Impact of News and Announcements on AGL Energy Share Price Valuation

This report provides a comprehensive analysis of AGL Energy Limited's share price fluctuations over a two-year period, examining the influence of various news announcements and financial performance indicators. The study investigates the correlation between company actions, earnings reports, dividend declarations, and market reactions to assess the presence of the efficient market hypothesis within the Australian context. The analysis covers key events such as earnings disclosures, dividend announcements, share buy-backs, and strategic decisions, highlighting how these factors impacted AGL's share valuation. The report uses financial data and market trends to demonstrate the direct relationship between information dissemination and investor behavior, emphasizing the significance of timely and accurate financial reporting. The conclusion summarizes the findings, reinforcing the impact of company news and performance on share price movements, thereby supporting the principles of market efficiency. It offers recommendations for investors to make informed decisions.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student:
Name of the University:
Authors Note:

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Executive Summary:
The report has indicated that the share price of AGL Energy Limited has directly changed to
different levels due to the impact from different news and announcements. The analysis has
indicated that share price of the company mainly fluctuated from the levels of 26.52 to 17.44,
where certain declaration and announcements influenced the share price valuation for the
organisations. Thus, the continuous decline in the earnings had a negative influence on the
share price valuation of the company and led to the decalin in its valuation in the capital
market. However, certain key decisions made by the management directly influenced its
pricing conditions and raised valuation of their share price. Thus, the presence of Efficient
market hypothesis is relevantly high for AGL Energy Limited in Australia.

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Table of Contents
Introduction:...............................................................................................................................3
Analysis:.....................................................................................................................................3
Conclusion and recommendations:............................................................................................9
References:...............................................................................................................................11

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Introduction:
The overall assessment aims in evaluating the relevant link between the actions of the
organisation and the announcement or news that is being conducted by the corporation. The
analysis of the relevant news that is associated with the organisation has been analysed for
detecting the relationship between the news and the share price movement of the
organisation. The detection of the relevant share price movement with the news directly
confirmations the validation of the effeminacy market hypothesis, where all the relevant
information is being discounted by the investors and determining the correct share price of
the organisation. Therefore, AGL Energy Limited is mainly evaluated in the assessment to
determine the relevant impact of different news or announcement on the share price of the
organisation.
Analysis:
Figure 1: Share price trend of AGL Energy Limited for the past 2 years

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(Source: Finance.yahoo.com 2019)
The above figure provides information about the overall impact of different news that
the has been established by the organisation over the period of last 2 years. From the relevant
analysis, it has been detected that the organisation’s share price is heavily affected from the
earnings results declared and dividend disclosed, as depicted in the above figure. Roca (2018)
stated that discounting of the share price with relevant news by the investor directly indicated
about the presence of the efficient market hypothesis, where the information is being
evaluated to determine the correct valuation of the organisation.
Figure 2: Share price during 9th August 2017
(Source: Finance.yahoo.com 2019)
The first and the foremost news that can be evaluated is the earnings disclosure that
was conducted on 9th August 2017, where the earnings of the organisation were mainly
estimated by the investors to be at the levels of 0.58 for the period ending June 2017.
However, the actual earnings of the organisation were mainly at the levels of 0.32, which as
44.77% or 0.26 less than the estimation of the investors. hence, the share price analysis

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during the period has indicated that price of the organisation declined due to the non-
fulfilment of the estimated earnings of the investors. The share price movement picked on the
next day of the announcement, where a high of 26.14 and a low of 24.27 was achieved in the
same day trade, which indicated that the price changed about 7.70% on a single day trade
(Agl.com.au 2019). Therefore, after the disclosure it has been detected that the share price of
the company has mainly declined to the levels of 23 during the next 8 days. This decline
mainly states about the disappointment of the investors regarding the company earnings
capability. The dividend declaration was mainly conducted during 23rd August 2017, which
led to the increment in the share price of the company, as the investors welcomed of 0.50 in
dividends. The share price of the company mainly increased to the levels of 23 to 24.75 after
the disclosure of the relevant dividends. However, after completion of the dividend payment
the share price of the company declined further to 22.60.
Figure 3: Share price during October to December 2017
(Source: Finance.yahoo.com 2019)

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The share price of the organisation again started to increase during 12th October 2017,
where the company initiated about the Final share buy-back notice, where the announcement
increased to the levels of 25.75 from 22.72. The news related to the AGL agreeing to sell
Active Stream to Ausgrid resulted in the decline in share price from 25.75 to 23.90. However,
after the certain decline the overall share price of the company increased during 27th
November 2017, where AGL Announces 10 percent Discount for Loyal Customers in
Victoria, which forced the increment in share price to the levels of 26.47. The news related to
Notification of interest payment and interest rate change and AGL announces plans for
Liddell Power Station has mainly forced the decline in share price of the company during the
period of 8th to 9th December 2017 (Agl.com.au 2019).
Figure 4: Share price during January to June 2018
(Source: Finance.yahoo.com 2019)
The report filed by the organisation during February of 2018 was the turing point of
the organisation’s share price, as the report indicated the declining financial conditions of the
company. The news of financial performance was taken into consideration by the investors,

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while evaluating the share price conditions of the company. Hence, the share price further
declines to new lows to 20.87 until 13th February 2018. However, the earning report that was
disclosed during 7th February 2018 also initiated the decline in the share price of the
company, as the relevant earnings was not as per the expectation of the investors. The
declaration of dividends increased the share price until it was paid during 22nd February 2018,
where the share price again started to decline. The news related to AGL to sell portfolio of
small generation and other assets to Whitehelm Capital during 23rd April 2018 renewed the
interest of the investors on the organisation, which again led to the increment in share price
from 20.22 to 22.57, as the investors welcomed the decision. After completion of some minor
events the achievement of AGL for reaching the key milestones for proposed LNG import
jetty again boosted the shares of the organisation from the levels of 20.54 to 23.29
(Agl.com.au 2019).
Figure 5: Share price during January to June 2018
(Source: Finance.yahoo.com 2019)

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The inclusion of AGL expanding low fixed rate plan to Qld NSW and SA was not
welcomed by the investors, as it would result in lower income and revenues, which led to
further decline of the share price to the levels of 20.94 from 23.27. Therefore, the share price
of the organisation mainly declined to new levels, due to the decline in earnings and after the
payment of the dividends the share price continued to decline to the new levels until the news
of AGL welcomes Sunraysia Solar Farm milestone, which increased the share price to new
levels from a low of 17.53 to 20 unital the end of the year. However, the continued problems
that was faced by the company during the year made the share price of the company
statement and did not allow the investors to reap the relevant benefits from the share price
movement (Agl.com.au 2019).
Figure 6: Share price during 2019
(Source: Finance.yahoo.com 2019)
The information in the above figure states about the share price movement of AGL for
the year of 2019, where the news regarding the AGL to invests $120 million at Loy Yang to
improve reliability and AGL invests $70 million at Bayswater to improve safety. The
disclosure of 2019 Half-Year Results Presentation has mainly indicated about the progress,

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which halted the share price decline and allow the organisation to consolidate their share
price and increase to new levels. However, the share price stared to decline after certain
decline, where the Presentation to Macquarie Australia Conference 2019 was heled after
which the share price started to decline. However, the major decline in share price was
witnessed during May, when the organisation declared to launch $2 million program to help
farmers cut debt and go solar. This decline was taken negatively by the investors, which
reduced the share price of the organisation from 22.96 to 19.43 in just a month. Further news
of Suspension of Class (ASX: AGLHA) from Official Quotation also fuelled the continuous
decline in the share price of the organisation (Asx.com.au 2011).
The news regarding AGL cuts prices for electricity standing offer customers with
implementation of DMO has gained duelled the share price growth, which led to the
increment in the share price from 19.43 to 21.11. However, the Webcast and conference call
details for FY19 results led to the decline in the share price of the organisation further, which
was due to the low level of growth achieved by the company during the half yearly period.
The disappointment of the investors increased, which led to the decline in share price from
the level of 21.35 to 19.08. The current share price of the organisation is at the levels of
19.25, where relevant news about AGL FY19 Results & FY20 Earnings Guidance and
Announcement of Buy-Back is triggering the share valuation of the organisation and is
including the investors to make relevant investment decisions (Asx.com.au 2011).
Conclusion and recommendations:
The overall evaluation of the report has mainly helped in determining the price action
movement of AGL Energy Limited for the past 2 years. The analysis has been made on the
relevant news that was been evaluated by the investors to determine the relevant share price
of the company and led to the valuation by the capital market. The inflation flow in the

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Australian market is considered to be appropriate, where investors are able to detect adequate
level of information regarding the company’s key decision and performance. Therefore, it has
been detected that the overall share price of the company is directly influenced by the news
and performance, which is adequately evaluated by the investor, while making relevant
investment decisions.

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References:
Agl.com.au. 2019. About AGL | AGL. [online] Available at: https://www.agl.com.au/about-
agl [Accessed 11 Aug. 2019].
Asx.com.au. 2011. Announcements Search Results. [online] Available at:
https://www.asx.com.au/asx/statistics/announcements.do?
by=asxCode&asxCode=AGL&timeframe=D&period=M6 [Accessed 11 Aug. 2019].
Finance.yahoo.com. 2019. Yahoo is now part of Oath. [online] Available at:
https://finance.yahoo.com/quote/AGL.AX?p=AGL.AX [Accessed 11 Aug. 2019].
Roca, E.D., 2018. Price Interdependence Among Equity Markets in the Asia-Pacific Region:
Focus on Australia and ASEAN: Focus on Australia and ASEAN. Routledge.