Wednesday, 28 April, 2021
Soaring success for ‘best of Yorkshire’ business portfolio
One year on from the launch of a unique Yorkshire-focused portfolio, investors are congratulating the businesses behind its incredible success.
Asset management company, Mole Valley Asset Management (MVAM), launched the ‘Yorkshire T20’ portfolio in March last year. It comprises 20 listed companies from across Yorkshire, and aims to champion some of the best businesses the county has to offer and provide a way for people to grow their savings while supporting local, home-grown industry.
Duncan Sanford, who heads up the innovative MVAM Yorkshire office, in York’s Blake Street, built the portfolio based on his extensive regional experience as former Chief Executive and Chief Investment Officer for Nestlé Capital Management Ltd, as well as his local knowledge derived from living and working in the region.
Duncan explained how the portfolio has performed beyond expectations in its first year: “While it’s important to note that we were fortuitous in our launch timing, the Yorkshire T20 portfolio has done very well over its first 12 months, with values rising 50-60% from March 31st 2020 to March 31st 2021.
“This is largely due to some real stars within Yorkshire, including Avacta, which is at the forefront of COVID-19 testing and other significant medical breakthroughs, and ZOO Digital, which is in a sweetspot of a film and entertainment industry being forced to shift its operations to online – which is exactly what ZOO specialises in.”
However, it’s not just about the returns for Duncan – the real enjoyment over the past year has been in getting to know the companies and the niche industries they serve.
“One of our strategies for picking the right companies is researching which listed Yorkshire businesses are doing great things, and then meeting with the company management to ensure that we understand the business model and their strategies,” he said.
“Ironically the events of the past year, including lockdowns and management being at home, have given these company leaders the opportunity to take a step back from the running of the company and really focus on their corporate strategies. They’ve realised they employ people who can do the day-to-day, and that they need to concentrate on steering their companies in the right direction beyond COVID, and focus more on strategic decision-making.
“This will ensure that they emerge stronger, post-pandemic, after achieving strong results already this year.
“Lockdown has also given us additional access to the management of these firms via online group meetings and so we’ve been able to share even more updates with investors, via our monthly YouTube webcasts.”
And what an exciting year it’s been for the Yorkshire T20 firms. Harworth Land Reclamation has been busy building its environmental credentials by purchasing ‘dirty’ land such as former industrial sites, and turning it into much-needed new housing.
Avacta is awaiting the CE quality mark, which will enable it to begin manufacturing and distributing its new, less invasive and potentially more accurate ‘lateral flow’ COVID tests. This and the company’s pioneering work developing less damaging and more effective cancer therapies has seen its share price skyrocket by almost 1,000 per cent over the past 12 months, from 22p at the end of March 2020, to £2.32 on the same date this year.
Meanwhile, ITM Power and Green Hydrogen Energy, a world leader in electrolysing energy, has also seen dramatic growth thanks to its innovations in developing more environmentally-friendly power. In March, it reached a pivotal agreement with Japan to supply its groundbreaking technologies to the country.
And the Benchmark Aquaculture company, based in Sheffield, which already supplies eggs for over 50 per cent of salmon produced in Europe, has just notched up its first worldwide customer after a year of inward review, which has seen it consolidating its business to focus almost entirely on furthering its pioneering work in sustainable farmed fish production. After shedding non-core aspects of its business such as land animal vaccinations and veterinary training, it anticipates further significant growth during the course of 2021 and beyond.
Duncan added: “There is so much potential in Yorkshire, across a broad range of industries that it’s hard to choose, but we believe we have an excellent group of listed firms which are proving to be hugely successful.”
So, what does Duncan look for when choosing which companies to add?
“We look for companies that are leaders in their fields, with global reach and strong, focused management who consider performance beyond just making money, but also in terms of their people and their impact on the environment,” he explained.
“This is because we’re seeing a real shift in investors’ expectations, where they increasingly want to support companies that focus on influencing and improving the world in the way they do business.”
Duncan believes that, while it may seem counter-intuitive to be investing during the coronavirus pandemic, it might actually be a prudent option in some cases.
“COVID-19 has undoubtedly had a huge impact on the global economy,” he said, “but some stocks represent incredibly good value, which creates potential for significant returns once the markets normalise. Of course, it’s always best to seek guidance before investing, and we continue to offer advice on a case-by-case basis.”
For further information and to arrange interviews, please contact Tracy Fletcher at By Tracy Fletcher Limited PR, via 07983 633385 or tracy@bytracyfletcher.com
Notes for editors
As a company, MVAM aims to encourage clients to have a healthier, more personal relationship with their money. We believe that, too often these days, people’s lifetime savings are invested impersonally and anonymously, with multiple levels of administration, each of which takes its own percentage cut.
By contrast, MVAM deals directly with both investors and the companies we invest in, in order to be upfront about our fees and keep all costs to a minimum. We pledge to take an active personal interest in all our clients, so that we can better understand what sort of investment decisions they are comfortable with, and the rewards they expect.
MVAM’s other financial services include a Premium Dividend Portfolio, AIM Inheritance Tax Portfolio, retirement planning, ISAs and corporate pension schemes. A dedicated investor portal app is available to all investors, along with personalised monthly financial reports. Imminent new services will include a multi-asset portfolio and a ‘Make the World a Better Place’ portfolio.
Any Yorkshire investors wishing to enquire about our services can contact the York office via 01904 929432, enquiries@mvam.com and www.mvam.com/mvam-office-york
Duncan Sanford, Director and Portfolio Manager
Duncan Sanford is the Director and Portfolio Manager for MVAM’s York office. He has over 20 years’ experience in the international financial industry, successfully combining direct investment and managing active investment teams. He worked as CEO and CIO for Nestlé Capital Management Ltd accountable for the global pension fund assets, managed both internally and externally. He joined MVAM from LGPS Central Limited, an aggregation of nine UK public pension funds, where he was the Interim Deputy CIO responsible for building the internal investment team and selecting external investment opportunities.
Case study – Avacta
Avacta is an example of the real success stories the Yorkshire T20 has invested in, and the past 12 months have been incredibly exciting, not least its contribution to the battle against COVID-19.
The Wetherby-headquartered innovator has developed a simple nasal swab-based antigen test which is intended to provide a result in minutes, indicating if a person with COVID-19 is infectious at that moment, whether they are symptomatic or not.
CEO Alastair Smith said: “We have two business divisions: diagnostics and therapeutics. Within the diagnostics division, the pandemic has played into some of our strengths so that we were able to very rapidly develop a series of reagents to detect the coronavirus. And, over the past 10 months, we have taken them into a number of products.
“The most prominent of those, in terms of driving shareholder value, is the rapid antigen, lateral flow test for the virus. We are very close now to CE-marking that product and being able to launch it commercially, and that has dramatically changed the valuation of the company. And, on the back of that, we were able to raise significant capital during the summer of last year, which has allowed us to fund our diagnostic test development and our therapeutic programmes.”
And those therapeutic programmes are potentially even more exciting, in terms of their pioneering approach to cancer treatment, as he went on to explain.
“We will also be bringing the first of our cancer therapies into the clinic and trialling it on patients mid-year. This, combined with the potential revenues from the rapid antigen test, represent really significant milestones and potential value inflection points for the group.
“It's been an enormously busy year for everyone involved in the company, keeping our therapies and programmes going under COVID-safe working conditions, and developing COVID-19 diagnostics, with all the restrictions around people working in labs. And the lateral flow tests will be our first diagnostic product to market, so we have had to establish the diagnostic development infrastructure at the same time; we effectively built the plane at the same time as flying it.”
The diagnostic tests will be a game-changer for tackling COVID-19. Not only are they high quality, demonstrating excellent clinical data, but they are on course to be manufactured in the UK, unlike many of the existing tests which are produced in China.
“We have three UK manufacturing partners in place, and have established supply chains for the associated test consumables, as well as putting in place the associated kit packing logistics all in the UK,” he explained. As far as the UK PLC is concerned, that’s great because hopefully the commercial success of the test will benefit those manufacturing and logistical support companies as well.
“And we have also worked hard to make our test what we call an anterior nasal test. The tests currently being used are nasal-pharyngeal, which require you to push them right up your nose or down to the back of your throat. That's very unpleasant, as many people will know from first-hand experience. Our test, by contrast, just samples in the lower nostrils and is not unpleasant. It's a lot more straightforward to use, which will be good not only for people’s compliance, but also how well they execute the tests, because people naturally don’t want to do something that makes them gag and in many cases this prevents them from doing it properly, potentially leading to inaccurate results.
“So we’re waiting eagerly for the CE mark, which will enable us to sell the test in the UK and Europe.”
At the same time as focusing on test development, Alastair added that the same technology, called Affimer®reagents, has been shown to have ‘anti-infective’, virus-blocking capabilities and these reagents have been licensed to Daewoong Pharmaceutical in South Korea, for them to use in the development of treatments for COVID-19.
He explained that Affimer reagents can effectively be programmed to find specific antigens in the body and either block or attack them, and so can be used to develop drugs for a range of diseases including cancer.
Avacta’s first drug into the clinic this summer, however, is based on its second technology platform called preCISIONTM. preCISION is used to reduce the side effects of chemotherapies which are effective but limited by their toxicity.
“Chemotherapies can be very destructive to patients’ whole bodies, not just to cancer cells,” added Alastair. “For example, doxorubicin, which has been in use for over 40 years, is effective against a range of cancers but is very damaging to the heart and patients can’t receive more than six doses of it before there is a real risk of fatal heart damage.
“What we’re developing is effectively chemotherapy without the side effects. We can take an existing chemotherapy and modify it with our preCISION chemistry to inactivate it, until it enters a tumour where it is activated to attack the cancer.
“Because the chemotherapy is inactive when it's injected into the patient, it can travel around the body in the bloodstream, through all the organs like the heart, but does no damage until it enters a tumour, where it is ‘switched on’ by an enzyme that is present in large amounts in most solid tumours, to kill the cancer cells. It therefore doesn’t damage healthy tissue where the enzyme isn’t present, but does kill the tumour.
“This has worked extremely well in the pre-clinical models and now we’re going to start testing it in humans later this year, in the summer. We’ll see the first data by the end of this year and if it works equally well in humans, then it will be a game-changer.”
Avacta’s ground-breaking therapy will not only allow patients to receive more doses over a longer period of time but will also make chemo accessible to more people because it will be able to be offered to patients who would currently be ruled out on grounds of frailty or other medical conditions that render them too vulnerable.
Alastair said: “In the case of doxorubicin, our modified version of the drug called AVA6000 Pro-doxorubicin, could be accessible to older patients who currently can’t be prescribed doxorubicin, and people should be able to have more than six rounds of the chemotherapy, which gives them a better chance of beating their cancers without putting them at risk.
“It’s hard not to be excited about it, I have to say, and the data we've got so far is really encouraging.”
And Alastair added he’s proud of the way the Yorkshire T20 portfolio is flying the flag for Yorkshire companies.
“For us, it’s about keeping that local connection, and enabling the region to be part of the UK’s success story. The T20 is a local Yorkshire portfolio with Yorkshire investors, and we’re benefitting from the profile of that. While we also operate on a national and international scale, we’re equally conscious of ‘Yorkshire PLC’. We employ 50 people in Yorkshire as well as others in Cambridge and the United States, and there’s a lot of inward investment at our site in Wetherby, so it’s great to have lots of Yorkshire shareholders.
“And, in terms of ‘UK PLC’, technological and medical innovation – and the biotech sphere we’re in – are areas where the UK can really generate wealth as part of its post-COVID recovery.
“The UK has a world-class biotech scene, so any support the government provides is going to be very well received. When you compare the current funding climate in the UK to the US, it's a bit more difficult to source the scale-up funding required to take multiple drugs into the clinic. The UK needs to not only support innovation at the earliest stages, which it is very good at, but to also support the scale-up and creation of global biotech companies to prevent them from having to go to the US. In a post-Brexit Britain we need to retain these companies so that we can enjoy the longer term wealth creation here in the UK.”
Case study - ZOO Digital
Another one of the Yorkshire-based companies featured in MVAM’s YorkshireT20 portfolio is ZOO Digital, which operates from bases in London, Los Angeles and Dubai, as well as its HQ in Sheffield.
ZOO provides a range of services for entertainment media companies around the world that helps them get their films and TV shows to international markets. ZOO’s two main services are ‘localisation’ – adapting the original content for different languages, both via dubbing the actors’ voices and creating subtitles – and ‘media services’, which involves putting those materials into the appropriate technical formats to make them compatible with different delivery platforms, such as Netflix, Amazon, and iTunes.
CEO, Dr Stuart Green, explained how the rise of online subscription services like Disney+ and Netflix, and changing consumer trends, has impacted on ZOO Digital in the past year: “Well, obviously, it's been a year of change pretty much everywhere you look. And our industry has been no exception. The entertainment industry has for some time been undergoing a seismic shift as it moves towards streaming as the primary way of delivering content to consumers. That's affected every part of the supply chain, and is a transformation that has been accelerated by the COVID-19 pandemic.”
A temporary blip in new content production has created even more scope for ZOO to grow when the industry bounces back into action, in a more remote-working manner than previously.
Dr Green added: “We've all had more free time at home and many people have been taking out more subscription streaming services, and that has accelerated the plans of big providers like Disney, Netflix and others who were already investing more and more in producing new original content. Of course, in the last year, they haven't been able to make much progress on that because those productions have been on hold.
“So, there's not been much in the way of new material coming into the industry over the course of the past year, and that has had a detrimental impact on the supply chain because lots of businesses in our sector and companies that we compete with are very dependent on new programmes.”
ZOO’s technology-enabled services plays perfectly to the increased need to support remote content production services, with less studio time and travel.
“We have a much more versatile business because of our technological enablement,” said Dr Green. “Our ability to offer a very wide range of services to our customers has meant that we've been able to grow the business by at least 27 per cent, when many of our competitors have been in decline. And we've seen consolidation in the competitive landscape with some big companies merging, which is also having a knock-on effect. So, a whole range of different factors is creating a structural shift in the sector, accelerated by COVID-19.”
And, in this respect, ZOO was already ahead of the game, looking for the kinds of remote content production solutions that have been made essential by the pandemic.
Dr Green said: “What the industry now needs in order to deliver more content into more international locations and through more streaming services while allowing remote working and collaboration over the internet, is exactly the kind of services we provide.
“This means we’re now well-placed to be able to capitalise on growth as the industry comes out of this period and new productions resume when it's safe for film sets to start again. We made great progress during the pandemic and we’re looking forward to that growth continuing as some kind of normality returns to the world.”
And Dr Green expects there will be a lasting change to the way programmes and films are prepared for international distribution. “The traditional way of delivering these kinds of services is broken,” he continued. “There was no business continuity solution for when situations such as this pandemic arose. The localisation supply chain needs to be more robust, there needs to be better business continuity.
“We believe that hybrid methods of working are here to stay, and for them to work successfully you need systems and technological infrastructure that enables individuals to work as effectively over the internet as when working out of a professional studio; to collaborate and produce work to the same standards and same quality regardless of location. I think that's here to stay, and the industry recognises that.”
This will also have a positive impact on the environment, of course.
He added: “There are a lot of positives in terms of less travel being better for the environment and better for efficiency and wellbeing, which are good for the film industry just like everywhere else.
“We're leading the charge on that, with our method of delivering these services which is much more environmentally friendly than the ones which require people to get on a plane and go to a physical studio. Of course, there'll still be circumstances when, for whatever reason, it makes sense for certain recordings to be done in a traditional setting, but that's something we can easily accommodate where necessary.”
And Dr Green is delighted to have the Yorkshire T20 along for his company’s exciting journey.
He said: “It is important for people to be aware of local businesses and the part they play in their local economy, particularly successful, publicly quoted ones that are doing great things but of which the public may be largely unaware.
“Initiatives like the Yorkshire T20 portfolio also create a buzz that raises awareness and draws attention to the kind of businesses in the locality that are making a difference, by generating growth, creating jobs and supporting the local economy. Of course, every bit of help from an economic standpoint is very welcome – with shareholders hopefully benefitting by being able to share in our success.”
Case Study: Benchmark Holdings
Another groundbreaking company within Mole Valley Asset Management’s Yorkshire T20 Portfolio, is Benchmark Holdings, a world leader in aquaculture biotechnology with the mission of improving the sustainabity of seafood production.
In 2020, the Sheffield-headquartered company underwent a significant restructuring, which resulted in it focusing on its pioneering work in the aquaculture industry. And, as a result, the future looks very promising indeed, according to Ivonne Cantu, its Director of IR and Corporate Development.
Established in 2000 and listed on the AIM market of the London Stock Exchange in 2013, Benchmark’s mission is to ‘enable food producers to improve their sustainability and profitability’. It does so by ‘developing products and solutions in genetics, health and nutrition that improve performance, animal health and welfare, and reduce environmental impact across the aquaculture production cycle.”
One of the areas served by Benchmark, for example, is fish farming, something which has come under significant scrutiny in recent years for its animal welfare, chemicals used to control parasites and diseases and, as a result, product quality.
By developing more advanced and tailored feeds, and more environmentally friendly methods of breeding, rearing, and controlling disease among stocks of the three main species, salmon, shrimp, bass/bream, Benchmark, which supports c. 50% of the world’s salmon production, aims to ensure better quality, animal welfare and environmental impact.
With headquarters in Yorkshire, the company also has sites in worldwide locations in Europe, Asia and North and South America, and notched up £105.6m in revenue during 2020. It undertakes large-scale production in six countries – mainly Norway, Iceland, Thailand, the US and Chile and serves customers across 70 countries.
Known for innovation
Benchmark’s genetics division is among the world’s leading producers of salmon eggs and it develops broodstock and fry for shrimp and tilapia, DNA profiling and selecting fish to breed from which have the right genetic traits for growth, quality and disease resistance. With disease outbreaks and parasites like sea lice one of the biggest challenges facing the aquaculture industry, its work in monitoring for emerging diseases, and developing solutions to help its customers combat such biological challenges, plays a vital role.
Great things, done right
As well as its obvious commercial potential, the company plays to MVAM’s commitment to, where possible, investing in businesses that have strong corporate responsibility credentials and a determination to do things right.
Ivonne explained how, prior to deciding to re-hone its focus on aquaculture, the company also developed vaccines for companion animals, an arm of the business it has now sold on. Similarly, it has also shed former subsidiaries in veterinarian diagnostics and training, and consultancy around sustainability for food producers.
“These were relatively small divisions but diluted our management team’s ability to focus on really delivering within our core specialism, and required capital investment,” she explained.
“Now, our management team is all about focus and financial discipline, and that’s also taking us through an important culture change, which is critical to getting all of our 800 employees, who are spread across the world in places as diverse as Chile, Thailand and Belgium, on board with our strategy, change programme and new values. The third phase of our restructuring is all about transformation.”
Ivonne added that, formerly working as a financial advisor to the business, she could clearly see the changes that needed to take place, to enable them to realise their potential, and welcomes the latest steps. “I saw Benchmark through its acquisition spree, overextending itself and finding it difficult to deliver to the market, and am now seeing it through the restructuring. I am confident that we’re now on the right track and have some very significant opportunities ahead.”
And one of those is just around the corner, in the form of a new sea lice treatment product already receiving a resounding welcome by potential customers. The company is awaiting regulatory approval on its latest innovation, a new sea lice treatment (BMK08) which will be deployed with Benchmark’s proprietary purification system CleanTreat®. Designed to reduce environmental impact in the salmon farming industry, CleanTreat has been hailed by experts as a ‘transformational step’ for the salmon industry. If approved, Benchmark plans to launch the new product in the second half of this year.
Right thing, right time
And, in addition to developments like this, Ivonne’s confidence stems largely from the way Benchmark is tuning in to the current zeitgeist surrounding sustainable food production and traceability.
“It's every stakeholder, from consumers to investors, the media, our own customers and the regulators, they are all interested in this agenda at the moment and that’s why I feel confident,” said Ivonne.
“Everybody is pulling in the same direction and willing to invest in it. Before, there was an element of paying lip service, but now, if you look at recent market financings and the development of sustainability and green bonds, investors are willing to fund sustainability projects that might have a longer payback period.
“Other developments like new global sustainability frameworks and the EU taxonomy are also really uniting everybody, and we benefit because we’re all about bringing solutions that are going to help our customers on that journey.”
The COVID-19 pandemic and its impact on working locations and practices, provided both the opportunity and the imperative around embracing change, for Benchmark.
“It forced us to increase our financial discipline,” added Ivonne. “And it stretched us to really look at our business and find ways of continuing to operate despite successive lockdowns. We had to become more resourceful around our supply chain and logistics, too, and all of these things have made us stronger.”
So, how is belonging to the Yorkshire T20 portfolio contributing to Benchmark’s corporate goals?
“We're very keen on expanding our shareholder register, which, for historic reasons, is quite concentrated, and it’s great to have new investors coming in and having a fresh look at our business.
“MVAM’s proactive approach to due diligence and really getting under the skin of our business in order to understand it, and the sector it is part of, is very refreshing. And the underlying investor base of the T20 is interesting to us because they provide another audience to communicate with about what we do.
“We want to spread the word to investors interested in the sustainability and ESG (Environmental, Social and Corporate Governance) trends which are at the heart of Benchmark’s business.”
Our Portfolio Manager, Duncan Sanford, added: “It’s hugely exciting to us, to be able to give our investors the opportunity to get involved with businesses like Benchmark which are at the very cutting edge of their sectors.
“The work they’ve done this year to pivot their business, and indeed face some uncomfortable questions, head on, in order to emerge stronger, gives me great hopes in terms of what the future has in store for them.”