Summerset boss sells shares after company takes $8.8m wage subsidy

Summerset Group chief executive Julian Cook sold 250,000 shares in the company last week worth around $1.5 million. Photo / Chris Steel

The chief executive of one of New Zealand's largest retirement care companies unloaded around $1.5 million worth of shares in the days after the company was granted a wage subsidy for more than 1300 staff.

A statement posted on the NZX late on Friday showed Julian Cook, chief executive of Summerset Group, sold 250,000 shares in the company on Wednesday. According to the statement the sale was worth $1,567,500.

It comes as Summerset was paid $8,870,544 in wage subsidies from the Ministry of Social Development, as part of the Government's scheme to help businesses which faced a large downturn in business as a result of Covid-19.

Shortly after receiving questions from the Herald, Summerset revealed Cook, his executive team and the board were taking a pay cut, a fact which has not been shared with investors.

"Our CEO and executive leadership team is taking a 20 per cent cut in pay during this period and our board has agreed to an equivalent reduction in director's fees. This was finalised last week," a spokeswoman said in a statement.

"We have not made any redundancies in the business. In order to reduce costs in the business approximately 260 corporate and construction staff have moved to a four-day week with a corresponding reduction in pay."

Summerset's recent updates have given investors a mixed picture of the impact of Covid-19 on the company.

At the end of March it warned it could not give any earnings guidance because of uncertainty, as it warned that it expected to build 300-350 units in 2020, down from the 400 it earlier predicted.

Its last trading statement said sales in the first three months of the year held up.

"We have maintained our sales for the first quarter at normal levels and have a good pipeline of sales. It is still too early to tell the impact of Covid-19 on our next quarter," Cook said on April 9.

On Monday, Summerset said the impact had been significant.

"Like many businesses, we have been significantly affected by Covid-19.

"In particular, retirement unit sales are unable to be transacted and we have ceased building new retirement units at all of our 12 sites under construction, which has a future effect on what we have available to sell."

The company said it had invested "millions of dollars to keep our residents and staff safe from Covid-19" including on security guards, recruitment of extra nurses and caregivers, ordering safety gear "and increased wages for our nurses, caregivers and other frontline staff in our villages".

Summerset refused to comment on Cook's share sales, beyond saying it was "around 8 per cent" of his holding in the company.

Shares in Summerset were up almost 4 per cent on Monday to $6.50. While the shares are well down on the $9.25 peak of January, the shares are up 4 per cent on what they were at 12 months ago.

The company has a market capitalisation of just under $1.5 billion.

Summerset is not the only company in the industry to take the wage subsidy.

On Monday Metlifecare, which has 25 reitrement "villages" mainly across the upper North Island, said it was "in a strong financial position and does not intend to raise equity capital".

Yet a search of the MSD database revealed that through a number of subsidiaries, it appears Metlifecare has taken around $6.2m in wage subsidies. Metlifecare has not yet said if the executive of the company planned to take a cut in pay.

Ryman said it had not applied for the subsidy. "There is a range of Government assistance available, and, like all New Zealand companies, we will continue to review what's available during what is difficult time," spokesman David King said.