15 December 2015

Flowgroup plc

(the "Company")

Management Options

Flowgroup plc (AIM: FLOW), which provides a range of innovative energy technologies, energy supply and energy services, announces that it has today granted new options and has today updated the vesting criteria of existing share options to the Executive Directors in order to retain and incentivise the Board to meet clear operational milestones.

Updated Vesting Criteria

The Remuneration Committee has considered how best to retain and incentivise the Company's senior management team as the Company focuses on the full commercial production of its game changing electricity generating boilers and growth in its energy supply business.  In order to provide an appropriate level of incentivisation to drive shareholder value, the Remuneration Committee has decided to change the vesting criteria from metrics linked to share price performance (ranging from 50p to 150p) to criteria linked directly to the delivery of key operational milestones:

·    Exceeding 100,000 Flow Energy customer accounts

·    Returning cash collateral over existing Flow Energy customers to the Company as the transition to a collateral-free arrangement is made with Shell as the trading partner

·    Completing new installations of the first 100 Flow mCHP production boilers in customers' homes

The number of options held by Directors which are affected by the adjustments to the vesting criteria described above are as follows:

Proposed Grant of New Options

In addition, the Company is proposing to grant 4,199,730 options to Tony Stiff, 3,000,000 options to Nigel Canham and 1,850,000 options to Andrew Beasley all of which are exercisable at 15.86p/share (which represents the 15 day average closing mid-price prior to grant).  Mr Canham's existing 1,000,000 options exercisable at 43.75p have been cancelled.

The new options will vest over a three year period from 1 January 2016 to 31 December 2018, with one third being available for exercise at the end of each year (the first such exercise would therefore be possible from 1 January 2017 onwards) subject to performance targets being met.  The Remuneration Committee will determine the targets by the end of March in each year of the vesting period.

Following the grant of the proposed new options as described above Tony Stiff will hold 9,526,573 options, representing 3.00% of the Company's issued share capital; Nigel Canham will hold 3,000,000 options, representing 0.95% of the Company's issued share capital; and Andrew Beasley will hold 1,850,000 options representing 0.58% of the Company's issued share capital.

Once the new options have been granted, the total number of options over ordinary shares granted to Directors pursuant to the Company's option scheme will be 18,790,160, representing 5.92% of the Company's issued share capital.