Rbs Round Up 070809

This material has been produced by RBS sales and trading staff and should not be considered independent.

The Round Up 7 August 2009 Issue No. 150 The Round Up is a comprehensive daily note produced by the RBS Warrants team providing an overview of market movements along with quality ideas for warrant traders and investors.

In today’s issue Global Market Action

Scoreboard

Aussie Market Action

SPI Comment, Events & Dividends

SLF (SLFSZX)

Self Funding Investment – property sector

Retail (JBH,DJS,HVN - KZP)

The Bear Cage – Stimulus spending to end

Reporting this week

Reporting Trading – AXA,AWC,NWS,TAH,RMD

Round Up Corner

RBS Monthly Market Review – July 2009

Equities Move

Last

% Move

Range

ASX 200

+61.8

4326.3

+1.4%

SPI - yesterday

+74.0

4291.0

Dow Jones

-24.7

9256.3

Volume u.c to +63

$5.1 bn(A)

+1.8%

-1 to +83

27,950(A)

-0.3%

-72 to +44

Avg

S&P 500

-5.6

997.1

-0.6%

-10 to +5

High

Nasdaq

-19.9

1973.2

-1.0%

-25 to +11

Avg

FTSE

+43.4

4690.5

+0.9%

u.c to +82

High

Commodities Move Oil-WTI spot

Last

% Today

% Past Month

-0.06

71.91

-0.1%

+12.4%

Gold Spot

+0.05

963.50

+0.0%

+4.2%

Nickel (LME)

-38.69

886.19

-4.2%

+23.2%

Aluminium (LME)

-3.66

88.96

-4.0%

+23.5%

Copper (LME)

-8.02

272.95

-2.9%

+21.4%

Zinc (LME)

-3.45

82.71

-4.0%

+18.6%

Silver

-0.14

14.56

-1.0%

+10.0%

Sugar

+0.43

19.80

+2.2%

+14.3%

Dual Listed Companies (DLC’s) Move

%Move

Last

AUD Terms

NWS (US)

+0.17

+1.4%

RIO (UK)

-28.0 p

-1.1%

BLT (BHP UK)

-4.0 p

-0.3%

+10.0 p

+3.4%

£3.050

BXB (UK)

12.38

Diff to Aus

14.74

-12.4 c

£24.95

49.84

-1206.2 c

£15.740

31.44

-734.9 c

6.09

+8.2 c

American Depository Receipts (ADR’s) Move

%Move

Last

BHP (US)

-1.16

-1.8%

AWC (US)

+0.31

+5.3%

TLS (US)

+0.04

+0.3%

AUD Terms 64.07

Diff to Aus

38.13

-66.0 c

6.12

1.82

+2.6 c

14.89

3.54

-2.5 c

ANZ (US)

-0.06

-0.4%

16.30

19.40

-6.9 c

WBC (US)

+2.33

+2.5%

96.49

22.97

+4.0 c

NAB (US)

-0.19

-0.9%

21.55

25.65

-10.0 c

LGL (US)

-0.65

-2.8%

22.96

2.73

+0.3 c

RMD (US)

-0.39

-0.9%

41.99

5.00

-10.2 c

JHX (US)

-0.01

-0.0%

20.90

4.98

+6.5 c

PDN (CAN)

-0.04

-1.0%

4.11

4.54

-1.9 c

Overnight Commentary United States Commentary US stocks fell for the second session, the Dow down 24.7 pts, and the S&P 500 off 0.6% and back below 1,000 pts. Jobless numbers were reasonable, but further falls by P&G and weakess in commodities, coupled with concerns over tonights official unemployment number, were enough to keep the market in the red. Eco - Initial Jobless Claims fell to 550k (vs 580k forecast), from 588k, although Continuing Claims rose to 6310k (vs 6291k exp'd) from 6241k. While Chain Store Sales fell a further 5.0% in July, after falling 5.1% in June. Industrials - Once again Procter & Gamble was the worst on the day, off 4.5% and taking 18.5pts, after the world's largest householdproducts maker yesterday reported fourth-quarter profit fell 18 percent as consumers curbed spending on higher-priced skin care and detergents in the recession, switching to cheaper generic options Resources - Base metals fell as a rally in the US dollar, following yesterday's unexpected contraction in US services, fueled concern that the near doubling of prices may be exaggerated, and trimmed demand for commodities as a hedge against inflation. Nickel, zinc and aluminium all fell 4%, and Alcoa lost 3.6% after the moves. Retail - Gap Inc rose 8.2% after the largest US clothing retailer raised it's second-quarter earnings forecast to as much as 32 cents/share, above the average analyst estimates of 27 cents/share. Macy's Inc added 5.6% after the dept store raised its 2Q earnings forecast. Financials - Citigroup rose 6.1% after another broker said they see 53% upside in the bank, however still expect a further $10bn raising in 4Q 2009 in order to repay TARP2 by year-end. Morgan Stanley has agreed to pay $950m to redeem warrants that the US Treasury received in October when it bought $10bn of preferred stock.

United Kingdom & Europe Commentary The FTSE 100 was up 0.9% or 43pts as the BoE unexpectedly expanded its quantitative easing program by £175bn. The FTSE Eurofirst 300 was up 0.4%, the DAX climbed 0.3% and the CAC was up 0.6% Eco - The BoE purchased £50bn in long-dated gilts, the move is a drastic way to lower bond yields. The market reacted positively but some commentators think the move means the UK economy is in much worse shape than the market thinks it is. The BoE and ECB kept rates on hold as expected. Euro Banks - KBC, the largest Belgian lender by market value, helped lift the sector after posting an unexpected profit for 2Q, the stock soared 22.5%. Belgian rival Fortis was up 5.8%, Natixis jumped 15.8%, SocGen added 3.3% but Commerzbank was off 0.6% after revealing further losses from their takeover of Dresdner.

UK Banks - The sector was stronger as Lloyds, up 12.4%, continued its strong run. Two brokers said hopes of a recovery look well founded and reiterated their buy calls. RBS was up 9.75%, Barclays added 5.2% and HSBC was up 5.4%. Insurers - Zurich Financial, one of the world’s leading insurance groups, rose 1.2% after the Swiss group posted a better-thanexpected net profit in spite of a more challenging market. Legal & General was up 4%, Prudential climbed 1.9% and Aviva ended 5.4% higher. Industrials - Household products giant Unilever, up 5.4%, saw support after forecast-beating results. The company reported unexpected growth in western European sales, helped by price cuts. Media - Thomson Reuters was also among the top blue-chip risers, up 6.1%, after the news and financial data publisher reported a better-than-expected quarterly profit, helped by cost cuts, and said it expected 2009 revenue to grow as the financial industry recovers.

Resources Commentary Miners - The sector was the biggest drag on the blue chips, tracking metal prices lower. BHP fell 0.25%, Rio was off 1.1%, Anglo dropped 2.1%, Xstrata was 1.3% lower and Vedanta ended down 0.3%. Energy - Crude fell on oversupply concerns but stocks were mixed in the UK and Europe. BP was off 1%, Shell was up 1.1%, BG Group fell 0.1%, Total added 0.2%, Repsol also climbed 0.2% but Statoil ended down 0.4%

SPI Commentary The SPI traded up 74pts or 1.75% to 4291. Open at 4216 with a low of 4216 and a high of 4300. Volume 28,136. Overnight the SPI trading down 17pts to 4274.

SPI Intraday

SPI Daily

*SPI report taken from the 9:50am open to the 4:30pm close on the previous trading day. Charts taken from IRESS

Upcoming Economic Events for the Week Monday

AUS

NSW Bank Holiday, AIG/PWC Manufacturing PMI, ANZ job ads

US Tuesday

AUS

Wednesday

AUS

Thursday

AUS

Friday

AUS

US

US

US

US

Existing house prices, nominal retail trade, real retail trade, RBA cash rate decision ISM, construction spending, personal income, personal consumption, core PCE deflator AIG/CBA services PSI, trade balance Pending home sales, ADP employment report AIG/HIA consruction PCI, employment, unemployment rate Non-manufacturing ISM, factory orders RBA Statement on Monetary Policy Average hourly earnings, unemployment rate, non farm payrolls, consumer credit

*Dates are indicative only and may change

Upcoming Dividends ExDivDate

Security

Description

Div (c)

Yield

Frk(%)

PayDate

Self Funding Investment: SPDR S&P/ASX 200 Property Fund (SLFSZX) The listed property sector has been one of the biggest casualties of the global financial crisis due to their high levels of gearing, falling occupancy rates and downward property revaluations. As a result the S&P/ASX 200 property index fell ~79% from its 2007 peak. However, with property trusts now reducing debt and obtaining refinancing from the banks, the underperforming property trust sector looks worthy of investment. You can gain exposure to the S&P/ASX 200 listed property stocks through SLFSZX. SLF is an S&P/ASX 200 Listed Property exchange traded fund (ETF) which tracks the performance of the listed property stocks. Technicals

Source: IRESS

The chart above shows SLF over the past 18 months. After bottoming in March 2009, the ETF has developed a sustained medium term uptrend with higher lows and current resistance at $7.50. A breakout of $7.50 would be a bullish signal for a continued advance of the uptrend

SPDR S&P/ASX 200 Listed Property Fund (SLFSZX) SPDR S&P/ASX 200 Listed Property Fund (SLF) seeks to closely track, before fees and expenses, the returns and characteristics of the S&P/ASX 200 Listed Property Trust Index. The approach is designed to provide a portfolio with low portfolio turnover, accurate tracking, and low costs.* The Index comprises the leading listed property vehicles in Australia and represents diversified exposure to the Australian listed property market. Exposure is diversified geographically across Australia’s major population centres and by sector across a range of property types, including industrial, commercial, retail and hotel/tourism.* *Source: IRESS

The breakdown of the S&P/ASX 200 Listed Property Index is as follows: Security

Description

MktCap($)

MktWeight

WDC

Westfield Group

25,167,772,097

46.30%

SGP

Stockland

7,039,547,620

12.95%

GPT

GPT Group

4,096,636,126

7.54%

CFX

CFS Retail Property

3,553,926,494

6.54%

DXS

Dexus Property Group

3,384,606,240

6.23%

MGR

Mirvac Group

3,173,820,078

5.84%

CPA

Commonwealth Prop

1,634,763,680

3.01%

IOF

ING Office Fund

1,430,118,085

2.63%

GMG

Goodman Group

1,348,421,200

2.48%

MOF

Macquarie Office

1,016,127,900

1.87%

MCW

Macquarie Countrywid

717,642,730

1.32%

BWP

Bunnings Warehouse

580,178,793

1.07%

ABP

Abacus Property Grp.

384,546,012

0.71%

CHC

Charter Hall Group

325,218,125

0.60%

IIF

ING Industrial Fund

295,460,083

0.54%

AJA

Astro Jap Prop Trust

211,095,600

0.39%

SLF vs XJO (ex property trust) performance over the past 3 years

Source: IRESS

The chart above compares the returns from the S&P/ASX 200 – Ex-property and SLF. It can be seen that the listed property sector has been a big underperformer compared to the rest of the market and this underperformance has increased over the past month, despite property companies improving their balance sheets. Look for this underperformance to reverse as the listed property companies de-risk and sell underperforming assets.

Using SLFSZX to gain exposure to listed property index Take advantage of upside in the S&P/ASX 200 Listed Property Index through an RBS Self Funding Instalment, SLFSZX. Self Funding Instalments (SFIs) are a simple way to gain long term geared exposure to ASX-listed shares while receiving many of the major benefits of share ownership including exposure to share price movements, dividends and franking credits. KEY BENEFITS of the new RBS self funding instalments include: * NO PUT PROTECTION COST * Simple, transparent and Cost-effective * 1 for 1 movement with the underlying share (delta 1) * Gearing around 50% - Limited downside risk * No margin calls * Non-recourse loan - You can never lose more than your initial outlay * ATO product rulings - Perfectly suitable to be used in SMSF's * Listed - Can be sold at anytime * Can be exercised at any time - simply by paying back loan amount * RBS are the only product issuer in the market who can offer this product * A low interest rate of 7.46% per annum

Key details of SLFSZX Underlying

SFI Code

Instalment Payment

Stop Loss

Current Share Price

Approx. SFI Value

SLF

SLFSZX

$3.5267

$3.88

$7.38

$3.85

Reasons to buy SLF: * Listed property has significantly underperformed the rest of the market, particularly in the most recent rally * A major concern for the smaller property trusts has been refinancing debt, however banks are more likely to refinance the property trusts rather than taking the properties onto their own balance sheets and then having to manage them * Occupancy rates are still high, particularly in retail property which makes up a large proportion of the overall SLF portfolio (predominantly WDC) * Major property compmanies have undergone capital raisings to improve their balance sheets and de-risk * SLF offers an attractive yield with any franking credits an added bonus * SLF gives you exposure to the whole sector, which reduces the risk of being exposed to problems of any individual company.

STRATEGY – Using SLFSZX and WDCKZR to gain exposure to listed property ex-WDC For investors out there who are looking to gain exposure to a basket of listed property stocks without the 46% exposure to Westfield Group (WDC), a strategy to consider would be long SLFSZX and then short WDC thorugh WDCKZR MINI short. This strategy would give you upside exposure to all the stocks in SLF except WDC.

RBS warrants over SLF Security SLFSZX

ExPrc 4-Feb-19

Stop Loss 352.67

CP

ConvFac Call

1

Delta

Description 1

Self Funding Instalment

The Bear Cage: Retail Sector (JBHKZP,DJSKZP,HVNKZP) – Stimulus spending to end The retail sector has significantly outeprformed the market in the first half of CY2009 with sales holding up strong despite the deteriorating economic environment. During this period Australian unemployment has held up better than expected, government stimulus efforts have bolstered consumer spending and low interest rates have eased the pressure on loan repayments. However, with stimulus spending set to dry up and unemployment expected to rise over the coming 6-12 months, the recent rally in retailers may be set to end. The large volume of money and Government debt created over the past 12 months is also likley to lead to inflation which will put upward pressure on interest rates in the medium term. Play downside in retail stocks or cover existing long positions through RBS MINI shorts. Technicals – Big outperformance vs market

Source: IRESS

The chart above shows the relative performance of the major retailers and the S&P/ASX 200 since the beginning of 2009. JBH has been the standout performer followed by DJS and then HVN. All three have significantly outperformed the XJO

JB Hi Fi (JBHKZP) Since hitting a $17 peak in 2007 JBH retraced back to $7 in line with the overall market in 2008. However since November 2008 the stock has staged a big recovery and sales growth has continued despite the economic downturn. JBH is perhaps one of the key beneficiaries of the Governments cash handouts which were made as part of the stimulus package. In June JBH upgraded FY09 NPAT expectations and store growth guidance. However the upgrade is now more than priced into the current share price and JBH is approaching the big resistance level at $17. With stimulus spending likley to dry up and unemployment set to continue to rise, the stock looks fully priced. Play a pullback off $17 resistance in JBHKZP

Source: IRESS

• • • • • •

JBH upgraded FY09 NPAT expectations to cA$92m and upgraded to its store growth guidance, now anticipating 160 large-fit stores and 50 small-fit stores Sales/earnings growth rates will surely come under pressure in FY10F JBH now trading on over 18x P/E and a ~2% dividend yield While the company is likley to continue to underpin earnings growth through its store rollout, the stock looks fully priced RBS Research target price $15.35 Play short at $17 resistance through JBHKZP

RBS MINIs over JBH Security

ExPrc

Stop Loss

CP

ConvFac

Delta

Description

JBHKZP

2499.82

2250

Short

1

1

MINI Short

Harvey Norman (HVNKZP) HVN released its FY09 sales last week which came in line with RBS Research expectations. However the concern going forward for HVN is the ability to continue to achieve sales and margin growth in FY10. The lack of further fiscal stimulus to assist sales in FY10F combined with an Irish business that remains in steep profit decline suggests a tough 1H10F and possibly FY10F is on the cards. RBS target price $3.50 with a HOLD recommendation. The stock has encountered resistance at the $3.50 level a number of times. Play HVN downside through HVNKZP

Source: IRESS

• • • •

While FY09 sales matched RBS Research expectations, we note they were supported by the Olympics, two fiscal stimuli and small business tax breaks in Australia. In the absence of further fiscal stimuli, we question whether a modest underlying improvement in Australia’s economy will be sufficient to leverage this higher market share during the next 12 months into strong profit growth. In addition, Ireland appears to be getting worse Any increase in unemployment is likley to have an impact on HVN particularly in the bigger ticket items space.

RBS MINIs over HVN Security

ExPrc

Stop Loss

CP

ConvFac

Delta

Description

HVNKZP

499.96

450

Short

1

1

MINI Short

David Jones (DJSKZP) DJS 4Q09 sales result yesterday was a solid finish to a year of disappointing sales growth. Total 4Q09 sales growth of +0.6% (RBS: -1.4%) reflected a continuation of June’s mid-single-digit sales growth through July. The stock was down sharply however as the stock looks fully priced at current levels. The question remains whether May and June sales growth is fiscal-stimulus-led, which combined with the cycling of one-off positives in FY10F suggests caution on the outlook. RBS Research have a $4.65 target price on DJS and a HOLD recommendation. The recent move over $5 appears to be overdone and the stock is fully priced. Happy to remain short DJS

Source: IRESS

• • • • •

Although DJS upgraded guidance, the upgrade provides little insight into the drivern of the revised outlook (fiscal stimulus vs cost-out vs improved underlying consumer sales) RBS Research believe it is too soon to assess a recovery in discretionary retail, and David Jones in particular. Stronger than expected sales growth in May and June were likely due to fiscal stimulus spend. July sales are forecast to turn negative again The recent run in the share price looks overdone and the stock is now above RBS Research $4.65 target price. Play downside through DJSKZP

RBS MINIs over DJS Security DJSKZP

ExPrc

Stop Loss 699.95

630

CP

ConvFac Short

1

Delta

Description 1

MINI Short

Reporting Trading : Stocks Reporting This Week – AXA, AWC, NWS,TAH,RMD Australian reporting season kicks off this week with AXA, AWC,NWS,TAH and RMD all set to report their numbers. RBS Research are expecting company results to come in line or slightly ahead of expectations due to the long downgrade cycle over the past six months. RBS MINIs are a great way to trade company results this reporting season, from both a long or short view. Date 5 Aug 6 Aug 6 Aug 6 Aug 7 Aug

Code AXA AWC NWS TAH RMD

Company

Y/E

AXA Asia Pacific Alumina Ltd News Corporation Tabcorp Holdings ResMed Inc

Dec Dec Jun Jun Jun

NPAT (pre abs) AUD AUD USD AUD USD

273.0 -16.9 1756.0 494.1 146.3

(Abs)

Div

EPS

2H div

Long Product

Short Product

10.0c 0.0c 13.2c 62.9c 0.0c

26.3c -2.4c 67.1c 89.8c 189.6c

18.5c 0.0c 7.2c 27.9c 0.0c

AXAKZE

0 -5675 0 0

AXAKZQ AWCKZR NWSKZR TAHKZQ RMDKZS

NWSKZI TAHKZF RMDKZD

AXA Asia Pacific (AXA) – Operationally weaker • AXA’s result was weaker than RBS forecast with operating earnings $256mln vs forecast of $266mln, however the stock traded higher as the focus will shift to the upside potential in FY10 Security

ExPrc

Stop Loss

CP

ConvFac

Delta

Description

AXAKZE

$2.29

$2.51

Long

1

1

MINI Long

AXAKZQ

$5.21

$4.70

Short

1

1

MINI Short

Alumina Limited (AWC) – aluminium market recovery signs • 1H09 underlying loss of A$15m, inline with RBS forecast of a $16.9m loss. No dividend declared as expected. Outlook comments are optimistic. While the aluminium market globally remains uncertain, there is evidence of manufacturing destocking coming to an end, and early positive signs of a recovery in some end markets. Security

ExPrc

AWCKZR

Stop Loss $2.98

CP

$2.39

ConvFac Short

Delta

1

Description 1

MINI Short

News Corporation (NWS) – FY10 consensus looks to low • NWS reported FY09 adjusted operating profit of US$3.56bn, in line with guidance for a 30% decline, however, operating profit was US$3.25bn after including US$312m of restructuring charges, mainly in the FIM division. Overall operating profit was therefore 6% below RBS US$3.4bn forecast • Importantly NWS provided guidance for high single digit operating profit growth in FY10, from a base of US$3.44bn. This implies operating profit of cUS$3.7-3.8bn in FY10. Bloomberg consensus is at currently at the low end of this range (US$3.70bn, 7% growth) which means there may be upgrades to come through Security

ExPrc

Stop Loss

CP

ConvFac

Delta

Description

NWSKZI

$7.6650

$8.37

Long

1

1

MINI Long

NWSKZR

$17.8955

$16.14

Short

1

1

MINI Short

Tabcorp (TAH) – largely in line with expectations • TAH reported FY09 normalised NPAT of A$496.1m, up 1.2% on the pcp after adjusting for amortisation charges, in line with RBS forecast (A$494.1m). EBITDA of A$1036.1 was 2.5% below RBS forecasts primarily as a result of a weaker than expected result from wagering. TAH was assisted by a lower tax rate in 2H09 and declared a final dividend of 30cps (fully franked), which was was slightly above RBS Research forecast. Security

ExPrc

Stop Loss

CP

ConvFac

Delta

Description

TAHKZF

$5.3511

$5.85

Long

1

1

MINI Long

TAHKZG

$4.6196

$5.05

Long

1

1

MINI Long

TAHKZP

$10.9220

$9.85

Short

1

1

MINI Short

TAHKZQ

$9.7364

$8.78

Short

1

1

MINI Short

ResMed Inc (RMD) • Rollout of new products and favourable currency movements on costs are likely to see RMD deliver a solid result • Play long via RMDKZD or short through RMDKZS Security

ExPrc

Stop Loss

CP

ConvFac

Delta

Description

RMDKZD

$3.7237

$4.07

Long

1

1

MINI Long

RMDKZS

$7.6125

$7.24

Short

1

1

MINI Short

RBS Round Up Corner RBS Monthly Market Review – July 2009

Sector performance – July 2009 Sector

Price curr

S&P/ASX 200 200 Cons Discret 200 Energy 200 Healthcare 200 Info Technol 200 Materials 200 Industrials 200 Property 200 Cons Staples 200 Telecoms 200 Utilities 200 Fin Ex Property

Price

Absolute performance (%)

-12m 1m

3m

6m 12m

Relative performance (%) 1m

3m

4244.0 4977.4 7.3 12.3 19.9 -14.7 1432.5 1570.6 9.4 14.9 31.4 -8.8 2.1 2.7 15338.6 17191.5 4.1 11.2 28.5 -10.8 -3.2 -1.1 7875.8 8290.6 -3.3 -3.3 -13.5 -5.0 -10.6 -15.5 570.8 500.7 7.8 10.1 37.0 14.0 0.5 -2.1 11098.8 14052.4 9.5 16.5 28.9 -21.0 2.2 4.2 3297.0 4719.6 10.0 15.6 10.8 -30.1 2.7 3.4 767.0 1340.5 2.4 9.0 -5.5 -42.8 -4.9 -3.3 7105.7 7082.0 6.9 5.9 15.5 0.3 -0.4 -6.4 1220.3 1550.3 4.1 5.9 -5.6 -21.3 -3.2 -6.4 4216.2 5399.6 6.3 -2.1 -1.3 -21.9 -1.0 -14.3 4661.5 4834.4 8.5 14.7 29.4 -3.6 1.2 2.5

6m 12m 11.6 8.6 -33.4 17.2 9.0 -9.1 -25.4 -4.3 -25.5 -21.1 9.5

5.9 4.0 9.7 28.7 -6.3 -15.4 -28.0 15.1 -6.6 -7.2 11.2

Priced at close of business 31 July 2009. Source: IRESS

Outlook and portfolio positioning We believe we are in the ‘late stage’ of the recession. For some time we have expected the equity market to move largely sideways for the rest of the year due to a very benign economic outlook. With somewhat more optimistic growth signs emerging, reporting season will be an important reference point to assess whether they are having an impact at the business coal face. We continue to reposition our model portfolio for economic recovery. Australia's performance vs the world In local currency, the All Ordinaries (+7.6%) outperformed the US S&P 500 (7.4%), but underperformed the regional MSCI ex Japan Index (+12.0%) and the World MSCI ex Australia Index (+8.3%). The best and worst performing sectors All sectors posted a positive performance for the month of July except Health Care (-3.3%). The best performers were Industrials (+10.0%), Materials (+9.5%), Consumer Discretionary (+9.4), Financials ex Property (+8.5%) and Information Technology (+7.8%). The top five and bottom five performing S&P/ASX 200 stocks The top five performers from the S&P/ASX 200 (price) Index for the month included Mincor Resources (+41.9%), Pacific Brands (+39.2%), WA Newspapers (+38.3%), Goodman Group (+37.8%) and Eastern Star Gas (+36.3%). The bottom five performers were Carnarvon Petroleum (-17.2%), Hastings Diversified (-16.5%), St Barbara (-15.2%), Transpacific Industries (-14.6%) and Tower Australia (-11.4%).

For further information please do not hesitate to contact us on the details below

Contact Equities Structured Products & Warrants Toll free

1800 450 005

www.rbs.com.au/warrants

Ben Smoker

02 8259 2085

[email protected]

Robbie Taylor

02 8259 2018

[email protected]

Ryan Corrigan

02 8259 2425

[email protected]

Elizabeth Tian

02 8259 2017

[email protected]

Tania Smyth

02 8259 2023

[email protected]

Robert Deutsch

02 8259 2065

[email protected]

Mark Tisdell

02 8259 6951

[email protected]

Trading Products Team

Investment Products Team

Disclaimer: The information contained in this report has been prepared by RBS Equities (Australia) Limited (“RBS”) (ABN 84 002 768 701) (AFS Licence No 240530) (“RBS Equities”) and has been taken from sources believed to be reliable. RBS Equities does not make representations that the information is accurate or complete and it should not be relied on as such. Any opinions, forecasts and estimates contained in this report are the views of RBS Equities at the date of issue and are subject to change without notice. RBS Equities and its affiliated companies may make markets in the securities discussed. RBS Equities, its affiliated companies and their employees from time to time may hold shares, options, rights and warrants on any issue contained in this report and may, as principal or agent, sell such securities. RBS Equities may have acted as manager or co-manager of a public offering of any such securities in the past three years. RBS Equities’ affiliates may provide, or have provided banking services or corporate finance to the companies referred to in this report. The knowledge of affiliates concerning such services may not be reflected in this report. This report does not constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment. RBS Equities, in preparing this report, has not taken into account an individual client’s investment objectives, financial situation or particular needs. Before a client makes an investment decision, a client should, with or without RBS Equities’ assistance, consider whether any advice contained in this report is appropriate in light of their particular investment needs, objectives and financial circumstances. It is unreasonable to rely on any recommendation without first having consulted with your adviser for a personal securities recommendation. This information contained in this report is general advice only. RBS Equities, its officers, directors, employees and agents accept no liability for any loss or damage arising out of the use of all or any part of the information contained in this report. This Information is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. If you are located outside Australia and use this Information, you are responsible for compliance with applicable local laws and regulation. This report may not be taken or distributed, directly or indirectly into the United States, or to any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1993, as amended. The warrants contained in this report are issued by RBS Group (Australia) Pty Limited (ABN 78 000 862 797, AFS Licence No. 247013). The Product Disclosure Statements relating to these warrants are available upon request from RBS Equities or on our website www.rbs.com.au/warrants © Copyright 2009. RBS Equities. A Participant of the ASX Group.

Explanation of Warrant Tables: Security – refers to the code ascribed to the warrant, ExDate – refers to the date on which the warrant expires or is reset, ExPrc – refers to the exercise price, or second instalment payment, CP – tells you whether the warrant is a call or a put, ConvFac – the conversion factor of the warrant which tells you how many warrants you need to exercise in order to take possession of 1 share, Delta – tells you how much the warrant will move for a 1c move in the underlying security, Description – Tells you the type of warrant. All charts taken from IRESS unless indicated otherwise