Final Results
19 January 2010
BLACKROCK COMMODITIES INCOME INVESTMENT TRUST plc
Announcement of results in respect of the year ended
30 November 2009
Chairman's Statement
The year to 30 November 2009 has been a period of exceptional performance for
commodity markets. Following a year in which commodity equity prices tumbled in
response to the credit crisis, concern regarding global growth and demand for
commodities, the rate of recovery for many commodities and equities has been
extraordinary.
It is pleasing to report that the Company has performed well over the year as a
whole. The net asset value ("NAV") per share increased by 59.4% and the share
price rose by 74.9% (both percentages calculated in sterling terms with income
reinvested). Since the year end, the Company's NAV has increased by 8.5% and
the share price has risen by 13.2%.
Revenue return and dividends
Revenue return per share for the year was 5.74 pence (2008: 6.96 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
6. It was the Company's aim to pay dividends amounting to at least 5.40 pence
for the year ended 30 November 2009 and we are pleased to have exceeded this
target by paying dividends amounting to 5.50 pence per share in total in
respect of the year (2008: 5.40 pence).
It is the Company's aim to pay dividends amounting to at least 5.50 pence per
share for the year ending 30 November 2010. This is a target and should not be
interpreted as a profit forecast. This represents a yield of 4.6% based on the
share price as at close of business on 30 November 2009.
Share capital
During the year, and to the date of this report a total of 3,515,000 shares
were issued from treasury at a premium to NAV, details of which are set out in
note 8.
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 17 June 2009 that it had decided not to proceed with the
tender offer in August 2009.
On 22 December 2009 the Board announced that it was not in the interests of
shareholders to implement a semi-annual tender offer in February 2010.
Over the six month period to 30 November 2009, the Company's shares had traded
at an average premium to NAV of 1.8% compared to the discount of 2% to NAV, the
price at which any tender offer would be made.
A resolution for the renewal of the Company's tender authorities will be put to
shareholders at the forthcoming Annual General Meeting ("AGM").
Discount and share buy backs
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 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 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 earlier of the conclusion of the AGM, when a
resolution will be put to shareholders to renew it, and 12 September 2010.
Gearing
The Company operates a flexible gearing policy which depends on prevailing
conditions. The maximum gearing used during the year was 9.9% and at 30
November 2009 the Company was not geared.
VAT
I am pleased to report that following the success of the Association of
Investment Companies ("AIC") and JPMorgan Claverhouse Investment Trust plc
challenge to the imposition of VAT on management services supplied to
investment trusts, HM Revenue & Customs has now repaid all of the irrecoverable
VAT.
The total amount of VAT recovered amounts to £110,000 and a further small
amount relating to interest is due to be repaid shortly. The VAT recovered has
been credited to the Consolidated Income Statement.
AIFM Directive
The European Union's ("EU") draft "AIFM Directive" is a controversial measure
aimed at regulating alternative investment funds which, in its current form,
has major implications for your Company and other investment trusts.
The AIC believes that the draft AIFM Directive is not proportionate because it
threatens serious, negative consequences for all listed investment companies
without providing compensating benefits. These issues arise regardless of the
company's asset allocation, size, domicile or the market in which their shares
are traded. The AIC recognises the far reaching implications of the AIFM
Directive on listed investment companies and is currently engaged with the EU
to seek the development of rules which would allow the business model of the
listed investment company sector to continue (albeit with additional regulatory
obligations). BlackRock is also making representations to the EU to seek a
final form of the AIFM Directive which will regulate companies such as this one
in a more proportionate, fair and effective way.
New Articles of Association
At the forthcoming Annual General Meeting, shareholders will be asked to
approve new Articles of Association (the "Articles") in substitution for the
current Articles. The new Articles will take account of the implementation in
August 2009 of the Companies Act (Shareholders' Rights) Regulations 2009 and
October 2009 the final parts of the Companies Act 2006.
Outlook
We are reasonably cautious about the near term outlook for commodity markets,
as western economies recover from the financial crisis. Longer term, our
positive outlook on the sector continues unchanged.
Alan Hodson
19 January 2010
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 policy 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 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 section 842 of
ICTA. 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 section 842
are not breached and the results are reported to the Board at each meeting.
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 ("BNYM") and the Investment Manager also produce annual
internal controls reports which are reviewed by their respective auditors and
give assurance regarding the effective operation of controls.
Financial risks
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.
In addition, it should be noted that the unquoted investments in the Company's
portfolio are subject to liquidity risk. This is taken into consideration by
the Directors when determining the valuation of these holdings.
Related party transactions
The Investment Manager is regarded as a related party and details of the
investment management fees payable are set out in note 3.
Statement of Directors'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 applicable accounting
standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
- the annual report includes a fair view of the development and performance of
the business and the position of the Company, together with a description of
the principal risks and uncertainties that the Company faces.
Investment Manager's Report:
The Investment Manager is pleased to report that for the year to 30 November
2009, the Company's NAV returned 59.4%, while the share price rose by 74.9%.
The HSBC Global Mining and MSCI World Energy indices gained 102.8% and 13.4%
respectively, while the FTSE All Share Index was up 29.3%. (All data are in
sterling with income reinvested).
Commodity market overview
Commodity markets have had an excellent year in stark contrast to the dismal
returns of 2008. In the table below all but one of the exchange traded
commodities have made reasonable gains during the period. In fact, the CRB
Commodity Index, with a rise of 32.5%, had one of its best ever years.
Commodity equities have also performed well with the mining sector strongly
outperforming the broader equity markets.
30 November %
Commodity 2008 2009 Change
Base Metals (US$/tonne)
Aluminium 1,701 2,007 18.0
Copper 3,581 6,814 90.3
Lead 1,080 2,290 112.0
Nickel 9,703 16,028 65.2
Tin 12,308 14,795 20.2
Zinc 1,183 2,226 88.3
Precious Metals (US$/oz)
Gold 812.7 1,177.7 44.9
Silver 10.1 18.1 79.3
Platinum 876.0 1,442.0 64.6
Palladium 187.0 360.5 92.8
Energy
Oil (US$/Bbl)(1) 49.8 77.3 55.3
Natural Gas (US$/MMBTU)(2) 6.7 4.4 -34.3
Uranium (US$/lb)(3) 55.0 43.0 -21.8
Bulk Commodities
Iron ore (USc/dmtu)(4) 137.5 98.8 -28.2
Coking coal (US$/tonne)(5) 300.0 128.0 -57.3
Thermal coal (US$/ tonne)(5) 125.0 70.0 -44.0
Potash (US$/st)(6) 767.0 467.0 -39.1
Equity Indices
HSBC Global Mining Index (US$) 274.3 583.1 112.6
HSBC Global Mining Index (£) 178.7 355.3 98.8
MSCI World Energy Index (US$) 188.5 221.0 17.3
MSCI World Energy Index (£) 122.8 134.7 9.6
(1) West Texas Intermediate.
(2) Henry Hub.
(3) Nuexco Restricted, U3 O8.
(4) Vale's Carajás/Southern Sytem average fines price to Europe.
(5) FOB Australia.
(6) Standard Muriate, Saskatchewan.
Source: Datastream.
Figures in US dollar terms and on a capital only basis.
The sell-off in commodity markets during 2008 was the result of a collapse in
demand, as a consequence of the financial crisis. The recovery in 2009,
however, does not represent real demand pull. Four other factors are
responsible for the performance of commodities during the year under review.
- One of the key drivers of commodity prices in 2009 has been China. While the
OECD economies have struggled with recession, China's economy has registered
robust growth and the country's appetite for commodities has been voracious.
The State Reserves Bureau ("SRB"), as well as other state-owned enterprises and
listed entities, took advantage of the sell-off in commodities to make
strategic investments. It is estimated that China has imported up to 800,000
tonnes of copper in the year (representing around 4% of total global demand),
while aluminium, nickel, lead and zinc have also been purchased by the SRB.
- US dollar weakness has had an important influence on commodities. Copper
prices have risen 155% off their lows in US dollar terms, but "only" 139% in
euro and 91% in Australian dollars. The South African rand has also rallied
strongly - gold is up 45% in US dollars for the period under review,
significantly better that the 7% rand return over the same period. As
investors' appetite for risk has increased, money has flowed into the commodity
complex as a hedge against US dollar weakness and longer term inflation.
- Another factor supporting the market during the period has been the monetary
and fiscal stimulus packages in response to the financial crisis and economic
slowdown. These have been successful in reactivating the commodity supply
demand chain. Other government policies have encouraged the recycling of
automobiles - the "cash for clunkers" schemes - which have brought forward
commodity consumption.
- Commodity producers reacted quickly in shutting down production in 2008. At
the same time they reduced exploration and capital expenditure budgets. The
cutbacks were generally insufficient to offset fully the fall in demand. They
did, however, prevent a substantial build of inventory in some commodities,
thereby setting the scene for the recovery. (Recently, several production
shutdowns have been reactivated in response to the better pricing environment
and the recovery in demand).
The MG Base Metals Price Index has nearly doubled off its low, even though
inventories have built to record levels. It should be noted, however, that
around 80% of this metal is aluminium, the price of which has significantly
lagged the other base metals. Copper has been the Company's preferred base
metal during the period under review, and is up 90% driven largely by Chinese
restocking.
In bulk commodities, the slow-down in stainless steel production in 2008
influenced annual price negotiations in favour of the consumer. Settlements in
iron ore were significantly below 2008 levels, although they did remain ahead
of 2007 contract prices. At the start of 2009, it was estimated that China
would produce 425-475 million tonnes of steel. That figure is likely to be
exceeded by around 100 million tonnes. Consequently, between January and
November 2009, Chinese iron ore imports have risen nearly 40%. Analysts are now
forecasting an increase in contract prices for 2010. Elsewhere in the bulk
commodities market, contract coking and thermal coal prices were negotiated
down 57% and 44% respectively.
In the precious metals arena, gold prices made a new all-time high of US$1,191/
oz during the year. The metal's status as a hedge against US dollar weakness
and inflation has fuelled steady demand from investors. Against this backdrop,
there were a number of bullish developments, all relating to central banks.
These included a new Central Bank Gold Agreement ("CBGA") with a reduced sales
quota of 400 tonnes per annum; the purchase of 454 tonnes by China; and
finally, in early November, the Reserve Bank of India's purchase of 200 tonnes
from the IMF. Platinum and silver prices outperformed gold during the period.
These metals have more industrial applications and have greater leverage,
therefore, to the economic recovery.
Oil prices bottomed out at US$31/Bbl in December 2008 and have risen steadily
since then, peaking at US$81/Bbl in October. Supply demand data have been
generally bearish during the period - demand has been weak and inventories have
been above seasonal averages. Oil's price performance has been more to do with
its close correlation with US equity markets. Gas prices, by contrast, have
slumped approximately 34% during the year. In September, gas (Henry Hub) hit a
7-year low of US$1.92/MMBTU, down 88% from its high in December 2005. In the
US, demand has been weak, shale gas has been a growing source of supply and
inventories are at historically high levels. The European market has also
struggled with swollen inventories, weak demand and a surge in LNG supply.
Commodity equities have performed well during the year, especially the mining
shares. As investor appetite for risk grew during the period, commodity
producers took the opportunity to bolster their balance sheets through equity
or debt issuance. The Company has participated in some of these transactions.
In terms of corporate activity, the key development centred on Rio Tinto. The
company has joint-ventured its Western Australian iron ore assets with BHP
Billiton, in a deal announced in June, along with a US$15 billion rights issue.
Earlier, BHP Billiton had withdrawn from a takeover offer for Rio Tinto. In
early December 2009, ExxonMobil announced a bid for XTO Energy, one of the
Company's exploration & production investments. In the twelve months to
November 2009, the mining sector has outperformed the energy sector by 80%,
notwithstanding the strong performance in oil prices. The Investment Manager
has therefore taken profits in mining shares and reinvested the proceeds in
energy shares. The Company's option strategy also reflects this switch.
Portfolio review
At 30 November 2009, the portfolio held 49 investments in companies within the
mining and energy sectors. The Investment Manager's investment philosophy is
unchanged. The vast majority of these companies have low operating costs and
(importantly in this financial environment) balance sheet flexibility. The
portfolio remains well diversified from a geographic and commodity perspective.
Around 40.5% of net assets are invested in integrated oil and diversified
mining companies, which themselves provide geographic and commodity
diversification. A full breakdown of the Company's geographic and commodity
allocation can be seen in the following tables.
In terms of income, the Group generated £4.2m in net income during year, with
the dividend payments amounting to £4.1m. Consequently, the Investment Manager
is pleased to report that the Group's revenue reserves have increased by £0.1m.
A full analysis of income and expenses is contained in the notes to the
financial statements.
Asset Allocations
Geography
Global 21.2%
USA 19.3%
Canada 14.3%
Asia 12.6%
South Africa 9.7%
Europe 9.6%
Latin America 8.1%
China 2.1%
Australia 1.2%
Russia 1.1%
Africa 0.8%
Source: BlackRock.
Sector
Energy 54.8%
Mining 45.2%
Source: BlackRock.
Mining
Diversified 39.0%
Copper 13.9%
Gold 7.7%
Aluminium 7.5%
Fertilizer 7.3%
Iron Ore 7.2%
Platinum 5.1%
Nickel 4.9%
Zinc 4.0%
Tin 3.4%
Source: BlackRock.
Energy
Integrated oil 53.1%
Exploration & production 28.7%
Oil services 9.1%
Coal 6.9%
Distribution 2.2%
Source: BlackRock.
Outlook
In the long term, the outlook for commodity markets is positive. Demand growth
will be driven by the emerging economies, such as China and India, as their
intensity of use of commodities rises from relatively low levels. Supply growth
on the other hand will be constrained. In fact, supply growth will be even
weaker as a consequence of the significant cuts to capital budgets by commodity
producers. Under this scenario, commodity prices are likely to trend higher. In
the short term, the Investment Manager remains reasonably cautious. The key
issues that are likely to influence commodity markets in 2010, include, amongst
others, the level of Chinese imports, the extent of the restocking cycle in
OECD economies and the direction of the US dollar. In the meantime, the
Investment Manager will continue to focus on making long term investments in
companies with quality assets that are in production and which have a record of
returning cash to shareholders.
Richard Davis
BlackRock Investment Management (UK) Limited
19 January 2010
Ten Largest Investments (as a percentage of the investment portfolio)
Vale - 6.0% (2008: 3.4%, www.vale.com) based in Brazil, the company is the
second largest mining company in the world and the largest producer of iron
ore. The company has significant interests in other commodities including
aluminium, coal, copper and gold. Since the 2006 acquisition of Inco, Vale is
also a leading producer of nickel. In addition to its mining interests, Vale
owns and operates transport infrastructure.
FreeportMcMoRan Copper & Gold - 5.7% (2008: 2.7%, www.fcx.com) following the
acquisition of Phelps Dodge in 2007, Freeport became the world's largest
publicly traded copper company. The company's assets include the Grasberg mine
in Indonesia, the world's largest copper and gold mine. The company also
operates copper mines in the US, Chile and Peru. The Company has positions in
Freeport's equity and bond.
BHP Billiton - 5.4% (2008: 8.1%, www.bhpbilliton.com) is the world's largest
diversified natural resources company, formed in 2001 following the merger of
UK's Billiton and Australia's BHP. 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. In June 2009, Rio
Tinto and BHP Billiton agreed to joint venture their iron ore assets in the
Pilbara region of Western Australia.
BP - 4.3% (2008: 4.2%, www.bp.com) is one of the world's leading energy
providers and one of the six "supermajors". (The other supermajors are Chevron,
ConocoPhillips, Exxon, Royal Dutch Shell and Total.) The company's exploration
& production division operates in 29 countries. BP produces around 3.9m barrels
of oil equivalent per day and has refining capacity of 2.7m barrels of oil per
day.
Sasol - 4.1% (2008: nil, www.sasol.com) is an integrated energy and chemicals
company based in South Africa. The company produces oil, gas and coal, as well
as liquid fuels, fuel components and chemicals through proprietary
technologies. Sasol is a world leader in coal to liquid technology, which
converts coal into liquid fuels.
Rio Tinto - 4.1% (2008: 3.3%, 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. For much of 2008, Rio Tinto
was the subject of a hostile bid by its rival BHP Billiton. In November 2008,
BHP Billiton withdrew its bid for the company due in part to worsening
financial markets. Rio Tinto - in an attempt to refinance its sizeable debt
burden - then announced its intention to sell a convertible bond and minority
stakes in some assets to Chinalco, the Chinese state aluminium company.
Subsequent to that announcement, equity markets rallied and Rio decided to
raise funds by way of a rights issue instead. At the same time, Rio Tinto
raised additional funds by joint venturing its Pilbara iron ore assets with BHP
Billiton.
Statoil - 3.5% (2008: 3.5%, www.statoil.com) was established in October 2007
following the merger of Statoil with Norsk Hydro's oil and gas assets and is
the leading operator on the Norwegian continental shelf. The company is one of
the world's leading suppliers of gas and the largest supplier of petroleum
products in Scandinavia. Statoil is also a world leader in the use of deepwater
technology and in carbon capture and storage.
Total - 3.3% (2008: 4.2%, www.total.com) is one of the largest publicly-traded
integrated oil and gas companies in the world. The company's key production
regions are the North Sea, Africa and the Middle East. Total is Western
Europe's leader in refining and marketing and one of the world's major traders
of crude oil and refined products. Total also produces petrochemical and
fertilizer products and has interests in coal mining and the power generation
sector.
Kumba Iron Ore - 3.3% (2008: 1.6%, www.kumba.co.za) is the world's fourth
largest supplier of sea-borne 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 63% of the outstanding
shares in Kumba.
Anadarko Petroleum - 3.2% (2008: 3.2%, www.anadarko.com) is one of the largest
independent oil and gas exploration & production companies in the world. The
company's assets include 10 major onshore US natural gas plays. Anadarko is
also the largest independent producer in the deepwater Gulf of Mexico. The
company also operates in Alaska, Algeria, Brazil, China, Ghana, Indonesia and
Mozambique. In 2009, Anadarko was part of a consortium that discovered oil off
the coast of Ghana. The discovery could open up a new petroleum province
stretching for more than 1,000km in deep waters offshore West Africa.
Investments
as at 30 November 2009
Main Market
geographic value % of
exposure £'000 Investments
Integrated oil
BP Global 3,735 4.3
Sasol South
Africa 3,576 4.1
Statoil Europe 2,983 3.5
Total Global 2,828 3.3
Exxon Mobil Global 2,287 2.7
Occidental Petroleum USA 2,215 2.6
Eni Europe 2,113 2.5
ConocoPhillips USA 1,703 2.0
Chevron Global 1,308 1.5
Marathon Oil USA 994 1.2
Hess USA 706 0.8
Petrol Brasileiros Latin
America 625 0.7
Petrol Brasileiros put option Latin
19/12/09 America (9) 0.0
ConocoPhillips put option
16/01/10 USA (25) 0.0
Occidental Petroleum put option
16/01/10 USA (43) (0.1)
-------- -------
24,996 29.1
-------- -------
Diversified
Vale^ Latin
America 5,138 6.0
BHP Billiton Global 4,644 5.4
Rio Tinto Global 2,777 3.2
Teck Resources 10.75% 15/05/19 Canada 1,423 1.7
Rio Tinto Finance 8.95%
01/05/14 Global 733 0.9
Sterlite Industries Asia 559 0.7
Sterlite Industries call option
20/03/10 Asia (40) 0.0
Vale call option 16/01/10 Latin
America (47) (0.1)
BHP Billiton call option
15/01/10 Global (51) (0.1)
-------- -------
15,136 17.7
-------- -------
Exploration & production
Anadarko Petroleum USA 2,721 3.2
Niko Resources Asia 2,674 3.1
Peyto Energy Trust Canada 1,769 2.1
Encana Canada 1,471 1.7
Nexen Canada 1,444 1.7
XTO Energy USA 1,421 1.7
Crescent Point Energy Trust
Units Canada 1,142 1.3
Denbury Resources USA 888 1.0
Newfield Exploration put option
19/12/09 USA (80) (0.1)
-------- -------
13,450 15.7
-------- -------
Copper
Freeport McMoRan Copper & Gold^ Asia 4,933 5.7
Katanga Mining 14% S/Nts
30/11/13 Africa 533 0.6
Freeport McMoRan call option
16/01/10 Asia (58) (0.1)
-------- -------
5,408 6.2
-------- -------
Oil services
KBR USA 1,532 1.8
Schlumberger USA 1,401 1.6
SBM Offshore Europe 946 1.1
Precision Drilling Trust Canada 382 0.4
-------- -------
4,261 4.9
-------- -------
Coal
China Shenhua Energy China 1,783 2.1
Straits Asia Resources Asia 1,445 1.7
-------- -------
3,228 3.8
-------- -------
Gold
Goldcorp Canada 1,024 1.2
Barrick Gold Canada 910 1.1
Petropavlovsk 7.125%
Convertible Bonds 11/08/10 Russia 904 1.1
High River Gold 8% Convertible
Bonds 31/12/11* Africa 191 0.2
Goldcorp call option 16/01/10 Canada (52) (0.1)
-------- -------
2,977 3.5
-------- -------
Aluminium
Alcoa USA 1,907 2.2
Alumina Australia 1,027 1.2
-------- -------
2,934 3.4
-------- -------
Fertilizers
Potash Corporation of
Saskatchewan Canada 1,713 2.0
Agrium USA 1,191 1.4
Potash Corporation of
Saskatchewan put option
16/01/10 Canada (51) (0.1)
-------- -------
2,853 3.3
-------- -------
Iron Ore
Kumba Iron Ore South
Africa 2,789 3.3
-------- -------
2,789 3.3
-------- -------
Platinum
Impala Platinum South
Africa 1,970 2.3
-------- -------
1,970 2.3
-------- -------
Nickel
International Nickel Indonesia Asia 1,334 1.6
Eramet Europe 571 0.7
-------- -------
1,905 2.3
-------- -------
Zinc
Nyrstar Europe 1,539 1.8
-------- -------
1,539 1.8
-------- -------
Tin
Minsur Latin
America 1,305 1.5
-------- -------
1,305 1.5
-------- -------
Distribution
Enbridge Income Fund Trust Canada 1,043 1.2
-------- -------
1,043 1.2
-------- -------
Portfolio 85,794 100.0
-------- -------
^Ordinary and preference shares
* Unquoted investment at Directors' valuation
2009 2008
£'000 £'000
Equity 82,466 58,691
Fixed Interest 3,784 4,941
Options (456) (246)
-------- -------
85,794 63,386
-------- -------
All investments are in ordinary shares unless otherwise stated.
The total number of holdings as at 30 November 2009 was 49 (2008: 61)
The total number of open options as at 30 November 2009 was 10 (2008: 5)
The negative valuations of £456,000 in respect of options held represent the
notional cost of repurchasing the contracts at market prices as at 30 November
2009.
CONSOLIDATED INCOME STATEMENT
for the year ended 30 November 2009
Revenue Revenue Capital Capital Total Total
2009 2008 2009 2008 2009 2008
Notes £'000 £'000 £'000 £'000 £'000 £'000
Income from investments held at fair value
through profit or loss 2 3,412 4,369 - - 3,412 4,369
Other income 2 2,471 2,962 - - 2,471 2,962
----- ----- ------ ------ ------ ------
Total revenue 5,883 7,331 - - 5,883 7,331
Gains/(losses) on investments held at fair
value through profit or loss - - 30,023 (55,148) 30,023 (55,148)
----- ----- ------ ------ ------ ------
5,883 7,331 30,023 (55,148) 35,906 (47,817)
Expenses
Investment management fees 3 (215) (294) (648) (882) (863) (1,176)
Write back of prior years' VAT 3 27 - 83 - 110 -
Other expenses 4 (251) (199) - - (251) (199)
----- ----- ------ ------ ------ ------
Total operating expenses (439) (493) (565) (882) (1,004) (1,375)
----- ----- ------ ------ ------ ------
Profit/(loss) before finance costs and
taxation 5,444 6,838 29,458 (56,030) 34,902 (49,192)
----- ----- ------ ------ ------ ------
Finance costs 5 (20) (142) (35) (407) (55) (549)
----- ----- ------ ------ ------ ------
Profit/(loss) before taxation 5,424 6,696 29,423 (56,437) 34,847 (49,741)
----- ----- ------ ------ ------ ------
Taxation (1,194) (1,782) 168 369 (1,026) (1,413)
----- ----- ------ ------ ------ ------
Profit/(loss) for the year 4,230 4,914 29,591 (56,068) 33,821 (51,154)
===== ===== ====== ====== ====== ======
Earnings/(loss) per ordinary share 7 5.74p 6.96p 40.13p (79.44p) 45.87p (72.48p)
===== ===== ====== ====== ====== ======
The total column of this statement represents the Consolidated Income
Statement, prepared in accordance with IFRS. The supplementary revenue and
capital return columns are both prepared under guidance published by the AIC.
The Company had no recognised gains or losses other than those disclosed in the
Consolidated Income Statement. 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.
STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 November 2009
Ordinary Share
Share premium Special Capital Revenue
capital account reserve reserve reserve Total
Group £'000 £'000 £'000 £'000 £'000 £'000
For year ended 30 november 2009
At 30 November 2008 756 1,223 67,355 (15,310) 3,601 57,625
Net profit for the year - - - 29,591 4,230 33,821
Proceeds of sale of shares
from treasury - - 2,865 - - 2,865
Cost of sale of shares
from treasury - - (1) - - (1)
Dividends paid (note 6) - - - - (4,050) (4,050)
At 30 November 2009 756 1,223 70,219 14,281 3,781 90,260
For year ended 30 November 2008
At 30 November 2007 756 737 64,987 40,758 2,780 110,018
Net (loss)/profit for the year - - - (56,068) 4,914 (51,154)
Proceeds of sale of shares
from treasury - 486 2,371 - - 2,857
Cost of sale of shares
from treasury - - (3) - - (3)
Dividends paid (note 6) - - - - (4,093) (4,093)
At 30 November 2008 756 1,223 67,355 (15,310) 3,601 57,625
Company
For year ended 30 November 2009
At 30 November 2008 756 1,223 67,355 (13,048) 1,339 57,625
Net profit for the year - - - 29,664 4,157 33,821
Proceeds of sale of shares
from treasury - - 2,865 - - 2,865
Cost of sale of shares
from treasury - - (1) - - (1)
Dividends paid (note 6) - - - - (4,050) (4,050)
At 30 November 2009 756 1,223 70,219 16,616 1,446 90,260
For year ended 30 November 2008
At 30 November 2007 756 737 64,987 41,927 1,611 110,018
Net (loss)/profit for the year - - - (54,975) 3,821 (51,154)
Proceeds of sale of shares
from treasury - 486 2,371 - - 2,857
Cost of sale of shares
from treasury - - (3) - - (3)
Dividends paid (note 6) - - - - (4,093) (4,093)
At 30 November 2008 756 1,223 67,355 (13,048) 1,339 57,625
BALANCE SHEETS
as at 30 November 2009
Group Company Group Company
2009 2009 2008 2008
Notes £'000 £'000 £'000 £'000
Non current assets
Investments held at fair value through profit or loss 85,794 88,129 63,386 65,648
Current assets
Investments held at fair value through profit or loss 1,422 1,422 - -
Other receivables 887 887 571 571
Cash and cash equivalents 2,931 238 2,778 211
------ ------ ------ ------
5,240 2,547 3,349 782
------ ------ ------ ------
Total assets 91,034 90,676 66,735 66,430
------ ------ ------ ------
Current liabilities
Other payables (763) (405) (731) (426)
Bank overdrafts (11) (11) (8,379) (8,379)
------ ------ ------ ------
(774) (416) (9,110) (8,805)
------ ------ ------ ------
Net assets 90,260 90,260 57,625 57,625
------ ------ ------ ------
Equity attributable to equity holders
Ordinary share capital 8 756 756 756 756
Share premium account 1,223 1,223 1,223 1,223
Special reserve 70,219 70,219 67,355 67,355
Capital reserve 14,281 16,616 (15,310) (13,048)
Revenue reserve 3,781 1,446 3,601 1,339
------- ------- ------- -------
Total equity 90,260 90,260 57,625 57,625
------- ------- ------- -------
Net asset value per ordinary share 7 120.63p 120.63p 80.25p 80.25p
======= ======= ====== ======
CASH FLOW STATEMENTS
for the year ended 30 November 2009
Group Company Group Company
2009 2009 2008 2008
Note £'000 £'000 £'000 £'000
Operating activities
Profit/(loss) before taxation 34,847 34,157 (49,741) (50,602)
Add back interest paid 81 73 553 546
(Gains)/losses on investments held at fair value
through profit or loss including transaction
costs (30,023) (30,096) 55,148 54,055
Decrease in other receivables 125 125 312 312
Increase/(decrease) in other payables 64 64 (113) (113)
(Increase)/decrease in amounts due from
brokers (444) (444) 602 602
Decrease in amounts due to brokers - - (824) (824)
Movements in investments held at fair value
through profit or loss 7,593 7,593 (5,830) (5,830)
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 10,821 10,050 107 (1,854)
----- ----- ----- -----
Interest paid (81) (73) (553) (546)
Taxation paid (797) (160) (1,397) (316)
Taxation on investment income included
within gross income (258) (258) (364) (364)
----- ----- ----- -----
Net cash inflow/(outflow) from operating
activities 9,685 9,559 (2,207) (3,080)
----- ----- ----- -----
Financing activities
Shares issued 2,864 2,864 2,854 2,854
Equity dividends paid 6 (4,050) (4,050) (4,093) (4,093)
----- ----- ----- -----
Net cash outflow from financing activities (1,186) (1,186) (1,239) (1,239)
----- ----- ----- -----
Increase/(decrease) in cash and cash
equivalents 8,499 8,373 (3,446) (4,319)
----- ----- ----- -----
Cash and cash equivalents at start of the year (5,601) (8,168) (2,312) (4,006)
Effect of foreign exchange rate changes 22 22 157 157
----- ----- ----- -----
Cash and cash equivalents at end of the
year 2,920 227 (5,601) (8,168)
----- ----- ----- -----
Comprised of:
Cash and cash equivalents 2,931 238 2,778 211
Bank overdrafts (11) (11) (8,379) (8,379)
----- ----- ----- -----
2,920 227 (5,601) (8,168)
----- ----- ----- -----
NOTES TO THE RESULTS
1. 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 income statement and related notes.
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
indicated.
Insofar as the Statement of Recommended Practice ("SORP") for investment 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.
2. Income
2009 2008
£'000 £'000
Investment income:
Overseas listed dividends 2,462 3,461
Fixed interest 460 395
UK listed dividends 490 513
----- -----
3,412 4,369
----- -----
Other operating income:
Deposit interest 5 128
Option premium income and stock lending
income 2,466 2,834
----- -----
2,471 2,962
----- -----
Total income 5,883 7,331
----- -----
Option premium income is stated after deducting transaction costs incurred on
the purchases and sales of investments.
At 30 November 2009 no securities were held out on loan (2008: nil).
3. Investment management fees
Revenue Capital Total Revenue Capital Total
2009 2009 2009 2008 2008 2008
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 215 648 863 294 882 1,176
Write back of prior years' VAT (27) (83) (110) - - -
--- --- --- --- --- -----
188 565 753 294 882 1,176
--- --- --- --- --- -----
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.
Following the outcome of the JPMorgan Claverhouse case, management fees are now
exempt from VAT.
4. Other expenses
2009 2008
£'000 £'000
Custody fee 13 25
Auditor's remuneration:
- audit services 22 21
- other services 5 5
Directors' emoluments 63 60
Registrar's fee 31 19
Other administrative costs 117 69
---- ----
251 199
---- ----
The Company's total expense ratio, calculated as a percentage of average
net assets and using expenses, excluding interest costs and VAT written
back, after relief for taxation, was: 1.1% 1.2%
---- ----
Other services comprise £5,000 (2008: £4,500) relating to the review of the
half yearly financial statements.
5. Finance costs
Revenue Capital Total Revenue Capital Total
2009 2009 2009 2008 2008 2008
£'000 £'000 £'000 £'000 £'000 £'000
Interest on bank overdrafts 20 35 55 142 407 549
--- --- --- --- --- ---
Finance costs are charged 25% to the revenue account and 75% to the capital
account.
6. Dividends
Under IFRS final dividends are not recognised until approved by shareholders.
They are also debited directly to reserves. The dividends disclosed in the
table below have been considered in view of the requirements of section 842 of
ICTA 1988 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 2009 were as follows:
2009 2008
£'000 £'000
Fourth interim dividend for the year
ended 30 November 2008 - 1.4625p (2007: 1.875p) 1,050 1,305
First interim dividend for the year ended
30 November 2009 - 1.35p (2008: 1.3125p) 986 929
Second interim dividend for the year ended
30 November 2009 - 1.35p (2008: 1.3125p) 1,004 929
Third interim dividend for the year ended
30 November 2009 - 1.35p (2008: 1.3125p) 1,010 930
----- -----
4,050 4,093
----- -----
For the year ended 30 November 2009, a fourth interim dividend of 1.45p (2008:
1.4625p) per ordinary share has been declared and will be paid on 29 January
2010, to shareholders on the Company's register on 29 December 2009.
The total dividends payable in respect of the year which form the basis of
section 842 of the Income and Corporation Taxes Act 1988 are set out below:
2009 2008
£'000 £'000
First interim paid on 24 April 2009 - 1.35p
(2008: 1.3125p) 986 929
Second interim paid on 24 July 2009 - 1.35p
(2008: 1.3125p) 1,004 929
Third interim paid on 23 October 2009 -
1.35p (2008: 1.3125p) 1,010 930
Fourth interim payable on 29 January 2010
- 1.45p (2009: 1.4625p) 1,085 1,050
----- -----
4,085 3,838
----- -----
7. Consolidated earnings 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:
2009 2008
Net revenue return attributable to ordinary shareholders
(£'000) 4,230 4,914
Net capital return attributable to ordinary shareholders
(£'000) 29,591 (56,068)
------ ------
Total earnings attributable to ordinary shareholders
(£'000) 33,821 (51,154)
------ ------
Equity shareholders' funds (£'000) 90,260 57,625
------ ------
The weighted average number of ordinary shares in issue
during each period, on which the return per ordinary share
was calculated, was: 73,739,251 70,573,777
The actual number of ordinary shares in issue at the
year end, on which the net asset value was calculated, was: 74,825,662 71,810,662
The number of ordinary shares in issue including
treasury shares at the year end, was: 75,600,000 75,600,000
Revenue return per share 5.74p 6.96p
Capital return per share 40.13p (79.44p)
------- -------
Total earnings per share 45.87p (72.48p)
------- -------
Net asset value per share 120.63p 80.25p
Share price 119.75p 72.50p
------- -------
As the Company's share price at 30 November 2009 stood at a discount to the
NAV, shares could not be sold out of treasury and consequently there was no
dilution to the Company's NAV or return per share at the year end date.
8. Share Capital
Ordinary Treasury Total
shares shares shares
number number number £'000
Authorised share capital
comprised:
Ordinary shares of 1p each 505,000,000 - 505,000,000 5,050
----------- --------- ----------- -----
Allotted, issued and fully
paid:
Shares in issue at 30
November 2008 71,810,662 3,789,338 75,600,000 756
Shares transferred from
treasury 3,015,000 (3,015,000) - -
---------- --------- ---------- -----
At 30 November 2009 74,825,662 774,338 75,600,000 756
---------- --------- ---------- -----
During the year 3,015,000 ordinary shares were sold from treasury at an average
price of 95p per share for a total consideration of £2,864,000 net of issue
costs (2008: 2,200,000 shares were sold from treasury for a consideration of
£2,854,000). The number of ordinary shares in issue at the year end was
75,600,000 of which 774,338 were held in treasury (2008: 3,789,338). Since
30 November 2009 500,000 ordinary shares have sold from treasury at a premia to
NAV for a total consideration of £672,500. The number of ordinary shares in
issue at date of this report was 75,600,000 of which 274,338 were held in
treasury.
9. 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 2009 annual report
and financial statements will be filed with the Registrar of Companies after
the Annual General Meeting.
The report of the Auditor for the year ended 30 November 2009 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 2008, 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 19 January 2010.
10. Annual Report
Copies of the annual report will be sent to members shortly and will be
available from the registered office, c/o The Company Secretary, BlackRock
Commodities Income Investment Trust plc, 33 King William Street, London EC4R
9AS. This report will also be available on the BlackRock Investment Management
website at www.blackrock.com.uk/its.
11. Annual General Meeting
The Annual General Meeting of the Company will be held at 33 King William
Street, London EC4R 9AS on Tuesday, 16 March 2010 at 10:30 a.m.
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
William Clutterbuck, The Maitland Consultancy
Tel: 020 7379 5151
19 January 2010
33 King William Street
London EC4R 9AS
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