The APM Human Services International Ltd (ASX: APM) share price is ending the week in style.
In morning trade, the ASX 300 share is up almost 11% to $2.06.
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Why is this ASX 300 share rocketing higher?
Investors have been scrambling to buy this human services provider's shares today after it announced a major contract win in the UK.
According to the release, APM has been confirmed as the successful bidder to deliver Functional Assessment Services (FAS) on behalf of the Department for Work and Pensions (DWP) in the London, South-East, and East Anglia region.
The release notes that these services provide an assessment of the functional impact of disability and illness on an individual's daily life and their needs as a result of their health conditions.
The contract is for an initial five-year period and has a total value of $720 million or 384 million pounds. It is expected to commence in 2024 and includes an option for a two-year extension.
It is worth noting that this revenue won't all flow through to the bottom line, though. The company will require an investment in capital expenditure and working capital in FY 2023 and FY 2024 before the contract commences.
Speaking of profits, the ASX 300 share has also provided the market with an update on its performance and guidance for FY 2023.
Trading update
Pleasingly, APM continues to make positive progress in executing its strategy. It also continues to increase its average tenure across key programs through new contract awards, retenders, and extensions. This has seen the base tenure (excluding future options) being more than 3 years across its largest contracts.
As for its guidance, the company is expecting its FY 2023 underlying net profit after tax and before amortisation (NPATA) to be in the range of $175 million and $180 million.
This will be up from $166.3 million despite the impacts of lower client flow into Employment Services Programs, a shortage of qualified allied health professionals, and higher interest costs.
Commenting on the contract award, APM Group's CEO, Michael Anghie, said:
We look forward to partnering with the Department of Work and Pensions to deliver these important Functional Assessment Services. APM is one of the leading health service providers in Australia delivering Assessment Services across a wide range of sectors including Health, Disability and Aged Care.
The opportunity to deliver Functional Assessment Services demonstrates the strength of our local service delivery team, our reputation for service excellence, and our ability to leverage APM's expertise across regions and markets. The contract win continues the trend of APM executing its strategy and diversifying its business globally both geographically and in terms of service and revenue models.
