Construction Work Done, Australia, Preliminary, Dec 2009
DECEMBER KEY POINTS
VALUE OF WORK DONE, CHAIN VOLUME MEASURES
TOTAL CONSTRUCTION

• The trend estimate for total construction work done rose 2.5% in the December quarter 2009
• The seasonally adjusted estimate for total construction work done rose 2.6%, to $40,099.8m, in the December quarter, and now shows a rise of 1.6% in the September quarter.

BUILDING

• The trend estimate for total and non-residential building work done should be interpreted with caution. See the data notes on page 2 of this publication
• The seasonally adjusted estimate of building work done rose 6.1% to $19,337.9m, in the December quarter. Residential building fell 2.9% to $10,322.8m and non-residential building rose 18.6%, to $9,015.1m.

ENGINEERING

• The trend estimate for Engineering work done rose 2.7% in the current quarter
• The seasonally adjusted estimate for Engineering work done fell 0.5%, to $20,761.9m, in the December quarter.

The Australian market fell at the open, then after an early bounce, trended downwards, before bouncing again mid-afternoon. The All Ordinaries finished Tuesday only 2 points down.

The S&P/ASX 200 closed at trivial 1 point up with all sectors finishing either marginally up or marginally down for the day. BHP Billiton (-$0.05) was offset by Rio Tinto (+$0.24). Commonwealth Bank (+$0.42), Westpac (+$0.24), ANZ (+$0.19) finished slightly up, while National Australia Bank (+$0.32) closed slightly down. In percentage terms, significant movers included i-Soft (-$0.04), Gunns (-$0.04) and Charter Hall (+$0.04).

Companies reporting FY09 financial results on Tuesday included Oil Search (+$0.11), GPT Group (+$0.01), and APN News & Media (-$0.07). Companies reporting 1H10 results included Amcor (+$0.07), Sonic Healthcare (-$0.30), Aristocrat Leisure (-$0.10), Cabcharge (-$0.09); Consolidated Media (-$0.01); Southern Cross Media (-$0.02); Boom Logistics (-$0.01), and NRW Holdings (-$0.08). Oil Search reported NPAT of US$133.7M, down on US$313.4M in FY08. Adjusted NPAT was $99.6M, down 59% on pcp. The decline was driven by a 35% fall in the average realised oil price combined with 7% lower oil sales. GPT announced FY09 adjusted NPAT of $375.8M, up 3% on guidance from May 2009. GPT’s statutory result was a loss of $1,070.6M, which included property valuation movements. Gearing was 23.5%, a considerable buffer to its covenant level of 40%. NTA reduced to $0.69 per share as a result of the dilutive $1.7B capital raising. GPT is targeting FY10 distribution in excess of 3cps and aims to achieve a 1-for-5 consolidation of shares on issue.

The Australian market climbed at the open then traded in a narrow range for the remainder of the day. The All Ordinaries finished Monday trading 76 points stronger.

Index                                      Close  Chg     %Chg
All Ordinaries                      4,733   +76.4   +1.6
ASX 200                                 4,718   +82.4   +1.8
ASX Small Ords                    2,473   +31.0   +1.3
Industrials                            3,939   +64.4   +1.7
Fin.-x-Prop Trusts                5,502   +109.0  +2.0
Materials                              12,269  +302.8  +2.5
Cons. Staple                          7,658   +144.6  +1.9
Telecom Serv.                       1,035   -48.0   -4.4
10y Bond Yield                     5.65    +0.02   +0.4

The S&P/ASX 200 closed 82 points up with all sectors except Telcos finishing in the black. Material and Energy led the way, with heavyweights BHP Billiton (+$1.16) and Rio Tinto (+$1.51) increasing. Newcrest Mining (+$1.46) had a strong day, as did Oz Minerals (+$0.08). Gunns (-$0.20) suffered after releasing its 1H10 results. Woodside Petroleum (+$0.99) and Origin Energy (+$0.55) helped boost the Energy sector (+$0.55). The banks, Commonwealth Bank (+$1.32), Westpac (+$0.66), ANZ (+0.58) and National Australia Bank (+$0.08) contributed to the market’s gain. Telstra (-$0.15) and Telecom New Zealand (-$0.06) finished lower as both traded ex-dividend.

Companies reporting financial results on Monday included Fairfax Media (+$0.02), Platinum Asset Management (+$0.04), Caltex (+$0.10), UGL (+$0.57), Challenger Financial Services (+$0.21), ING Office (+$0.02), AWE (-$0.03), Seven Network, (+$0.0), Transfield Services Infrastructure (+$0.01) and Gunns. Fairfax Media reported a 1H10 NPAT of $143.5M, compared to a loss of $375.6M (inclusive of $522.9M of impairments and significant items) in 1H09. On a like-for-like basis revenue declined 9.2% on pcp and EBITDA was down 10.8%. The company generated $225.8M of operating cash flow and reduced debt by $170.2M. An interim dividend of 1.1cps (2.0cps in 1H09) unfranked was declared. A new agreement with APN News and Media to combine the Fairfax classified brands with those of APN was revealed.

Valuations of Partially Completed Investment Properties:

The International Valuations Standards Council have released a report detailing methods of valuing investment property – Important to note: The market value of a partially completed investment property will reflect the expectations of market participants of the value of the property when complete, less deductions for the costs required to complete the project and appropriate adjustments for profit and risk. The valuation and all key assumptions used in the valuation should reflect market conditions at the valuation date. It is inappropriate to estimate the market value of a partially completed investment property solely by reference to the project plan or feasibility study produced at the commencement of the project.

The full article can be found at http://www.ivsc.org/pubs/gn17-2010.pdf

ABS Release 15/02/2010

Lending Finance, Australia, Dec 2009

DECEMBER 2009 COMPARED WITH NOVEMBER 2009:

HOUSING FINANCE FOR OWNER OCCUPATION

The total value of owner occupied housing commitments excluding alterations and additions decreased 1.4% in trend terms and the seasonally adjusted series decreased 4.7%.

PERSONAL FINANCE

The trend series for the value of total personal finance commitments decreased 0.1%. Fixed lending commitments fell 1.2%, while revolving credit commitments rose 0.9%;

The seasonally adjusted series for the value of total personal finance commitments increased 0.2%. Revolving credit commitments rose 2.2%, while fixed lending commitments fell 2.1%.

COMMERCIAL FINANCE

The trend series for the value of total commercial finance commitments decreased 0.8%. Revolving credit commitments decreased 2.1% and fixed lending commitments decreased 0.3%;

The seasonally adjusted series for the value of total commercial finance commitments was flat. Revolving credit commitments rose 3.8%, while fixed lending commitments fell 1.3%.

LEASE FINANCE

The total value of lease finance commitments increased 0.6% in trend terms and the seasonally adjusted series increased 8.7%.

The Australian market trended down throughout the morning then rebounded, offsetting most of the morning’s losses. The All Ordinaries finished Thursday trading 13 points lower.

The S&P/ASX 200 closed 13 points down. Gains in the Health Care, Info Tech, Consumer Staples, Utilities and Telco sectors were offset by losses from the Industrial, Financial, Material, Energy and Consumer Discretionary sectors. Major miners BHP Billiton (-$0.46), Rio Tinto (-$0.82) fell. Lihir Gold (-$0.10) and Sims Metal (-$1.71) helped drag the Material sector down. Wesfarmers (+$0.95) and Coca-Cola (+$0.43) had strong days. The banks saw modest moves with Commonwealth Bank (-$0.18), Westpac (-$0.04), ANZ (-$0.02) down and National Australia Bank (+$0.04) slightly up. Qantas (-$0.24) fell heavily after reporting its 1H10 profit result.

Companies reporting financial results on Thursday included: Wesfarmers; AMP (-$0.11); Santos (-$0.14); Lihir Gold; ASX (+$1.07); Qantas; WorleyParsons (+$0.15); Sims Metal; Intoll (-$0.03); Macquarie Office (no change); Macquarie DDR (no change); Adelaide Brighton (-$0.11); Challenger Infrastructure (+$0.05); Invocare (+$0.11); PMP (+$0.025); and Austereo (+$0.04). Wesfarmers reported flat 1H10 revenue ($26.5B) and NPAT ($0.88B) on pcp. Group EBIT slumped 11% on pcp to $1.55B as Resources earnings evaporated, primarily due to contract coal prices sharply lower compared to pcp. On a brighter note, Retail earnings jumped 23% on pcp aided by a better Coles result, a strong performance from Office works and an impressive uplift in Target. Energy, and Chemicals and Fertilisers improved. Insurance, and Industrial and Safety were lower. A 1H10 dividend of 55 cps ff was declared.

Reserve Bank of Australia Release 02/02/2010

Reserve Bank Board decided to leave the cash rate unchanged at 3.75 per cent.

ABS Release 03/02/2010

International Trade in Goods and Services, Australia, Dec 2009

BALANCE ON GOODS AND SERVICES

• The trend estimate of the balance on goods and services was a deficit of $1,988m in December 2009, an increase of $198m on a revised deficit in November 2009;
• In seasonally adjusted terms, the balance on goods and services was a deficit of $2,252m in December 2009, an increase of $524m on the revised deficit in November 2009.

CREDITS (EXPORTS OF GOODS & SERVICES)

• Seasonally adjusted, goods and services credits rose $675m (4%) to $19,767m.Non-rural goods rose $571m (5%) with the coal, coke and briquettescomponent up $256m (10%), the metals (excl. non-monetary gold) component up $178m (25%) and the other mineral fuels component up $174m (13%). Rural goods rose $135m (7%) and non-monetary gold fell $46m (4%). Services credits rose $15m.

DEBITS (IMPORTS OF GOODS & SERVICES)

• Seasonally adjusted, goods and services debits rose $1,198m (6%) to $22,018m.Intermediate and other merchandise goods rose $760m (11%) with the fuels and lubricants component up $535m (26%), capital goods rose $246m (7%),non-monetary gold rose $224m (51%) and consumption goods fell $74m (1%).Services debits rose $42m (1%).