Crystal Amber calls for removal of Northgate chairman

12th Mar 2019 10:32

(Sharecast News) - Activist investor Crystal Amber has called a shareholder meeting to remove Northgate chairman Andrew Page, blaming the vehicle rental company's multiple profit warnings and declining shareholder returns. The fund has proposed the return of former Northgate chief executive Steve Smith to the board as a non-executive director. Smith spent two decades at the company and has maintained a private shareholding.In a statement on Tuesday, Crystal Amber Fund said it believes that Page has been the "principal driver" of Northgate's "lacklustre performance, both operationally and in generating value for shareholders" since he became chairman in September 2015.Richard Bernstein, investment adviser to Crystal Amber, said: "In the 11 years since the Fund was established, this is only the second time that we have felt compelled to requisition a general meeting of an investee company to change its board. We have attempted to engage repeatedly and constructively with the Northgate board as a major shareholder since 2016. We have finally lost patience with Mr Page's refusal to listen to positive proposals to enhance shareholder value."The fund pointed to a 29% fall in operating profit between the first half of 2016 and the first half of the current financial year, with return on capital employed dropping from 12.0% to 6.7%. "Despite enjoying the tailwind of a growth market, Northgate's number of vehicles on hire in the UK and Ireland is lower in organic terms than in October 2015. Since Page's appointment as Chairman, Northgate has achieved a total shareholder return of -16%, during a period when the Numis UK Mid Cap Index (excluding Investment Companies) has delivered +24%."As well as multiple profit warnings, Bernstein said Northgate had "a culture of inept communications with the market" and there was not the right mix of skills and experience on the board. "As chairman, he inherited a business with a strong market share in a healthily-growing sector, yet his tenure has left the company totally lacking in strategic direction and languishing in the doldrums. We believe that Northgate is a fundamentally good business with enviable positions in each of its markets, but it suffers from the inadequate stewardship provided by the board led by Mr Page, which is preventing it from achieving its true potential."Northgate noted that the requisition notice required the company to call a shareholder meeting within 21 days.