Flowgroup Regulatory News (FLOW)

RNS REACH

08 April 2016

Flowgroup plc

("Flowgroup" or the "Company")

EU Commission publishes VAT action plan

Flowgroup plc (AIM: FLOW), which provides a range of innovative energy technologies, energy supply and energy services, welcomes the European Commission's VAT Action Plan that was published on 7 April 2016 which presents measures for modernising VAT in Europe.

The Commission's VAT Action Plan presents two options for modernising VAT rates which, the Directors believe, would both see the continuation of a reduced rate of VAT applying to Flow boiler sales and installations. The first option is to amend the existing VAT directive while maintaining the current list of goods and services eligible for reduced rates, and regularly reviewing this list. The Flow boiler would be expected to qualify for the reduced rate as an energy efficiency device. The second option is to abolish the list of goods and services that can benefit from reduced rates and instead give Member States direct control of the number and level of reduced rates. The Government has previously confirmed that energy efficiency devices, like the Flow boiler, will continue to benefit from the UK's 5% reduced VAT rate.

Any legislative changes arising from the VAT Action Plan are not expected to be implemented until 2017.

As previously stated, the Group is currently installing Flow boilers with 5% VAT payable on the boiler and installation.