11 March 2019
CRYSTAL AMBER FUND
LIMITED
(“Crystal Amber
Fund” or the “Fund”)
Crystal Amber Fund
requisitions General Meeting of Northgate plc:
Proposes to remove
chairman and appoint a new independent director
Crystal Amber Fund, the activist investment fund, announces that
it has today delivered to the board of Northgate plc (“Northgate”)
a requisition notice requiring the company to convene a General
Meeting at which resolutions will be proposed to remove Northgate’s
chairman, Andrew Page, and appoint
Steve Smith to the board as a
non-executive director.
The Fund believes that Mr Page has been the principal driver of
Northgate Group’s lacklustre performance, both operationally and in
generating value for shareholders, since he became chairman in
September 2015.
During Page’s tenure as chairman, between the first half of FY16
and the first half of FY19, Northgate's operating profit fell by
29% and its return on capital employed dropped 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%.
Richard Bernstein, investment
adviser to Crystal Amber Fund, 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.”
Crystal Amber’s second resolution at the General Meeting – which
Northgate is obliged to hold during April, under the provisions of
the Companies Act – seeks to appoint Steve
Smith to the Northgate board.
Mr Smith is a former Chief Executive Officer of Northgate.
He worked for the group for two decades and during his time
as Managing Director of vehicle operations and subsequently Group
CEO, Northgate expanded from a base of 2,500 vehicles, located
mostly in the north east of England, to a fleet of 109,000 vehicles across
the UK, Ireland and Spain. 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. Mr Smith has maintained a private shareholding in
Northgate.
He is currently a non-executive director of Ramsdens Holdings
plc and three private companies.
Richard Bernstein
commented: "Steve Smith led
the team that grew Northgate successfully to the scale and market
power it has today, a legacy that is being squandered by the
current board led by Andrew
Page. We believe that his track record as a very
successful former CEO of the group and his unrivalled understanding
of the commercial vehicle hire sector mean that his election to the
board would be a huge boon for all shareholders. We could all
have more confidence that Northgate would properly exploit its
strong base and return more value to shareholders with his wisdom
and experience in the boardroom."
Additional information regarding Crystal Amber’s reasons for
requisitioning the General Meeting is available via the Fund’s
website here: https://crystalamber.com/
For further enquiries please contact:
Crystal Amber Fund Limited |
|
Christopher Waldron (Chairman) |
Tel: 01481 742 742 |
|
|
Allenby Capital Limited - Nominated Adviser |
|
David Worlidge/Liz Kirchner |
Tel: 020 3328 5656 |
|
|
Winterflood Investment Trusts - Broker |
|
Joe Winkley/Neil Langford |
Tel: 020 3100 0160 |
|
|
Crystal Amber Advisers (UK) LLP - Investment
Adviser |
|
Richard Bernstein |
Tel: 020 7478 9080 |