APM Human (ASX: APM) shares up above 8% on contract win in UK

Highlights:

• APM Human Services International Limited (ASX: APM) rose 8.602% to AU$2.020 on Friday, 26 May 2023, at 3:27 pm AEST.
• APM informed about its major contract win in the UK and gave a business update.
• The contract has a total value of AU$720 million in the first five years contract period and is anticipated to begin in 2024.

International health and human services provider APM Human Services International Limited (ASX: APM) rose 8.602% to AU$2.020 on Friday, 26 May 2023, at 3:27 pm AEST post its declaration regarding a major contract win in the UK.

Let’s dig into further details about the ASX industrial stock- APM’s latest contract win.

On Friday, APM notified that it had been approved as the successful bidder to provide Functional Assessment Services on behalf of the Department for Work and Pensions in the London, South-East and East Anglia region.

These services gave an evaluation of the functional effect of disability, along with illness on a person’s daily life and their requirements as an outcome of their health conditions.

The contract has a total value of AU$720 million in the first five years contract period and is anticipated to begin in 2024, with an option for an additional two-year contract extension. Mobilisation of the new FAS contract will need an investment capex and working capital in FY23 and FY24 prior to the beginning of the contract.

Further, APM gave a financial update on FY23 and internal board and committee appointments.

The company continues to progress its average tenure throughout main programs via new contract awards, retenders, along with extensions, with the base tenure excluding future options being above three years throughout its biggest contracts.

On the earnings guidance front, the company anticipates FY23 underlying NPATA to fall between AU$175 to AU$180 million. FY23 earnings growth is affected by reducing client flow into Employment Services Programs, a shortage of qualified allied health professional, along with greater interest costs.

As of 30 June, APM anticipates net leverage to be in line with the six-month period.

Also, on the internal board appointments front, Nev Power, the independent non-executive director, was hired by the board as the lead independent director, which is in addition to his present designation as a member of the remuneration and nomination committee.

Further Ben Wyatt, independent non-executive director was hired by the board to APM’s remuneration and nomination committee.