Following up on a daily flow of news about some corporate how’s-your-father that brought the heads of the DGL Group and My Food Bag into a series of articles last week, Point of Order initially was led astray by information on the NZX website. The company which the NZX records as “DGL” happens to be Delegat Limited, which (its website says) is aiming to be a global Super Premium wine company.
Delegate has invested in state-of-the-art wineries and world class vineyards in the prime grape growing regions of New Zealand and Australia and focuses exclusively on making “the world’s most sought-after Super Premium wines and brands”.
My Food Bag describes itself as an online food delivery business and New Zealand’s longest- standing meal-kit provider, operating in the $37 billion New Zealand retail food sector.
So why aren’t they in bed together?
But no – the corporate contretemps to which we were drawn involves My Food Bag and a chemical company which, although it is named DGL, has been given the code letters DGC for NZX purposes
Having latched on to the DGL which was at the centre of the controversy, Point of Order checked out the bizarre market consequences of the media’s urge to make a meal of its chief executive’s ill-considered choice of words.
We must confess to being bewildered by investors’ susceptibility to the public mood generated by a media feeding frenzy.
MFB’s share price fell from $0.85 to $0.82 over five days of trading last week. Its lowest point was $0.79.
DGL Group’s price fell a much greater 17% from $3.28 to $3.24, troughing at $3.06 over the same five days.
No, nothing had happened in the economy to explain this market behaviour.
Rather, the news media feasted on something silly – and yes, offensive – which DGL Group boss Simon Henry had said in an interview with NBR.
Journalists became so exercised by what he said that they rushed to seek opinions from a raft of possible generators of snappy headlines, including the PM and Henry’s brother.
Newshub whistled in a language expert to analyse Henry’s apology to Nadia Lim rather than a financial expert to analyse the financial performances of the two companies.
Henry triggered the media hounding of himself by describing My Food Basket’s founder and celebrity chef, Nadia Lim, as “a bit of Eurasian fluff”.
Before journalists turned those words into headline fodder, My Food Bag’s share price had been slipping since the company listed on March 5 last year.
On its first day of trading, its share price was $1.74. At the end of last week it was $0.82.
DGL’s share price, in contrast, had been on an upwards track since the company listed on May 24 last year.
On its first day of trading, DGL’s share price was $1.10. At the end of trading last week it was $3.14.
Simon Henry should have used his interview with NBR to discuss his company’s performance and aspirations and steer clear of disparaging another company which – so far as Point of Order can see – does not threaten DGL, nor have any relationship with it.
Investors and analysts will get their chance to study My Food Bag’s performance later this week. It made a general announcement to the NZX last week to confirm it will release its audited annual results for the financial year ended 31 March 2022 before the market opening on Friday this week.
DGL made a statement during the week, too – but a very different one.
It advised that its board
“… wishes to update the market on actions being taken following reported comments by CEO Simon Henry about a prominent New Zealand public identity, Ms Nadia Lim, last week.
“The Board has previously stated that the comments were offensive and unacceptable. They were also inconsistent with the cultural values expected of an organisation like DGL Group.
“Mr Henry has apologised to Ms Lim, the Board, DGL employees and by extension all stakeholders for his remarks, and the Board acknowledges his genuine regret.
“The Board is determined to ensure respect for diversity and inclusion is embedded firmly throughout DGL Group’s culture at all levels, and that the company’s adherence to ESG principles aligns with market expectations.”
A “suitable advisory firm” will be appointed to conduct a thorough independent review of DGL’s culture and recommend any changes necessary to ensure the culture reflects key values.
The remuneration framework for all DGL Group senior executives will be reviewed by the Board’s Remuneration Committee,
“… with a plan to implement a balanced scorecard approach for assessing at-risk remuneration, targeting an implementation date of 1 July 2022.”
According to the statement, Henry understands the importance of his own conduct in setting standards across DGL Group. He is fully supportive of, and will participate in this process initiated by the Board.
But a good question raised by the ruckus is whether the share prices of the two companies were affected by what Henry said or – more likely – by the news media’s reportage.
The media’s performance deserved the admonition it copped from Damien Grant in an article headed How the media stoked the Simon Henry-Nadia Lim controversy.
The problem with being a social justice advocate in a progressive liberal democracy is that there isn’t always enough overt sexism and racism from which to draw the requisite amounts of indignation.
Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor to Stuff, writing from a libertarian perspective.
He wrote about “the delight of the perpetually offended when a real-life, fire-breathing, patriarchal, cis-heteronormative, white, male ogre stumbled onto centre stage!”
The reaction in the commentariat at the unscripted comments by DGL founder Simon Henry was ecstatic.
Rachel Smalley was fizzing at the scoop her NBR colleague Hamish McNicol landed. The story ran for days on the NBR site; and fair enough too. But if Henry’s comments are a legitimate story, so is the coverage of them.
Henry listed his company and reinvested all of the capital raised into his firm. It quadrupled in value in a year.
For some unfathomable reason, Henry was exercised at the contrast with My Food Bag, whose promoters took most of the cash for themselves through a sell-down of their shares on listing, and saw a halving in the post-listing share price.
Investing with the disreputable Simon Henry provided an eight-times better return than with Companion of the NZ Order of Merit recipient and My Food Bag co-founder, Theresa Gattung.
For what it’s worth, here’s how the two companies check out on some basis measures:
My Food Bag Group
Capitalisation (000s) $198,799
Gross Div Yield 5.081%
Securities Issued 242,437,524
Capitalisation (000s) $893,416
Gross Div Yield 0.000%
Securities Issued 279,192,548