Economists had originally expected the Reserve Bank of Australia (RBA) to quickly follow its May rate cut with another cut in June or soon thereafter. But slightly positive economic data keep getting in the way of the central bank’s easing bias.

Even so, the RBA’s cash rate currently stands at 2.75 percent, which is a 50-year low. Similar to the US Federal Reserve’s federal funds rate, the cash rate is a benchmark that helps target the rates financial institutions charge one another for overnight loans and is one of the RBA’s key levers of monetary policy.

The recent selloff in the Australian dollar affords the bank additional flexibility to contemplate the timing of its next rate cut. And this week’s somewhat stronger-than-expected jobs report means the bank may take a breather on lowering the cash rate until later in the year.

Although economists had forecast a loss of 10,000 jobs for May, the Australian Bureau of Statistics (ABS) reported that the economy actually added 1,100 jobs last month. As a result, the seasonally adjusted unemployment rate ticked lower to 5.5 percent, though it’s still 0.4 percentage points higher than a year ago.

Of course, that’s hardly a robust gain in employment for a country of roughly 23 million. And it’s in stark contrast to April, when the economy added 50,100 jobs, though that number has since been revised lower to 45,000.

Unfortunately, all the job gains came from part-time employment, which was up 6,400 versus month-ago gains of 15,600. That number was also subsequently revised lower to 15,300.

The number of full-time jobs dropped 5,300, compared to gains of 34,500 a month ago, which have now been revised lower to 29,800.

The labor force participation rate fell by a tenth of a percentage point to 65.2 percent, which was in line with expectations.

While job creation continues to shift from resource-oriented states, such as Western Australia, to states whose economies are more dependent on housing and services, such as New South Wales and Victoria, the latter are also weakening in terms of job growth.

Meanwhile, the Australian dollar has continued to get pummeled since its near-term peak of USD1.0545 in mid-April, falling as low as USD0.9427 on June 11. It finally rebounded late this week by 1.7 percent, to close at USD0.9584.

In the wake of this selloff, investment banks such as Goldman Sachs raced to lower their projections for where the aussie could ultimately be headed over the next year, with some targeting a level of USD0.88 by year-end.

The overall consensus for the aussie, however, is not nearly as gloomy. Bloomberg’s aggregation of about 50 institutions shows an average forecast of USD0.97 for the fourth quarter.

Nevertheless, the selloff in the aussie is certainly disheartening for investors who have benefitted from rising share prices further enhanced by currency appreciation.

During the resource boom, the aussie had enjoyed the perception of being backed by an economy underpinned by hard assets. That boosted its status among global institutions that were looking for a currency that would hold its value amid unprecedented monetary easing in the developed world. In fact, the Aussie eventually became somewhat akin to a minor reserve currency.

But now that the boom is fading, it’s more apparent than ever that Australia’s strong currency has been a major headwind for the country’s economy. And until commodities rebound, a cheaper currency will presumably help our companies be more competitive globally, and that should eventually flow through to share prices.

Indeed, one of the RBA’s primary goals in cutting rates is to remove some of the support for the strong Australian dollar. But its success on this front has been fairly muted.

It wasn’t until early May, when US Federal Reserve Chairman Ben Bernanke hinted that the Fed could begin winding down its USD85 billion per month bond-purchasing program, that currency traders began to sell off the Aussie in earnest. At the same time, they piled into the US dollar, which exacerbated the Aussie’s decline.

But given the magnitude of the selloff in US dividend stocks, traders may have exaggerated not only the speed with which the Fed could act, but also the extent to which it would curtail its easing.

Since then, US economic data have been mixed, while the Fed is signaling that it will need to see stronger evidence that the economy has found its footing before it can start exiting the long-term bond market. And it might not begin raising the federal funds rate for at least another year, if not longer.

In response, the US dollar index, which compares the dollar’s value against a weighted basket of six foreign currencies, has dropped sharply, to 80.67, from its recent high of 84.35, which it hit on May 22.

As such, the aussie’s modest rebound could gain momentum in the months ahead, especially if the Fed offers even greater clarity on its intent with regard to quantitative easing (QE). Still, most analysts believe the aussie will now occupy a lower trading range, so any moves above parity with the US dollar could be fleeting.

And while the RBA’s rate cuts hadn’t previously had much effect on the aussie, that could change if the central bank lowers rates by another 75 basis points over the next year, as Westpac Banking Corp (ASX: WBC, NYSE: WBK) Chief Economist Bill Evans predicts.

Even at 2 percent, Australia’s cash rate will still be markedly higher than many of the corresponding rates among its central bank peers.

One of the reasons the RBA has historically maintained a higher short-term rate is to attract capital inflows to offset the country’s persistent current account deficit. During the first quarter, this deficit narrowed considerably, falling by AUD6.2 billion, to AUD8.5 billion, from the prior quarter.

And the trade balance actually registered a modest surplus of AUD400 million, compared to a deficit of AUD5.2 billion in the fourth quarter. This performance was due to a 1.1 percent rise in export volumes, resulting from additional capacity in the resource sector, along with a 3.5 percent decline in import volumes. Exports of coal and metal ores were largely responsible for growth in this area.

Westpac expects net exports to add a significant 1 percentage point to gross domestic product (GDP) for the first quarter. Over the past year, net exports have added 2.4 percentage points to GDP, which compares favorably to prior years.

Unfortunately, the news here is not entirely good. The decline in import volumes is the result of businesses cutting back on investment spending, with capital goods imports dropping 12.3 percent. This latter figure is now 18.2 percent below its peak in June of last year, further evidence that the resource boom is fading.

Australia’s policymakers are keen to find pockets of growth in the non-resource arena, and in an environment of declining rates, housing certainly comes to mind as one strong possibility. But in April, home loans only rose 0.8 percent month over month, falling short of forecasts of 2 percent. And the March gain of 5.2 percent was revised lower, to 4.8 percent.

A housing boom often depends on spurring prospective first-time homebuyers to act, but here the data were even less promising. Loans for this demographic were up a seasonally adjusted 0.7 percent, but down 10.8 percent from a year ago, which puts current numbers near their historic lows.

Overall, the Australian economy is certainly struggling, but historically low interest rates coupled with a weaker Aussie dollar are the first key steps toward an eventual rebound.

Dividend Watch List

We have two additions to the Dividend Watch List this month, AE Portfolio Aggressive Holding WorleyParsons Ltd (ASX: WOR, OTC: WOPEF, ADR: WOPEY) and engineering, mining operations and property maintenance conglomerate UGL Ltd (ASX: UGL, OTC: UGLFF).

WorleyParsons slumped to a four-year low after management issued revised guidance for fiscal 2013 that no longer includes a forecast for earnings “growth” relative to fiscal 2012 numbers.

According to a company statement released May 16, underlying earnings for the year ending June 30 will be between AUD320 million and AUD340 million, as clients in Western Australia defer major projects and the company sees less-than-expected construction growth in the Canadian oil sands market. Management had forecast in February that underlying earnings would exceed AUD345.6 million.

We’re reducing our buy-under target on WorleyParsons, and we’re including it in this month’s Dividend Watch List because Australian companies traditionally pay out within a fixed percentage range of earnings or cash flow to shareholders rather than at a fixed dividend rate, as North American companies usually do.

Management made no comment on its dividend intentions in its mid-May announcement, though the payout ratio as of fiscal 2013 first-half earnings allows some room to the upside while permitting the company to fund its ongoing work. Overall debt as well as short-term maturities (just 8.9 percent of market capitalization coming due by the end of 2015) is more than manageable.

WorleyParsons remains a buy for aggressive investors who don’t own it yet up to the reduced buy-under target of USD24.

UGL, meanwhile, cited the slowdown in mining activity, delays and execution issues with projects, particularly in power, and general economic malaise in downgrading its earnings guidance for fiscal 2013 by approximately 39 percent from management’s prior forecast.

UGL expressed confidence that, having taken its hit in fiscal 2013, it will emerge with a clean slate in fiscal 2014.

But UGL is also contemplating the separation of its property management business from its engineering and mining operations, the former being far healthier than the latter and causing management to wonder about unlocking its value.

The mining unit, suggests Credit Suisse, could be facing significant cost pressures or suffering from the breakdown of relationships with key customers.

UGL had previously announced a strategic review, with decisions due in time for its Aug. 12, 2013, fiscal 2013 earnings announcement. Management has now said that it will consolidate operations and maintenance (O&M) into engineering and seek an additional AUD20 million in cost savings by August as part of this restructure.

At this stage the company believes costs that have been removed are sufficient and the combination of O&M and engineering will produce a business with appropriate scale. The board has signaled its preference for a de-merger of engineering and property services.

UGL’s downgrade highlights the risk around the second-half performance for mining services companies in general. Although a separation of the businesses makes some sense, timing is less than optimal, as the DTZ property business has yet to deliver on its promise.

The unit is on track to post earnings growth in fiscal 2013 in the US and Asia, although conditions remain tough in Germany and France. The longer-term outlook is positive, however, with demand for outsourced property services growing globally in spite of weakness in some areas.

This is clearly a muddled situation. UGL is now a hold.

Because Australian companies typically report official earnings and declare dividends only twice a year, changes–additions to and subtractions from–the Dividend Watch List will be rarer than, for example, the Dividend Watch List compiled for AE’s sister letter Canadian Edge.

Earnings season is over Down Under, the vast majority of companies having reported results for the first half of fiscal 2013, which ran from July 1, 2012, through Dec. 31, 2012, or for financial years that correspond with the calendar year, or from Jan. 1, 2012, through Dec. 31, 2012.

Basically the entire Basic Materials section of the How They Rate coverage universe can now be considered on the List, in one sense because all those companies are exposed to volatile resource prices, in another, more concrete way because most announced lower dividends this period than they did for the last one. And that’s one of the criteria that will get you a place on the List.

Several Basic Materials companies in fact “omitted” interim dividend payments, which effectively makes their reductions 100 percent.

The Watch List reflects the entirety of the recent reporting season, and, as you’ll note, it’s rather lengthy. This length is a reflection of longstanding dividend practice for Corporate Australia, which as a general rule is not bound by strict dividend rates but rather by payout ratio ranges when it comes to “capital management” policy.

Australian companies customarily maintain policies of paying out a specified percentage based on particular earnings metrics, whether that metric is statutory net profit after tax (NPAT), underlying NPAT or operating cash flow.

Practically speaking, dividend rates will often vary more than they do for Canadian or US companies, which are almost universally pledged to maintaining dividend rates, often at the cost of tapping balance sheets in the absence of sufficient cash flow to cover obligations to shareholders.

This latter is fine in the short term, and it can be manageable in the longer term as well. But Australian firms are traditionally more debt-averse than their North American counterparts.

It’s important to note, too, that the CE Watch List is based on the monthly distribution scheme established during the income trust era, which, to the benefit of investors everywhere, persists even after the forced conversion to traditional corporations for many of these stocks.

Australia’s twice-yearly rhythm varies as well from the quarterly dividend arrangement to which most US companies adhere.

With recent dividend reductions and/or changes to guidance or policies that suggest non-regular payment the following companies have declared their worthiness for inclusion on the Dividend Watch List.

Basic Materials

Aditya Birla Minerals Ltd (ASX: ABY, OTC: ABWAF) reported a 1 percent rise in fiscal 2013 revenue to AUD502.3 million, but management reported a net loss of AUD8.3 million and didn’t declare a final dividend.

Company policy is “to seek to maximise cash returns to Shareholders whilst having regard to ensuring a sound financial structure for the Company and providing for value accretive development and exploration activities and targeted growth opportunities.”

Because there’s no clarity on the payment interval this stock will probably be an emeritus member of the Dividend Watch List. It is, however, a speculative buy under USD0.50 for aggressive investors only.

Alumina Ltd (ASX: AWC, NYSE: AWC) didn’t declare a dividend for 2012 when it reported results on Feb. 21, 2013, which was a bit of a surprise in light of the USD20 million dividend it received from the AWAC joint venture.

Alumina didn’t declare an interim dividend when it reported 2012 first-half results on Aug. 16, 2012. Management had reduced its final dividend for 2011 by 25 percent, in step with guidance issued late that year. Hold.

Aquarius Platinum Ltd (ASX: AQP, OTC: AQPBF) is likely to benefit from the multiple mine outages in South Africa during 2012, as resulting supply shortages should provide a boost for platinum prices in 2013.

But the company is unlikely to resume its dividend in the near future. The company posted a 29 percent in first-half revenue to AUD179 million and posted a net operating cash outflow of AUD38 million. Production declined 27 percent, while the average US dollar PGM basket price was down 10 percent from the prior corresponding period. Hold.

Arrium Ltd (ASX: ARI, OTC: ARRMF, ADR: OSTLY) reduced its interim dividend by 33 percent to AUD0.02 per share, as its fiscal 2013 first-half loss deepened from AUD447.2 million from AUD74 million a year ago due to a AUD474 million non-cash writedown on the value of its steel manufacturing unit and its distribution business due to a weak operating environment, sluggish construction activity and the impact of a strong Australian dollar.

Revenue for the period declined to AUD3.32 billion from AUD3.8 billion. Management is focused on paying down debt. Hold.

BlueScope Steel Ltd (ASX: BSL, OTC: BLSFF) discontinued its dividend after posting a AUD12 million net loss for the first six months of fiscal 2013. The company posted a fiscal 2012 net loss after tax of AUD1.044 billion, better than the AUD1.054 billion loss for fiscal 2011.

Management expects emerging signs of improvement it noted during the second quarter of the fiscal year to continue and forecast a “small” underlying net profit after tax for the second half of the fiscal year. Hold.

Fortescue Metals Group Ltd (ASX: FMG, OTC: FSUMF, ADR: FSUGY) didn’t declare an interim dividend, as fiscal 2013 first-half EBITDA declined by 26 percent and management’s focus is on preserving cash during what remains a period of rapid capacity expansion.

The board will “consider” declaring a full-year dividend in August. Hold.

Grange Resources Ltd (ASX: GRR, OTC: GRRLF) reduced its 2012 final dividend to AUD0.01 per share from AUD0.03 in 2011. Sales volume growth was solid, but a realized price decline of 31 percent was a significant hurdle to overcome. Hold.

Iluka Resources Ltd’s (ASX: ILU, OTC: ILKAF, ADR: ILKAY) 2012 final dividend was AUD0.10, down from AUD0.55 a year ago. Buy under USD10.

Independence Group NL (ASX: IGO, OTC: IPGDF), although we noted last month that recent production news suggested it would be able to maintain the fiscal 2013 interim dividend in line with the AUD0.02 paid a year ago, nevertheless reduced it to AUD0.01.

This is despite the fact that first-half NPAT was up 111.4 percent and revenue increased by 15.7 percent. Management is preserving cash to focus on development of its Tropicana gold project, which is on course to begin production in September 2013, amid still-soft nickel prices. Hold.

Kingsgate Consolidated Ltd (ASX: KCN, OTC: KSKGF) cut its interim dividend by 50 percent to AUD0.05 per share.

Revenue for the first six months was up 10 percent but costs surged by 41.2 percent, taking a 19 percent bite out of gross profit. Hold.

Medusa Mining Ltd (ASX: MML, OTC: MDSMF) didn’t declare an interim dividend, despite the fact that fiscal 2013 first-half revenue was up 28 percent, EBITDA was up 24 percent and NPAT grew by 19 percent.

Medusa, which “omitted” its interim dividend in order to focus resources on its key Co-o development, is no longer a great way to gain gold exposure and get paid at the same time. Hold.

Mount Gibson Iron Ltd (ASX: MGX, OTC: MTGRF) maintained its fiscal 2013 interim dividend at AUD0.02 per share.

The company posted first-half revenue growth of 10 percent, though costs were up 18 percent and realized prices were down 20 percent. Although it didn’t cut this time, the fiscal 2013 final dividend remains extremely sensitive to a continued recovery in iron ore prices. Buy under USD0.50.

OM Holdings Ltd (ASX: OMH, OTC: OMHLF) didn’t declare a final dividend for 2012. The company hasn’t made a cash payout to shareholders since May 2011. Hold.

Oz Minerals Ltd (ASX: OZL, OTC: OZMLF, ADR: OZMLY), which reported 2012 full-year results on Feb. 13, 2013, reduced its final dividend from AUD0.30 a year ago to AUD0.20. The full-year payout is AUD0.30 per share, which is actually at the top end of management’s policy of paying 30 percent to 60 percent of net profit.

Oz had made the List for a prior reduction in its 2012 interim dividend.

Management’s commentary was relatively bullish, as CEO Terry Burgess forecast higher output and a corresponding decline in cash costs during the second half of 2013 versus the first half. Mr. Burgess also noted a “robust” outlook for copper prices due to strong demand. Buy under USD4.50.

Panoramic Resources Ltd (ASX: PAN, OTC: PANRF) actually resumed its dividend with an interim declaration of AUD0.01 per share after not paying a final dividend for fiscal 2012. But the fiscal 2013 interim payment was 50 percent lower than the fiscal 2012 interim payment.

Management appears to have things pointed in the right direction, as operating costs–one of the things it can control, as opposed to commodity prices–were flat. But this is for speculators betting on a stimulus-driven global economic turnaround. Buy under USD0.40.

Sedgman Ltd (ASX: SDM, OTC: SGTDF) reduced its interim dividend by 33 percent to AUD0.03 after reporting a 20.9 percent decline in fiscal 2013 first-half revenue.

The company’s focus on a still-struggling coal market, a strong aussie and project deferrals weighed on management. This too is for aggressive speculators betting on a global economic rebound and corresponding bounce-back for coal prices. Hold.

TFS Corp (ASX: TFC, OTC: TFSCF) omitted its interim dividend entirely and in fact hasn’t paid out anything since November 2011. Hold.

Western Areas NL (ASX: WSA, OTC: WNARF) reduced its fiscal 2013 interim dividend by 60 percent compared to fiscal 2012, as first-halt EBITDA declined by 36.2 percent and NPAT fell to AUD2.12 million from AUD24.1 million a year ago.

Cash costs were better than forecast, but realized nickel prices were, in management’s words, at “depressed” levels. Western Areas is Australia’s lowest-cost nickel miner and merits a look from aggressive speculators. Buy under USD3.60.

Whitehaven Coal Ltd (ASX: WHC, OTC: WHITF) didn’t declare an interim dividend, as fiscal 2013 first-half revenue declined 17.5 percent and management reported a AUD47 million net loss on lower coal prices and a strong aussie. Hold.

Consumer Goods

Billabong International Ltd (ASX: BBG, OTC: BLLAF, ADR: BLLAY) didn’t declare an interim dividend, as fiscal 2013 first-half global sales slid 8.1 percent and the surfwear company posted a AUD536.6 million net loss.

Adjusted EBITDA was up by 9.1 percent, however, as cost cuts and store closures had a positive impact. Two separate groups continue to kick the tires here, and a deadline for completing due diligence has been established. Sometime shortly after March 28, 2013, we’ll know whether shareholders will be rescued by one of the competing AUD1.10 per share bids. Sell.

Goodman Fielder Ltd (ASX: GFF, OTC: GDFLF, ADR: GDFLY) didn’t pay an interim dividend for the first half of fiscal 2013, as normalized EBITDA slipped 13 percent and normalized NPAT was off 4 percent from a year ago.

But management announced during a conference call to discuss fiscal 2013 first-half results that it will resume payouts with a final dividend in respect of fiscal 2013, with a stated policy of distributing 50 percent to 80 percent of NPAT. Buy under USD0.75.

Ridley Corp (ASX: RIC, OTC: RIDYF) didn’t declare an interim dividend, though fiscal 2013 first-half revenue was up 6 percent. Management did, however, report a AUD12.7 million net loss due to AUD24.9 million of non-recurring writedowns and noted the absence of retained profits in omitting the payout. Buy under USD0.85.

Consumer Services

APN News & Media Holdings Ltd (ASX: APN, OTC: APNDF) didn’t declare a final dividend after posting a 13 percent decline in revenue and a 25 percent slide in EBITDA. NPAT excluding one-time items was within guidance management issued in December 2012, but the statutory loss was AUD455.8 million.

The advertising market remains challenged, and debt remains a concern. Sell.

David Jones Ltd (ASX: DJS, ADR: DJNSY) noted in a sales and revenue update that fiscal 2013 third-quarter like-for-like sales declined 3.4 percent year over year, as total sales slipped 2.2 percent to AUD391.1 million from AUD399.8 million a year ago. Management attributed the shortfall to an unusually warm winter’s impact.

The company cut its final dividend for fiscal 2012 to AUD0.07 per share from AUD0.15 a year ago. Hold.

Harvey Norman Holdings Ltd (ASX: HVN, OTC: None) reduced its interim payout by 10 percent from AUD0.05 a year ago to AUD0.045 for the first half of fiscal 2013. The company reported a 7.3 percent slide in global sales, as like-for-like sales slipped by 5.3 percent.

Management did note, however, that January 2013 sales were up 4.1 percent overall and 5.8 percent on a like-for-like basis. That’s enough to merit an upgrade from “sell.” Hold.

Myer Holdings Ltd (ASX: MYR, OTC: MYGSF) reported that fiscal 2013 third-quarter comparable sales rose 0.4 percent and overall sales were up 0.5 percent to AUD652.5 million, as it posted its fourth consecutive quarter of positive comparable sales growth.

Myer maintained its fiscal 2013 interim dividend at AUD0.10 per share after it cut its fiscal 2012 final distribution to AUD0.09 from AUD0.115. Hold.

Navitas Ltd (ASX: NVT) declared an interim distribution of AUD0.093, down slightly from AUD0.094 a year ago. The company reported a 4 percent increase in first-half revenue to AUD355.4 million, while EBITDA rose 5 percent to AUD59.9 million. Management noted a “gradually improving” operating environment.

Navitas reduced its fiscal 2012 final dividend to AUD0.101 from AUD0.12 in fiscal 2011. Hold.

Seven West Media Ltd’s (ASX: SWM, OTC: WANHF) interim dividend of AUD0.06 was level with what it paid as a final dividend for fiscal 2012 but down by 66.3 percent from a year ago.

Revenue for the first half of fiscal 2013 was down 3.4 percent, and management reported a net loss of AUD109.34 million. The stock has more than doubled off the five-year low it hit in early November 2012. Buy under USD2.

Southern Cross Media Group Ltd (ASX: SXL, OTC: SOUTF) reduced its interim dividend by 10 percent to AUD0.045 from AUD0.05, as fiscal 2013 first-half revenue declined by 9.6 percent, EBITDA slid 15.5 percent and NPAT was 52 percent lower.

The shares have surged on management’s solid outlook for full-year results as well as speculation about a combination with Nine Network Australia Ltd. Hold.

Tabcorp Holdings Ltd (ASX: TAH, OTC: TABCF) declared an interim dividend of AUD0.11 per share, down from AUD0.13 a year ago. First-half revenue from continuing operations was up 2.1 percent, though the company has had to adjust to the loss of New South Wales gaming licenses. EBIT from continuing activities rose 6.5 percent.

Management has now re-based its payout to a new reality. Buy under USD3.35.

Tatts Group Ltd (ASX: TTS, OTC: TTSLF) reduced its interim dividend by 27.3 percent, though revenue from continuing operations for the first half of fiscal 2013 was up 16 percent, EBITDA surged at a like rate and NPAT grew by 26 percent.

The payout ratio for the half-year was 86 percent versus 88 percent a year ago, though the fiscal 2012 was based on cash flow that included contribution from the now-discontinued Victoria gaming machine business. Tatts Pokies, which came on line during the recently concluded period, will likely help Tatts off the List come August. Buy under USD3.

Financials

QBE Insurance Ltd (ASX: QBE, OTC: QBEIF) reduced its final dividend for 2012 by 60 percent to AUD0.10 after it cut its interim distribution to AUD0.40 from the AUD0.62.

Cash profit for 2012 was up 32 percent, statutory NPAT increased by 8 percent, though the latter figure missed guidance due to higher amortization and impairment charges. But management is setting up to handle the impact of Superstorm Sandy and the January rains that hammered Queensland. Hold.

Industrials

Boart Longyear (ASX: BLY, OTC: BOARF, ADR: BLGPY) slashed its final dividend in respect of 2012 by 82.1 percent, bringing the full-year payout reduction to 28.8 percent. Revenue for the year was flat, but EBITDA was down 29 percent and statutory NPAT slid by 58 percent. Slowing global mining activity and corporate restructuring have taken a serious toll. Hold.

Boral Ltd (ASX: BLD, OTC: BOALF) reduced its fiscal 2013 interim dividend to AUD0.05 per share from AUD0.075 a year ago, though first-half results exceeded expectations and management issued relatively upbeat guidance for the balance of the year.

The company posted a net loss of AUD25.3 million, but profit before significant items was AUD55.2 million, better than management’s forecast. Sales, meanwhile, were AUD2.8 billion.

Boral had cut its fiscal 2012 final dividend by 50 percent to AUD0.035 per share. Hold.

Emeco Holdings (ASX: EHL, OTC: None) maintained its interim dividend at AUD0.025 per share, though fiscal 2013 first-half operating NPAT was down 14 percent. Hold.

GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY) reduced its interim dividend by 36.8 percent to AUD0.06 from AUD0.095 a year ago. Fiscal 2013 first-half sales declined 8 percent, trading EBIT dipped 23 percent and NPAT was off by 23.7 percent. Management noted weak conditions across all segments.

Company policy is to pay 80 percent to 95 percent of NPAT, up from 70 percent to 80 percent. But the AUD0.18 per share “floor” that had underpinned the policy has been removed. Buy under USD2.

Oil & Gas

Caltex Australia Ltd’s (ASX: CTX, OTC: CTXAF) 2012 final dividend was 17.8 percent lower than a year ago, reflecting the closure of the Kurnell refinery. Operations and financials were otherwise healthy.

Caltex stock has actually been on a strong run of late. Last month we had the stock a “buy,” but the price has run so far past our buy-under target of USD16 that we’re making official what was effectively true. Hold.

Technology

Redflex Holdings Ltd (ASX: RDF, OTC: RFLXF) declared an interim dividend, but it’s 33 percent lower than it was a year ago at AUD0.02 per share. The company completed a restructuring that will lead to AUD10 million in cost savings.

Management had previously disclosed an investigation into the relationship between one of its employees and a city official that involved improper benefits passing from the former to the latter. Chicago, which accounted for approximately 13 percent of fiscal 2012 revenue, will not allow Redflex to bid on impending contracts for new traffic light camera installations.

Fiscal 2013 first-half NPAT was below forecast at AUD3.6 million, revenue was down 7.2 percent and EBITDA was off by 25.8 percent. Sell.

Telecommunications

Telecom Corp of New Zealand (ASX: NZT, OTC: NZTCF) reduced its interim dividend by 11.1 percent after a significant restructuring of the company in calendar 2012. Management reported comparable adjusted EBITDA growth of 3.7 percent, as it appears the business is now relatively stable based on its recent history.

But management also revised downward full-year adjusted EBITDA guidance. Sell.

The ADR List

We continue to track the How They Rate coverage universe and beyond for Australia-based companies that afford US investors the convenience of ADR investing, either on their initiative or via the effort of an interested financial institution.

Here again is our primer on Australian stocks, US OTC symbols and ADRs.

The great majority of the companies under How They Rate coverage have US symbols, many because they actively seek to raise capital here on their own accord. That means they comply, to varying degrees, with US Securities and Exchange Commission filing requirements for foreign companies and with US accounting principles. Others trade here because a sponsoring institution has effectively created a secondary market for the shares, without the underlying company’s active participation.

Shares traded on US OTC markets bearing a final “F” in their five-letter symbols are basically home-listed shares trading in a market created by and for US institutions. Individuals can buy and sell here, too. Prices basically reflect ASX prices and also reflect changes in the relationship between the US dollar and the Australian dollar. One “F” share represents one ASX-listed share. The dividend you receive in respect of an “F” share is the dividend paid in respect of the ASX-listed share, adjusted for currency effects.

An ADR is a certificate that represents stock of a foreign company. ADRs are listed on US stock exchanges or the OTC Bulletin Board or Pink Sheets. Those that trade OTC have five-letter symbols ending with the letter “Y.” All transactions, including dividend payments, are conducted in US dollars.

One ADR certificate may represent one or more shares of the foreign stock; it can also represent a fraction of a share. For example, one Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY) ADR, which trades under the symbol TLSYY, is worth five ordinary shares that trade on the Australian Securities Exchange under the symbol TLS. Australia & New Zealand Banking Group Ltd’s (ASX: ANZ, OTC: ANEWF, ADR: ANZBY) ADR, ANZBY, is worth one Australia-listed ANZ share.

Because many ADRs don’t have a one-to-one ratio between the depositary receipts and the shares of stock, financial ratios are often not included in stock listings. Data in Australian Edge Portfolio tables and How They Rate is derived based on Australian Securities Exchange symbols so is as complete as you’ll find anywhere.

Foreign companies themselves often “sponsor” the creation of their own ADRs. These are called “sponsored ADRs.” There are three levels of sponsorship.

A Level I sponsored ADR is created by a company because it wants to extend the market for its securities to the US. It does not, however, want to register with the Securities and Exchange Commission (SEC) or conform to generally accepted accounting principles (GAAP). Level I ADRs trade on the OTC Bulletin Board or Pink Sheets trading systems, usually but not exclusively by institutional investors. Australia & New Zealand Banking Group’s is a Level I ADR.

Level II and Level III sponsored ADRs must be registered with the SEC, and financial statements must be reconciled to generally accepted accounting principles. A Level II ADR requires partial compliance with GAAP, while a Level III ADR requires complete compliance. A Level III sponsorship is require if the ADR is a primary offering and is used to raise capital for the company. Only Level II and Level III sponsored ADRs can be listed on the New York Stock Exchange (NYSE), the American Stock Exchange or Nasdaq. Telstra Corp sponsors a Level III ADR in the US, meaning it’s actively seeking to raise capital here.

An unsponsored ADR is created by a US investment bank or brokerage that buys ordinary shares on the underlying company’s home market then deposits them in a local custodian bank. This depositary bank then issues shares that represent an interest in the stocks and handles most of the transactions with American investors, serving both as transfer agent and registrar for the ADR.

The shares of the foreign stock held in the custodian bank are called “American Depositary Shares,” although this term is sometimes used as a synonym for “American Depositary Receipts.” Unsponsored ADRs can’t be listed on the major American stock exchanges because they aren’t registered with the SEC and lack other necessary qualifications.

The price of an ADR is determined by supply and demand but will generally track the price of the underlying ordinary share. When dividends are paid, the custodian bank receives it and withholds any foreign taxes, exchanges it for US dollars and then sends it to the depositary bank, which then sends it to the investors.

The US depositary bank handles most of the interaction with US investors, including rights offerings, stock splits and stock dividends. Sponsored ADR investors may receive communications, including financial statements, directly from the company.

Here is a list of companies in the How They Rate coverage universe that have an ADR listing in the US, along with the number of ordinary ASX-listed shares the ADR represents.

Basic Materials          

• Alumina Ltd (ASX: AWC, NYSE: AWC)–One ADR is worth four ordinary shares.
• Aquarius Platinum Ltd (ASX: AQP, OTC: AQPBF, ADR: AQPTY)–One ADR is worth two ordinary shares.
• Arrium Ltd (ASX: ARI, OTC: ARRMF, ADR: OSTLY)–One ADR is worth 20 ordinary shares.
• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)–One NYSE-listed ADR is worth two ordinary shares.
• BlueScope Steel Ltd (ASX: BSL, OTC: BLSFF, ADR: BLSFY)–One ADR is worth five ordinary shares.
• Fortescue Metals Group Ltd (ASX: FMG, OTC: FSUMF, ADR: FSUMY)–One ADR is worth five ordinary shares.
• Iluka Resources Ltd (ASX: ILU, OTC: ILKAF, ADR: ILKAY)–One ADR is worth five ordinary shares.
• Kingsgate Consolidated Ltd (ASX: KCN, OTC: KSKGF, ADR: KSKGY)–One ADR is worth one ordinary share.
• Mineral Resources Ltd (ASX: MIN, OTC: MALRF, ADR: MALRY)–One ADR is worth one ordinary share.
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–One ADR is worth one ordinary share.
• Oz Minerals Ltd (ASX: OZL, OTC: OZMLF, ADR: OZMLY)–One ADR is worth 0.5 ordinary shares.
• Rio Tinto Ltd (ASX: RIO, NYSE: RIO)–One ADR is worth one ordinary share.

Consumer Goods

• Billabong International Ltd (ASX: BBG, OTC: BLLAF, ADR: BLLAY)–One ADR is worth two ordinary shares.
• Goodman Fielder Ltd (ASX: GFF, OTC: GDFLF, ADR: GDFLY)–One ADR is worth 10 ordinary shares.

Consumer Services

• Crown Ltd (ASX: CWN, OTC: CWLDF, ADR: CWLDY)–One ADR is worth two ordinary shares.
• David Jones Ltd (ASX: DJS, ADR: DJNSY)–One ADR is worth one ordinary share.
• Metcash Ltd (ASX: MTS, OTC: MCSHF, ADR: MHTLY)–One ADR is worth six ordinary shares.
• TABCORP Holdings Ltd (ASX: TAH, OTC: TABCF, ADR: TACBY)–One ADR is worth two ordinary shares.
• Wesfarmers Ltd (ASX: WES, OTC: WFAFF, ADR: WFAFY)–One ADR is worth 0.5 ordinary share.

Financials

• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–One ADR is worth one ordinary share.
• Commonwealth Bank of Australia Ltd (ASX: CBA, OTC: CBAUF, ADR: CMWAY)–One ADR is worth one ordinary share.
• National Australia Bank Ltd (ASX: NAB, OTC: NAUBF, ADR: NABZY)–One ADR is worth one ordinary share.
• QBE Insurance Ltd (ASX: QBE, OTC: QBEIF, ADR: QBIEY)–One ADR is worth one ordinary share.
• Westfield Group Ltd (ASX: WDC, OTC: WEFIF, ADR: WFGPY)–One ADR is worth two ordinary shares.
• Westpac Banking Corp Ltd (ASX: WBC, NYSE: WBK)–One ADR is worth five ordinary shares.

Health Care

• Cochlear Ltd (ASX: COH, OTC: CHEOF, ADR: CHEOY)–One ADR is worth 0.5 ordinary share.
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–One ADR is worth 0.5 ordinary share.
• Sonic Healthcare Ltd (ASX: SHL, OTC: SKHCF, ADR: SKHCY)–One ADR is worth one ordinary share.

Industrials

• Amcor Ltd (ASX: AMC, OTC: AMCRF, ADR: AMCRY)–One ADR is worth four ordinary shares.
• Boral Ltd (ASX: BLD, OTC: BOALF, ADR: BOALY)–One ADR is worth four ordinary shares.
• GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY)–One ADR is worth four ordinary shares.
• Toll Holdings Ltd (ASX: TOL, OTC: THKUF, ADR: THKUY)–One ADR is worth two ordinary shares.

Oil & Gas

• Beach Energy Ltd (ASX: BPT, OTC: BEPTF, ADR: BCHEY)–One ADR is worth 20 ordinary shares.
• Boart Longyear Ltd (ASX: BLY, OTC: BOARF, ADR: BLGPY)–One ADR is worth two ordinary shares.
• Caltex Australia Ltd (ASX: CTX, OTC: CTXAF, ADR: CTXAY)–One ADR is worth two ordinary shares.
• Oil Search Ltd (ASX: OSH, OTC: OISHF, ADR: OISHY)–One ADR is worth 10 ordinary shares.
• Santos Ltd (ASX: STO, OTC: STOSF, ADR: SSLTY)–One ADR is worth one ordinary share.
• Woodside Petroleum Ltd (ASX: WPL, OTC: WOPEF, ADR: WOPEY)–One ADR is worth one ordinary share.
• WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY)–One ADR represents one ordinary share.

Technology

• Redflex Holdings Ltd (ASX: RDF, OTC: RFLXF, ADR: RFLXY)–One ADR is worth eight ordinary shares.

Telecommunications  

• Singapore Telecommunications Ltd (Singapore: ST, ASX: SGT, OTC: SNGNF, ADR: SGAPY)–One ADR is worth 10 ordinary shares.
• Telecom Corp of New Zealand Ltd (ASX: TEL, NYSE: NZT)–One ADR is worth five ordinary shares.
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–One ADR is worth five ordinary shares.

Utilities

• AGL Energy Ltd (ASX: AGK, OTC: AGLNF, ADR: AGLNY)–One ADR is worth one ordinary share.
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)–One ADR is worth one ordinary share.