Flowgroup's shares plunge as it reports full year loss

29th Apr 2016 15:37

(ShareCast News) - Flowgroup's shares plunged on Friday after the energy services company reported a wider operating loss in 2015.The company posted an operating loss of £17.1m in the year to 31 December 2015, compared to £10m in 2014. Flowgroup said the loss reflected increased investment in staff and infrastructure "in preparation of further growth across the business".Such investments included the company's electricity-generating Flow boiler. The full launch of the Flow boiler had been delayed by a European Court of Justice ruling in June last year that had the potential to increase the rate of VAT payable on the product and its installation from 5% to 20%. "In order to reduce this risk, we accelerated our cost reduction programme for the Flow boiler to reduce the effect of any potential rise in VAT and made design and performance improvements in the same process," said chief executive Tony Stiff.The group finally completed the first commercial installation of the Flow boil in customer homes in April 2016, which board expects "will allow it to deliver increased value for shareholders". Meanwhile, revenue rose to £40.4m from £33.4m the previous year, driven by the energy business as gross margins rose to 8.6% from 6.7% due to more favourable market conditions.The group completed a deal with Shell in December 2015 for provision of gas and electricity, with extended credit terms and without the requirement for cash security deposits,"We believe that both the UK energy market and the global heating market represent significant opportunity for the Group," said Stiff."With our disruptive products and approach, strong partnerships and leadership in place and growing brand awareness, we believe that we can deliver growth in 2016 and beyond."Shares fell 17.82% to 20.75p at 1555 BST.