In recent days US Federal Reserve Chairman Ben Bernanke provided some additional clarity regarding his guidance last month on the fate of the central bank’s extraordinary easing.

At a press conference following last month’s meeting of the Federal Open Market Committee, Mr. Bernanke had said the US economy was trending in a direction that could allow the central bank to start cutting back on its USD85 billion per month bond-purchasing program as soon as this fall, with a complete cessation possible by mid-2014.

With the prospect of an end to quantitative easing along with an eventual rise in short-term rates looming ahead, anxious traders simply assumed that the timing of these moves was already a foregone conclusion, despite the fact that Mr. Bernanke stressed it would be entirely dependent upon economic data.

With most of the developed world’s central banks still in the midst of an easing bias, the Fed’s relative hawkishness, albeit conditional, caused currency traders to abandon many formerly favored currencies, such as the aussie, and pile into the US dollar.

Meanwhile, equity markets sold off out of fears that they couldn’t stand on their own without substantial Fed backing. And with bond yields expected to rise, investors began to flee from dividend stocks with the assumption that they wouldn’t be able to withstand competition from fixed-income securities in a rising-rate environment.

At the time, we noted that the Fed’s outlook tends to be more optimistic than reality, and that mixed US economic data suggested that an end to easing might not occur as quickly as everyone thinks. In the short term, however, traders managed to create an atmosphere where such nuance didn’t seem to matter. But clearly the rapid tightening of financial conditions caused Mr. Bernanke to worry that the markets had already gotten ahead of themselves.

In his comments following a speech on July 10 at a conference of the National Bureau of Economic Research in Boston, the Fed chief conceded that the central bank’s economic outlook tends to be rosier than its private-sector peers. Furthermore, he sought to dispel fears about a rise in short-term rates by noting that the 6.5 percent unemployment rate that he had previously cited as a key threshold was merely a starting point for considering the possibility of a rate hike, not an automatic trigger. Beyond that, he asserted that the official unemployment rate was likely masking deeper weakness in the labor market.

Mr. Bernanke also said that if financial conditions tighten even further, to the point where they undermine the nascent recovery, the Fed would have to address that situation. Finally, he stated that the Fed could continue its bond-purchasing program if inflation, which is around 1 percent, doesn’t rise to the Fed’s long-term 2 percent target.

Many global markets rose in response to Mr. Bernanke’s remarks, including the Australian market, which gained 0.7 percent on Friday and closed at a seven-week high. The S&P/ASX 200 is still down about 4.7 percent from its 52-week high, which it hit on May 14. But the aussie has yet to recover, last trading near USD0.906, down 14.5 percent from its high on Jan. 10.

At the same time, China is signaling greater comfort with a rate of economic growth well below the government’s earlier 2013 target of 7.5 percent. The Middle Kingdom is Australia’s largest trading partner, so a deepening slowdown there is an ill portent for the Australian economy.

While Chinese Finance Minister Lou Jiwei expressed confidence his country’s economy can achieve a 7 percent growth rate this year, he also said that a 6.5 percent growth rate wouldn’t be a “big problem.” He said China’s economy probably grew below 7.7 percent during the first half of the year, and that the government was willing to tolerate further slackening while it pursues a structural transition with the hope of achieving more sustainable long-term growth.

In the short term, at least, Australia’s exports to China appear to be holding up. Although China’s June trade results fell well short of economists’ forecasts, with imports falling 0.7 percent versus an expected rise of 8 percent, the country’s imports from Australia were up 12 percent year over year.

The combination of a weakening aussie, which is now down 17.5 percent from its 52-week high against the renminbi, and falling commodity prices could mean that Chinese demand for Australian commodities will remain strong.

On the domestic front, the Australian Bureau of Statistics’ (ABS) June survey of the labor force surpassed expectations, with 10,300 new jobs added versus a consensus forecast of flat growth. However, the prior month was revised to a loss of 700 jobs from the original result of a gain of 1,100 jobs.

The unemployment rate ticked higher by a tenth of a percentage point, to 5.7 percent from a revised 5.6 percent (it was originally 5.5 percent). But this was largely due to an increase in the labor force participation rate, to 65.3 percent from 65.2 percent. That simply means more people were actively pursuing employment opportunities than previously.

Unfortunately, the quality of the jobs created was not particularly reassuring: Full-time employment dropped by 4,400 positions, while part-time employment jumped by 14,800 positions.

Indeed, Westpac Banking Corp (ASX: WBC, NYSE: WBK) economists argue that Australia is experiencing a soft labor market, which they say is underscored by the aforementioned rising unemployment rate compared to a flat employment to population ratio (61.6 percent). Westpac expects the unemployment rate to peak at 6.2 percent either later this year or in early 2014.

Interestingly, employment in the resource-rich state of Western Australia climbed by 4,800 jobs, while the unemployment rate there dropped three-tenths of a percentage point to 4.6 percent. This provides support for the notion that the resource boom may have peaked, but that the peak will be sustained for the next nine to 12 months.

Dividend Watch List

As we note in this month’s Portfolio Update, Aggressive Holding Ausdrill Ltd (ASX: ASL, OTC: AUSDF) is currently sporting a 16.2 percent dividend yield, clearly indicating that the market expects management to announce a reduced rate when it reports fiscal 2013 financial and operating results in late August.

Management recently reiterated that fiscal 2013 net profit after tax (NPAT) will come in between AUD90 million to AUD96 million on revenue of AUD1.15 billion to AUD1.17 billion. But this forecast is the result of a downward revision announced in April.

Ausdrill’s payout ratio for the first half of fiscal 2013 was just 39 percent, and the company has a debt-to-assets ratio of 27 percent. And there are no maturities until 2019. And, as we also noted last month, Ausdrill has never cut its dividend from one corresponding period to the next. A strong balance sheet also provides protection.

The company has broadened its production mining services into iron ore via core drill and blast as well as dewatering services. That will help mitigate the impact of gold’s decline, as production of the the yellow metal accounts for the biggest share of Ausdrill’s revenue.

And it’s possible that scaled-back activity will allow the company to save in other ways, including CAPEX and operating costs, preserving its ability to make cash returns to shareholders.

But the downward revision is sufficient to earn Ausdrill a place on the Dividend Watch List. Ausdrill remains a buy under USD2 for aggressive investors.

Codan Ltd (ASX: CDA, OTC: None) has found its way to the Watch List this month after management backed off its robust earnings growth forecast for fiscal 2013.

In mid-June Codan announced that some of the African markets where its largest division, Metal Detection, sells gold detectors “have experienced a level of instability” due to “major civil unrest.” As a result, although Codan is still tracking to the biggest second-half profit in the company’s history, it won’t be as strong as the first half.

Codan now expects full-year net profit after tax “in the region of” AUD45 million. That would be a new company record and it would be double the NPAT reported for fiscal 2012.

Codan’s share price has taken a dive from AUD3.03 on June 13 to as low as AUD1.48 on July 2. It’s now trading at AUD1.70 as of July 11, where it yields 6.7 percent. Hold.

GUD Holdings Ltd (ASX: GUD, OTC: GUDHF, ADR: GUDDY) announced on June 20 that it expects full-year fiscal 2013 underlying profit to come in 20 percent below fiscal 2012. This follows management reporting a 16.3 percent decline in first-half underlying profit. The company cited “continuing depressed consumer and business sentiment” in its statement.

GUD’s Consumer Products division, which includes the Sunbeam and Oates brands, experienced a marked decline in first-half 2013 sales, 15 percent versus the prior corresponding period, while margins slid to 11.9 percent from 16.5 percent.

GUD has noted that retailers continue to squeeze wholesalers on “over and above” fees, including those for shelf and catalogue space. This reflects an attempt to get better returns on the floor space rent than on selling the product itself, as consumers are resisting price increases.

According to GUD, Sunbeam isn’t losing market share on a value basis but has ceded ground on a volume basis due to the increased popularity of “house” brands.

GUD’s Industrial Products order book fell from AUD55 million as of Dec. 31, 2012, to AUD40 million as of March 31, 2013. Over the eight weeks leading to the guidance announcement, order intake for Dexion slowed significantly. Automotive Products continues to perform at the same rate it showed in the first half of 2013.

Water Products benefited from extremely hot weather in from November to January along the east coast of Australia. But rains that began in January and into February hampered the business for the remainder of fiscal 2013.

GUD is negatively impacted too by the decline in the Australian dollar, as it sources its products in US dollars. Hedging will mitigate some of this impact.

The currency decline could also have some positive impact, as it should make the house brands more expensive. Consumers buy house brands because they’re cheap’ it’s accepted as a matter of fact that they’re of inferior quality. A weaker Australian dollar could narrow the gap between house brands and Sunbeam’s price points.

GUD’s share price has rebounded from an initial hit on the guidance announcement. But the stock is still yielding 16.4 percent. At these levels a lower final dividend is more than priced in. GUD is a buy for speculators under USD6.50.

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.

We’re heading into fiscal 2013 reporting season Down Under, during which the majority of companies in the How They Rate coverage universe will post financial and operating results for the 12 months from July 1, 2012, through June 30, 2013. Other will report calendar 2013 first-half results.

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 fiscal 2013 first-half 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.

We also include companies that have recently announced reduced guidance for full-year 2013 earnings.

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 Dividend 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.

Without a consistent dividend payment to compensate speculation of a return to more normal economic growth and a corresponding rebound in copper prices, Aditya Birla is a hold.

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.

UGL Ltd (ASX: UGL, OTC: UGLFF), an engineering, mining operations and property maintenance conglomerate, 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.

UGL’s downgrade highlights the risk around the second-half performance for mining services companies in general. UGL is a hold.

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.

WorleyParsons Ltd (ASX: WOR, OTC: WOPEF, ADR: WOPEY) has recovered somewhat off the four-year low it hit 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.

WorleyParsons remains a buy for aggressive investors who don’t own it yet up to USD24.

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

• Ansell Ltd (ASX: ANN, OTC: ANSLF, ADR: ANSLY)–One ADR is worth four ordinary shares.
• 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.