Australian Gas Light Company (The)

Energy group AGL has a long and proud history—the group recently clocked up AGM number 165 and laid on some superb ham and cheese rolls to celebrate. But this isn’t a company on which we have been too keen of late. Notwithstanding some sensible words from chairman Mark Johnson and his thorough understanding of the company, management was far too keen to point out opportunities than focus on risks. No doubt short-term graphs showing carefully selected criteria will satisfy some, but what about basic and more useful measures like return on equity? These are much less impressive. AGL is currently working on the most ‘efficient’ (read ‘tax effective’) way to distribute capital to shareholders—so perhaps a special dividend or share buyback is in the pipeline. But as one shareholder pointed out, this doesn’t mean the cap won’t be passed around again once a ‘suitable’ acquisition is found. The shares are down 5% since issue 160/Sep 04 (SELL—$13.55) and our recommendation remains SELL.