AE Portfolio Conservative Holding Australia and New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY) broke with its recent pattern and its stated intent to not allow the Reserve Bank of Australia (RBA) to dictate its policy by passing along the full value of the central bank’s Jun. 1 25 basis point cut to its benchmark overnight interest rate to its mortgage and small business customers.

The head of ANZ’s Australia operations said that even as funding costs remained elevated, the bank recognized that not all sectors of the economy were strong. “Although there was strong economic data this week,” said Phil Chronican in a statement released by the bank, “we know that several major states and many of our customers are not directly benefiting from the strength of the resources sector.

“The bottom line is that while deposit customers are receiving very competitive deposit rates, many of our borrowing customers are under pressure from a range of other costs. We felt that reducing interest rates by 0.25 percent per annum for home borrowers and small business was the right decision in these circumstances.”

In December 2011 ANZ announced that from January 2012 it would review its variable home loan and small business interest rates on the second Friday of each month, with any changes to take effect the following Friday, breaking out of step with the RBA and its banking peers. ANZ argued at the time that changes to the RBA’s cash rate had negligible impact on its actual funding costs, which are now determined in large part by participation in global wholesale funding markets and rising competition for domestic deposits.

Officials of the bank had been among the most aggressive defenders of a position that caused quite a bit of controversy. But ANZ is now stepping back into line in a move that could be interpreted as an effort to gain market share at the expense of its competitors.

The remaining three of Australia’s “Four Pillars” did not follow ANZ’s lead. Commonwealth Bank of Australia Ltd (ASX: CBA, OTC: CBAUF, ADR: CMWAY) and National Australia Bank Ltd (ASX: NAB, OTC: NAUBF, ADR: NABZY) each cut their lending rates by 21 basis points, while Westpac Banking Corp (ASX: WBC, NYSE: WBK) trimmed by 20 basis points.

Re-Rating the Universe

We’ve adjusted the manner in which we rate companies in the Australian Edge coverage universe. These changes are detailed in this month’s Portfolio Update, where the reinterpreted AE Safety Rating System and new scores are discussed for our Aggressive and Conservative Holdings.

Based on the revised System, we have the following changes for Portfolio Holdings:

Conservative Holdings

• Australand Property Group Ltd (ASX: ALZ, OTC: AUAOF)–From 3 to 5
• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–From 5 to 4
• Cardno Ltd (ASX: CDD, OTC: COLDF)–From 5 to 6
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–From 4 to 6
• Envestra Ltd (ASX: ENV, OTC: EVSRF)–From 5 to 4
• M2 Telecommunications Group Ltd (ASX: MTU, OTC: MTCZF)–From 4 to 6
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–From 4 to 5
• Transurban Group (ASX: TCL, OTC: TRAUF)–From 3 to 5

Aggressive Holdings

• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)–From 4 to 5
• Mineral Resources Ltd (ASX: MIN, OTC: MALRF)–From 2 to 4
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–From 3 to 4
• New Hope Corp Ltd (ASX: NHC, OTC: NHPEF)–From 5 to 4
• Oil Search Ltd (ASX: OSH, OTC: OISHF, ADR: OISHY)–From 2 to 3
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)–From 3 to 5
• WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY)–From 3 to 4

As of press time we’re still in the process of re-rating the broader How They Rate coverage universe. We’ll provide details of changes in the July AE.

We’ve made the following advice changes in How They Rate:

Basic Materials

Aditya Birla Minerals Ltd (ASX: ABY, OTC: ABWAF)–From Hold to Buy < USD0.50. This is for aggressive speculators only, who can appreciate the volatility that’s sure to ensue in coming weeks and months as Europe works out its problems, China gets a grip on its growth program and the company’s main output, struggles to find a bottom and turn around.

The board approved and management declared a AUD0.05 dividend on May 30, finally getting back to a paying basis after “omitting” a mid-year payment. Revenue for fiscal 2012 was up 7 percent to AUD498.6 million, though net profit after tax (NPAT) was off 54 percent. Fourth-quarter copper production and sales, however, each rose 29 percent.

It appears the company pays an annual dividend, but policy remains “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. (See Below.)

Alumina Ltd (ASX: AWC, NYSE: AWC)–From Buy < USD1.50 to Hold. Although the company has undrawn credit facilities to help it through what is an increasingly difficult operating environment for global aluminum companies, absence of any cash flow guidance and rising overall debt levels suggest a dividend cut is highly likely.

Alumina reduced its final dividend for 2011 by 25 percent, in step with guidance issued late in the year. The company reduced its fiscal 2012 output target to 15.5 million metric tons from 15.9 million.

Industrials

Campbell Brothers Ltd (ASX: CPB, OTC: CBEBF)–From Hold to Buy < 58. This provider of analytical laboratory testing services, with operations in health care as well as mining, posted fiscal 2012 adjusted net income of AUD222.4 million, slightly above guidance, on a 27 percent increase in sales to AUD1.41 billion. The board approved and management declared a final dividend of AUD1.30 per share, up 60 percent year over year. Minerals and energy units drove the positive outcome, though life sciences lagged.

Although it didn’t provide numerical guidance for fiscal 2013, management did express the view that recent acquisitions as well as capacity increases, the introduction of new technologies and the upgrade of existing facilities would pave the way for solid organic growth.

The stock had nearly doubled from the September 2011 founding of AE to early May but has come back to a reasonable value with the recent selloff. These numbers and management’s commentary suggest the dividend is secure.

Dividend Watch List

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 more static than, for example, the Dividend Watch List compiled for AE’s sister letter Canadian Edge. 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. And this twice-yearly Australian rhythm varies as well from the quarterly dividend arrangement to which most US companies adhere.

We do follow close what companies say in their quarterly production or sales reports, their regular trading updates that fall outside the regular reporting schedule and their presentations to investor conferences. We also get clues–often as specific as official guidance figures–out of annual general meetings.

The business of AE is to identify businesses capable of paying sustainable and growing dividends over time. The corollary of this mandate is to identify those businesses that are not capable sustaining or growing dividends.

Twenty-one of 107 companies tracked in the Australian Edge How They Rate coverage universe declared a dividend lower than the one declared for their prior corresponding period during the recently concluded earnings reporting season. Several companies have also adjusted downward their earnings forecasts for fiscal 2012.

With recent dividend reductions or changes to guidance the following companies have declared as well their worthiness for inclusion on the Dividend Watch List.

Myer Holdings Ltd (ASX: MYR, OTC: MYGSF) is new to the List this month, as it finally joins its retail brethren after posting a fiscal 2012 third-quarter sales decline of 0.9 percent. The biggest worry was the 2.1 percent slide in like-for-like sales, as store open more than a year showed serious weakness. Management expressed a commitment to closing non-performing stores as it gathers itself to compete in a world rapidly shifting away from traditional to online stores.

A downward revision to full-year guidance from a prior forecast of up to a 10 percent decline to a new prediction of up to a 15 percent shortfall earn the stock a place on the Watch List. Hold.

Toll Holdings Ltd (ASX: TOL, OTC: THKUF) also warrants a place on the List after chopping its previous guidance for fiscal 2012 underlying earnings before interest and taxation (EBIT) to AUD400 million to AUD420 million from a prior target of AUD450 million. Fiscal 2011 underlying EBIT was AUD436 million.

Australia’s largest trucking company and freight handler has a relatively strong balance sheet, and its operating performance remains sound. But external pressures in the form of a weakening Chinese economy and a still-recovering Japanese economy suggest an overabundance of caution is in order. Hold.

Basic Materials

Aditya Birla Minerals Ltd’s (ASX: ABY, OTC: ABWAF) board approved and management declared a AUD0.05 dividend on May 30, finally getting back to a paying basis after “omitting” a mid-year payment. Revenue for fiscal 2012 was up 7 percent to AUD498.6 million, though net profit after tax (NPAT) was off 54 percent. Fourth-quarter copper production and sales, however, each rose 29 percent.

It appears the company pays an annual dividend, but policy remains “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) reduced its final dividend for 2011 by 25 percent, in step with guidance issued late in the year. The company reduced its fiscal 2012 output target to 15.5 million metric tons from 15.9 million.

Although the company has undrawn credit facilities to help it through what is an increasingly difficult operating environment for global aluminum companies, absence of any cash flow guidance and rising overall debt levels suggest a dividend cut is highly likely. We’ve cut our rating from buy under USD1.50. Hold.

Aquarius Platinum Ltd (ASX: AQP, OTC: AQPBF) and its partners in the Marikana mine in South Africa have mothballed the No. 4 shaft due to the continuing weakness for platinum-group metals (PGM) prices. Marikana accounts for approximately 18 percent of Aquarius’s annual production. This comes after the company reported that fiscal 2012 third-quarter earnings slid 137 percent to a AUD9.4 million loss, as production declined 18 percent and prices for PGMs dove 14 percent. Cash costs, meanwhile, surged by 26 percent.

The company didn’t pay an interim dividend on its fiscal 2012 first-half results. Sell.

BlueScope Steel Ltd (ASX: BSL, OTC: BLSFF) announced last October the suspension of its dividend, and it continues to sell assets to generate cash for debt-reduction purposes. The company is struggling to adjust to competitive pressures from steel producers in lower-cost Asian markets. Government aid will help, but this transition is not for dividend-focused investors to wait out. Sell.

Independence Group NL (ASX: IGO, OTC: IPGDF) reduced its interim dividend by 50 percent, but its March quarter production report answered several questions about its ability to establish some consistency in its operations, as cash costs for the period were solid and production was 4 percent higher than forecast. Output from its Jaguar gold mine was 98 percent higher in March than in January and February, and costs were the lowest ever for the project.

A high payout ratio coupled with management’s expressed desire to diversify away from nickel through gold-asset acquisitions suggest a choice may have to be made between investing in growth and sustaining a dividend. Hold.

OneSteel Ltd (ASX: OST, OTC: OSTLF, ADR: OSTLY) paid a AUD0.03 per share interim dividend, down 50 percent from the AUD0.06 it paid for the first half of fiscal 2011. Having committed full-bore to identifying itself as an iron ore miner, management and the board asked for and received from shareholders their approval to change to company name to Arrium.

The forecast is for “significant improvement” in fiscal 2012 second-half results, which will be revealed on or about Aug. 21, 2012. Buy under USD0.80.

Panoramic Resources Ltd (ASX: PAN, OTC: PANRF) paid 50 percent less for its fiscal 2012 interim dividend than it did a year ago, as lower realized prices for nickel offset double-digit production growth. March quarter nickel production reached a company record, prompting management to again boost its full-year output guidance. Buy under USD1.40.

Western Areas NL (ASX: WSA, OTC: WNARF) cut its interim dividend 50 percent because of lower sales in the first half of fiscal 2012. Lower realized prices for its nickel offset higher production, though costs trends were positive and management reiterated full-year guidance.

March quarter production trends were solid, and sales hit a record. Concentrate sales for the second half are on track for a 25 percent gain over first-half levels.

Western Areas will remain on the Watch List until it reports final fiscal 2012 results, including dividend details, but it’s earned an upgrade from hold, though this is for aggressive investors only. Buy under USD4.60.

Consumer Goods

Billabong International Ltd (ASX: BBG, OTC: BLLAF) cut its interim distribution by 81 percent, likely an interim step on the way to zero. The company continues to sell productive assets to generate cash to pay down debt, but its ability to pay remaining liabilities will be impaired by the absence of the full cash flow from said assets. The company has also rejected a AUD3 per share cash buyout offer. Sell.

Goodman Fielder Ltd (ASX: GFF, OTC: GDFLF) didn’t pay an interim dividend. Prior-year comparisons make the decision obvious, as revenue was off 3.7 percent and statutory net profit after tax was down 77 percent. Sequential comparisons show a turnaround may be underway, and management is undertaking a strategic review to assess a problem of size but no scale for its five operating divisions. Hold.

Consumer Services

APN News & Media Holdings Ltd (ASX: APN, OTC: APNDF) reduced its 2011 annual dividend by 28.6 percent from 2010 levels. Statutory net profit after tax (NPAT) slid by 24 percent, though revenue rose 1 percent to AUD1.07 billion. Trimming the dividend will provide more cash as the company undertakes a tough transition to outdoor advertising. But based on current market conditions the company is guiding to a AUD3 million revenue shortfall for the first half of 2012 versus the comparable period of 2011. Debt remains a concern. Sell.

David Jones Ltd (ASX: DJS, ADR: DJNSY) reported that fiscal 2012 third-quarter sales fell 2.9 percent to AUD399. 8 million, while like-for-like sales slid 3.1 percent. Management reaffirmed its guidance for a full-year decline for net profit after tax (NPAT) of 35 percent to 40 percent, as early fourth-quarter activity suggested a carry-through of this weak third-quarter performance.

DJs already slashed its interim dividend by 19 percent, and it appears another reduction may be in the offing as it continues to roll out a new sales strategy built around finally building out a world-class Internet presence.

First-half profit fell 20 percent to AUD85 million from AUD105.7 million a year ago, at the bottom end of company guidance but in broadly in line with market expectations. First-half sales fell 6.7 percent to AUD1.01 billion from AUD1.08 billion a year ago.

DJs, along with most of Australia’s retail sector, has seen earnings slide as cautious consumers have reined in their spending in the wake of concerns over the global and domestic economy. Consumers have also shifted their spending to the Internet to take advantage of the strong Australian dollar to buy from overseas websites. Hold.

Harvey Norman Holdings Ltd (ASX: HVN, OTC: None) trimmed its interim dividend by 16.7 percent, as fiscal 2012 first-half net profit after tax (NPAT) slid 2.1 percent on an 8.2 percent decline in sales. March quarter before-tax earnings slid 44 percent, while nine-month sales fell 25 percent.

The Australian Bureau of Statistics reported that April retail sales declined by 0.2 percent after 10 months of growth, offering little hope for this already struggling franchise. Sell.

JB Hi-Fi Ltd (ASX: JBH, OTC: JBHIF) has the lowest “cost of doing business” in the retail sector, which is cause for optimism as it continues to grapple with a changing operating landscape in the age of Internet shopping as well as a consumer base concerned with the economy. Its CODB did decline in the March 2012 quarter from the prior corresponding period, but management said during a May 4 presentation at the Macquarie Australia conference that full-year net profit after tax (NPAT) would come in between AUD100 million and AUD105 million, well below market expectations of approximately AUD119 million.

March quarter sales were 8.8 percent higher on a sequential basis, while same-store sales rose 1.e percent. Management also stuck to its guidance for AUD3.1 billion full-year sales. But the company also reduced its final fiscal 2011 dividend to AUD0.29 from the AUD0.33 paid for the corresponding period of fiscal 2010, and though recent employment figures in Australia coupled with recent cuts by the Reserve Bank of Australia to its overnight cash rate totaling 75 basis points offer more cause for hope, it remains the case that consumers are watching their spending.

Management also noted that discounting will continue, at least over the next quarter, in this challenging environment. Margins, in sum, are still under a lot of pressure, and so is the dividend. Hold.

Seven West Media Ltd (ASX: SWM, OTC: WANHF), Australia’s largest diversified media business, announced Apr. 24, 2012, that earnings before interest and taxation (EBIT) for the fiscal year ending Jun. 30, 2012, would be AUD460 million to AUD470 million, about AUD50 million lower than previously expected and below analysts’ consensus forecast of AUD517 million.

“Based on conditions now becoming evident in all segments (TV, Newspapers and Magazines), the previous expectations of the market strengthening in the final quarter are unlikely to be met,” Seven West said in a statement.

Shares slid from a AUD3.77 close on the Australian Securities Exchange (ASX) on Apr. 24 to AUD2.69 May 10, as investors priced in a significant dividend cut; the posted yield is now 16.7 percent. The company will report fiscal 2012 results on or about Aug. 24, 2012. Hold.

Southern Cross Media Group Ltd (ASX: SXL, OTC: SOUTF) management highlighted the fact that “like for like” revenue was off only 2.7 percent from the first half of fiscal 2012 compared to the prior corresponding period. Unequivocal good news can be found in the conclusion that cost-control efforts exceeded expectations; coupled with the cash saved from a 28.6 percent interim dividend reduction Southern Cross should be able to continue to ride out challenging advertising conditions. Buy under USD1.25.

TABCORP Holdings Ltd (ASX: TAH, OTC: TABCF) reduced its interim dividend by 45.8 percent from AUD0.24 to AUD0.13 per share, a move management said was “in line with stated policy.” Fiscal 2012 third-quarter revenue rose 2.7 percent to AUD724 million, as wagering was up 4.3 percent.

A positive shift to a more stable underlying revenue mix and improving margins earn TABCORP an exit from the Watch List and an upgrade from hold. Buy under USD2.60.

Financials

QBE Insurance Ltd (ASX: QBE, OTC: QBEIF) reduced its 2011 dividend by 32 percent from the rate it paid in 2010; 2011 was a year marked by “unprecedented natural catastrophes and challenging investment markets,” which made hoarding cash a reasonable move. Internal metrics suggest QBE will do well once external conditions improve. For now, however, dividend investors are better off elsewhere. The company will report on results for the first half of calendar 2012 in August. Hold.

Westfield Group Ltd (ASX: WRT, OTC: WEFIF, ADR: WFGPY) cut its full-year 2011 payout by 24 percent. Australia’s biggest REIT by market capitalization is a hold.

Industrials

GWA Group Ltd (ASX: GWA, OTC: GWAXF, ADR: GWAXY), which manufactures building fittings for homes and commercial buildings, didn’t cut its dividend but has already backed off already downbeat guidance it issued along with fiscal 2012 first-half earnings in February.

The company reported an 11 percent sales decline for the six months ended Dec. 31, 2011, as revenue dipped 1 percent to AUD314.9 million. At the time these numbers were released, on Feb. 14, management forecast a 16 percent decline in earnings before interest and taxation (EBIT). On Apr. 10, however, via a trading update, GWA altered its EBIT decline for fiscal 2012 to 20 percent to 25 percent.

Although management once again confirmed its full-year dividend guidance of AUD0.18 per share, this quick turnabout is cause for concern and at least a place on the Dividend Watch List.

GWA Group is a hold.

Leighton Holdings Ltd (ASX: LEI, OTC: LGTHF) cut its fiscal 2012 profit guidance by about 25 percent to 38 percent, after more unforeseen problems at two key projects. Writedowns on the value of the assets have wiped AUD254 million from its forecast for the year to Dec. 31.

Leighton posted a AUD104 million before-tax loss for the March quarter, as the Airport Link road and the Victoria desalination plant project continued to exact tolls. Management is sticking to guidance for full-year underlying net profit after tax of AUD400 million to AUD450 million, though, which is a reduction from previous guidance for 2012 NPAT of AUD600 million to AUD650 million. Sell.

Oil & Gas

Caltex Australia Ltd (ASX: CTX, OTC: CTXAF) paid AUD0.45 per share in respect of 2011 results, down from AUD0.60 in 2010. The refiner’s unaudited March quarter profit showed a 10 percent decline. Hold.

Utilities

DUET Group (ASX: DUE, OTC: DUETF) announced in mid-2011 that it would reduce its payout by 10 percent to reduce debt. The company recently completed an equity offering that reduced net debt, but distribution coverage is still a concern. The stock remains a hold.

Spark Infrastructure Group (ASX: SKI, OTC: SFDPF) reduced its 2011 payout by 25.1 percent, but management forecast 5 percent distribution growth for 2012. Spark Infrastructure is a buy under USD1.40.

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.
• 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.
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–One ADR is worth one ordinary share.
• OneSteel Ltd (ASX: OST, OTC: OSTLF, ADR: OSTLY)–One ADR is worth 20 ordinary shares.
• 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.
• 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.