Australia has suffered a raft of disappointing economic data as of late, though the country’s economy is still expected to perform significantly better than last year.

Australia’s economy added slightly more jobs in June than economists had expected, with employment expanding by 15,900 positions versus the consensus forecast of 12,000.

According to the Australian Bureau of Statistics (ABS), the seasonally adjusted unemployment rate now stands at 6.0 percent, up a tenth of a percentage point from May’s revised rate and also a tenth of a point higher than economists had predicted. So once again, the unemployment rate is at the high for this cycle. In fact, it’s at an 11-year high.

The seasonally adjusted labor force participation rate increased by a tenth of a point, to 64.7 percent, which was also a tenth of a point higher than forecast. The participation rate is now just a tenth of a point higher than the low for this cycle.

Unfortunately, all of the gains in June were due to part-time employment, which increased by 19,700 people. Part-time jobs are generally considered to be of lesser quality due to lower pay and higher turnover.

By contrast, full-time employment decreased by 3,800 people.

To get a better sense of the trends in job creation, we like to compare a medium-term period to a short-term period.

Over the trailing three years, total job creation has averaged 11,000 positions per month. During that same period, full-time job creation has averaged 5,900 positions per month, while part-time jobs were added to the economy at an average of 5,100 per month.

Over the trailing six months, the economy has added an average of 18,500 jobs per month. During that same period, full-time job creation has averaged 15,800 jobs per month, while part-time jobs have increased by 2,700 per month.

While the near-term trend appears to be promising, it should be noted that the first quarter experienced far stronger job creation than the second quarter, so it’s possible that the employment market is showing signs of weakening again.

One important indicator of future labor demand is the number of hours worked. That statistic rose 0.9 percent month over month in June, and is once again at an all-time high following an April swoon. On a year-over-year basis, the number of hours worked is up by 2.1 percent.

Consumers Pull Back

Until earlier this year, the retail sector had been one of the surprisingly strong areas of Australia’s economy. More recently, however, retail turnover has been in decline, perhaps as the result of falling consumer sentiment due to a still-weak labor market and the contentious federal budget.

After four consecutive months of strong gains, the sector began sagging in February, and downward momentum appears to be increasing.

The ABS reported that retail sales fell by 0.5 percent in May, following a 0.1 percent decline in the prior month, which itself was revised lower from an initial report of a 0.2 percent increase. Economists had expected a flat result for the month.

The largest contributor to the fall was the clothing, footwear and personal accessory retailing category, (down 2.3 percent), followed by department stores (down 2.6 percent), and household goods retailing (down 0.9 percent). These falls were partially offset by rises in food retailing (up 0.1 percent) and cafes, restaurants and takeaway food services (up 0.1 percent).

Easy Money

Following its monetary policy meeting earlier this month, the Reserve Bank of Australia (RBA) announced that the benchmark short-term cash rate would remain at 2.5 percent, an all-time low. The central bank reiterated its intent to maintain interest rates at these levels during what it describes as a “period of stability.”

Based on futures market data aggregated by Bloomberg, the vast majority of traders see the cash rate remaining at its present level through at least the end of the year. Interestingly, there is not insignificant sentiment that the next move on interest rates will actually be a cut of 25 basis points, though that view is still in the minority.

One of the aims of the RBA’s policymaking has been to engineer a lower exchange rate in order to help boost the country’s export sector. But while the currency has fallen, with a strong assist from the US Federal Reserve, it’s still much higher than the central bank would prefer.

As RBA Governor Glenn Stevens put it, “The exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy.”

The Australian dollar currently trades near USD0.939, up about 8.1 percent from the three-year low in late January, but still down about 14.8 percent from the cycle high in mid-2011.

Based on past statements, we believe the RBA would like to see the exchange rate decline to USD0.85, or at least 9.5 percent from current levels. However, the consensus forecast is that the aussie won’t fall to that level until 2017, at the earliest.

The currency is expected to average around USD0.92 for the remainder of 2014, gradually declining to USD0.88 in 2015.

Despite some of these dismal data, private-sector economists still forecast gross domestic product (GDP) growth of 3.1 percent for full-year 2014, which compares quite favorably to the anemic 1.7 percent projected for the US.

And while the S&P/ASX 200 has lagged the S&P 500 by 2.6 percentage points year to date when performance data for each index are calculated in their respective local currencies, the aussie’s recent ascent has pushed the country’s market ahead of the US by 2.9 percentage points in US dollar terms.

Although the performance enhancement from a rising currency is unlikely to persist for too much longer, we’ll gladly take it for now.

Dividend Watch List

Metcash Ltd (ASX: MTS, OTC: MCSHF, ADR: MHTLY) management announced on March 20, 2014, after January and February results came in below forecast, that fiscal 2014 underlying earnings per share (EPS) will decline by 13 percent to 15 percent versus fiscal 2013.

In the event, underlying EPS for the 12 months ended April 30, 2014, were AUD0.283, down 13.2 percent compared to the prior corresponding period.

The food marketing and distribution company with strong ties to independent grocers in Australia did report a 3.2 percent increase in sales revenue to AUD13.4 billion. Food & Grocery like-for-like supermarket wholesale sales fell by 2.1 percent.

Statutory net profit after tax (NPAT) declined by 17.9 percent to AUD169.2 million, while underlying NPAT was down 10.9 percent to AUD250.1 million.

Operating cash flow grew by 29.7 percent to AUD388.7 million, boosted by approximately AUD80 million of timing benefits that will unwind in fiscal 2015.

Metcash declared a final dividend of AUD0.09 per share, down from AUD0.165 a year ago. The full-year payout was AUD0.185 per share, down from AUD0.28 for fiscal 2013.

Management noted that the trading environment during 2014 remained difficult. The effects of ongoing deflation (1.4 percent for the grocery market), rising utility costs, value-conscious consumers and excessive fuel discounting by Wesfarmers Ltd’s (ASX: WES, OTC: WFAFF, ADR: WFAFY) Coles unit and Woolworth’s Ltd (ASX: WOW, OTC: WOLWF), the two largest grocery chains in Australia negatively impacted operating margin.

Metcash’s Food & Grocery segment was also impacted by the closure of 25 Franklins stores.

The tough trading conditions for the Food & Grocery segments were partially offset by growth in the Liquor and Hardware & Automotive segments as well as by incremental growth from acquisitions.

Metcash incurred AUD54 million of significant items after tax, mainly due to a strategic review and impairment and acquisition costs incurred.

Management described fiscal 2014 as “challenging” but said it was “an important transition period,” as the company undertook a strategic review and developed a transformation plan to address the structural challenges of the business, particularly in Food & Grocery.

Management has been encouraged by initial results from pilot programs enacted according to results of its strategic review. Metcash remains a hold.

June 30, 2014, marked the end of fiscal 2014 Down Under, though companies won’t begin reporting operating and financial numbers until late July and early August.

A large number of companies, concentrated in the Basic Materials group, did post dividend reductions, omissions and discontinuations during interim reporting season in February. And several have provided third-quarter operating updates that provided some insight into future dividend levels.

Basically the entire Basic Materials section of the How They Rate coverage universe can now be considered on the List because all those companies are exposed to volatile resource prices.

The Watch List is rather lengthy, 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.

Once again, we have removed companies that have omitted dividends for more than two consecutive cycles; for these companies dividend policy can be considered “discontinued.”

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.

Basic Materials

Arrium Ltd (ASX: ARI, OTC: ARRMF, ADR: OSTLY) posted a 54 percent increase in fiscal 2014 third-quarter iron ore shipments to 3.03 million metric tons. Its average realized price was down 13.4 percent to USD110 per dry metric ton, but cash costs were below guidance.

Arrrium reported a 7 percent increase in fiscal 2014 first-half revenue, while underlying EBITDA grew by 97 percent. Management declared an interim dividend of AUD0.06, up from AUD0.02 a year ago.

Solid full-year fiscal 2014 results should get Arrium off the Watch List. Hold.

Ausdrill Ltd (ASX: ASL, OTC: AUSDF) reported a 26.9 percent decline in fiscal 2014 first-half revenue compared to the prior corresponding period to AUD424.2 million. Earnings before interest, taxation, depreciation and amortization (EBITDA) slid 34.3 percent to AUD94.1 million, as the mining sector’s slowdown continues to have a deep impact.

Management declared an interim dividend of AUD0.025, down from AUD0.065 a year ago.

We have more on Ausdrill in this month’s Portfolio Update. Sell.

Grange Resources Ltd (ASX: GRR, OTC: GRRLF) reported that 2014 first-quarter pellet production grew by 14 percent to 504,170 metric tons.

Revenue for 2013 was AUD281.1 million, down from AUD331.3 million but in line with guidance. NPAT was AUD25.6 million.

Management declared a AUD0.01 final and a AUD0.01 special dividend. Hold.

Iluka Resources Ltd (ASX: ILU, OTC: ILKAF, ADR: ILKAY) reported first-quarter production was up 22.4 percent sequentially and 0.1 percent year over year, with Chinese imports of zircon up 82 percent in March compared to February.

Management also noted a recovery of demand in its 2014 first-quarter production update.

Iluka declared a final dividend of AUD0.04 per share, down from AUD0.10 a year ago.

2013 mineral sands revenue slid 28.7 percent to AUD763.1 million, while EBITDA margin shrank to 32.6 percent from 67.9 percent. EBITDA was down 60.6 percent to AUD295.2 million. Buy under USD10.

Kingsgate Consolidated Ltd (ASX: KCN, OTC: KSKGF) posted fiscal 2014 third-quarter gold production of 48,725 ounces, in line with guidance, with all-in costs of USD1,126 per ounce. Management expects a “strong” fourth quarter at its key Chatree mine, with overall output on track to full-year guidance of 70,000 to 80,000 ounces.

Kingsgate omitted its interim dividend for fiscal 2014 after it did the same for its final dividend for fiscal 2013. Hold.

Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY) reported fiscal 2014 third-quarter gold production of 551,590 ounces at an average cost of AUD988 per ounce and an average realized price of AUD1,450 per ounce.

Management guided to the upper end of its full-year output forecast range, with costs at the lower end, but the price of gold is the major factor here. And bullion has been weak.

Newcrest didn’t declare an interim dividend after omitting its final dividend for fiscal 2013.

Fiscal 2014 first-half NPAT plunged 88 percent to AUD40 million. Hold.

Oz Minerals Ltd (ASX: OZL, OTC: OZMLF, ADR: OZMLY) reported that 2014 first-quarter copper production was ahead of guidance, while costs were below forecast.

Oz cut its 2013 final dividend in half relative to 2012, declaring a AUD0.10 payment.

Revenue for the year was AUD644 million, down from AUD985.7 million in 2012 on lower production and lower gold and copper prices. Underlying EBITDA declined to AUD115.8 million from AUD353.9 million. Buy under USD4.50.

PanAust Ltd (ASX: PNA, OTC: PNAJF) has received a AUD2.30 per share, AUD1.5 billion buyout offer from China-based state-owned asset management firm Guangdong Rising. Management granted the bidder exclusive due diligence rights after rejecting the bid as too low.

PanAust declared a final dividend of AUD0.03 per share, down from AUD0.04 a year ago.

2013 sales revenue ticked up 1.7 percent to USD725 million on higher copper and precious metals sales volumes and higher production, offsetting lower commodity prices. EBITDA slid 17.7 percent to USD272.5 million. Buy under USD2.30.

Sedgman Ltd (ASX: SDM, OTC: SGTDF) declared an interim dividend of AUD0.02, down from AUD0.03 a year ago.

Fiscal 2014 first-half revenue declined to AUD153.9 million from AUD257.4 million, as several major projects were deferred by clients. Management reported negative EBITDA and a net loss of AUD6.7 million. Hold.

Western Areas NL (ASX: WSA, OTC: WNARF) reported fiscal 2014 third-quarter total mine production of 6,709 metric tons of nickel in ore with an average head grade of 4.4 percent nickel. Cash costs were down slightly quarter over quarter to AUD2.52 per pound. And cash on hand has grown to AUD171.1 million.

Western Areas declared an interim dividend of AUD0.01, down from AUD0.02 a year ago.

Fiscal 2014 first-half revenue was down by AUD9.3 million, but EBITDA improved to AUD65.4 million from AUD58.3 million, as EBITDA margin improved by 20 percent to 45.6 percent on cost savings and productivity improvements. Buy under USD3.60.

Consumer Goods

GUD Holdings Ltd (ASX: GUD, OTC: GUDHF, ADR: GUDDY) declared an interim dividend of AUD0.18 per share, down from AUD0.26 a year ago, when it also declared a special dividend of AUD0.10 per share.

Fiscal 2014 first-half underlying profit declined by 31 percent to AUD14.9 million on a 4.3 percent decline in sales to AUD2998.4 million. Management reaffirmed its forecast for a full-year profit decline of 20 percent. Buy under USD6.50.

Ridley Corp (ASX: RIC, OTC: RIDYF) declared an interim dividend of AUD0.015 per share, down from AUD0.0375 a year ago.

Fiscal 2014 first-half revenue from continuing operations grew by 28 percent to AUD442.6 million, as NPAT surged by 178 percent to AUD9.9 million. EBIT for Ridley AgriProducts was up 33.5 percent to AUD20.7 million. Hold.

Consumer Services

Metcash Ltd’s (ASX: MTS, OTC: MCSHF, ADR: MHTLY) place on the Watch List is explained above. Hold.

Myer Holdings Ltd (ASX: MYR, OTC: MYGSF) reported a 0.9 percent decline in fiscal 2014 third-quarter total sales due to store closures and refurbishments. Like-for-like sales were up a less-than-expected 0.2 percent, largely due to weak February results.

Soft sales for its Myer Exclusive Brands line are a bad sign for margins. And the failure of its effort to merge with upmarket department store David Jones Ltd (ASX: DJS, ADR: DJNSY) is a blow to longer-term growth prospects.

First-half net profit after tax (NPAT) declined 8.1 percent to AUD81 million, cost of doing business was up 2.1 percent, and management declared an interim dividend of AUD0.09, down from AUD0.10 a year ago. Hold.

Seven West Media Ltd’s (ASX: SWM, OTC: WANHF) final dividend was flat at AUD0.06 per share.

Fiscal 2013 NPAT excluding items was flat too at AUD225 million on revenue of AUD1.867 billion, though management reported a statutory net loss of AUD70 million on magazine business impairments. Management noted strong TV advertising and forecast low single-digit growth for fiscal 2014. Buy under USD2.

Southern Cross Media Group Ltd (ASX: SXL, OTC: SOUTF) reported 1.8 percent growth in fiscal 2014 first-half revenue, as NPAT ticked up by 1.8 percent to AUD45.9 million and underlying NPAT grew 1.1 percent to AUD47.2 million. Television results were solid, though radio expenses were higher than expected.

Management maintained an interim dividend of AUD0.045 per share. Buy under USD1.80.

Tabcorp Holdings Ltd (ASX: TAH, OTC: TABCF) reported a 2.3 percent increase in fiscal 2014 third-quarter revenue to AUD492.3 million. Year-to-date revenue is up 1.5 percent to AUD1.537 billion. Management noted the strength of its Wagering and Media & International units.

Tabcorp declared an interim dividend of AUD0.08 per share, down from AUD0.11 a year ago.

Management reported a 2.3 percent increase in fiscal 2014 first-half NPAT to AUD74.6 million, as revenue rose 1 percent to AUD1.045 billion. Operating expenses ticked up by 0.9 percent to AUD220.6 million. Buy under USD3.35.

Tatts Group Ltd (ASX: TTS, OTC: TTSLF) maintained an interim dividend of AUD0.08.

Fiscal 2014 first-half revenue from continuing operations declined 3.5 percent to AUD1.49 billion, EBITDA was up 6.7 percent to AUD265 million and NPAT rose 12.2 percent to AUD122 million on record lotteries earnings, growing online demand and cost controls. Buy under USD3.

Financials

QBE Insurance Ltd (ASX: QBE, OTC: QBEIF) reported a steep decline in 2013 cash profit to USD761 million from USD1.04 billion and posted a statutory net loss of USD254 million on weakness in North America

Its four other regions were solid, however, and management boosted the final dividend by 20 percent to AUD0.12 per share.

QBE had cut its 2013 interim dividend by 50 percent, though it was in line with management policy to pay 50 percent of cash profit. Hold.

Industrials

ALS Ltd (ASX: ALQ, OTC: CPBLF) reported underlying net profit after tax (NPAT) of AUD171.9 million for the fiscal year ended March 31, 2014, 27.9 percent below the result for fiscal 2013 amid difficult global market conditions.

Revenue, however, was up 3.3 percent to AUD1.503 billion from AUD1.455 billion. And NPAT excluding losses related to asset sales and amortization of intangibles was AUD163.1 million, within management’s Feb. 27, 2014, guidance range. Statutory NPAT was AUD154.4 million.

ALS declared a final dividend of AUD0.20 per share, down 25.9 percent from AUD0.27 a year ago. The full-year fiscal 2014 dividend was down 18.8 percent to AUD0.39. Hold.

Boart Longyear Ltd (ASX: BLY, OTC: BOARF, ADR: BLGPY) reported a 46.7 percent decline in 2014 first-quarter revenue to USD197 million and posted negative statutory EBITDA of USD2 million. Adjusted EBITDA was USD4 million, down from USD40 million a year ago.

Management has engaged advisors to explore strategic alternatives, as the survival of the business, hit hard by the sharp downturn in mining exploration activity, is increasingly in question.

Boart reported 2013 revenue of USD1.22 billion, down from USD2.01 billion in 2012 and posted a net loss of USD620 million.

Management omitted the final dividend after doing the same for the 2013 interim dividend. Hold.

Bradken Ltd (ASX: BKN, OTC: BRKNF) cut its fiscal 2014 underlying EBITDA forecast to approximately AUD173 million from a prior estimate, offered in February 2014, of approximately AUD180 million.

Bradken declared an interim dividend of AUD0.15, down from AUD0.20 a year ago, as fiscal 2014 first-half earnings before interest, taxation, depreciation and amortization (EBITDA) slid 18 percent to AUD86.2 million. Buy under USD5.25.

Emeco Holdings (ASX: EHL, OTC: None) will pay no dividends prior to June 30, 2014, as it focuses on debt reduction in the aftermath of amending covenants on its AUD450 million senior debt facility.

Fiscal 2014 first-half revenue declined by 48.7 percent to AUD126.4 million, while EBITDA slid 70 percent to AUD33.1 million. Management reported a statutory net loss of AUD179.8 million and an operating loss of AUD16.3 million, though free cash flow was positive at AUD75 million. Hold.

GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY) said it wouldn’t pay an interim dividend after announcing a AUD17 million impairment charge to be taken against fiscal 2014 first-half results on its Gliderol garage door business.

Half-year net sales were down 1 percent and like-for-like sales were down 3 percent, as trading EBIT declined by 1 percent Bathrooms & Kitchens revenue was up 7 percent, reflecting strength in residential construction market.

Management expects to resume its dividend with the final payment for fiscal 2014. Buy under USD2.80.

UGL Ltd (ASX: UGL, OTC: UGLFF) omitted its fiscal 2014 interim dividend.

Operating revenue for the period was up 7 percent to AUD2.2 billion, though EBIT declined to AUD78.5 million from AUD85.7 million a year ago. Underlying NPAT dipped to AUD49.7 million from AUD51 million. Hold.

Oil & Gas

Caltex Australia Ltd (ASX: CTX, OTC: CTXAF) reported a first-quarter historic-cost net profit decline of 36.3 percent to AUD121 million, though management’s outlook for the remainder of the year is positive.

Caltex declared a final dividend for 2013 of AUD0.17, down from AUD0.23.

Historic cost after-tax profit for the year was AUD530 million versus AUD57 million for 2012, which was impacted by costs related to closure of Kurnell refinery. Underlying profit of AUD504 million was up from AUD366 million. Buy under USD16.50.

WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY) declared an interim dividend of AUD0.34 per share, down 18.1 percent from the AUD0.415 it paid a year ago.

Fiscal 2014 first-half statutory revenue was up 9 percent to AUD4.82 billion, though underlying EBIT declined 29 percent to AUD178.2 million. Operating cash flow surged 84 percent to AUD230 million. Buy under USD16.

Technology

Codan Ltd (ASX: CDA, OTC: CODAF) reported fiscal 2014 first-half revenue of AUD61.1 million, down from AUD135.9 million. The steep slide for the price of gold has had a dramatic impact on metal detector sales.

‘Underlying profit was AUD4.5 million, down from AUD27.4 million, and the interim dividend was down 75 percent to AUD0.015 per share. Hold.

Redflex Holdings Ltd (ASX: RDF, OTC: RFLXF) guided to a pre-tax loss of between AUD7 million and AUD9 million for the second half of fiscal 2014, though EBITDA is tracking to AUD5 million to AUD7 million.

Redflex declared an interim dividend of AUD0.02, in line with the prior corresponding period.

Fiscal 2014 first-half revenue declined by 0.2 percent to AUD69 million, while EBITDA were up 6.1 percent to AUD19.8 million. NPAT was off 14.3 percent to AUD3.1 million. Sell.

SMS Management & Technology Ltd (ASX: SMX, OTC: SMSUF, ADR: SMSUY) expects fiscal 2014 second-half EBITDA to be 5 percent to 15 percent higher compared to the first six months of the year, as utilization improved in March.

SMS reported that first-half revenue was up 6 percent to AUD153.5 million, but NPAT fell by 55 percent to AUD5.8 million.

The interim dividend was down 63 percent compared to the prior corresponding period. We have more on SMS in this month’s Portfolio Update. Sell.

Telecommunications

Telecom Corp of New Zealand (ASX: NZT, OTC: NZTCF) reported a 3 percent decline in fiscal 2014 first-half revenue to NZD1.847 billion, as continuing profit slipped 12.5 percent to NZD147 million. The interim dividend was flat.

Management has guided to a fiscal 2014 full-year dividend of NZD0.16 per share, provided operating conditions remain stable. That’s in line with the fiscal 2013 dividend, which was down by 27.3 percent compared to fiscal 2012. Hold.

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.
• Atlas Iron Ore Ltd (ASX: AGO, OTC: ATLGF, ADR: AGODY)–One ADR is worth five 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.
• Coca-Cola Amatil Ltd (ASX: CCL, OTC: CCLAF, ADR: CCLAY)–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 Resorts Ltd (ASX: CWN, OTC: CWLDF, ADR: CWLDY)–One ADR is worth two ordinary shares.
• 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.
• SMS Management & Technology Ltd (ASX: SMX, OTC: SMSUF, ADR: SMSUY)–One ADR is worth two 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.