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ClearStar jumps as it secures two new contracts with combined value of over US$1mln

Last updated: 10:38 20 Nov 2018 GMT, First published: 08:07 20 Nov 2018 GMT

Contract
The contract, both with new clients, are to begin in 2019

ClearStar Inc (LON:CLSU) shares jumped in mid-morning trading Tuesday after it inked two new contracts for its services with an expected annual combined value of over US$1mln.

The AIM-listed provider of background check services said the two rolling contracts, to begin in 2019 with new clients, were for the provision of financial institution screening (FIS) and medical information services (MIS) respectively.

READ: Clearstar to provide vetting for Virtual Badge app

ClearStar said the FIS contract was for a global professional services company that provides solutions to Fortune 500 clients, with the company itself providing screening for personnel placed with the customer’s financial institution clients to ensure compliance with the US’s Federal Deposit Insurance (FDI) and Patriot Acts.

The firm said the contract was its first regarding FDI Act compliance, which it said demanded “more comprehensive and exhaustive screening” than those required by the Fair Credit Reporting Act which regulates its existing consumer reporting agency clients.

Robert Vale, chief executive of ClearStar, added that in a pilot test for the FIS services the company had achieved a 50% increase in delivery time compared with the incumbent provider and greater accuracy.

Under the MIS contract, ClearStar said its ClearMD product would be used by a large consumer reporting agency to provide its clients with mobile-managed drug screening.

The company said it had been chosen as it was the only provider to offer paperless medical screening with a fully-customisable user platform across the three largest drug testing laboratories in the US.

Demand for its medical screening business has helped boost ClearStar’s earnings recently, with its last set on interim results posting an underlying profit as its medical division turnover jumped 27%.

READ: Clearstar posts underlying profit as demand for medical screening climbs

Vale said the new contracts reflected an expansion of the company’s activities “beyond background screening for recruitment purposes to verification and ongoing monitoring for ensuring human capital integrity”.

Shares were up 4.5% at 58p.

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