SUM - Summerset Group

[couta1]

Re-sales have been relatively flat for two or three years, just means at some point in the future, perhaps a few years away, respectfully remembering what re-sales means, we may see a flurry.

At the end of the day SUM growth comes from new construction and the re-valuation of assets. IMO long term it’s a demographic hold, short term it’s an asset valuation watch for those that do.

Attachment 6303

Thats why I can't understand anyone investing in Sum without at least a 3 year minimum hold and 5 yrs is a better starting point.

[MAC]

Thats why I can't understand anyone investing in Sum without at least a 3 year minimum hold and 5 yrs is a better starting point.

Warren agreed with you just this morning Couta, apologies for the ad;

http://www.cnbc.com/id/102053601

[Beagle]

Mr S Scoullar

Chief Financial Officer

Summerset

Dear Sir,

Re: Shareholders concerns related to the timing of company director selling SUM securities immediately prior to the release of Q1 sales results:

You may be aware about recent disquiet on the well supported shareholder blog website www.shareterader.co.nz related to the timing of the disposal of SUM shares by Norah Barlow only 2 days prior to the release of 2014 Q1 sales results.

April 7th, 2014: Norah Barlow Family Trust interests sold shares for approximately $4.8 million consideration, as per disclosure notice dated April 11th to the NZX.

April 9th, 2014: release of SUM Q1 sales results

With today's computerised reporting systems and with Mrs's Barlow's role as CEO many shareholders I have communicated with struggle to see how she wouldn't at the very least had a very good gauge on sales figures for the quarter. Certainly she would have been well aware of January and February's sales and had a very good gauge of March 2014 sales, (at the very least), such that she was aware that SUM were about to announce what was ostensibly a flat sales result for Q1 2014).

Given that this disappointing and price sensitive announcement was both scheduled and imminent and given that most shareholders do not invest in Summerset for flat sales results, (i.e. it is widely perceived as you know to be a growth stock), it would appear Mrs Barlow acted with inside information in this sale and used that information to her pecuniary advantage to sell the significant majority of her family trust's stake in the company immediately prior to this announcement. Many shareholders were disappointed with this Q1 sales result and the subsequent Q2 sales result and the current share price reflects that. (Put colloquially, it would appear she acted with haste and scant regard to the Securities Act to dispose of the majority of her stake and get out before the **** hit the fan).

Notwithstanding that it is understood that many of these shares may have only recently been released as part of her long term CEO incentive plan and may have recently become tradable as a result of steeping down as CEO, many shareholders are struggling with reconciling the timing of this disposal with the company's own insider trading policy and the Securities Act and have serious concerns that there was only one clear business day between the execution of this sale on Monday 7th April and the release of Q1 sales results first thing on Wednesday morning 9th April.

Simply put, her record as CEO and director does not give her a free pass from insider trading laws (Securities Markets Act 1988) which prima facie appear to have been breached.

This sale also appears to be incongruous with Summerset’s own Securities Trading Policy. I am sure you don't need me to quote you own rules back to you but I, (on behalf of a number of very concerned shareholders) would appreciate a written explanation of how the directors feel Mrs Barlow's disposal in this instance was consistent with company policy surrounding Securities trading.

It is important to shareholders that our board of directors acts at all times with utmost integrity, but is also perceived to be doing so. In this instance there is a strong perception amongst some shareholders of a breech of insider trading regulations regardless of whether this has occurred or not. This isn't good for how one of the Directors is perceived by some shareholders and does nothing for the reputation of the company itself.

I am asking you on behalf of a number of very concerned shareholders to consult with the board to clarify:

a. The process which was applied to ensure that Norah Barlow had no insider knowledge about the Q1 sales results while selling SUM securities immediately prior to the release of the Q1 sales report or how otherwise this sale is consistent with the Securities Act and the company's insider trading policy.

b. Whether Directors have a view towards reviewing and improving the company's Security Trading policy and guidelines framework. This would ensure that in future the doubt or perception of insider trading can be completely eliminated. (This could be effected. by extending the "black out trading period" to include the period of thirty days prior to the release of scheduled price sensitive quarterly sales results).


Naturally I am aware that the Financial Markets Authority handles complaints regarding insider trading allegations but out of respect for the job Mrs Barlow has done and is doing for the company I am writing to address the board in this first instance to seek an explanation and would request this in writing within thirty days. I would be extremly disappointed if Summerset leave me with no option but to have to consider a formal complaint to the Financial Markets Authority and genuinely hope there is a satisfactory and plausible explanation forthcoming.

Yours sincerely,

Roger


Copy of e.mail sent on 26 August 2014.

Copy of their response received 9 September 2014 signed by CFO and CEO.

Dear Roger

Thank you for your email of 26 August 2014.
We take the matter of insider trading extremely seriously and strongly refute any allegation that
there was any insider trading in respect of the sale of shares by Mrs Barlow in April of this year.
Mrs Barlow followed at all times Summerset’s Securities Trading Policy in the sale of her shares,
and we do not believe that the 2014 sales results contained price sensitive information.
As you note in your email, Mrs Barlow sold her shares on April 7th 2014 with the 2014 Q1 sales
results released on April 9th. Summerset’s quarterly sales results provide the market with an
update of the number of units sold only and do not provide any financial information. The closing
price on the NZX for SUM on April 8th was $3.41. Following the release on April 9th, the closing
price was $3.39. The closing price one week later on April 16th was $3.44. On this basis it is clear
that this announcement was not price sensitive, supporting our original view on this matter.
Furthermore, Summerset’s share price continued to trade within a range of $3.32 to $3.58 over
the next three months.
Regarding our trading policies generally, we are always reviewing and where appropriate
updating these policies. At a recent board meeting on 11th of August 2014, the board resolved to
amend the policy such that executives who cease employment with the company must continue
to comply with the Securities Trading Policy for a period of six months post-employment. This
change is not linked in any way to Mrs Barlow’s share sales and indeed the new policy would not
have altered Mrs Barlow’s position in respect of the sale of her shares as she remained a director
of Summerset and therefore continued to be bound by Summerset’s Securities Trading Policy.

I'm now making this public so that people can judge for themselves whether they are happy that SUM's managment / board appears to have approved Norah Barlow's significant trade in securities immediatly before the Q 1 sales announcement.

I've done my bit. Shareholders would do well to consider carefully if they are happy with their board's decision on this matter and whether this is a relevant indicator of their professionalism or not.

Extract from SUM's security trading policy
2 POLICY STATEMENT 2.1 FUNDAMENTAL RULE – INSIDER TRADING IS PROHIBITED AT ALL TIMES 2.1.1 If you possess “material information” (refer to definition below), then whether or not you are a Restricted Person below, you must not: • trade Restricted Securities; • advise or encourage others to trade, or hold any Restricted Securities; or • pass on the material information to others. The prohibitions apply regardless of how you learn of the information, and regardless of why you are trading. The prohibition on insider trading applies not only to information concerning Summerset’s securities. If a person has material information in relation to listed securities of another issuer (including futures contracts listed on an authorised futures exchange) over listed securities, that person must not trade in those securities.
2.2 INSIDER TRADING LAWS 2.2.2 If you have any material information, it is illegal for you to: • trade Summerset’s listed securities; • advise or encourage another person to trade or hold Summerset’s listed securities; • advise or encourage a person to advise or encourage another person to trade or hold Summerset’s listed securities; or • pass on the material information to anyone else – including colleagues, family or friends – knowing (or where you ought to have known) that the other person will use that information to trade, continue to hold, or advise or encourage someone else to trade, or hold, Summerset’s listed securities. 2.2.3 This offence, called “insider trading”, can subject you to criminal liability including large fines and/or imprisonment, and civil liability, which may include being sued by another party or Summerset, for any loss suffered as a result of illegal trading.

[winner69]

not sure I understand, Norah sold out 3/4 of their holdings several month ago and current holdings (if sold) would not need a SSH announcement.

Would need to do a Directors and Officers Disclosure though

[couta1]

yay, up 1 to 280

(I'll take anything that i can get at the moment. No win is too small!)

Gee NG your easily excited, now aren't you going to be a very happy boy in a few years time dare I say it when the price has a 5 or 6 in front of it

[Tevita]

Roger,

The majority of present day shareholders have possibly held their shares a considerable time - but certainly not all. The former will have done well over time if not as well as certain officers of the company who sold down. Therefore their appropriate discontent will be more muted than the latter who would have far greater cause for grievance. Well done for being so proactive and not just mumbling in your beard about perceived irregularities.

[RTM]

Gee NG your easily excited, now aren't you going to be a very happy boy in a few years time dare I say it when the price has a 5 or 6 in front of it

They won't go down that far will they Couta1 ?
Might get some if they do.

Cheers

[couta1]

They won't go down that far will they Couta1 ?
Might get some if they do.

Cheers

No chance, try Rakon Youll probably be lucky Cheers

[Goldstein]

Roger, first of all, good on you for the work you've put in on this matter. Chasing things that hard makes you a very good investor.

However, the board has now said "Mrs Barlow followed at all times Summerset’s Securities Trading Policy in the sale of her shares,"

So, if there is fault here it is with the SUM board.

Mrs Barlow is a smart business woman, and would maximise her return while playing inside the rules. I suspect she advertised the sale of her shares to the board well in advance - it was possibly even brought up when she discussed the end of her tenure as CEO with the board.

[Beagle]

Roger, first of all, good on you for the work you've put in on this matter. Chasing things that hard makes you a very good investor.

However, the board has now said "Mrs Barlow followed at all times Summerset’s Securities Trading Policy in the sale of her shares,"

So, if there is fault here it is with the SUM board.

Mrs Barlow is a smart business woman, and would maximise her return while playing inside the rules. I suspect she advertised the sale of her shares to the board well in advance - it was possibly even brought up when she discussed the end of her tenure as CEO with the board.

Thanks Goldstein. Not necessarily a good investor its just that I expect the highest standards of compliance from directors from a legal, ethical and moral stand-point and find actions that are well short of expected behaviour morally and ethically repugnant quite apart from the legal ramifications, if any. I completely agree with you BUT what I find most disturbing from SUM's response is exactly what you've pointed out. The entire board between them could not see that Mrs Barlow was about to breech insider trading laws and approved the sale. How a bunch or apparently articulate and intelligent people could possibly reach that conclusion beggars belief. Remember you only have to have inside knowledge of material information and act upon it to be in breech of the Securities trading laws. Everyone to date I've sent a PM too agrees that the SP action after the Q1 sales announcement, (SUM's main defence) is completely irrelevant. All that is relevant is she clearly had inside information and made a major transaction just before the information was made public.
I can't see how any intelligent person would try and make the claim that at the time Mrs Barlow sold she wasn't in possession of inside information, let alone the whole board.
I think a far more plausible scenario is that Julian Cook is doing his best to cover Mrs Barlow's tracks.

P.S. Perhaps I should put it this way. If one takes the position that what's happened is wrong, who would you put your money on to have got it wrong, Mrs Barlow acting in her own interests without the consent of the board or the entire board lead by Rob Campbell with all his experience as a director after careful consideration granting approval for this transaction before it happened ? Which seems more likely to you especially given one party has a circa $5m vested interest ?