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

The Round Up
1 September 2009
Issue No. 166
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, commentary
Aussie Market Action SPI Comment, Events & Dividends
STO (STOVZJ) Trading Buy – A play on LNG
WOWKZF/WESKZT MINI Pairs Trade – WOW enters hardware
TLS (TLSSZX) MINI Trading Buy – Buy the dips
Round Up Corner NEW – Trading warrants

Equities

Move Last % Move Range Volume

ASX 200 -10.5 4479.1 -0.2% -18 to +48 $6.3 bn(H)
SPI - yesterday -12.0 4471.0 -0.3% -25 to +51 35,118(A)
Dow Jones -47.9 9496.3 -0.5% -108 to -1 Avg
S&P 500 -8.3 1020.6 -0.8% -14 to -4 Avg
Nasdaq -19.7 2009.1 -1.0% -31 to -15 Avg
FTSE

Commodities

Move Last % Today % Past Month

Oil-WTI spot -3.02 69.72 -4.2% +0.3%
Gold Spot -3.95 951.05 -0.4% -0.3%
Nickel (LME) 865.01 +15.2%
Aluminium (LME) 84.69 +4.0%
Copper (LME) 293.21 +17.1%
Zinc (LME) 84.16 +11.5%
Silver 14.90 +7.0%
Sugar +0.87 24.39 +3.7% +31.1%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) -0.29 -2.2% 12.64 14.98 -22.4 c
RIO (UK)
BLT (BHP UK)
BXB (UK) -0.8 p -0.2% £3.753 7.24 -18.9 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) -1.76 -2.7% 62.30 36.91 +10.7 c
AWC (US) -0.08 -1.4% 5.47 1.62 -5.0 c
TLS (US) -0.49 -3.4% 13.74 3.26 -0.4 c
ANZ (US) +0.61 +3.5% 17.91 21.22 -7.0 c
WBC (US) -0.16 -0.2% 102.04 24.18 -19.0 c
NAB (US) +0.35 +1.5% 23.85 28.26 -22.2 c
LGL (US) -0.11 -0.5% 23.12 2.74 -3.1 c
RMD (US) +0.12 +0.3% 45.91 5.44 -0.0 c
JHX (US) -0.65 -2.2% 28.85 6.84 -11.4 c
PDN (CAN) +0.24 +5.8% 4.39 4.75 +15.2 c

Overnight Commentary
United States Commentary
US markets recovered from their lows, but still finished in the red, after Chinese weakness hurt commodity names, and as financials
dragged on concerns that their recent recovery had gone too far too quickly. Better manaufacturing data wasn't enough to boost
indices, with Dow closing down 48pts and S&P 500 off 8.3pts.

Eco - Genrally better manufacturing data for August, from the Chicago Purchasing Manager improving to 50.0 vs 48.0 exp'd and 43.4
previous, and Milwaukee Manufacturing at 56.0 vs 48.0 exp'd and 45.0 previous, although the Dallas Manufacturing improved but still
contracting at -9.1% vs -14.0% exp'd and -23.4% previous.

Resources - Alcoa lost 3.6% and Caterpillar fell 3% as the LME exchange was closed but Shanghai tumbled on concerns of a
slowdown and lending curbs will limit growth. Crude also fell below the $70/barrel level, Freeport-McMoRan lost 3.8% and ExxonMobil
fell 1.4%.

Financials - AIG lost 9.8% to top the S&P 500 losses after concerns over its valuations as Barron's called its stock overpriced, after the
shares more than tripled in August. Elsewhere Citi down 4.4%, BoA lost 2.2% and AmEx fell 1.2%.

Energy - Baker Hughes Inc lost 9.6%, to be the worst on the S&P 100, after the world's third-largest oilfield-services provider agreed to
buy BJ Services for $5.5bn, a 16% premium for the natural-gas and deepwater bsiness. BJ Services rose 4.1%.

Disney - Walt Disney fell 3% after it announced ithad agreed to buy Marvel Entertainment for $4bn in cash and scrip, sending the
comic book maker surging 25%.

Financial - KKR Financial Holdings, the debt-affiliate of buyout firm KKR & Co, advanced 19% after it was raised to 'market outperform'
on improved liquidity, net cashflows to shareholders and positive trends in credit markets.

United Kingdom & Europe Commentary

European bourses fell after the Shanghai Composite market plunged 7%. The FTSE Eurofirst 300 dropped 0.65%, the DAX was off
1.1% with the CAC also off 1.1%. London was closed for a public holiday.

Euro Banks - Falling global equity markets did little to help the banks. BNP was off 1.7%, SocGen dropped 1%, Deutsche Bank was
2.5% lower and Commerzbank ended down 1.3%. Greek Banks were hit hard by a poor retail sales number.

Industrials - HeidelbergCement fell 2.5% after recently announcing China and India were improving. Holcim fell 1.2%, Bouygues
dropped 1.4%. Norwegian solar power group Renewable Energy Corp which recently announced a new plant in Singapore sank 4.6%.
Resources Commentary
Miners - Metal and mining groups were lower. French miner Eramet dropped 2.6%, aluminium producer Norsk Hydro fell 2.9% and
ArcelorMittal was off 2.8%.

Energy - Crude was hit with the China weakness falling below $70 per barrel. Total fell 0.8%, Statoil was off 2.9% and Repsol ended
1% lower.

SPI Commentary
The SPI traded down 12pts or 0.27% to 4471. Open at 4501 with a high of 4534 and a low of 4458. Volume 34,050. Overnight the SPI
traded down 10pts to 4461.

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 TDMI inflation gauge, HIA new home sales, RBA private sector credit, wages bill, real business sales, company profits,
real business inventories, small business profits
US Chicago PMI
Tuesday AUS AIG/PWC manufacturing PMI, building approvals, real net exports, current account balance, real public demand, RBA
cash rate decsiion
US
Wednesday AUS Real GDP
US ISM, pending home sales, construction spending, ADP employment report
Thursday AUS AIG/CBA services PSI, trade balance
US US FOMC minutes
Friday AUS
US Non farm payrolls, unemployment rate, average hourly earnings, consumer credit
*Dates are indicative only and may change

Upcoming Dividends

ExDivDate Security Description Div (c) Yield Frk(%) PayDate

2-Sep-09 ALL Aristocrat Leisure 4.5 3.57% 100 29-Sep-09
2-Sep-09 TTS Tattersalls Limited 11 8.47% 100 2-Oct-09
3-Sep-09 NWS News Corp 6 0.9% 0 14-Oct-09
4-Sep-09 AGK AGL Energy 28 3.87% 100 30-Sep-09
7-Sep-09 AMP AMP Limited 14 4.72% 50 16-Oct-09
Trading Buy:

Santos Limited (STOVZJ) – A play on LNG

STO made a move to $16 yesterday where it found some resistance and closed at $15.80. Look for the stock to
consolidate its recent move up before moving to $16.50 which was resistance in March. RBS Research have a buy
recommendation on STO with a $16.50 target price. STO reported NPAT of $102mln which beat consensus. The stock
went ex dividend 22c and will not fully underwrite the DRP which suggests that the company has a strong funding
position. Oil and gas stocks have been strong following results, with STO underperforming WPL and OSH. STO remains
RBS Research favourite pick. Buy STOVZJ for a bounce to $16.50

Source: IRESS

STO has been moving higher since July and recently broke resistance at $15. The stock now looks headed to its march
high of $16.50 which is also RBS Research target price.

STO has transformed into an LNG stock with two recent deals being added to the portfolio of potential LNG
developments, bringing the total number of possible LNG assets, at differnent stages of development, up to five. Given
this new strategic direction, STO appears to predominantly position itself increasingly as an LNG player. RBS Research
believe that this makes the company attractive as a target to international oil companies seeking to participate in the LNG
race from an early stage.

RBS MINIs over STO

Security ExPrc Stop Loss CP ConvFac Delta Description

STOVZJ 24-Sep-09 $ 16.00 Call 4 0.10 Trading Call Warrant
STOVZK 29-Oct-09 $ 14.00 Call 4 0.20 Trading Call Warrant
STOVZY 24-Sep-09 $ 14.00 Put 4 -0.03 Trading Put Warrant
STOVZZ 29-Oct-09 $ 13.00 Put 4 -0.02 Trading Put Warrant

RBS Warrants over STO

Security ExDate ExPrice CP ConvFac Delta Description

STOKZD $ 8.8526 $ 9.93 Long 1 1 MINI Long
STOKZE $ 7.8670 $ 8.85 Long 1 1 MINI Long
STOKZT $22.5094 $ 20.47 Short 1 1 MINI Short
STOKZU $20.5563 $ 18.73 Short 1 1 MINI Short
MINI Pairs Trade:

Woolworths (WOWKZF)/ Wesfarmers (WESKZT) – WOW enters hardware

WOW announced to the market that they plan to enter the Australian hardware and home improvement market. This is a
logical step in WOW’s domestic growth profile and RBS Research believe it could add $1.25 - $1.75 to WOW’s valuation.
Given WES outeperformance over 2009 compared to WOW and the potential market share loss in their Bunnings
business, we believe the way to trade the news is to go long WOW and short WES through WOWKZF and WESKZT

Source: IRESS

• Woolworths’ intends to acquire, through a joint venture with US home improvement retailer Lowe’s, hardware
wholesaler Danks for an enterprise value of A$87m (securing immediate scale, infrastructure and expertise), as
well as establish a Big Box H&HI format (also via the JV), to compete directly with Bunnings.
• Investment and proceeds in the JV are to be split two-thirds Woolworths and one-third Lowe’s, and RBS Research
estimate cA$3.5bn in sales and cA$330m in JV EBIT is possible should the company achieve its plan of 150 sites
over five years
• RBS Research believe a successfully established big box format could enhance valuation $1.25 - $1.75 per share

RBS MINIs over WOW

Security ExPrc Stop Loss CP ConvFac Delta Description

WOWKZD $20.1875 $ 21.01 Long 1 1 MINI Long
WOWKZE $18.5064 $ 19.27 Long 1 1 MINI Long
WOWKZF $23.6341 $ 24.59 Long 1 1 MINI Long
WOWKZR $37.1202 $ 35.13 Short 1 1 MINI Short
WOWKZT $34.2012 $ 32.52 Short 1 1 MINI Short

RBS MINIs over WES

Security ExPrc Stop Loss CP ConvFac Delta Description

WESKZG $12.7721 $ 14.63 Long 1 1 MINI Long
WESKZH $10.5496 $ 12.20 Long 1 1 MINI Long
WESKZT $29.6274 $ 27.24 Short 1 1 MINI Short
MINI Trading Buy:

Telstra Corporation (TLSKZD) – Buy the dip

Yesterday TSL traded back down to its medium term uptrend line having gone ex dividend 14c last week and post the
Future Fund offering 498mln TLS shares at $3.47 (cum dividend). RBS Research consider the Future Fund selldown a
good thing for shareholders despite the ongoing overhang. Use the pullback as a buying opportunity. RBS has a BUY on
TLS with $4.50 target price. Buy TLSKZD

Source: IRESS

Telstra Result points and fundamentals

• Broadband ARPU up 6.5% to A$57.70. MBB SIOs doubled to 1.05m, helping lift mobile ARPU 4.8% to A$51.84
• Sales of IP-based products increased at double-digit rates. With the rate of PSTN erosion reducing in 2H09 (cf
1H09) the speed-driven revenue lines helped keep total revenue growth at 2.7%.
• Maintaining comparable revenue growth in FY10 may be harder as unemployment rises, the A$ strengthens and
Sensis sales face a tougher business environment.
• The company says achieving its FY10 targets ‘would give us significant excess free cashflow, and all the
flexibility that brings’. We think there is enough flexibility to contribute to NBN Co, on the right terms, and still pay
an extra 2cps in dividends fully franked.
• Key downside risks include further margin contraction, tougher regulation and lower access prices.
• Upside risks include faster sales recovery, better cost control and higher access prices. Regulatory issues may
be clearer when proposed legislation is tabled, we think by September.

RBS MINIs over TLS

Security ExPrc Stop Loss CP ConvFac Delta Description

TLSKZC 260.58 274 Long 1 1 MINI Long
TLSKZD 289.16 306 Long 1 1 MINI Long
TLSKZP 449.9 405 Short 1 1 MINI Short

RBS Warrants over TLS

Security ExDate ExPrice CP ConvFac Delta Description

TLSJZB 29-Oct-09 250 Call 1 0.88 HOT Instalment
TLSIZA 28-Jan-10 250 Call 1 0.95 HOT Instalment
TLSIZQ 14-Jun-10 250 Call 1 1 Rolling Instalment
TLSIZR 14-Jun-10 225 Call 1 1 Rolling Instalment
TLSSZX 4-Feb-19 193.88 Call 1 1 Self Funding Instalment
TLSSZZ 30-Jun-17 255.18 Call 1 1 Self Funding Instalment
RBS Round Up Corner:

NEW – Trading Warrants

Security ExDate ExPrice CP ConvFac

ANZWZE 17/12/2009 24.00 Call 4
BHPVZM 17/12/2009 36.00 Call 4
BHPVZN 17/12/2009 32.00 Call 4
CBAVZH 17/12/2009 46.00 Call 5
CBAVZI 17/12/2009 52.00 Call 5
CSLWZA 17/12/2009 32.00 Call 4
MQGVZE 17/12/2009 55.00 Call 5
NABWZF 17/12/2009 30.00 Call 4
NCMVZA 26/11/2009 32.00 Call 4
RIOWZN 17/12/2009 70.00 Call 6
WBCVZM 26/11/2009 27.00 Call 4
WOWWZA 26/11/2009 28.00 Call 4
WPLWZN 17/12/2009 55.00 Call 5
ANZWZU 17/12/2009 21.00 Put 4
BHPWZS 17/12/2009 32.00 Put 4
CBAWZW 17/12/2009 45.00 Put 5
MQGVZQ 17/12/2009 50.00 Put 5
NABWZR 17/12/2009 22.00 Put 4
NCMWZW 26/11/2009 26.00 Put 4
WBCVZV 26/11/2009 23.00 Put 4
WOWWZP 26/11/2009 26.00 Put 4
WPLWZZ 17/12/2009 48.00 Put 5

MINIs approaching stop loss

Approx. MINI Share:

Underlying MINI Code MINI Type Strike Stop Loss Share Price
Value Stop Loss

TOL TOLKZP Short $8.99 $8.08 $ 7.97 $ 1.02 1.4%

XJO XJOKZX Short 4,891.28 4,646.00 4,501.00 $ 3.90 3.2%
CBA CBAKZT Short $50.34 $47.53 $ 46.00 $ 4.34 3.3%
CPU CPUKZP Short $11.79 $10.60 $ 10.11 $ 1.68 4.8%
SUN SUNKZQ Short $8.72 $8.23 $ 7.83 $ 0.89 5.1%
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
Trading Products Team
Ben Smoker 02 8259 2085 ben.smoker@rbs.com
Robbie Taylor 02 8259 2018 robbie.taylor@rbs.com
Ryan Corrigan 02 8259 2425 ryan.corrigan@rbs.com
Investment Products Team
Elizabeth Tian 02 8259 2017 elizabeth.tian@rbs.com
Tania Smyth 02 8259 2023 tania.smyth@rbs.com
Robert Deutsch 02 8259 2065 robert.deutsch@rbs.com
Mark Tisdell 02 8259 6951 mark.tisdell@rbs.com

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
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in preparing this report, has not taken into account an individual client’s investment objectives, financial situation or particular needs. Before a client
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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