Final Results

Merrill Lynch Commodities Income IT 19 January 2007 19 January 2007 MERRILL LYNCH COMMODITIES INCOME INVESTMENT TRUST plc Preliminary announcement of results in respect of the period ended 30 November 2006 Performance to 30 November 2006 3 Months 6 Months Period to 30.11.2006 Net asset value (total return) +4.5% +5.2% +11.1% Ordinary share price (total return) -2.5% +0.7% +4.4% Source: BlackRock Merrill Lynch Investment Managers, Datastream. • The net asset value per share at 30 November 2006 was 105.53p (Launch 13 December 2005: 98.00p). • Net asset value total return of 11.1%. • Share price total return of 4.4%. • Total dividends per share were 4.50p for the period against a target of 4.25p. • Dividend target for the current year to 30 November 2007 raised to 4.50p per share. For further information please contact: Jonathan Ruck Keene, Managing Director Investment Trusts - 020 7743 2178 - Richard Davis, Fund Manager - 020 7743 2668 Nigel Webb, Director Media & Communications 020 7743 5938 BlackRock Investment Management (UK) Limited Or William Clutterbuck The Maitland Consultancy - 020 7379 5151 The Chairman, Alan Hodson, comments: Review of the year to 30 November 2006 'I am pleased to present the first annual report to shareholders of the Merrill Lynch Commodities Income Investment Trust, for the period ended 30 November 2006. 'During the period, the Company's net asset value (NAV) per share increased by 11.1% and the share price increased by 4.4% (both percentages calculated in sterling terms with net income reinvested). 'Trading in the mining and energy equity sectors was volatile throughout the year. Mineral prices increased across the board, but there was little growth in the oil price, despite wide fluctuations. Earnings and dividends grew strongly, enabling the Company to provide a satisfactory total return to shareholders. Revenue return and dividends 'Revenue return per share for the period was 5.28 pence. As set out in the Company's prospectus dated 22 November 2005, it is the Company's intention to pay four quarterly dividends. It was the Company's aim to achieve a dividend yield of 4.25% in our first year. We are pleased to have exceeded this target by paying dividends amounting to 4.50 pence per share in total during the period. 'It is the Company's aim to pay dividends amounting to at least 4.50 pence per share for the year ending 30 November 2007. Share capital 'The Company was launched on 13 December 2005 and 75,000,000 shares were issued at a price of 100 pence per share. A further 600,000 shares were issued on 4 May 2006 at a premium to NAV in excess of 6%. 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. During the period, the Company's shares have usually traded at a premium. In view of this, the Directors decided not to implement the August 2006 tender offer. The Directors, having consulted the Company's broker UBS, and a number of shareholders regarding the February 2007 tender offer, have concluded that they will again not implement this offer. Those shareholders consulted indicated that it was unlikely that they would wish to tender any shares and the Directors are mindful of the fact that, on this occasion, the shares have been trading at a small discount to NAV for a relatively short period of time. 'The current tender offer authority expires on 19 March 2007 and a resolution for its renewal will be put to shareholders at the forthcoming Annual General Meeting. Discount and share buybacks 'The Directors recognise the importance to investors of ensuring that any discount of the Company's share price to its underlying NAV is as small as possible. Accordingly, the Directors will monitor the discount closely and will consider share repurchases in the market if the discount to NAV widens significantly. 'The Directors have the authority from shareholders to buyback up to 14.99% of the Company's issued share capital. This authority, which has not so far been utilised, expires at the forthcoming Annual General Meeting on 19 March 2007 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 period was 8.8% and at 30 November 2006 gearing amounted to 4.2%. Outlook 'The strong growth in commodity prices has stagnated since the middle of 2006 but prices are likely to be supported by continued robust demand and muted supply growth. Equity valuations are attractive at current levels and the prospects for dividend growth and share buybacks continue to look favourable, most particularly in the mining sector.' Commenting upon the outlook for the Company, Richard Davis of BlackRock Investment Management (UK) Limited, the Investment Manager, notes: 'Notwithstanding the slowdown in the global economy, supply and demand fundamentals for the mining industry remain robust. Spot base metal prices, with the exception of copper are well above their 2006 averages. Strong Asian demand, supply side disruptions and delays to new projects could support metal prices at these levels going forward. Equities, which are trading on undemanding valuation metrics and have strong balance sheets, should be in a position to pay attractive dividends in 2007. 'In the energy market, non OPEC oil supply looks unlikely to grow significantly in 2008-10. However, 2007 could be a different story, as a handful of large delayed projects have led to a higher than average volume of new oil production being projected to hit the market. This is not a supply response to high oil prices - these projects were started before the oil price ratcheted up - but it does put emphasis on OPEC's resolve to balance the markets. If OPEC can maintain the oil price at current levels - and members have announced additional production cuts for 2007 at their December meeting - there is room in our view for energy equities to rally.' CONSOLIDATED INCOME STATEMENT for the period ended 30 November 2006 Revenue Capital Total return return Notes £'000 £'000 £'000 Income from investments held at fair value through profit or loss 3 4,763 - 4,763 Other operating income 3 1,296 - 1,296 ------- ------- ------- Total revenue 6,059 - 6,059 Gains on investments held at fair value through profit or loss - 4,577 4,577 ------- ------- ------- 6,059 4,577 10,636 Expenses Investment management fees 4 (227) (682) (909) Other expenses 5 (326) - (326) ------- ------- ------- Total operating expenses (553) (682) (1,235) ------- ------- ------- Profit before finance costs 5,506 3,895 9,401 and taxation ------- ------- ------- Finance costs (77) (193) (270) ------- ------- ------- Profit before taxation 5,429 3,702 9,131 ------- ------- ------- Taxation (1,450) 263 (1,187) ------- ------- ------- Profit for the period 3,979 3,965 7,944 ===== ===== ===== Return per ordinary share 7 5.28p 5.26p 10.54p ===== ===== ===== The total column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. All income is attributable to the equity holders of Merrill Lynch Commodities Income Trust plc. There are no minority interests. STATEMENTS OF CHANGES IN EQUITY for the period ended 30 November 2006 Share Share Special Capital Capital Retained Total capital premium reserve reserve - reserve - earnings account realised unrealised Group £'000 £'000 £'000 £'000 £'000 £'000 £'000 For period ended 30 November 2006 Net assets at launch on 13 December 2005 750 74,250 - - - - 75,000 Launch costs - (1,500) 20 - - - (1,480) Cancellation of share premium account - (72,750) 72,750 - - - - Shares issued 6 717 - - - - 723 Dividends paid (note 6) - - - - - (2,403) (2,403) Profit for the period on ordinary activities - - - 304 3,661 3,979 7,944 At 30 November 2006 756 717 72,770 304 3,661 1,576 79,784 Company For period ended 30 November 2006 Net assets at launch on 13 December 2005 750 74,250 - - - - 75,000 Launch costs - (1,500) 20 - - - (1,480) Cancellation of share premium account - (72,750) 72,750 - - - - Shares issued 6 717 - - - - 723 Dividends paid (note 6) - - - - - (2,403) (2,403) Profit for the period on ordinary activities - - - 304 4,285 3,355 7,944 At 30 November 2006 756 717 72,770 304 4,285 952 79,784 BALANCE SHEETS as at 30 November 2006 Group Company 2006 2006 Note £'000 £'000 Non current assets Investments held at fair value through 81,110 81,734 profit or loss Current assets Other receivables 3,310 3,310 Cash and cash equivalents 909 - --------- --------- 4,219 3,310 --------- --------- Total assets 85,329 85,044 --------- --------- Current liabilities Other payables (2,219) (1,934) Bank overdrafts (3,326) (3,326) --------- --------- (5,545) (5,260) --------- --------- Net assets 79,784 79,784 --------- --------- Equity attributable to equity holders Ordinary share capital 756 756 Share premium account 717 717 Special reserve 72,770 72,770 Capital reserve - realised 304 304 Capital reserve - unrealised 3,661 4,285 Retained earnings 1,576 952 --------- --------- Total equity 79,784 79,784 --------- --------- Net asset value per ordinary share 7 105.53p 105.53p ====== ====== CASH FLOW STATEMENTS for the period ended 30 November 2006 Group Company Note £'000 £'000 Operating activities Profit before taxation 9,131 8,799 Add back interest paid 270 258 Gains on investments held at fair value (4,577) (5,201) through profit or loss including transaction costs Increase in other receivables (320) (320) Increase in other payables 405 405 Increase in amounts due from brokers (2,829) (2,829) Increase in amounts due to brokers 1,236 1,236 Net purchases of investment held at fair value (76,538) (76,538) through profit or loss ---------- ---------- Net cash outflow from operating activities before interest (73,222) (74,190) and taxation ---------- ---------- Interest paid (270) (258) Net tax paid (245) (198) Tax on investment income included within gross (520) (520) income ---------- ---------- Net cash outflow from operating activities (74,257) (75,166) ---------- ---------- Financing activities Shares issued 75,723 75,723 Launch costs paid (1,485) (1,485) Equity dividends paid 6 (2,403) (2,403) ---------- ---------- Net cash inflow from financing activities 71,835 71,835 ---------- ---------- Decrease in cash and cash equivalents (2,422) (3,331) Cash and cash equivalents/(bank overdrafts) at - - start of the period Effect of foreign exchange rate changes 5 5 --------- --------- Cash and cash equivalents/(bank overdrafts) (2,417) (3,326) at the end of the period --------- --------- Comprised of: Cash at bank 909 - Bank overdrafts (3,326) (3,326) --------- --------- (2,417) (3,326) --------- --------- NOTES TO THE PRELIMINARY RESULTS 1. Principle activity (a) Basis of preparation The principal activity of the Company is that of an investment trust company within the meaning of section 842 of the Income and Corporation Taxes Act 1988. 2. Basis of preparation The Group and Parent Company financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985. The Company has taken advantage of the exemption provided under section 230 of the Companies Act 1985 not to publish its individual income statement and related notes. The Group's financial statements are presented in sterling, which is the currency of the primary environment in which the Group operates. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated. Insofar as the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Trust Companies ('AITC'), now known as the Association of Investment Companies ('AIC'), revised in December 2005 is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP. 3. Income 2006 £'000 Investment income: Overseas listed dividends 4,074 Fixed interest 93 UK listed dividends 596 -------- 4,763 -------- Other operating income: Deposit interest 138 Option premium income 1,143 Underwriting commission 15 -------- 1,296 -------- Total income 6,059 -------- Option premia are stated after deducting transaction costs incurred on the purchases and sales of investments. Investment income includes dividend income of £397,000 arising from investments sold ex-dividend within one month of purchase cum-dividend. 4. Investment management fees 2006 Revenue return Capital Total return return £'000 £'000 £'000 Investment management fees 214 644 858 Irrecoverable VAT 13 38 51 ------ ------ ------ 227 682 909 ------ ------ ------ 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 account and 75% to the capital account. 5. Other expenses 2006 £'000 Custody fee 97 Auditors' remuneration: - audit services 22 - non audit services 9 Directors' emoluments 55 Registrar's fee 20 Other administrative costs 123 -------- 326 -------- The Company's total expense ratio, calculated as a percentage of average net assets and 1.1% using expenses, and interest costs, after relief for taxation, was: -------- Non audit services relate to preparation of the initial accounts (£4,000), and the review of the interim financial statements (£5,000). 6. Dividends Under IFRS interim dividends are not recognised until paid. They are also debited directly to reserves. Amounts recognised as distributions to equity shareholders during the period to 30 November 2006: 2006 £'000 1st interim dividend paid on 28 April 2006 of 1.0625p 797 2nd interim dividend paid on 28 July 2006 of 1.0625p 803 3rd interim dividend paid on 27 October 2006 of 1.0625p 803 -------- 2,403 -------- For the period ended 30 November 2006, a 4th interim dividend of 1.3125p per ordinary share has been declared and will be paid on 26 January 2007, to shareholders on the Company's share register on 29 December 2006. The total dividends payable in respect of the period which form the basis of section 842 of the Income and Corporation Taxes Act 1998 are set out below: 2006 £'000 Revenue available for distribution by way of dividends 3,355 1st interim paid on 28 April 2006 of 1.0625p (797) 2nd interim paid on 28 July 2006 of 1.0625p (803) 3rd interim paid on 27 October 2006 of 1.0625p (803) 4th interim payable on 26 January 2007 of 1.3125p (992) -------- (40) -------- 7. Consolidated return per ordinary share and net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: 2006 £'000 Net revenue return attributable to ordinary shareholders 3,979 Net capital return attributable to ordinary shareholders 3,965 ---------- Total earnings attributable to ordinary shareholders 7,944 ---------- Equity shareholders funds 79,784 ---------- The weighted average number of ordinary shares in issue during each period, on which 75,357,955 the return per ordinary share was calculated, was The actual number of ordinary shares in issue at the end of the period, on which the 75,600,000 net asset value was calculated, was: Revenue return per share 5.28p Capital return per share 5.26p ---------- Total return per share 10.54p ---------- Net asset value per share 105.53p Share price 101.25p ---------- The annual report and accounts will be posted to shareholders in late January or early February 2007. Copies will also be available from the Company's registered office at 33 King William Street, London, EC4R 9AS. 19 January 2007 33 King William Street London EC4R 9AS This information is provided by RNS The company news service from the London Stock Exchange

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