Woodford-backed activist seeks to oust ‘lacklustre’ chairman

Crystal Amber slams chairman who has overseen ‘multiple’ profit warnings

A Woodford-backed investment trust has called a general meeting to oust the “lacklustre” chairman of Northgate arguing the vehicle hire business has lost investors 16% in a growth market since he’s been at the helm.

Crystal Amber holds a 6.5% stake in the business, which accounts for 32.7% of the portfolio.

Richard Bernstein (pictured), investment adviser on the investment trust, said he has lost patience with Northgate chairman Andrew Page and wishes to install Steve Smith to the board as non-executive director.

Smith is the former chief executive of the business and holds a private shareholding in the business. The regulatory filing from Crystal Amber said he was due to retire as CEO in 2009 but stayed a further year at the request of the board to help the group navigate the downturn caused by the financial crisis.

A regulatory filing has requisitioned a general meeting to take place in April, although no specific date was mentioned.

JO Hambro Capital Management was the largest shareholder in April 2018 with a 10% stake, according to Northgate’s last annual report. Janus Henderson UK & Irish Smaller Companies and L&G UK Smaller Companies Trust both hold Northgate in their top 10, according to FE Analytics.

Crystal Amber loses patience

Crystal Amber blamed Page, who became chairman in September 2015, for lacklustre performance. Since Page’s appointment, 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%, the regulatory filing said.

Bernstein 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.

“He has presided over multiple profit warnings, a culture of inept communications with the market and, in our view, has failed to ensure there is 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.”

Page was re-elected to the board with 87.6% support from shareholders at the 2018 annual general meeting, which took place in September. Andrew Allner, another member of the board, had even less shareholder support with 72.39% backing him for re-election. The board noted shareholder feedback suggested this was due to the high number of boards Allner served on.

Woodford connection

The £199.5m trust is backed by Neil Woodford’s Equity Income fund, which has a 0.73% allocation to the closed-ended fund.

In turn, Crystal Amber used to hold Woodford Patient Capital Trust but sold out in H2 2018 making £1m gains, according to its half-yearly report published this month.

Woodford added the holding in February 2015. The equity manager said in a blog post at the time explaining the decision: “This is a company that we have known well for a long time and we are very supportive of its investment approach which aims to deliver long-term value through active engagement with the companies in which it has invested. We hold its management team in very high regard.”

Crystal Amber performance

6m1yr3yr5yr10yr
Crystal Amber-9.619.2849.4647.69142.44
FTSE 250-4.76-1.9324.2331.68329.05
IT UK All Companies sector-5.830.2729.0823.39226.66
Source: FE Analytics

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