Private shareholders in Photo-Me International (PHTM) are set to benefit following the success of activist investor Principle Capital Holdings in ousting the chairman and chief executive. After calling for an EGM to oust chair Vernon Sankey and Serge Crasnianski both agreed on Friday (24 August) to step aside.

Having bottomed out at 56.5p at the beginning of last week, the shares have since rallied 17% to 66p at the time of going to press. Principle has a successful track record acting as a catalyst for change, most recently at educational business Nord Anglia (NAE), and Photo-Me investors are likely to welcome its involvement now.

On Friday, Sankey said he would not seek re-election as a director at the AGM on 17 October, and Crasnianski promised to step aside as soon as the company's plans to dispose of its vending machine division are complete. But Principle, led by South African businessman Brian Myerson, says it will push ahead with the EGM anyway wishing both gone now.

Principle, which originally tried to call and EGM last month before pulling out, has become frustrated with the firm's lack of progress over the past 18 months during which time profits have slumped from almost £35 million in 2005 to barely a third of that last year. Having secured the support of more than 50% of shareholders it is in the dominant position.

Other issues have also stirred controversy, including a prolonged strategic review, delays in selling its underperforming vending business, its failure to pursue any form of capital return to shareholders and, arguably most controversial of all, share sales by executive directors Francois Giuntini and Ricardo Costi just before a profits warning earlier this year (Shares 8 March).

Sankey may not be surprised by the latest twist in this saga; he was an unsuccessful chief exec of Reckitt & Colman in the mid 1990s. Having failed to exploit the group's catalogue of superb brands, he eventually resigned.

by: John Marshall