Final Results
BLACKROCK COMMODITIES INCOME INVESTMENT TRUST plc
Annual Report 30 November 2011
Performance Record
Financial Highlights
As at As at
30 November 30 November Change
2011 2010 %
Assets
Net assets (£'000) 118,642 125,848 -5.7
Net asset value per ordinary share 131.08p 139.05p -5.7
- with income reinvested - - -2.0
Ordinary share price (mid-market) 127.75p 143.00p -10.7
- with income reinvested - - -7.1
Year ended Year ended
30 November 30 November Change
2011 2010 %
Revenue
Net revenue after taxation (£'000) 5,321 4,480 18.8
Revenue return per ordinary share 5.88p 5.85p 0.5
------ ------- -----
Interim dividends
1st interim 1.400p 1.375p 1.8
2nd interim 1.400p 1.375p 1.8
3rd interim 1.400p 1.375p 1.8
4th interim 1.550p 1.475p 5.1
------ ------ -----
5.750p 5.600p 2.7
====== ====== =====
Special dividends
1st special - 1.00p
------ ------
2nd special - 0.52p
====== ======
Total dividends paid and payable 5.750p 7.12p
====== ======
Chairman's Statement
The year under review has been challenging for investment. The Company's net
asset value ("NAV") per share returned -2.0% and the share price returned
-7.1%. Since the launch of the Company in December 2005 the NAV has returned
73.5% and the share price 65.8% (all percentages calculated in sterling
terms with income reinvested).
Since the year end, the Company's NAV has increased by a further 2.9%
and the share price by 4.2%.
Revenue return and dividends
The Company's revenue return per share for the year amounted to 5.88 pence
(2010: 5.85 pence). As set out in the Company's prospectus dated 22 November
2005, it is the Company's intention to pay four quarterly dividends, details of
which are set out in note 8. It was the Company's aim to pay dividends
amounting to at least 5.60 pence for the year ended 30 November 2011 and we are
pleased to have exceeded this target by paying quarterly dividends amounting to
5.75 pence per share in total in respect of the year (2010: 5.60 pence).
It is the Company's aim to pay dividends amounting to at least 5.75 pence per
share for the year ending 30 November 2012. This is a target and should not be
interpreted as a profit forecast. This represents a yield of 4.5% based on the
share price as at the close of business on 30 November 2011.
Tender Offer
The Directors of the Company have the discretion to make semi-annual tender
offers at the prevailing NAV, less 2% for up to 20% of the issued share capital
in August and February of each year.
The Board announced on 21 June 2011 that it had decided not to proceed with the
tender offer in August 2011.
On 6 December 2011 the Board announced that the semi-annual tender offer in
February 2012 would not be implemented as its ordinary shares had traded at an
average discount to NAV of 0.3% during the six months to 30 November 2011.
Given that this is better than a discount of 2% to NAV, the price at which any
tender offer would be made, the Board concluded that it would not be in the
interests of shareholders to implement the tender offer as at 28 February 2012.
A resolution for the renewal of the Company's semi-annual tender authority will
be put to shareholders at the forthcoming annual general meeting.
Discount and share buy backs
The Directors recognise the importance to investors of ensuring that the
Company's share price is as close to its underlying NAV as possible.
Accordingly, the Directors monitor the share rating closely and will consider
share repurchases in the market if the discount to NAV widens significantly.
The Directors have the authority from shareholders to buy back up to 14.99% of
the Company's issued share capital. This authority, which has not so far been
utilised, expires on the conclusion of the 2012 AGM, when a resolution will be
put to shareholders to renew it.
Gearing
The Company operates a flexible gearing policy which depends on prevailing
conditions. The maximum gearing used during the year was 3.8% and at
30 November 2011 gearing was 1.8%.
Annual General Meeting
The Company's Annual General Meeting will be held at 10.30 a.m. on Tuesday
13 March 2012 at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N
2DL. The Investment Manager will make a presentation to shareholders on the
Company's progress and the outlook for the year ahead.
Outlook
Against a backdrop of economic and market uncertainty driven by the Eurozone
crisis and weak economic data out of China and the US, commodity equities are
currently trading at relatively low valuations. Producers continue to
generate strong cash flows and earnings which are reflected in progressive
returns from our portfolio. Given its significant share of global consumption, the
Chinese economy represents a key factor driving the performance of commodities
markets. Barring an economic collapse in China, we remain cautiously optimistic
about the long term prospects for commodities markets, although we anticipate a
year of continuing high volatility ahead.
Alan Hodson
Chairman
20 January 2012
Principal risks
The key risks faced by the Company are set out below. The Board regularly
reviews and agrees policies for managing each risk, as summarised below.
- Performance risk - The Board is responsible for deciding the investment
strategy to fulfil the Company's objectives and monitoring the performance of
the Investment Manager. An inappropriate strategy may lead to poor performance.
To manage this risk the Investment Manager provides an explanation of
significant stock selection decisions and the rationale for the composition of
the investment portfolio. The Board monitors and maintains an adequate spread
of investments in order to minimise the risks associated with particular
countries (including the risk of government intervention and confiscation of
assets) or factors specific to particular sectors, based on the diversification
requirements inherent in the Company's investment policy.
- Income/dividend risk - The amount of dividends and future dividend growth
will depend on the Company's underlying portfolio. Any change in the tax
treatment of the dividends or interest received by the Company (including as a
result of withholding taxes or exchange controls imposed by jurisdictions in
which the Company invests) may reduce the level of dividends received by
shareholders. The Board monitors this risk through the receipt of detailed
income forecasts and considers the level of income at each meeting.
- Regulatory risk - The Company operates as an investment trust in accordance
with the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010.
As such, the Company is exempt from capital gains tax on the profits realised
from the sale of its investments. The Investment Manager monitors investment
movements, the level and type of forecast income and expenditure and the amount
of quarterly dividends to ensure that the provisions of Chapter 4 of Part 24 of
the Corporation Tax Act 2010 are not breached and the results are reported to
the Board at each meeting.
The Company must also comply with the provisions of the Companies Act 2006 and,
as its shares are admitted to the Official List, the UKLA Listing Rules, the
Disclosure and Transparency Rules and the Prospectus Rules. A breach of the
Companies Act 2006 could result in the Company and/or the Directors being fined
or the subject of criminal proceedings. Breach of the UKLA Listing Rules could
result in the Company’s shares being suspended from listing, which in turn would
breach the requirements of Chapter 4 of Part 24 of the Corporation Tax Act 2010.
The Board relies on the services of its professional advisers and its Company
Secretary to ensure compliance with all relevant regulations. The Company Secretary
has stringent compliance procedures in place and monitors regulatory developments
and changes.
- Operational risk - In common with most other investment trust companies, the
Company has no employees. The Company therefore relies upon the services
provided by third parties and is dependent on the control systems of the
Investment Manager and the Company's other service providers. The security, for
example, of the Company's assets, dealing procedures, accounting records and
maintenance of regulatory and legal requirements, depend on the effective
operation of these systems. These are regularly tested and monitored and an
internal control report, which includes an assessment of risks together with
procedures to mitigate such risks, is prepared by the Investment Manager and
reviewed by the Audit and Management Engagement Committee at least twice a
year. The custodian, Bank of New York Mellon (International) Limited ("BNYM")
and the Investment Manager also produce internal controls reports on a
quarterly and annual basis respectively, which are reviewed by their respective
auditors and give assurance regarding the effective operation of controls.
- Market risk - Market risk arises from volatility in the prices of the
Company's investments. It represents the potential loss the Company might
suffer through holding investments in the face of negative market movements.
The Board considers asset allocation, stock selection, unquoted investments and
levels of gearing on a regular basis and has set investment restrictions and
guidelines which are monitored and reported on by the Investment Manager. The
Board monitors the implementation and results of the investment process with
the Investment Manager.
- Liquidity risk - Investments in the Company's portfolio are subject to
liquidity risk, particularly from any unquoted investments. The Company may
also invest in smaller capitalisation companies or the securities markets of
developing countries which are not as large as the more established securities
markets and have substantially less trading volume, which may result in a lack
of liquidity and higher price volatility.
- Financial risk - The Company's investment activities expose it to a variety
of financial risks that include market price risk, foreign currency risk and
interest rate risk. These factors are taken into consideration by the Directors
when determining the valuation of unquoted holdings. Further details are
disclosed in note 18 of the annual report, together with a summary of the policies
for managing these risks and liquidity and credit risks.
Related party transactions
The Investment Manager is regarded as a related party and details of the
investment management fee payable is set out in note 4.
The Board consists of five non-executive Directors, all of whom, with the
exception of Mr Ruck Keene who is an employee of the Investment Manager, are
considered to be independent by the Board. None of the Directors has a service
contract with the Company. For the year ended 30 November 2011, the Chairman
received an annual fee of £28,000, the Chairman of the Audit and Management
Engagement Committee received an annual fee of £21,000 and each of the other
Directors received an annual fee of £18,000. Mr Ruck Keene waived the entitlement
to his fees. With effect from 1 December 2011 the annual remuneration of the
Chairman was increased to £30,000, the Chairman of the Audit and Management
Engagement Committee to £23,000 and the other Directors to £20,000.
Four members of the Board hold shares in the Company. Alan Hodson holds 150,000
ordinary shares, David Gibbs holds 22,454 ordinary shares, Humphrey van der
Klugt holds 35,000 ordinary shares and Jonathan Ruck Keene holds 14,000
ordinary shares. Michael Merton does not hold any shares in the Company at
this time.
Statement of Director's Responsibilities
In accordance with Disclosure and Transparency Rule 4.1.12, the Directors also
confirm to the best of their knowledge and belief that:
• the financial statements, prepared in accordance with IFRS as adopted
by the European Union, give a true and fair view of the assets, liabilities,
financial position and profit/(loss) of the Company and the Group; and
• this Annual Report includes a fair review of the development and
performance of the business and the position of the Company and the Group,
together with a description of the principal risks and uncertainties that it
faces.
For and on behalf of the Board of Directors
Alan Hodson
Chairman
20 January 2012
Investment Manager's Report
The Investment Manager reports that for the year to 30 November 2011, the
Company's NAV returned -2.0% and the share price returned -7.1%. Over the same
period, the HSBC Global Mining and MSCI World Energy indices returned -12.8% and
10.4% respectively, while the FTSE All Share Index returned 2.6%. (All data are
in sterling with income reinvested).
Commodity Market Overview
Fortunes were mixed in commodity markets during the year under review, as shown
in the following table. Base metals were weak, as were those precious metals
with significant industrial exposure, gold behaved as expected, making gains
in an environment of uncertainty. Coal prices finished the period higher
and iron ore prices fell. In the energy sector, oil prices were strong.
The year started positively and by the close of the interim period prices were
stronger across the board, with the exception of uranium. Generally, demand had
been strong not only in emerging economies, but also in the OECD where the
recovery in commodity consumption had been better than expected. Meanwhile,
supply growth remained constrained and capacity utilisation had been sub-par,
by example due to weather related events. However, the market had turned
markedly bearish by the second half as investors refocused their attention on
the near-term headwinds facing capital markets. The inability of European
politicians to solve the debt crisis, together with worsening economic data and
the prospect of downgrades to Chinese growth saw several commodities close well
below their highs of 2011.
30 November 30 November
Commodity 2010 2011 % Change
Base Metals (US$/tonne)
Aluminium 2,255 2,103 -6.7
Copper 8,418 7,860 -6.6
Lead 2,214 2,091 -5.6
Nickel 22,998 17,492 -23.9
Tin 24,497 20,875 -14.8
Zinc 2,105 2,073 -1.5
Precious Metals (US$/oz)
Gold 1,385.2 1,745.9 26.0
Silver (USc/oz) 2,713.0 3,135.0 15.6
Platinum 1,658.0 1,558.0 -6.0
Palladium 697.0 620.0 -11.0
Energy
Oil (WTI) (US$/Bbl) 1 84.1 100.4 19.4
Oil (Brent) (US$/Bbl) 2 86.1 111.2 29.2
Natural Gas (US$/MMBTU) 3 4.15 3.54 -14.7
Uranium (US$/lb) 4 59.9 52.3 -12.7
Bulk Commodities (US$/tonne)
Iron ore 5 167.8 147.0 -12.4
Coking coal 6 228.0 263.6 15.6
Thermal coal 7 108.5 112.0 3.2
Potash (US$/st) 8 473.0 533.0 12.7
Equity Indices
HSBC Global Mining Index (US$) 682.5 590.9 -13.4
HSBC Global Mining Index (£) 438.2 375.7 -14.3
MSCI World Energy Index (US$) 222.6 242.0 8.7
MSCI World Energy Index (£) 142.9 153.9 7.7
1. West Texas Intermediate
2. Brent
3. Henry Hub
4. Nuexco Restricted, U3O8
5. CFR China (Bloomberg)
6. HCC, CFR China (Macquarie)
7. FOB Newcastle (Macquarie)
8. Standard Muriate, Saskatchewan
Source: Datastream. Data are on a capital basis only.
Base metal prices, having made some good gains early in the year, finished the
period down 12.8% (in US Dollar terms, as measured by the MG Base Metal Price
Index). The strength we saw had been driven by supply and demand imbalances.
Copper demand, for example, expanded by 9% in 2010 to 18.7 million tonnes, a
record level. However, as the market focussed on worsening economic data out of
several major economies, prices started to drift lower. The market came under
severe pressure in the third quarter amidst a broad collapse across many asset
classes, including the base metals, which fell 17.8% in September alone. While
global demand has disappointed in 2011, so has supply prices for some metals
have held up remarkably well amidst the turmoil in financial markets. In the
copper market, there has been deterioration in mine supply as the issues of
declining, ageing mines become more persistent. Year-on-year, only three of the
world's top ten copper mines have registered an increase in production. Nickel
prices declined sharply this year due largely to the surge in Chinese
Nickel-Pig-Iron production that has stolen market share from refined nickel.
In the bulk commodity markets, heavy rains in Queensland resulted in some of
the worst flooding for five decades and caused around 40 coal mines to close.
As Australia is the world's largest supplier of coking coal prices moved up to
US$370/tonne at one point, significantly higher than the end of December 2010
price of US$249/tonne. The iron ore market was well supported by the strength
in Chinese demand and a tax imposed on Indian exports and prices held up well
in September, when many other commodities slumped. In October, however, iron
ore prices, which had traded around US$175/tonne, for much of the year fell
back to US$117/tonne in response to production cuts by Chinese steel mills. In
November, prices quickly bounced back to US$140/tonne. It would appear that
Chinese buyers returned to the market to take advantage of seaborne iron ore
prices that were below the costs of domestic iron ore production.
The outlook for thermal coal has improved following the Japanese earthquake and
tsunami, which saw an increase in thermal coal's share of electricity
generating capacity. Meanwhile, China's imports have been strong due to the
improvement in the competitive positive of imported coal versus Chinese
domestic production. Both China and India are struggling to meet internal
demand. Meanwhile, the supply side remains constrained.
In the precious metals sector, gold prices made a new all time high of US$1,911
/oz in September. Strong demand for gold continued into the third quarter, as
reported by the World Gold Council. The 6% year-on-year increase was
predominantly driven by investment demand, with the yellow metal posting the
third highest quarter for investment demand on record at 468 tonnes. Robust
demand also came from the Official Sector (central banks) at 148 tonnes over
the third quarter. For the first eleven months of 2011, demand from the central
banks reached 356 tonnes, far exceeding expectations from industry consultants.
Most recently Russia added 19.5 tonnes to their gold holdings, with further
additions being made by Mexico, Kazakhstan and Columbia. Investment in the
silver market saw prices retest the previous peal of US$50/oz set more than 30
years ago when the Hunt Brothers tried to corner the market. The white metal
soon retreated from these levels as COMEX raised margin requirements.
Elsewhere, platinum and palladium fell 6.0% and 11.0% respectively. The Platinum
Group Metals are used mainly in auto catalysts and have fallen in line with
declines in the automotive sector. The gold to platinum ratio rose to a new
high, surpassing the previous peak reached at the height of the 2008 financial
crisis.
Oil prices rose back above the US$100/Bbl level during the period. Political
issues in the MENA region had a significant impact on prices with the Libyan
rebel uprising against Colonel Gaddafi at its epicentre. Prior to the conflict,
Libya produced 1.6mb/d; at its trough production had fallen to 100kb/d. A
portion of capacity could be delivered to the market comparatively quickly, but
it is our view that it may take up to three years for production to return to
pre-conflict levels. In response to the outage of Libyan supply and sustained
high oil prices, the International Energy Agency ("IEA"), for only the third
time in history, facilitated a release of 60 million barrels from the strategic
petroleum reserves. Towards the end of the period oil production from Syria,
Nigeria and the Yemen declined adding pressure to an already supply constrained
market. Amidst the deteriorating economic environment, demand data points for
oil have disappointed and downside risks have increased. The IEA moderated its
oil demand forecasts by 200kb/d for 2011 and 400kb/d for 2012. It is also
important to highlight a constructive demand side trend: Japan, post the
Fukushima incident, only has 10 of 54 nuclear power stations in
operation and is consuming an additional 230kb/d as their oil fired power
stations increase fuel consumption in an attempt to fill the nuclear shortfall.
In the third quarter, OECD inventories underwent a counter seasonal drawdown
declining to below the 5-year average.
It is important to pay due attention to both sides of the fundamental equation;
supply as well as demand. The outlook for oil supply growth from non-OPEC
remains muted as new sources struggle to offset declines from existing
production and OPEC, the oil cartel that controls 43% of the world's
production, has vested interests in keeping oil prices supported. The cartel
has shown itself able and willing in the past to curb production should crude
prices drop to levels which may jeopardise their own national fiscal budgets.
Interestingly, the spread between Brent and West Texas Intermediate ("WTI")
widened considerably during the period. Elevated stock levels and weak demand
at Cushing, Oklahoma, the point of delivery for the WTI NYMEX crude oil
contract, pushed the price lower. At its peak, the spread was US$27/Bbl in
Brent's favour and by the end of the period it had closed to US$11/Bbl. The
spread emerged due to landlocked excess inventories at the WTI delivery point
in Cushing, Oklahoma. However, a series of projects have been undertaken to
distribute oil from the landlocked delivery point, the most significant of
which has been Enbridge's proposal, announced in November, to establish a
reverse flow capability in the Seaway pipeline which would take crude from
Cushing to refiners on the Gulf Coast.
On 11 March 2011, the earthquake and tsunami that devastated the east coast of
Japan caused significant damage to the Fukishima nuclear plant, one of the
world's largest. This raised concerns about the long term build out of nuclear
reactors globally and, by implication, the uranium industry. The price of
uranium fell 22% on news that the reactor had been affected, while uranium
equity valuations were slashed. Uranium prices recovered some of these losses,
to close the period down 12.8%. The Company had no exposure to uranium equities
during the period under review. A reduced build out should be positive for
other forms of power generation including coal and oil.
In commodity equity markets, one of the features of the period under review has
been the dislocation between equity valuations and commodity prices. The
situation has arisen, in our view, as a consequence of the heightened equity
market volatility that has been so prevalent this year. This in turn has been
caused by the ongoing Eurozone debt crisis as well as concerns about the global
economic outlook. The so called "risk-on, risk-off" trading patterns have
impacted all commodity equities, although it has been more pronounced in mining
stocks. Mining equities have also underperformed the broader equity indices for
only the third time in the past eleven years. Within the mining sector, gold
stocks, as measured by the FTSE Gold Mines Index, have gained 2.9% this year,
while gold prices have risen 26.0%. We believe this presents investment
opportunities for the Company.
BHP Billiton made a move into the North American shale gas industry with the
purchase of Chesapeake Energy's Fayetteville assets in Arkansas. This US$4.75
billion acquisition was followed by the US$15 billion purchase of Petrohawk
Energy. The company owns assets in three world class shale gas plays including
the Eagle Ford and Haynesville shales and the Permian Basin, which cover around
1 million acres in Texas and Louisiana. In other equity news, the much
anticipated London IPO of Glencore, the Swiss based commodities trader,
received a lukewarm reception by investors. In the energy sector, renewed deep
water drilling activity in the Gulf of Mexico was highlighted by Exxon
announcing two large oil discoveries and a gas discovery in the region. The
implications of and settlement of claims for the Macondo disaster are still yet
to be fully resolved. During the period, Mitsui, Anadarko, Cameron
International and Weatherford settled claims with BP. BP also reinstated its
dividend payment during 2011.
Another feature of energy companies this year has been the demerging of
upstream and downstream businesses. Marathon Oil spun off its downstream unit,
which is now known as Marathon Petroleum Company ("MPC"). We retained the
Company's position in Marathon Oil and sold out of the position in MPC.
Encouraged by the strong performance in Marathon's share price, ConocoPhillips
announced details of a similar demerger that is expected to be completed in the
first half of 2012.
Portfolio review
At 30 November 2011, the Company held 57 investments within the energy and
mining sectors. The Company's exposure to energy increased over the period,
driven partly by the outperformance relative to mining shares. The weighting
also reflects the Investment Manager's view that energy shares are (marginally)
better value and higher yielding than mining equities. A full breakdown of the
Company's geographic and commodity allocation can be seen in the following
tables.
Asset Allocation - Geography
Global 23.6%
Canada 22.3%
USA 20.8%
Europe 8.7%
Latin America 6.9%
Australia 5.5%
Asia 4.7%
South Africa 4.1%
Africa 1.8%
China 1.6%
Source: BlackRock.
Asset Allocation - Commodity
Energy 59.1%
Mining 40.9%
Mining
Diversified 41.8%
Gold 13.0%
Copper 12.7%
Iron ore 9.3%
Aluminium 6.4%
Fertilizers 5.1%
Nickel 4.2%
Tin 3.1%
Zinc 2.2%
Platinum 2.2%
Energy
Integrated oil 49.4%
Exploration & production 21.3%
Coal 11.4%
Oil services 8.3%
Oil sands 6.6%
Distribution 3.0%
Source: BlackRock.
The Company generated £5.3 million of income during the year. Dividend and
coupon payments from investee companies amounted to £4.6 million, or 72% of
total income. It is worth noting the option premium income as a percentage of
total income has fallen for the second consecutive year. The Investment Manager
is pleased to report that the Group's net income for the year exceeded the Company's
dividend target of 5.60 pence per share. Consequently, the fourth quarter
dividend was raised bringing the total dividend for 2011 to 5.75 pence per
share. Group revenue reserves increased to £3.1 million. A full analysis of
income and expenses is contained in the notes to the financial statements on
pages 36 to 53 of the annual report.
Outlook
We remain optimistic about the long term prospects for commodity markets, which
should be driven by demand growth and weak supply growth. In this regard, China
remains the single most important factor in commodity markets, given its
dominant share of global consumption. Therefore, one of the key risks to the
commodities sector would be a "hard landing" of China's economy, although we
believe this is unlikely. With inflation now off its highs, it is important to
note that the authorities have at their disposal a range of tools that can be
used to support economic growth, including the ability to lower interest rates.
Commodity equities are trading at attractive valuations, both in absolute terms
and relative to their long term averages. Arguably, the market is therefore
already discounting the prospect of slower global economic growth in 2012.
Despite the recent pullback we have seen in commodity markets, prices remain at
attractive levels for producers and they continue to generate strong cash flows
and earnings, more of which is being returned to shareholders. Meanwhile, their
balance sheets are stronger than they have been for many years, and we expect
to see dividend increases in the portfolio in 2012. For as long as the Eurozone
debt crisis remains unresolved, we would expect to see heightened volatility in
the market as investor sentiment fluctuates between risk-on and risk-off
trading.
Richard Davis
20 January 2012
Ten Largest Investments
30 November 2011
ExxonMobil - 5.0% (2010: 3.9%, www.exxonmobil.com) is the world's largest
publicly traded international oil and gas company and the largest refiner and
marketer of petroleum products.
Teck Resources - 4.2% (2010: 2.9%, www.teck.com) is Canada's largest
diversified mining company focused on copper, metallurgical coal, zinc and
energy. With assets in Canada, USA, Peru and Chile, Teck is the world's second
largest exporter of seaborne coking coal in the world and the third largest
zinc producer. In energy, Teck is also developing oil sands projects in
Alberta's Athabasca oil sands region.
RioTinto - 4.1% (2010: 3.4%, www.riotinto.com) is one of the world's leading
mining companies. The company produces aluminium, copper, diamonds, gold,
industrial minerals, iron ore and energy products.
BHP Billiton - 4.0% (2010: 4.5%, www.bhpbilliton.com) is the world's largest
diversified natural resources company. The company is a major producer of
aluminium, iron ore, copper, thermal and metallurgical coal, manganese,
uranium, nickel, silver and titanium minerals. The company also has significant
interests in oil, gas, liquefied natural gas and diamonds.
Coal & Allied - 3.8% (2010: 1.9%, www.coalandallied.com.au) based in the Hunter
Valley, New South Wales, the company is one of Australia's major coal
producers. In December 2011, Rio Tinto and Mitsubishi bought out the company's
minority shareholders.
Total - 3.8% (2010: 4.1%, www.total.com) based in France, Total is one of the
world's largest international oil and gas companies with operations covering
the entire energy chain, from oil exploration and production to trading,
shipping and refining and marketing of petroleum products.
Peyto Exploration & Development - 3.8% (2010: 2.5%, www.peyto.com) is an
explorer and producer of unconventional natural gas. The company's wells, gas
plants and pipelines are situated in the foothills of the Rockies in Alberta.
Kinross - 3.3% (2010: 0.5%, www.kinross.com) based in Canada, Kinross is a gold
mining company with assets in Canada, USA, Brazil, Chile, Ecuador, Russia,
Ghana and Mauritania. In late 2010, the company bought Red Back Mining, owner
of the world class Tasiast development project in Mauritania, an acquisition
that has transformed Kinross into a high growth senior gold company.
Chevron - 3.2% (2010: 2.3%, www.chevron.com) is one of the world's leading
integrated energy companies engaged in every aspect of the oil, gas and power
generation industries. Chevron is one of the world's "supermajor" oil
companies, along with BP, Exxon, Shell and Total.
KumbaIron Ore - 3.2% (2010: 3.8%, www.kumba.co.za) is the world's fourth
largest supplier of seaborne iron ore. Based in South Africa, the company
accounts for over 80% of the country's iron ore production, most of which is
exported to Europe and Asia. Anglo American plc owns 65% of the outstanding
shares in Kumba.
All percentages reflect the value of the holding as a percentage of total
investments. For this purpose where more than one class of securities is held
these have been aggregated.
Investments
as at 30 November 2011
Market
Main geographic value % of
exposure £'000 investments
Integrated Oil
ExxonMobil Global 6,072 5.0
Total Global 4,594 3.8
Chevron Global 3,914 3.2
Occidental Petroleum USA 3,770 3.1
Repsol Europe 3,161 2.6
ConocoPhillips USA 3,124 2.6
Statoil Europe 2,874 2.4
BP Global 2,635 2.2
Eni Europe 2,521 2.1
Hess USA 1,417 1.2
Marathon Oil USA 1,226 1.0
35,308 29.2
Diversified
BHP Billiton Global 4,853 4.0
Rio Tinto Global 4,204 3.5
Vale Latin America 3,686 3.1
Teck Resources Canada 3,481 2.9
Teck Resources 10.75% 15/05/19 Canada 1,564 1.3
Xstrata Global 1,373 1.1
Rio Tinto Finance 8.95% 01/05/14 Global 744 0.6
Vedanta Resources Asia 489 0.4
Glencore Global 259 0.2
20,653 17.1
Exploration & Production
Peyto Exploration & Development Canada 4,589 3.8
Anadarko Petroleum USA 3,615 3.0
Crescent Point Energy Trust Units Canada 2,498 2.1
Vermillion Energy Canada 2,057 1.7
Noble Energy USA 1,314 1.1
Ultra Petroleum USA 1,119 0.9
15,192 12.6
Coal
Coal & Allied Australia 4,636 3.8
China Shenhua Energy China 1,909 1.6
Sakari Resources Asia 1,655 1.4
8,200 6.8
Gold
Kinross Canada 3,956 3.3
Barrick Gold Canada 1,180 1.0
IAMGOLD Africa 898 0.7
High River Gold 8% Convertible Bonds
31/12/11* Africa 413 0.3
6,447 5.3
Copper
Freeport McMoRan Copper & Gold Asia 2,265 1.9
Antofagasta Latin America 1,729 1.4
Southern Copper Latin America 1,289 1.1
Katanga Mining 14% S/Nts 30/11/13 Africa 679 0.5
Anvil Mining Africa 362 0.3
6,324 5.2
Oil Services
Schlumberger USA 2,992 2.5
Baker Hughes USA 1,561 1.3
Transocean USA 1,362 1.1
Transocean call option 17/12/11 USA (4) 0.0
National Oilwell Varco put option 21/01/12 USA (31) 0.0
5,880 4.9
Oil Sands
Suncor Energy Canada 2,291 1.9
Canadian Oil Sands Canada 1,201 1.0
Cenovus Energy Canada 1,190 1.0
4,682 3.9
Iron Ore
Kumba Iron Ore Africa 3,814 3.2
Fortescue Metals Australia 784 0.6
4,598 3.8
Aluminium
Alcoa USA 1,836 1.5
Alumina Australia 1,272 1.1
3,108 2.6
Fertilizers
Agrium USA 1,869 1.5
Potash Corporation of Saskatchewan Canada 455 0.4
Mosaic USA 268 0.2
2,592 2.1
Distribution
Enbridge Income Fund Trust Canada 2,196 1.8
2,196 1.8
Nickel
International Nickel Indonesia Asia 1,267 1.0
Eramet Europe 782 0.7
2,049 1.7
Tin
Minsur Latin America 1,626 1.3
1,626 1.3
Zinc
Nyrstar Europe 1,140 0.9
1,140 0.9
Platinum
Impala Platinum Africa 1,075 0.9
1,075 0.9
Uranium
Cameco put option 17/03/12 Canada (109) (0.1)
(109) (0.1)
Total Investments 120,961 100.0
* Unquoted investment at Directors' valuation
All investments are in equity shares unless otherwise stated. The total number of
holdings as at 30 November 2011 was 57 (2010: 55)
The total number of open options as at 30 November 2011 was 3 (2010: 9)
The negative valuations of £144,000 in respect of options held represent the
notional cost of repurchasing the contracts at market prices as at 30 November
2011.
Consolidated Statement of Comprehensive Income
for the year ended 30 November 2011
Revenue Revenue Capital Capital Total Total
2011 2010 2011 2010 2011 2010
Notes £'000 £'000 £'000 £'000 £'000 £'000
Income from
investments
held at
fair value
through
profit or
loss 3 4,625 3,610 - - 4,625 3,610
Other
income 3 1,822 2,200 - - 1,822 2,200
----- ----- ----- ----- ----- -----
Total
revenue 6,447 5,810 - - 6,447 5,810
----- ----- ----- ----- ----- -----
(Losses)/
gains on
investments
held at
fair value
through
profit or
loss - - (6,401) 16,773 (6,401) 16,773
----- ----- ----- ------ ----- ------
6,447 5,810 (6,401) 16,773 46 22,583
----- ----- ----- ------ ----- ------
Expenses
Investment
management
fee 4 (363) (282) (1,090) (848) (1,453) (1,130)
Other
expenses 5 (268) (260) - - (268) (260)
----- ----- ----- ------ ----- ------
Total
operating
expenses (631) (542) (1,090) (848) (1,721) (1,390)
----- ----- ----- ------ ----- ------
Profit/
(loss)
before
finance
costs and
taxation 5,816 5,268 (7,491) 15,925 (1,675) 21,193
----- ----- ----- ------ ----- ------
Finance
costs 6 (20) (9) (55) (27) (75) (36)
----- ----- ----- ------ ----- ------
Profit/
(loss)
before
taxation 5,796 5,259 (7,546) 15,898 (1,750) 21,157
----- ----- ----- ------ ----- ------
Taxation 7 (475) (779) 125 (120) (350) (899)
----- ----- ----- ------ ----- ------
Net profit/
(loss) for
the year
after
taxation 5,321 4,480 (7,421) 15,778 (2,100) 20,258
----- ----- ----- ------ ----- ------
Earnings/
(loss) per
ordinary
share 9 5.88p 5.85p (8.20p) 20.61p (2.32p) 26.46p
===== ===== ===== ====== ===== ======
The total column of this statement represents the Group's Consolidated
Statement of Comprehensive Income, prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union.
The supplementary revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies ("AIC"). All items in the
above statement derive from continuing operations. No operations were acquired
or discontinued during the year. All income is attributable to the equity
holders of BlackRock Commodities Income Investment Trust plc. There were no
minority interests.
The total net loss of the Company for the year was £2,100,000 (2010: profit of
£20,258,000).
The Group does not have any other recognised gains or losses. The net profit
disclosed above represents the Group's total comprehensive income.
Statements of Changes in Equity
for the year ended 30 November 2011
Ordinary Share
share premium Special Capital Revenue
capital account reserve reserves reserve Total
Group Notes £'000 £'000 £'000 £'000 £'000 £'000
For the year
ended
30 November
2011
At 30
November 2010 905 20,748 71,223 30,059 2,913 125,848
Total
comprehensive
income:
Net (loss)/
profit for
the year - - - (7,421) 5,321 (2,100)
Transactions
with owners,
recorded
directly to
equity:
Write back of
issue costs - 30 - - - 30
Dividends
paid 8 - - - - (5,136) (5,136)
--- ------ ------ ------ ----- -------
At 30
November 2011 905 20,778 71,223 22,638 3,098 118,642
=== ====== ====== ====== ===== =======
For the year
ended
30 November
2010
At 30
November 2009 756 1,223 70,219 14,281 3,781 90,260
Total
comprehensive
income:
Net profit
for the year - - - 15,778 4,480 20,258
Transactions
with owners,
recorded
directly to
equity:
Issue and
conversion of
C shares into
ordinary
shares 149 19,501 - - - 19,650
Proceeds of
sale of
shares from
treasury - 24 1,004 - - 1,028
Dividends
paid 8 - - - - (5,348) (5,348)
--- ------ ------ ------ ----- -------
At 30
November 2010 905 20,748 71,223 30,059 2,913 125,848
=== ====== ====== ====== ===== =======
Ordinary Share
share premium Special Capital Revenue
capital account reserve reserves reserve Total
Company Notes £'000 £'000 £'000 £'000 £'000 £'000
For the year
ended
30 November
2011
At 30
November 2010 905 20,748 71,223 31,444 1,528 125,848
Total
comprehensive
income:
Net (loss)/
profit for
the year - - - (7,248) 5,148 (2,100)
Transactions
with owners,
recorded
directly to
equity:
Write back of
issue costs - 30 - - - 30
Dividends
paid 8 - - - - (5,136) (5,136)
--- ------ ------ ------ ----- -------
At 30
November 2011 905 20,778 71,223 24,196 1,540 118,642
=== ====== ====== ====== ===== =======
For the year
ended
30 November
2010
At 30
November 2009 756 1,223 70,219 16,616 1,446 90,260
Total
comprehensive
income:
Net profit
for the year - - - 14,828 5,430 20,258
Transactions
with owners,
recorded
directly to
equity:
Issue and
conversion of
C shares into
ordinary
shares 149 19,501 - - - 19,650
Proceeds of
sale of
shares from
treasury - 24 1,004 - - 1,028
Dividends
paid 8 - - - - (5,348) (5,348)
--- ------ ------ ------ ----- -------
At 30
November 2010 905 20,748 71,223 31,444 1,528 125,848
=== ====== ====== ====== ===== =======
Statements of Financial Position
as at 30 November 2011
2011 2011 2010 2010
Group Company Group Company
Notes £'000 £'000 £'000 £'000
Non current assets
Investments held at
fair value through
profit or loss 120,961 122,519 126,285 127,670
------- ------- ------- -------
Current assets
Other receivables 354 1,577 1,619 1,619
Cash and cash
equivalents - 46 374 60
------- ------- ------- -------
354 1,623 1,993 1,679
------- ------- ------- -------
Total assets 121,315 124,142 128,278 129,349
------- ------- ------- -------
Current liabilities
Other payables (557) (431) (2,430) (1,964)
Bank overdraft (2,116) (5,069) - (1,537)
------- ------- ------- -------
(2,673) (5,500) (2,430) (3,501)
------- ------- ------- -------
Net assets 118,642 118,642 125,848 125,848
======= ======= ======= =======
Equity attributable to
equity holders
Ordinary share capital 10 905 905 905 905
Share premium account 20,778 20,778 20,748 20,748
Special reserve 71,223 71,223 71,223 71,223
Capital reserves 22,638 24,196 30,059 31,444
Revenue reserve 3,098 1,540 2,913 1,528
------- ------- ------- -------
Total equity 118,642 118,642 125,848 125,848
======= ======= ======= =======
Net asset value per
ordinary share 9 131.08p 131.08p 139.05p 139.05p
======= ======= ======= =======
The financial statements were approved and authorised for issue by the Board of
Directors on 20 January 2012 and signed on its behalf by Alan Hodson, Chairman.
Cash Flow Statements
for the year ended 30 November 2011
2011 2011 2010 2010
Group Company Group Company
Note £'000 £'000 £'000 £'000
Operating activities
(Loss)/profit before
taxation (1,750) (1,848) 21,157 20,724
Add back interest paid 68 67 36 36
Losses/(gains) on
investments held at
fair value through
profit or loss
including transaction
costs 6,401 6,228 (16,773) (15,823)
Increase in other
receivables 30 (1,193) (51) (51)
(Decrease)/increase in
other payables (520) (520) 959 959
Decrease/(increase) in
amounts due from
brokers 1,128 1,128 (684) (684)
(Decrease)/increase in
amounts due to brokers (533) (533) 533 533
Movements in
investments held at
fair value through
profit or loss (1,102) (1,102) (23,647) (23,647)
Movements in cash fund
held at fair value
through profit or loss - - 1,422 1,422
------- ------- ------- -------
Net cash inflow/
(outflow) from
operating activities
before interest and
taxation 3,722 2,227 (17,048) (16,531)
------- ------- ------- -------
Interest paid (68) (67) (36) (36)
Taxation (paid)/
recovered (319) 119 (397) (72)
Taxation on investment
income included within
gross income (394) (394) (324) (324)
------- ------- ------- -------
Net cash inflow/
(outflow) from
operating activities 2,941 1,885 (17,805) (16,963)
------- ------- ------- -------
Financing activities
Share issue costs paid (320) (320) - -
Shares issued - - 20,678 20,678
Equity dividends paid 8 (5,136) (5,136) (5,348) (5,348)
------- ------- ------- -------
Net cash (outflow)/
inflow from financing
activities (5,456) (5,456) 15,330 15,330
------- ------- ------- -------
Decrease in cash and
cash equivalents (2,515) (3,571) (2,475) (1,633)
------- ------- ------- -------
Cash and cash
equivalents at start
of the year 374 (1,477) 2,920 227
Effect of foreign
exchange rate changes 25 25 (71) (71)
------- ------- ------- -------
Cash and cash
equivalents at end of
the year (2,116) (5,023) 374 (1,477)
------- ------- ------- -------
Comprised of:
Cash and cash
equivalents - 46 374 60
Bank overdraft (2,116) (5,069) - (1,537)
------- ------- ------- -------
(2,116) (5,023) 374 (1,477)
======= ======= ======= =======
Notes to the Financial Statements
1. Principal activities
The principal activity of the Company is that of an investment trust company
within the meaning of section 1158 of the Corporation Tax Act 2010.
The principal activity of the subsidiary, BlackRock Commodities Securities
Income Company Limited, is investment dealing and options writing.
2. Accounting policies
The principal accounting policies adopted by the Group and the Company are set
out below.
(a) Basis of preparation
The Group and Parent Company financial statements have been prepared in
accordance with IFRS as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006. The Company has taken
advantage of the exemption provided under section 408 of the Companies Act 2006
not to publish its individual Statement of Comprehensive Income and related
notes. All of the Group's operations are of a continuing nature.
The Group's financial statements are presented in Sterling, which is the
currency of the primary economic environment in which the Group operates. All
values are rounded to the nearest thousand pounds (£'000) except when otherwise
stated.
Insofar as the Statement of Recommended Practice ("SORP") for investment trust
companies and venture capital trusts issued by the AIC, revised in January 2009
is compatible with IFRS, the financial statements have been prepared in
accordance with guidance set out in the SORP.
A number of new standards, amendments to standards and interpretations are
effective for annual periods beginning after 1 January 2013, and have not been
applied in preparing these financial statements. None of these are expected to
have a significant effect on the measurement of the amounts recognised in the
financial statements of the Company. However, IFRS 9 "Financial Instruments"
issued in November 2009 will change the classification of financial assets, but
is not expected to have an impact on the measurement basis of the financial
assets since the majority of the Company's financial assets are measured at
fair value through profit or loss.
IFRS 9 (2009) deals with classification and measurement of financial assets and
its requirements represent a significant change from the existing requirements
in IAS 39 in respect of financial assets. The standard contains two primary
measurement categories for financial assets: at amortised cost and fair value.
A financial asset would be measured at amortised cost if it is held within a
business model whose objective is to hold assets in order to collect
contractual cash flows, and the asset's contractual terms give rise on
specified dates to cash flows that are solely payments of principal and
interest on the principal outstanding. All other financial assets would be
measured at fair value. The standard eliminates the existing IAS 39 categories
of "held to maturity", "available for sale" and "loans" and "receivables".
The standard is effective for annual periods beginning on or after 1 January
2013 but is not yet approved by the EU. Earlier application is permitted. The
Company does not plan to adopt this standard early.
(b) Basis of consolidation
The Group's financial statements consolidate the financial statements of the
Company and its wholly owned subsidiary, which is registered and operates in
England and Wales, BlackRock Commodities Securities Income Company Limited.
(c) Presentation of the Consolidated Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Consolidated Statement of Comprehensive Income between items of a
revenue and a capital nature has been presented alongside the Consolidated
Statement of Comprehensive Income. In accordance with the Company's status as a
UK investment company under section 833 of the Companies Act 2006 and section
1158 of the Corporation Tax Act 2010, net capital returns may not be
distributed by way of dividend.
(d) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business being investment business.
(e) Income
Dividends receivable on equity shares are treated as revenue for the year on an
ex-dividend basis. Where no ex-dividend date is available dividends receivable
on or before the year end are treated as revenue for the year. Provision is
made for any dividends not expected to be received. Special dividends, if any,
are treated as a capital or a revenue receipt depending on the facts or
circumstances of each particular case. The return on a debt security is
recognised on a time apportionment basis so as to reflect the effective yield
on the debt security.
Interest income is accounted for on an accruals basis. Premia on written
options are recognised as income.
(f) Expenses
All expenses, including finance costs, are accounted for on an accruals basis.
Expenses have been charged wholly to the revenue column of the Consolidated
Statement of Comprehensive Income except as follows:
- expenses which are incidental to the acquisition of an investment are
included within the cost of the investment. Details of transaction costs on the
purchases and sales of investments are disclosed in note 10 in the annual report;
- expenses are treated as capital where a connection with the maintenance or
enhancement of the value of the investments can be demonstrated;
- the investment management fees and finance costs of borrowing borne by the
Company have been allocated 75% to the capital column and 25% to the revenue
column of the Consolidated Statement of Comprehensive Income in line with the
Board's expectations of the long term split of return, in the form of capital
gains and income respectively, from the investment portfolio.
(g) Taxation
Deferred taxation is recognised in respect of all temporary differences that have
originated but not reversed at the financial reporting date, where transactions
or events that result in an obligation to pay more taxation in the future or right
to pay less taxation in the future have occurred at the financial reporting date.
This is subject to deferred taxation assets only being recognised if it is
considered more likely than not that there will be suitable profits from which
the future reversal of the temporary differences can be deducted. Deferred taxation
assets and liabilities are measured at the rates applicable to the legal
jurisdictions in which they arise.
(h) Investments held at fair value through profit or loss
The Company's investments are classified as held at fair value through profit
or loss in accordance with IAS 39 "Financial Instruments: Recognition and
Measurement" and are managed and evaluated on a fair value basis in accordance
with its investment strategy.
All investments are initially recognised as held at fair value through profit
and loss. Purchases of investments are recognised on a trade date basis. The
sales of investments are recognised at the trade date of the disposal. Proceeds
are measured at fair value, which is regarded as the proceeds of sale less any
transaction costs.
The fair value of financial instruments is based on their quoted bid price at
the financial reporting date, without deduction for any estimated future
selling costs. Unquoted investments are valued by the Directors at fair value
using International Private Equity and Venture Capital Association Guidelines.
This policy applies to all current and non current asset investments held by
the Group.
Changes in the value of investments held at fair value through profit or loss
and gains and losses on disposal are recognised in the Consolidated Statement
of Comprehensive Income as "Gains or losses on investments held at fair value
through profit or loss". Also included within this heading are transaction
costs in relation to the purchase or sale of investments.
Under IFRS, the investment in the trading subsidiary is carried at fair value
which is deemed to be the total equity of the subsidiary.
(i) Other receivables and other payables
Other receivables and other payables do not carry any interest and are short
term in nature and are accordingly stated at their nominal value.
(j) Dividends payable
Under IFRS interim dividends are recognised when paid to shareholders. Final
dividends, if any, are only recognised after they have been approved by
shareholders.
(k) Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling at
the date of the transaction.
Foreign currency monetary assets and liabilities are translated into Sterling
at the rate ruling on the financial reporting date. Foreign exchange
differences arising on translation are recognised in the Consolidated Statement
of Comprehensive Income as a revenue or capital item depending on the income or
expense to which they relate.
(l) Cash and cash equivalents
Cash comprises cash in hand and on demand deposits. Cash equivalents are short
term, highly liquid investments that are readily convertible to known amounts
of cash and that are subject to an insignificant risk of changes in value.
(m) Bank borrowings
Bank overdrafts are recorded as the proceeds received. Finance charges are
accounted for on an accruals basis in the Consolidated Statement of
Comprehensive Income using the effective interest rate method and are added to
the carrying amount of the instruments to the extent that they are not settled
in the period in which they arise.
3. Income
2011 2010
£'000 £'000
Investment Income:
Overseas listed dividends 3,962 3,037
Fixed interest 321 307
UK listed dividends 342 266
----- -----
4,625 3,610
----- -----
Other operating income:
Deposit interest - 17
Option premium income 1,822 2,183
----- -----
1,822 2,200
----- -----
Total 6,447 5,810
===== =====
Option premium income is stated after deducting transaction costs incurred on
the purchases and sales of investments.
4. Investment management fee
2011 2010
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 363 1,090 1,453 282 848 1,130
=== ===== ===== === === =====
Details of the investment management contract are disclosed in the Directors'
Report on page 17 of the annual report. The investment management fee is levied
at a rate of 1.1% of gross assets per annum based on the gross assets on the
last day of each quarter and is allocated 25% to the revenue column and 75% to
the capital column of the Consolidated Statement of Comprehensive Income. The
investment management fee is levied quarterly, based on the gross assets on the
last day of each quarter, and is charged 25% to the revenue column and 75% to
the capital column of the Consolidated Statement of Comprehensive Income.
5. Other expenses
2011 2010
£'000 £'000
Custody fee 24 24
Auditor's remuneration:
- audit services 24 22
- other services 5 5
Directors' emoluments 85 69
Registrar's fee 33 25
Other administrative costs 97 115
--- ---
268 260
=== ===
The Company's total expense ratio, calculated as a percentage
of average net assets and using expenses, excluding any
interest costs and excluding taxation, was: 1.3% 1.4%
The Company's total expense ratio, calculated as a percentage
of average net assets and using expenses, excluding any
interest costs and including taxation, was: 1.7% 2.2%
==== ====
Fees paid to the Auditor for other services comprise £5,500 (2010: £5,000)
relating to the review of the half yearly financial statements.
6. Finance costs
2011 2010
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest on bank overdrafts 20 55 75 9 27 36
== == == == == ==
Finance costs are charged 25% to the revenue column and 75% to the capital
column of the Consolidated Statement of Comprehensive Income.
7. Taxation
a) Analysis of charge in the year
2011 2010
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Current taxation:
Corporation taxation 126 - 126 523 (8) 515
Double taxation relief - - - (82) - (82)
--- --- --- --- --- ---
126 - 126 441 (8) 433
--- --- --- --- --- ---
Overseas taxation 383 - 383 312 - 312
Prior year adjustment (29) - (29) 21 - 21
--- --- --- --- --- ---
Total current taxation 480 - 480 774 (8) 766
=== === === === === ===
Deferred taxation (5) (125) (130) 5 128 133
--- --- --- --- --- ---
Total taxation (note 7b) 475 (125) 350 779 120 899
=== === === === === ===
b) Factors affecting current taxation charge for the year
The taxation assessed for the year is lower than the standard rate of
corporation taxation in the UK for a large company of 26.66% (2010: 28.00%). The
differences are explained below:
2011 2011 2011
Revenue Capital Total
£'000 £'000 £'000
Total profit/(loss) on ordinary activities
before taxation 5,796 (7,546) (1,750)
----- ----- -----
Profit/(loss) on ordinary activities
multiplied by standard rate of corporation
taxation 26.66% 1,545 (2,012) (467)
Effects of:
Non taxable capital gains - 1,707 1,707
Taxation effect of allowable expenses in
capital (305) 305 -
Prior year adjustment (29) - (29)
UK dividends (91) - (91)
Non taxable overseas dividends (1,021) - (1,021)
Effect of income taxable in different
periods 3 - 3
Expense relief for overseas taxation (6) - (6)
Marginal relief (4) - (4)
Provision for Peruvian capital gains
taxation - 3 3
Reversal of deferred taxation provision - (128) (128)
Overseas taxation charge 383 - 383
----- ----- -----
(1,070) 1,887 817
----- ----- -----
Total corporation taxation charge for the
year (note 7a) 475 (125) 350
==== ===== =====
2010 2010 2010
Revenue Capital Total
£'000 £'000 £'000
Total return on ordinary activities before
taxation 5,259 15,898 21,157
----- ----- -----
Return on ordinary activities multiplied by
standard rate of corporation taxation 28% 1,473 4,451 5,924
Effects of:
Non taxable capital gains - (4,696) (4,696)
Taxation effect of allowable expenses in
capital (178) 237 59
Prior year adjustment 25 - 25
UK dividends (75) - (75)
Non taxable overseas dividends (695) - (695)
Rate differential impact in deferred
taxation - (3) (3)
Unrealised offshore income gain - 131 131
Double taxation relief (82) - (82)
Movement in double taxation relief in
deferred taxation (1) - (1)
Overseas taxation charge 312 - 312
----- ----- -----
(694) (4,331) (5,025)
----- ----- -----
Total corporation taxation charge for the
year (note 7a) 779 120 899
===== ===== =====
Investment trusts are exempt from corporation taxation on capital gains
provided the Company obtains agreement from HM Revenue & Customs that the tests
outlined in Chapter 4 of Part 24 of the Corporation Tax Act 2010 have been met.
Due to the Company's intention to meet the conditional requirement to obtain
approval under section 1158 of the Corporation Tax Act 2010 it has not provided
for taxation on any capital gains.
8. Dividends
Under IFRS final dividends, if any, are not recognised until approved by
shareholders, and special and interim dividends are not recognised until they are
paid. They are also debited directly to reserves. The dividends disclosed in the
table below have been considered in view of the requirements of section 1158 of
the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the
amounts declared meet the relevant requirements. Amounts recognised as distributions
to ordinary shareholders during the year to 30 November 2011 were as follows:
2011 2010
£'000 £'000
Fourth interim dividend for the year ended 30 November 2010
- 1.475p (2009: 1.45p) 1,335 1,085
First interim dividend for the year ended 30 November 2011
- 1.40p (2010: 1.375p) 1,267 1,036
Second interim dividend for the year ended 30 November 2011
- 1.40p (2010: 1.375p) 1,267 1,039
Third interim dividend for the year ended 30 November 2011
- 1.40p (2010: 1.375p) 1,267 1,039
First special dividend for the year ended 30 November 2011
- 0.00p (2010: 1.00p) - 756
Second special dividend for the year ended 30 November 2011
- 0.00p (2010: 0.52p) - 393
----- -----
5,136 5,348
===== =====
For the year ended 30 November 2011, a fourth interim dividend of 1.55p (2010:
1.475p) per ordinary share has been declared and will be paid on 20 January
2012, to shareholders on the Company's register on 23 December 2011.
The total dividends payable in respect of the year which form the basis of
section 1158 of the Corporation Tax Act 2010 are set out below:
2011 2010
£'000 £'000
First interim dividend paid on 21 April 2011 of 1.40p (2010:
1.375p) 1,267 1,036
Second interim dividend paid on 22 July 2011 of 1.40p (2010:
1.375p) 1,267 1,039
Third interim dividend paid on 21 October 2011 of 1.40p
(2010: 1.375p) 1,267 1,039
First special dividend paid on 21 October 2011 of 0.00p
(2010: 1.00p) - 756
Second special dividend paid on 29 November 2011 of 0.00p
(2010: 0.52p) - 393
Fourth interim dividend payable on 20 January 2012 of 1.55p
(2011: 1.475p) 1,403 1,335
----- -----
5,204 5,598
===== =====
9. Consolidated earnings and net asset value per ordinary share
Revenue and capital earnings per share are shown below and have been calculated
using the following:
2011 2010
Net revenue profit attributable to ordinary
shareholders (£'000) 5,321 4,480
Net capital (loss)/profit attributable to
ordinary shareholders (£'000) (7,421) 15,778
----- ------
Total (loss)/profit attributable to ordinary
shareholders (£'000) (2,100) 20,258
======= =======
Equity shareholders' funds (£'000) 118,642 125,848
======= =======
The weighted average number of ordinary shares in
issue during each period, on which the return per
ordinary share was calculated was: 90,508,000 76,543,554
The actual number of ordinary shares in issue at
the year end, on which the net asset value was
calculated was: 90,508,000 90,508,000
The number of ordinary shares in issue including
treasury shares at the year end was: 90,508,000 90,508,000
---------- ----------
Revenue earnings per share 5.88p 5.85p
Capital earnings per share (8.20p) 20.61p
---------- ----------
Total earnings per share (2.32p) 26.46p
---------- ----------
Net asset value per share 131.08p 139.05p
Share price (mid-market) 127.75p 143.00p
========== =========
10. Share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number number £'000
Allotted, called up and
fully paid share capital
comprised:
Ordinary shares of 1p
each
Shares in issue at
30 November 2010 90,508,000 - 90,508,000 905
---------- ------- ---------- -------
At 30 November 2011 90,508,000 - 90,508,000 905
========== ======= ========== =======
The number of ordinary shares in issue at the year end was 90,508,000 of which
none were held in treasury (2010: nil).
The ordinary shares carry the right to receive any dividends and have one
voting right per ordinary share. There are no restrictions on the voting rights
of the ordinary shares or on the transfer of the ordinary shares.
11. Publication of non-statutory accounts
The financial information contained in this announcement does not constitute
statutory accounts as defined in the Companies Act 2006. The 2011 annual
report and financial statements will be filed with the Registrar of Companies
shortly.
The report of the Auditor for the year ended 30 November 2011 contains no
qualification or statement under section 498(2) or (3) of the Companies Act
2006.
The comparative figures are extracts from the audited financial statements of
BlackRock Commodities Income Investment Trust plc and its subsidiary for the
year ended 30 November 2010, which have been filed with the Registrar of
Companies. The report of the Auditor on those accounts contained no
qualification or statement under section 498 of the Companies Act.
This announcement was approved by the Board of Directors on 20 January 2012.
12. Annual Report
Members will be notified that the annual report is available shortly or if
a hard copy has been requested this will be sent shortly. It will also be
available from the registered office, c/o The Company Secretary, BlackRock
Commodities Income Investment Trust plc, 12 Throgmorton Avenue, London EC2N
2DL.
13. Annual General Meeting
The Annual General Meeting of the Company will be held at 12 Throgmorton
Avenue, London EC2N 2DL on Tuesday, 13 March 2012 at 10:30 a.m.
ENDS
The Annual Report will also be available on the BlackRock Investment Management
website at http://www.blackrock.co.uk/literature/annual-report/
blackrock-commodities-income-investment-trust-plc-annual-report.pdf. Neither
the contents of the Manager's website nor the contents of any website accessible
from hyperlinks on the Manager's website (or any other website) is incorporated
into, or forms part of, this announcement.
For further information, please contact:
Jonathan Ruck Keene, Managing Director, Investment Companies, BlackRock
Investment Management (UK) Limited
Tel: 020 7743 2178
Richard Davis, Natural Resources Team, BlackRock Investment Management (UK)
Limited
Tel: 020 7743 2668
Emma Phillips, Media & Communication, BlackRock Investment Management (UK)
Limited
Tel: 020 7743 2922
12 Throgmorton Avenue
London EC2N 2DL
20 January 2012