Utilitywise surges on improved energy supplier deal

(ShareCast News) - As well as revealing a solid start to its new financial year, Utilitywise, the corporate utility switching provider, has negotiated improved terms with a second energy supplier that will improve future cash flows.Any Utilitywise clients that extend their contract with the unnamed energy supplier will henceforth receive the same payment terms as a new client, so either 75% or 80% of the fee being paid on the extension signing, rather than upon the start of the contract extension, which is often several months later. The AIM-listed company said it was in discussions with its other energy suppliers to amend payment terms in this way.Chief executive Geoff Thompson said: "A key focus for our business is improving cash conversion and hence this change of commercial terms is a very positive achievement."In the summer, Utilitywise was criticised by rival Inspired Energy for its accounting policy, booking revenue at the start of the contract, which was felt "too aggressive" and risky in a market for small and medium sized businesses.At the Utilitywise annual shareholder meeting the company said it had made a solid start to the year, with trading in line with expectations and customer numbers up to 28,507 from the 27,000 or so announced in late October and a secured future pipeline of £27.7m."The pace of recruitment is picking up and we anticipate our position continuing to improve, as per previous market guidance, as the year progresses."Analysts at Shore Capital, which is broker to Inspired Energy, said on Tuesday that the new terms were "very positive for Utilitywise future business operations and should allow further unwind on accruals over the next year or so".They added: "Good news for Utilitywise - we expect other suppliers to now fall into line on these terms - and its sector peers including Inspired Energy who we also expect to benefit in due course from better supplier payment terms".Shares in Utilitywise were up 21% to 169.25p by 1330 GMT on Tuesday.