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Xero admits another big share sale blunder

For the second time this week, listed software company Xero has admitted making a share sale mistake relating to NZX disclosure rules. 

Xero now says an August 13 sale of 25,000 shares by former director Philip Norman for $127,500 at $5.10, was not disclosed to the market until today.

Mr Norman resigned as a Xero director on July 26.

This follows another error earlier this week which saw questions of a possible Securities Markets Act disclosure breach around a share dump by chief operating officer Alastair Grigg. 

Company secretary Linda Cox released a statement to the NZX today taking the blame for this latest mistake involving the sale of Mr Norman's shares.

"Due to a fault on my part the disclosure of Mr Norman is being filed outside the required filing period.

"Mr Norman notified his sale of shares to me within the required time period and is in no respect responsible for this oversight."

Ms Cox says Mr Norman sold his shares to repay a company loan that was advanced at his original appointment for the purpose of buying shares.

She says only became aware of the error when reviewing the disclosure notices of all Xero directors and officers after the Alastair Grigg mistake.

A copy of the statement was also sent to the Financial Markets Authority, which polices the Securities Markets Act. 

More by Caleb Allison

Comments and questions
27

Is it a coincidence that both Grigg and Norman sold their shares at $5.10 within two days and around the high of the share price before it got dumped on small volumes??

What is Mrs Bennet, the CEO of NZX doing about it? Probably nothing as has been the case to date.

Now that the rules have been changed through this precedence, its game for anyone to do the same

Cowboys. If they can't manage disclosure rules, how could you trust the annual reports?

Tim Bennett needs to act unless he wants his term as CEO defined by this event.

Rod Drury is very quiet for someone normally so loud !!!!

Rod Drury is on the board of NZX, so effectively is Tim Bennetts boss!!

All are equal but some are more equal than others?

That makes Mrs Bennetts lack of action on this even worse.

If Mrs Bennett and NZX had any credibility they would come down harder on Xero than with any other company infringing to the same degree due to the conflict with Rod Drury and the fact that with him being a director of NZX he should have made sure that Xero was squeeky clean.

In fact Rod Drury would probably resign from the NZX board as well.

But no we live in New Zealand with banana republic style regulatory authorities who have one set of rules for the masses and one set for the old boys club

DISGUSTING

How can a person who heads a company listed on the NZX also be on the board of the NZX? Conflict of interest, surely?

I don't see the disclosure of a sale of 25,000 shares by an ex-director being made a few days late as a "big blunder" but the company should face some sort of sanction.

As for the stuff up with Mr Grigg, isn't it now known that the date of the sale given on the disclosure notice was wrong and that the notification had in fact been made within the 5 day period.

Linda Cox is nobody's cowboy. She did this stuff for Telecom for years and is one of the best in the game. She'll be extremely embarrased about these slipping through. Good of her to put her hand up to be named personally though.

Well said Linda.

Xero management stuff up again - although in fairness at least Linda Cox has admitted the error and has taken the blame, and she should get credit for that.

Sam Knowles as Chairman needs to put in place some serious compliance resource and change the culture internally.

Sam Knowles does have credibility - unlike some of the other directors and CEO

He will insist on Rod Drury resigning

Just fell over laughing my head off!

No, NZX is rubbing hands with glee as yet another fine to fill the NZX coffers.

Especially now that NZX trades are dropping and the partial privatizations may not go ahead.

Have you forgotten that Mark my words I'l fine everyone has resigned from the NZX ?

Drury resign???!!! Good luck with that...

The odds are 100 : 1 that nothing serious will come out of it.

Self-regulation of a stock market is a train-wreck waiting to happen. There will always be reluctance to punish your own clients, as I am sure this will demonstrate.

Lets have some balance in your reporting . This month Ross Jenkins, the CFO bought 24,000 shares at $5.35 and a further 8,300 at $4.84.

If you are to report disclosure by directors or officers, avoid bias, report all.

Joe, you miss the point.

The key issue is about problems with disclosure at Xero. One correct disclosure does not make up for another bad one.

It is important that that market is fully and reliably informed about the activities of Directors and Executives of listed companies - otherwise people lose faith in the company and then ultimately in the market. Xero has cocked up twice this week - that is news.

Adding to the concern is that Rod Drury is on the Board of NZX and there are concerns that his position means they will get away with it without any penalty. Xero needs to be held to account for its mistakes.

Thinking of the market, is it still not strange to others that a company that doesn't make profit, has turnover of $30m, is valued at $500m?

To the simple minded, yes.

Oh well, please explain it to us simpletons then, great wise one.

Yes, please do explain to my simple mind how a company can be worth nearly 20x its revenue, when most successful tech firms are valued at 10x-15x their profit?

You have to remember that technology companies work to different models. Case in point, Nicira. Recently acquired by VMware for USD1.2B (yes b, not m). Total sales (sales, not profit) an estimated USD5m. How's that for a multiple, makes Xero look like a bargain huh?

Without Xero I would not be feeding my family and helping other business owners do the same.
Every day I listen to their concerns, offer a friendly shoulder to cry on and help them keep compliant with Inland Revenue here in NZ and around the world.
I'm so incredibly proud to lead and encourage bookkeepers around the world to help their respective SME's to cut costs and collaborate with Xero accountants to deliver value.

Thank you thank you kiwi made Xero ... you are my heros!

Gayle, you are a joke. If Xero was a cult church, which I think it is, You are the most blind. You're continual irrelevant comments on the xero blog state that. The point is, your business is 100% reliant on Xero. When Xero either gets sold to an overseas VC company and has no interest in the NZ market, or when the ponzy scheme of Xero runs out of money then your business will be gone.

Xero appear to me to be building the worlds leading online accounting software. Not cliche "world leading", but literally. The market is gigantic, and the share price represents future value. They are in a growth and establishment phase, not a mature stable growth phase, so regular multipliers don't apply.