2014
11 September 2014
12 November 2014
11 December 2014
Exercise
price
(pence)
105.5
41.5
23.0
43.8
21.3
29.8
28.0
28.0
17.3
14.5
16.25
25.9
30.25
36.25
28.8
43.75
Ordinary
shares
under
option
412,500
72,289
491,472
182,854
1,954,650
1,954,650
12,415,761
1,748,063
1,325,056
362,068
500,000
1,321,677
1,000,000
750,000
720,125
1,000,000
Share price
at date
of grant
(pence)
39.5
41.5
29.5
43.8
18.5
31.5
31.4
31.4
17.3
14.5
17.6
32.5
28.2
36.25
36.0
43.75
Expected
volatility
38.7%
42.7%
40.8%
38.7%
38.7%
38.7%
58.6%
58.6%
61.0%
61.0%
59.1%
51.8%
51.8%
51.8%
51.8%
51.8%
Risk-free
interest
rate
4.50%
4.50%
4.50%
4.50%
4.50%
4.50%
0.86%
0.86%
0.86%
0.86%
0.86%
1.80%
1.80%
1.80%
1.80%
1.80%
Life of
option
(years)
1
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
Expected
Vesting
dividends requirements
Nil
1
Nil
2
Nil
2
Nil
2
Nil
1
Nil
1
Nil
3
Nil
4
Nil
3
Nil
4
Nil
4
Nil
5
Nil
4
Nil
4
Nil
5
Nil
4
1. Options have been modified with criteria 4 (BlackScholes model)

2. No performance criteria are attached and may be exercised until the tenth anniversary following their grant (BlackScholes model)
3. The options may be exercised at any time following their grant equally in three tranches, subject to certain commercial performance criteria (Monte Carlo model)
4. The 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 (BlackScholes model)
The middle market price of ordinary shares on 31 December 2014 was 43.75 (2013: 16.25) pence. The high and low market prices
during the year were 47.5 (2013: 35.18) pence and 13.0 (2013: 9.98) pence respectively.
Expected volatility is derived from observation of the historic volatility of the Companys shares from 2006 to date.
The expected life used in the model has been adjusted based on managements 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.
Flowgroup plc
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C3. Tangible fixed assets
Cost
At 1 January 2014
Additions
At 31 December 2014
Accumulated depreciation
At 1 January 2014
Charge for the year
At 31 December 2014
Net book value
At 31 December 2014
At 31 December 2013
Leasehold
improvement
000
Plant and
equipment
000
Total
000
56
1
57
307
97
404
363
98
461
48
1
49
198
68
266
246
69
315
8
8
138
109
146
117
C4. Investments
Total
000
Cost
At 1 January 2014
Additions
At 31 December 2014
Provisions for impairment
At 1 January 2014
Provision for the year
At 31 December 2014
Net book value
At 31 December 2014
At 31 December 2013
2,080
154
2,234
1,813
1,813
421
267
The investments comprise:
Thermetica Limited
Flow Battery Limited
Energetix Laser Technologies Limited
Energetix (Europe) Limited
Flow Products Limited
Flow Energy Limited
Kingston Energy Limited
Energetix (Nominees) Limited
Energetix Genlec Limited
Circuit Energy Supply Limited
Energetix Group Ltd
Flow Installations Limited
Flow Finance Limited
Energetix Technologies Inc.
Principal activity
Non-trading
Backup power solutions
Non-trading
Holding company
Next generation heating system
Energy supply
Non-trading
Holding company
Non-trading
Non-trading
Holding Company
Non-trading
Non-trading
Non-trading
Percentage
held
100%
99%
60%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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.
The Directors believe that the carrying values of the investments are supported by their underlying net assets.
Annual Report 2014
66
67
Our Financials

C5. Debtors
2014
000
8,056
40
100
8,196
Amounts owed by subsidiary undertakings

Other debtors
Prepayments and accrued income
2013
000
8,345
64
29
8,438
Amounts owed by subsidiary undertakings are unsecured, interest free, repayable on demand and have no fixed repayment date.
C6. Creditors: amounts falling due within one year

2014
000
110
5,110
197
679
6,096
Trade creditors
Amounts owed to subsidiary undertakings
Taxation and social security
Accruals
2013
000
73
3,909
607
4,589
Amounts owed to subsidiary undertakings are unsecured, interest free, repayable on demand and have no fixed repayment date.
C7. Deferred taxation

The unprovided deferred taxation asset calculated at a tax rate of 20% (2013: 20%) is set out below:
2014
000
(58)
(1,167)
(1,225)
Depreciation in excess of capital allowances

Trade losses
2013
000
(45)
(991)
(1,036)
Unrelieved tax losses of 5,836,000 (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 December 2014
Number of Share capital
shares
000
Issued and fully paid
As at 1 January
Shares issued (26 June 2014)
As at 31 December
239,367,262
78,260
7,826
39,130
239,492,478
11,968
4
1
2
11,975
On 26 June 2014, the Company issued 39,130 ordinary shares of 5 pence at 23 pence per share.
Flowgroup plc
31 December 2013
Number of
Share capital
shares
000
132,505,606
17,795,000
89,066,656
239,367,262
6,626
890
4,452
11,968
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
C9. Share premium account

At 1 January
Shares issued (net of expenses)
At 31 December
2014
000
41,827
23
41,850
2013
000
30,794
11,033
41,827
2014
000
1,030
692
1,722
2013
000
482
548
1,030
C10. Other reserves

At 1 January
At 31 December
Other reserves relates to accrued share-based payments.
C11. Profit and loss account

The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account in
these Financial Statements. The Parent Companys loss for the year was 11,949,000 (2013: 11,711,000).
At 1 January
Loss for the year
At 31 December
2014
000
(34,011)
(11,949)
(45,960)
2013
000
(22,300)
(11,711)
(34,011)
2014
000
(11,949)
30
692
(11,227)
20,814
9,587
2013
000
(11,711)
16,375
548
5,212
15,602
20,814
2014
000
163
163
2013
000
6
90
96
Directors emoluments are disclosed in note 6 on page 45.
C12. Shareholders funds

Loss for the year
Shares issued in the year
(Decrease)/Increase in shareholders funds
Shareholders funds at 1 January
Shareholders funds at 31 December
C13. Operating lease commitments minimum lease payments

The annual payments under non-cancellable lease arrangements are:
Within one year

Within 25 years
No sublease payments or contingent rent payments were made or received; neither do the Companys operating lease agreements
contain any contingent rent clauses, renewal or purchase options or escalation clauses.
Annual Report 2014
68
69
Our Financials

C14. Related party transactions

The Company has taken advantage of the exemptions in Financial Reporting Standard No. 8 Related Party Transactions and has not
disclosed transactions with wholly owned subsidiary undertakings.
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 2014 was 66,000 (2013: 64,845).
Henry J Cialone has provided additional technical consultancy services to the Company. The amount paid during the year ended
31 December 2014 was 24,406 (2013: 27,754).
John Johnston has provided additional consultancy services to the Company. The amount paid during the year was 11,000 (2013: Nil).
C15. 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.
Flowgroup plc
Our Business
and Strategy
Our
Performance
Our
Governance
Our
Financials
Shareholder
Information
Advisers and
Company Information
Company registration number 5819555
Registered office
Bankers
Castlefield House
Liverpool Road
Castlefield
Manchester
M3 4SB
HSBC Bank plc

4 Hardman Square
Spinningfields
Manchester
M3 3EB
Principal place of business
Solicitors
Capenhurst Technology Park

Capenhurst
Chester
CH1 6EH
Atticus Legal LLP

Castlefield House
Liverpool Road
Castlefield
Manchester
M3 4SB
Directors
C Spottiswoode (Non-Executive Chairman)
AD Stiff (Group Chief Executive Officer)
NP Canham (Chief Financial Officer)
Dr HJ Cialone (Non-Executive Director)
DK Grundy (Non-Executive Director)
JJ Johnston (Non-Executive Director)
Company Secretary
PM Barry
Nominated adviser/joint broker

Investec Bank Plc
2 Gresham Street
London
EC2V 7QP
Joint broker
CENKOS Securities Limited
6.7.8 Tokenhouse Yard
London
EC2R 7AS
Annual Report 2014
Independent auditor
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
70
Shareholder Information
Shareholder
Notes
Flowgroup plc
Flowgroup plc
Capenhurst Technology Park
Chester
CH1 6EH
t I 0151 348 2100
f I 0151 348 2101
e I info@flowgroup.uk.com

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Flowgroup plc

Welcome to our report

Why were different

Flowgroup is a new kind of energy company.

Patented technology platform providing the

In the UK we provide competitive home energy

Close relationship with partner Jabil,

Group Overview Highlights

Group Overview Our Organisation

Group Overview Value Creation

HOW WE CREATE VALUE

Corporate Social Responsibility

Independent Auditors Report (Group)

Group Income Statement

Group Statement of Changes in Equity

Group Statement of Financial Position

Group Statement of Cash Flows

Notes to the Group Financial Statements

Independent Auditors Report (Company)

Company Balance Sheet

Notes to the Company Balance Sheet

Advisers and Company Information

Clare Spottiswoode, Chairman of Flowgroup. said:

Following the launch of our electricity-generating

Annual Report 2014

Our Business and Strategy

Post year end

Revenue of 33.4m (2013: 13.8m)

Awarded CE Certification from the

Market launch of the Flow boiler during

Operating loss of 10.0m (2013:

Increased the number of Flow

Boiler production line received CE Type

Signed agreements with Zopa for the

Manufacturing of the Flow boiler by

Flowgroup signed testing agreements

Post year-end, the Flow boiler launched

Leveraging our technology

Growing our energy

Becoming a trusted brand

Powering the connected future

Annual Report 2014

Our Business and Strategy

Flow Energy increased

Flow Battery installed

The Flow Boiler

MicroCHP comes of age

Cost reduction in key scroll

Can generate around 40%

Reduces household carbon

Generates at peak making

Innovative launch offer the boiler that pays for itself

Customers can completely avoid the

Customers buying a boiler with Flow

Annual Report 2014

Our Business and Strategy

Designed and manufactured

We will design bespoke versions

Flows position as a utility, with the

In some countries, the gas used by

The UK market is large, with 1.7m

The sale of energy-efficient products

Following the launch of our electricity-generating

We believe that our technology

There is no other microCHP