Mendus — All hands on deck as inflection points approach

Mendus (OMX: IMMU)

Last close As at 18/06/2024

SEK0.48

0.02 (4.35%)

Market capitalisation

SEK482m

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Research: Healthcare

Mendus — All hands on deck as inflection points approach

With Mendus’s Q124 results, management recapped its clinical priorities, which are all progressing as expected. The focus remains on the AMLM22-CADENCE trial for lead cancer vaccine vididencel, in combination with oral azacitidine as a maintenance treatment for acute myeloid leukaemia (AML). R&D expenses came in slightly ahead of expectations with the ramp up in clinical activity, including preparation for the subsequent pivotal Phase III trial, with large-scale manufacturing of vididencel (planned initiation in H225) through Mendus’s alliance with NorthX Biologics. The second clinical-stage asset, ilixadencel, is being prepared for a new Phase II trial in soft tissue sarcomas (STS) and is scheduled to launch in Q224. The end-Q124 net cash balance of SEK87.3m was bolstered by the SEK69.1m realised through warrant conversions in April, which we estimate will provide a runway into Q325. Our overall valuation increases slightly to SEK2.11bn (from SEK2.05bn), but the per share valuation declines to SEK2.09, from SEK2.38, with the higher share count.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Mendus

All hands on deck as inflection points approach

Q124 results

Pharma and biotech

20 May 2024

Price

SEK0.45

Market cap

SEK452m

SEK10.5/US$

Pro forma net cash at 31 March 2024

SEK156.4m

Pro forma shares in issue

1,007.2m

Free float

37%

Code

IMMU

Primary exchange

Nasdaq Stockholm

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(12.4)

(3.9)

(64.0)

Rel (local)

(16.8)

(11.8)

(69.7)

52-week high/low

SEK1.34

SEK0.30

Business description

Mendus is a clinical-stage immuno-oncology company based in Sweden and the Netherlands. The company specialises in allogeneic dendritic cell biology and currently has two lead cell-based, off-the-shelf therapies for haematological and solid tumours.

Next events

Vididencel Phase II combination trial initiation (AML)

Q224

Ilixadencel Phase II trial initiation (STS)

H224

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

Dr Arron Aatkar

+44 (0)20 3077 5700

Mendus is a research client of Edison Investment Research Limited

With Mendus’s Q124 results, management recapped its clinical priorities, which are all progressing as expected. The focus remains on the AMLM22-CADENCE trial for lead cancer vaccine vididencel, in combination with oral azacitidine as a maintenance treatment for acute myeloid leukaemia (AML). R&D expenses came in slightly ahead of expectations with the ramp up in clinical activity, including preparation for the subsequent pivotal Phase III trial, with large-scale manufacturing of vididencel (planned initiation in H225) through Mendus’s alliance with NorthX Biologics. The second clinical-stage asset, ilixadencel, is being prepared for a new Phase II trial in soft tissue sarcomas (STS) and is scheduled to launch in Q224. The end-Q124 net cash balance of SEK87.3m was bolstered by the SEK69.1m realised through warrant conversions in April, which we estimate will provide a runway into Q325. Our overall valuation increases slightly to SEK2.11bn (from SEK2.05bn), but the per share valuation declines to SEK2.09, from SEK2.38, with the higher share count.

Year
end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/22

3.4

(138.8)

(0.70)

0.0

N/A

N/A

12/23

29.6

(101.6)

(0.22)

0.0

N/A

N/A

12/24e

3.1

(124.6)

(0.13)

0.0

N/A

N/A

12/25e

0.0

(125.7)

(0.12)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

All systems go for late-stage vididencel development

Mendus collaborated with the Australasian Leukaemia and Lymphoma Group to launch the CADENCE trial in Q224, on the heels of the regulatory green light in March 2024. In parallel, it is preparing for a separate global registrational trial in H225, following the receipt of positive initial FDA feedback. We understand that clinical data from the prior ADVANCE II trial (vididencel as a monotherapy), the CADENCE trial (vididencel in combination with oral azacitidine) and the planned pivotal trial will contribute to the global registration dossier for vididencel in the AML maintenance setting. Management indicated that Mendus has sufficient inventory for the CADENCE trial, and the NorthX Biologics manufacturing alliance is anticipated to support the registrational study and potential subsequent commercialisation.

Warrant conversions add to the coffers

Mendus closed Q124 with net cash of SEK87.3m (SEK88.2m in cash and SEK0.9m in interest-bearing liabilities), supported by a post-period warrant conversion that provided SEK69.1m in additional funds. Based on our cash burn projections, we expect available funds to provide operational support into Q325. We estimate Mendus will need to raise an additional SEK75m in H225.

Valuation: SEK2.11bn or SEK2.09 per share

As we roll forward our model and reflect the higher cash balance, our valuation increases slightly to SEK2.11bn, from SEK2.05bn, but declines on a per share basis with the higher share count (SEK2.09 from SEK2.38, with 1,007m shares vs 863m previously) with the April 2024 warrant conversion.

Pipeline overview

Heading Mendus’s active clinical pipeline is vididencel, an off-the-shelf cellular immunotherapy. Following the positive survival, immunomonitoring and measurable residual disease data from ADVANCE II, Mendus is now assessing the combination of vididencel with oral azacitidine, the standard of care and only approved drug for AML maintenance. AMLM22-CADENCE (expected n=140) will be a randomised, multi-centre clinical trial consisting of two stages and will involve AML patients in complete remission following high-intensity chemotherapy. The first stage (18–24 months) will assess the safety of vididencel in combination with oral azacitidine, compared to oral azacitidine alone, in 40 patients. The second stage (24–36 months) will assess the efficacy of the combination in a further 100 patients. Per the study protocol, vididencel will be administered as four biweekly intradermal injections, after which three booster injections will be administered up to six months after the start of treatment. We understand that the launch of the planned registrational trial will align with the interim safety readout from CADENCE (H225), but should not affect the planned design.

Vididencel is also being developed as a potential maintenance therapy for ovarian cancer, for which it is currently being investigated in the Phase I ALISON trial. Patient recruitment for this trial was completed in December 2023, and we continue to expect updates throughout 2024, including a detailed analysis of the survival data and primary endpoint readout in H224.

The company’s second asset, ilixadencel, is an intratumoural immune primer, backed by preclinical and clinical data to support its safety, and potential as a treatment for STS, a group of tumours that respond poorly to immunotherapies. Management is engaged in discussions with potential collaborators to perform a Phase II trial aiming to establish efficacy in this indication, and we note that Mendus has already been granted FDA Fast Track and Orphan Drug designations for ilixadencel. Management has communicated that it intends to announce more detailed plans for this trial within Q224, with potential launch in H224.

Further, Mendus continues to make progress with its preclinical research, aiming to design next-generation immune primers based on its DCOne cell line platform, while exploring synergistic combinations with vaccinations and intratumoural priming. The company is also exploring the use of the DCOne platform to expand therapeutic quantities of memory natural killer (NK) cells, which could provide the basis for novel NK cell-based therapies. We expect updates on this front over the rest of 2024, provided ‘candidates make material progress towards the clinical stages of development.

Exhibit 1: Mendus’s clinical development pipeline

Source: Mendus Q124 report

Financials and valuation

In Q124, Mendus reported total operating expenses of SEK38.1m, up 27.4% y-o-y from SEK29.9m in Q123, primarily reflecting the higher R&D expenses on its vididencel and ilixadencel clinical programs and its DCOne platform. R&D expenses, accounting for c 76% of total operating expenses (compared to c 66% in Q123), increased significantly by 46.7% y-o-y to SEK29.0m, from SEK19.8m in the prior period. The increase was largely attributable to the ADVANCE II (AML) and ALISON (ovarian cancer) trials, as well as preparatory activities for the Phase II CADENCE trial (initiation planned in Q224). General and administrative expenses were down to SEK9.0m from SEK9.9m in Q123. While no revenue was recorded during the quarter, other operating income (primarily consisting of patent transfer revenue and a research grant from Oncode-PACT) were reported at SEK2.8m in Q124, compared to SEK0.3m in Q123. The operating loss for the period was SEK35.3m, up from SEK29.6m in Q123. The cash outflow from operating activities stood at SEK30.6m, slightly lower than SEK33.6m in Q123, and was favourably affected by changes in working capital (SEK56m of prepaid expenses and accrued income on the balance sheet in Q124 vs SEK64m in Q423).

Based on the Q124 results, we have made certain adjustments to our FY24 and FY25 estimates. Reflecting the income from patent transfers and grants, we now estimate income of SEK3.1m in FY24. We also tweak our operating expense estimates, and have increased R&D while lowering SG&A across both forecast years to reflect the Q124 performance and management guidance. Our revised R&D estimates are SEK90.0m in FY24 and SEK86.8m in FY25, up from SEK85.4m and SEK88.1m, respectively. Our SG&A expense estimates have been revised down to SEK31.7m in FY24 and SEK32.6m in FY25, from SEK34.0m and SEK35.1m previously. As a result, our operating loss estimates increase slightly to SEK124.8m in FY24 and SEK125.7m in FY25, compared to SEK121.2m and SEK124.9m previously.

At end-Q124, Mendus reported a net cash position of SEK87.3m or gross cash of SEK88.2m adjusted for SEK0.9m in long-term liabilities. The cash balance was bolstered in April by the receipt of SEK69.1m from the exercise of series TO3 warrants issued in connection with the July 2023 raise of SEK317m. In total 144.0m warrants were exercised (at a conversion price of SEK0.48/warrant; 76.3% of the warrants outstanding), resulting in the shares outstanding figure increasing to 1,007m from 863m previously). Based on our cash burn projections, we estimate the pro forma cash balance to be sufficient to support operations into Q325, in line with management guidance. We calculate that the company needs to raise a further SEK75m in H225, before signing a partnership deal for vididencel in FY26. Should the licensing deal not come through, the company would be required to raise a combined SEK300m through FY26 and FY27, according to our calculations.

Other than the discussed changes to our near-term estimates, we keep our long-term assumptions unchanged for Mendus’s current clinical programs. We roll forward our model and adjust our valuation for the latest pro forma net cash figure. Our valuation has improved to SEK2.11bn from SEK2.05bn previously. However, the per share valuation is affected by the higher number of shares outstanding and reduces to SEK2.09, down from SEK2.38 in our last update note. Exhibit 2 presents a breakdown of our valuation assumptions across the clinical programs.

Exhibit 2: Mendus rNPV valuation

Product

Indication

Launch

Peak sales
($m)

NPV
(SEKm)

Probability of success

rNPV
(SEKm)

NPV/share
(SEK/share)

Vididencel (DCP-001)

AML

2028

980

4,268

20.0%

932

0.93

Vididencel (DCP-001)

OC

2031

760

2,524

15.0%

764

0.76

Ilixadencel

GIST

2029

230

1,707

15.0%

256

0.25

Pro-forma net cash at 31 March 2024*

156.4

100.0%

156.4

0.16

Valuation

 

 

 

8,654

 

2,108

2.09

Source: Edison Investment Research. Note: *Adjusted for the SEK69.1m funds realised through post-period warrant conversions.

As indicated above, assuming Mendus takes its assets to commercialisation on its own, we estimate that it will need to raise a total of SEK375m between FY25 and FY27 before reaching profitability in 2028. If this is actioned through an equity issue, the company would be required to issue c 839m shares (at the current share price of SEK0.447), which would lead to the total number of shares outstanding increasing to 1.85bn and our per share valuation being diluted to SEK1.35/share.

Exhibit 3: Financial summary

Accounts: IFRS; year-end 31 December; SEK’000s

2022

2023

2024e

2025e

Income statement

 

 

 

 

Total revenue

3,375

29,612

3,062

0

Cost of sales

0

0

0

0

Gross profit

3,375

29,612

3,062

0

SG&A (expenses)

(44,028)

(30,748)

(31,670)

(32,621)

R&D costs

(87,049)

(92,653)

(89,968)

(86,822)

Other income/(expense)

(1,134)

(559)

0

0

Exceptionals and adjustments

0

0

0

0

Reported EBITDA

(128,836)

(94,348)

(118,576)

(119,443)

Depreciation and amortisation

(4,848)

(6,303)

(6,184)

(6,289)

Reported Operating Profit/(loss)

(133,684)

(100,651)

(124,760)

(125,732)

Finance income/(expense)

(5,101)

(968)

149

64

Other income/(expense)

 

 

 

 

Exceptionals and adjustments

0

0

0

0

Reported PBT

(138,785)

(101,619)

(124,611)

(125,668)

Adjusted PBT

(138,785)

(101,619)

(124,611)

(125,668)

Income tax expense

0

0

0

0

Reported net income

(138,785)

(101,619)

(124,611)

(125,668)

 

 

 

 

 

Basic average number of shares, m

199.4

461.9

935.2

1,007.2

Basic EPS (SEK)

(0.70)

(0.22)

(0.13)

(0.12)

Diluted EPS (SEK)

(0.70)

(0.22)

(0.13)

(0.12)

 

 

 

 

 

Balance sheet

 

 

 

 

Property, plant and equipment

13,899

11,197

9,197

6,897

Intangible assets

532,441

532,441

532,441

532,441

Right of use assets

26,216

23,247

20,922

18,830

Other non-current assets

618

624

624

624

Total non-current assets

573,174

567,509

563,184

558,792

Cash and equivalents

41,851

120,782

69,595

23,320

Prepaid expenses and accrued income

1,919

64,359

64,359

64,359

Other current assets

3,442

3,302

3,302

3,302

Total current assets

47,212

188,443

137,256

90,981

Non-current loans and borrowings

22,845

850

850

75,850

Non-current lease liabilities

23,706

21,115

21,115

21,115

Total non-current liabilities

46,551

21,965

21,965

96,965

Trade and other payables

7,411

8,129

8,129

8,129

Current loans and borrowings

29,198

0

0

0

Short-term lease liabilities

2,413

2,523

2,523

2,523

Other current liabilities

20,375

18,608

18,608

18,608

Total current liabilities

59,397

29,260

29,260

29,260

Equity attributable to company

514,438

704,727

649,216

523,548

 

 

 

 

 

Cashflow statement

 

 

 

 

Operating Profit/(loss)

(133,684)

(100,651)

(124,760)

(125,732)

Depreciation and amortisation

4,848

6,303

6,184

6,289

Other adjustments

(6,390)

(1,966)

0

0

Movements in working capital

27,030

(65,479)

0

0

Interest paid / received

(1,135)

(968)

149

64

Income taxes paid

0

0

0

0

Cash from operations (CFO)

(109,331)

(162,761)

(118,427)

(119,379)

Capex

(12,324)

(1,823)

(1,859)

(1,897)

Acquisitions & disposals net

0

0

0

0

Other investing activities

0

1,380

0

0

Cash used in investing activities (CFIA)

(12,324)

(443)

(1,859)

(1,897)

Net proceeds from issue of shares

0

297,904

69,100

0

Movements in debt

8,194

(55,807)

0

75,000

Other financing activities

0

0

0

0

Cash flow from financing activities

8,194

242,097

69,100

75,000

Increase/(decrease) in cash and equivalents

(113,461)

78,893

(51,187)

(46,275)

Cash and equivalents at beginning of period

155,313

41,851

120,782

69,595

Cash and equivalents at end of period

41,851

120,782

69,595

23,320

Net (debt) cash

(10,192)

119,932

68,745

(52,530)

Source: Company reports, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Mendus and prepared and issued by Edison, in consideration of a fee payable by Mendus. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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General disclaimer and copyright

This report has been commissioned by Mendus and prepared and issued by Edison, in consideration of a fee payable by Mendus. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Research: Industrials

Smiths News — Refinancing releases dividend shackles

Smith News’ H124 results highlighted the robustness of the underlying business, but also revealed the success that management is achieving in creating long-term shareholder value. For example, 74% of revenue is now contracted until 2029, the recent refinancing saves costs and removes the dividend restriction, and the organic growth initiatives are gaining significant momentum. Furthermore, the revised capital allocation policy raises the possibility that modest, self-funded M&A could add further scope to the growth initiatives. Our revenue and profit forecasts are broadly unchanged, but dividends are materially raised. Our valuation is edged up to 90p.

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