Half-yearly Report
BLACKROCK COMMODITIES INCOME INVESTMENT TRUST plc
Half Yearly Financial Report 31 May 2011
The Company's objectives are to achieve an annual dividend target and, over the
long term, capital growth by investing primarily in securities of companies
operating in the mining and energy sector.
Financial Highlights
31 May 30 November
2011 2010 Change
Attributable to ordinary shareholders (unaudited) (audited) %
Assets
Net assets (£'000) 137,175 125,848 9.0
Net asset value per ordinary share 151.56p 139.05p 9.0
- with income reinvested 11.0
Ordinary share price (mid-market) 150.50p 143.00p 5.2
- with income reinvested 7.2
For the six For the six
months ended months ended
31 May 31 May
2011 2010 Change
(unaudited) (unaudited) %
Revenue
Net revenue after taxation (£'000) 2,872 2,657 +8.1
Return per ordinary share* 3.17p 3.53p -10.2
*Further details are given in note 6.
Performance to 31 May 2011
Launch
Six One 13 December
months year 2005
Net asset value per ordinary share
- with income reinvested 11.0% 25.2% 96.7%
Ordinary share price (mid-market)
- with income reinvested 7.2% 24.0% 91.4%
Source: BlackRock.
Chairman's Statement
Performance
During the six month period to 31 May 2011 commodity markets continued to
perform well despite uncertainties about the global economy, political
instability in North Africa and the Middle East and concerns over Eurozone
sovereign debt which affected market sentiment and equity pricing.
Against this background the Company's net asset value ("NAV") per share
increased by 11.0% and the share price rose by 7.2% (both percentages in
sterling terms with income reinvested). Further information on investment
performance is given in the Investment Manager's Report.
Since the period end, the Company's NAV has increased by 1.0% and the share
price has risen by 2.7% (with income reinvested).
Revenue return and dividends
Revenue return per share for the six month period was 3.17 pence (six months to
31 May 2010: 3.53 pence). The target for the year ending 30 November 2011 is to
pay dividends amounting to at least 5.60 pence per share in total (this is a
target and should not be interpreted as a profit or dividend forecast)(2010:
target of 5.50 pence). The first quarterly dividend of 1.4 pence per share was
paid on 21 April 2011 and the second quarterly dividend of 1.4 pence per share
will be paid on 22 July 2011 to Shareholders on the register on 1 July 2011
(2010: three interim dividends each of 1.375 pence per share and a fourth
interim dividend of 1.475 pence per share, together with two special dividend
payments, the first of 1.0 pence per share and the second of 0.52 pence per
share).
Tender offer
The Directors of the Company have the discretion to make semi-annual tender
offers in February and August of each year at the prevailing NAV, less 2%, for
up to 20% of the Company's issued share capital.
The Company announced on 21 June 2011 that over the six month period to 31 May
2011 the Company's shares traded at an average premium to NAV of 1.9% and have
ranged between a premium of 5.5% and a discount of 3.0%. Given that the average
is significantly better than a discount of 2% to NAV, the price at which any
tender offer would be made, the Board has concluded that it is not in the
interests of shareholders to implement the tender offer as at 31 August 2011.
Gearing
The Company operates a flexible gearing policy which depends on prevailing
market conditions. The maximum gearing used during the period was 3.5% which
was the level of gearing at 31 May 2011.
Prospects
It is difficult to predict the short term outlook for commodity markets in view
of uncertainties relating to the global economy and concerns about Eurozone
debt. However, as a result of demand growth coupled with weak supply growth we
remain positive on the long term outlook for the sector.
Alan Hodson
21 July 2011
Interim Management Report and Responsibility Statement
The Chairman's Statement and the Investment Manager's Report give details of
the important events which have occurred during the period and their impact on
the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
- Performance;
- Income/dividend;
- Regulatory;
- Operational;
- Market; and
- Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 30
November 2010. A detailed explanation can be found on pages 16 and 17 of the
Annual Report and Financial Statements which are available on the website
maintained by the Investment Manager, BlackRock Investment Management (UK)
Limited, at www.blackrock.co.uk/brci.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Related party transactions
The Investment Manager is regarded as a related party and details of the
management fees payable are set out in note 3 and note 8. The related party
transactions with the Directors are also set out in note 8.
Directors'responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with International Accounting
Standard 34 `Interim Financial Reporting'; and
- the interim management report together with the Chairman's Statement and
Investment Manager's Report, include a fair review of the information required
by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
The half yearly financial report was approved by the Board on 21 July 2011 and
the above responsibility statement was signed on its behalf by the Chairman.
Alan Hodson
For and on behalf of the Board
21 July 2011
Investment Manager's Report
Summary
The Investment Manager is pleased to report that for the six month period to
31 May 2011, the Company's NAV returned 11.0% and the share price 7.2%.
Over the same period, the HSBC Global Mining and the MSCI World Energy indices
gained 3.4% and 16.0% respectively, while the FTSE All Share Index was up
10.8%. (All percentages are in sterling with income reinvested).
Commodity Market Overview
Commodity prices were stronger across the board during the period under review,
with the exception of uranium, as shown in the following table. Generally,
price moves reflected supply-demand fundamentals. Demand has been strong, not
only in the emerging economies, but also in the OECD countries, where the
recovery in commodity consumption has been better than expected. Supply growth,
on the other hand, remains constrained and capacity utilisation for some
commodities has been sub-par, due to weather related events for example.
Meanwhile, political unrest in the Middle East and North Africa ("MENA") has
buoyed oil and gold markets. Commodity equities are generating record cashflows
and earnings and many have raised dividends and share buy-backs. Their
valuations, however, have fluctuated according to investor sentiment. The so
called "risk on - risk off" trading patterns have generated volatility and in
some cases a disconnect from the performance of the underlying commodity.
In April and May, markets adopted a more bearish tone, the "risk-off" trade, as
investors refocused their attention on some of the near term headwinds facing
capital markets, namely the likelihood of Greece defaulting on debt repayments
and the release of poor economic data out of the US. Commodity markets were
weaker and closed the period below their recent highs.
30 November 31 May %
Commodity 2010 2011 Change
Base Metals (US$/tonne)
Aluminium 2,255 2,662 18.1
Copper 8,418 9,202 9.3
Lead 2,214 2,536 14.5
Nickel 22,998 23,587 2.6
Tin 24,497 27,882 13.8
Zinc 2,105 2,247 6.8
Precious Metals (US$/oz)
Gold 1,358.2 1,538.1 13.3
Silver (USc/oz) 2,713.0 3,865.0 42.5
Platinum 1,658.0 1,828.0 10.3
Palladium 697.0 777.0 11.5
Energy
Oil (WTI) (US$/Bbl) 1 84.1 102.7 22.1
Oil (Brent) (US$/Bbl) 2 86.1 116.9 35.8
Natural Gas (US$/MMBTU) 3 4.2 4.6 9.5
Uranium (US$/lb) 4 59.9 57.0 -4.8%
Bulk Commodities (US$/tonne)
Iron ore 5 167.8 169.8 1.2%
Coking coal 6 228.0 299.0 31.1%
Thermal coal 7 108.5 119.5 10.1%
Potash (US$/st) 8 473.0 510.0 7.8%
Equity Indices
HSBC Global Mining Index (US$) 682.5 740.3 8.5%
HSBC Global Mining Index (£) 438.2 449.8 2.6%
MSCI World Energy Index (US$) 222.6 269.5 21.1%
MSCI World Energy Index (£) 142.9 163.8 14.6%
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 (except where otherwise indicated).
Figures in US dollar terms and on a capital only basis.
Looking at the individual commodities, copper prices gained 9.3% in US dollar
terms. The strength in prices has been driven simply by supply and demand growth.
Copper demand expanded by 9% in 2010 to 18.7 million tonnes, a record level.
Falling grades and a paucity of new large scale projects have contributed to the
supply deficit. Aluminium was the best performing base metal during the period.
Like copper, demand has also surprised on the upside. Global consumption in 2010
rose by an astonishing 20% to a record 41 million tonnes. Nickel prices made modest
gains on the back of a 23% increase in 2010 stainless steel output, underpinned by
the expansion of the Chinese economy. Zinc made gains during the period, despite
the fact that short term fundamentals remain challenged. The zinc market is expected
to register another surplus this year and London Metal Exchange ("LME")
inventories stand at a 16 year high. Lead, the worst performing base metal in
2010, has seen strong demand this year from replacement battery markets and new
vehicle output in China. Tin has enjoyed further price strength following its
excellent performance in 2010. The world's largest tin miner, PT Timah, based
in Indonesia, announced that its production for 2010 had fallen by 10%.
In bulk commodities, heavy rains in Queensland, which resulted in some of the
worst flooding for five decades, caused around 40 coal mines to close.
Australia is the world's largest supplier of coking coal and companies such as
BHP Billiton, Rio Tinto and Xstrata declared force majeure as they were unable
to meet obligations to customers. Prices for coking coal moved above the US$350
/t at one point, substantially higher than the 31 December price of US$232/t.
Iron ore prices also remain strong. Prices have been supported by ongoing
strength in Chinese demand and a tax imposed on Indian exports as well as other
supply-side constraints.
In the precious metals sector, gold prices registered a new all time high of
US$1,564/oz in April. Investment demand continues to be the key determinant of
prices. This in turn has been driven by ongoing concerns about inflation,
currency weakness, political turmoil in the MENA region and Eurozone sovereign
debt. Physically backed ETFs, a measure of investment demand, now hold over
2,000 tonnes of gold, worth nearly US$100 billion. Central bank activity has
also been supportive, with Mexico recently announcing a purchase. While bullion
has performed well, the gold equities have been disappointing. Over the six
month period to May, the metal gained 13.2% but the equities fell 0.9% in US
dollar terms. This underperformance is due in part to the headwinds affecting
equity markets in general.
Investment in the silver market saw prices surge as it retested the previous
peak of US$50/oz set more than 30 years ago when the Hunt Brothers tried to
corner the market. In May, however, the white metal plummeted 21%, as COMEX
raised margin requirements, which pushed a number of speculative investors out
of the market. At 31 May, the gold:silver ratio stood at 40:1, down from 65:1
at the start of 2010. Silver's fundamentals are, in the Investment Manager's
view, not as strong as those driving gold prices. Elsewhere in precious metals
markets, platinum prices rose on supply-side constraints coupled with a
recovery in demand from auto catalysts. Palladium has outperformed platinum due
to tighter fundamentals, while the Russian stockpile, if not yet depleted, has
certainly been reduced.
Oil prices rose back above the US$100/Bbl level during the period, a gain of
22.1%. Political unease in the MENA region played an important role in oil's
price move. The problems began in Egypt, where concerns about the operational
status of the Suez Canal pushed oil higher, although the gains were driven more
by the threat of the unrest spreading to other countries. According to the
International Energy Agency ("IEA"), Egypt accounts for only 0.74MBbl/day out
of an 88.1MBbl/day global market. Libya, however, is a more significant
producer and the unrest here took around 1MBbl/day of supply out of the market
in February. Oil prices (Brent) broke up through the US$120/Bbl level. While
political issues in the MENA region had a significant impact on prices, firmer
demand growth has also provided some support. Early in the year, this was
evidenced by upward revisions to 2011 demand estimates by both OPEC and the
IEA. Importantly, the revisions were global and not confined to emerging
economies. A consequence of this demand has been a gradual erosion in spare
capacity in the system. It is estimated that OPEC spare capacity has fallen
below the 5MBbl/day level for the first time in two years. Later in the period,
however, concerns about demand destruction in the US sparked a sell-off in oil
prices. Elsewhere, however, demand remains robust. In China, India and Brazil
oil demand continues to increase year-on-year.
Interestingly, the spread between Brent and WTI widened considerably during the
period. Elevated stock levels and weak demand at Cushing, Oklahoma, the WTI
delivery point, coupled with high delivery costs at the facility pressured the
WTI price lower. Brent, in our view, is a better reflection of the underlying
fundamentals in the market.
On 11 March, the earthquake and tsunami that devastated the east coast of
Japan left the Fukushima nuclear plant, one of the world's largest, in a
precarious state. This raised concerns about the long term build out of nuclear
reactors globally and, by implication, the uranium industry. The price of
uranium slumped 22% on news that the Fukishima reactor had been impacted, while
uranium equities were also severely punished. There followed announcements by
several governments that have fundamentally changed the long term demand
dynamics. Switzerland, for example, has suspended approvals for three new
reactors, while Germany has decided that its nuclear power capacity will be
phased out by 2022. Nuclear generation currently satisfies 23% of Germany's
electricity demand. This follows the country's decision to suspend 7GW of
nuclear capacity for safety review in the immediate aftermath of the disaster.
Safety reviews have been ordered by the UK and the US. China, which potentially
was the largest contributor to uranium demand growth, also suspended approval
for its nuclear programme. Other countries may follow suit. According to the
World Nuclear Association, there are 438 reactors around the world, with
another 62 under construction, 158 at the planning stage and 310 under
proposal. A reduced nuclear build out would be positive for other energy
sources including traditional sources such as coal and oil. Already, the net
impact on Japanese oil demand has been positive with oil fired capacity making
up for some of the shortfall in nuclear generation. The Company had no exposure
to uranium equities.
In commodity equity markets, BHP Billiton made a move into the North American
shale gas industry with the purchase of Chesapeake Energy's Fayetteville assets
in Arkansas. The US$4.75 billion transaction came three months after the
company failed in its attempt to purchase Potash Corporation of Saskatchewan.
The company also commenced a US$10 billion share buy-back programme split
between its Australian and UK listed shares. In other equity news, the much
anticipated London IPO of Glencore received a lukewarm welcome by investors.
The Company did not participate in the IPO, although the Investment Manager did
subsequently purchase some shares at lower prices. In the energy sector, BP
announced in May that it has reached a settlement with Mitsui with regards to
the Macondo oil spill. Mitsui, a 10% owner of the Macondo well, will make a
payment of US$1.065 billion and is released from any further payments relating
to compensation or clean up costs. Anadarko, one of the Company's ten largest
investments, is expected to settle with BP later this year. In February, US
regulators approved the first deepwater drilling permits in the Gulf of Mexico
since the Macondo oil spill in April 2010. BP has also reinstated its dividend
payment this year.
Portfolio review
At 31 May 2011, the Company held 58 investments in companies within the energy
and mining sectors. The Company's exposure to energy shares has increased
slightly over the period, driven in part by their 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:
Asset Allocation as at 31 May 2011 - Geography
Country %
Global 21.1
Canada 18.8
USA 18.5
Europe 10.7
Asia 9.9
Latin America 7.8
Australia 5.4
South Africa 4.7
China 1.5
Africa 1.4
Russia 0.2
Asset Allocation as at 31 May 2011 - Commodity
%
Energy 56.8
Mining 43.2
Energy Breakdown %
Integrated 48.1
E&P 24.8
Coal 12.8
Oil Services 8.3
Oil Sands 3.2
Distribution 2.8
Mining Breakdown %
Diversified 34.7
Copper 18.9
Aluminum 8.5
Gold 7.6
Iron Ore 7.4
Fertilizer 7.0
Nickel 4.6
Zinc 4.4
Tin 3.5
Platinum 3.4
Sources: BlackRock
The Group generated £3.44 million in income during the period, with dividend and
interest payments from investee companies amounting to £2.59 million. The
Group's income through option writing was £0.85 million. Consequently, the
Investment Manager is pleased to report that the Group's revenue reserves have
increased to £3.2 million, an increase of 10.3% for the period. A full analysis
of income and expenses is contained in the notes to the financial statements.
It is worth noting that the option premium, as a percentage of gross income,
has fallen as dividend payments from the portfolio's investments have been
increasing.
Outlook
We remain positive on the long term outlook for commodity markets which should
be driven by strong demand growth and weak supply growth. China and other
emerging market economies are fundamental in terms of demand growth. Any
significant and sustained downturn in the Chinese economy would be bearish for
commodity markets. Near term, uncertainties about the global economy and
concerns about Eurozone sovereign debt will continue to affect market sentiment
and as a consequence equity pricing. Under this scenario, commodity equities
may move sideways, albeit with some volatility. Commodity equities are
typically trading on high single digit PE multiples for 2011 and the Investment
Manager would view, therefore, any near term pullback in the market as a buying
opportunity. In addition, with commodity prices at attractive levels for the
producers, the companies are generating strong cash flows and earnings, more of
which is being returned to shareholders. We would expect to see further
dividend increases in our underlying portfolio.
Richard Davis
BlackRock Investment Management (UK) Limited
21 July 2011
Ten Largest Investments
ExxonMobil - 4.3% (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.
BHP Billiton - 4.3% (2010: 4.5%, 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.
Coal & Allied - 3.9% (2010: 1.9%, www.coalandallied.com) is a major coal
producer in the Hunter Valley Region of New South Wales, Australia. The
company, which is managed by Rio Tinto Coal Australia, produces thermal coal,
semi-soft coking coal and pulverised injection coal for domestic and export
markets.
Freeport McMoRan Copper & Gold - 3.8% (2010: 4.4%, 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.
Total - 3.5% (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.
Anadarko Petroleum - 3.2% (2010: 4.3%, www.anadarko.com) is one of the largest
independent oil and gas exploration and production companies in the world. The
company's assets include ten major onshore US natural gas plays. Anadarko is
the largest independent producer in the deepwater Gulf of Mexico. The company
also operates in Alaska, Algeria, Brazil, China, Ghana, Indonesia and
Mozambique.
Kumba Iron Ore - 3.2% (2010: 3.8%, 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.
Statoil - 3.1% (2010: 2.7%, www.statoil.com) is listed on the Oslo and New York
stock exchanges. Statoil is an integrated oil and gas company which is the
largest operator on the Norwegian continental shelf. The company has interests
in more than 30 other countries, including Angola, which is the largest
contributor to production outside Norway.
Occidental Petroleum - 3.0% (2010: 3.5%, www.oxy.com) is the fourth largest US
exploration and production company engaging in oil and gas exploration,
production, transportation and marketing. It operates in three core regions of
the world: the US, Middle East/North Africa and Latin America. The company is
also a major producer of a variety of chemicals, petrochemicals, polymers and
plastics.
Rio Tinto - 3.0% (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.
All percentages reflect the value of the holding as a percentage of total
investments. Percentages in brackets represent the value of the holding at 30
November 2010.
Investments
as at 31 May 2011
Main Market
geographic value % of
exposure £'000 investments
Integrated Oil
ExxonMobil Global 6,036 4.3
Total Global 4,895 3.5
Statoil Europe 4,314 3.1
Occidental Petroleum USA 4,193 3.0
Chevron Global 3,823 2.7
Repsol Europe 3,100 2.2
Conocophillips USA 3,071 2.2
Eni Europe 2,755 2.0
BP Global 2,679 1.9
Marathon Oil USA 2,270 1.6
Hess USA 1,199 0.8
38,335 27.3
Diversified Mining
BHP Billiton Global 5,983 4.3
Rio Tinto Global 3,647 2.6
Vale†Latin 3,429 2.4
America
Teck Resources Canada 2,395 1.7
Xstrata Global 1,924 1.4
Teck Resources 10.75% 15/05/19 Canada 1,548 1.1
Vendanta Resources Asia 861 0.6
Rio Tinto Finance 8.95% 01/05/14 Global 735 0.5
Sterlite Industries Asia 669 0.5
Rio Tinto put option 16/09/11 Global (79) (0.1)
21,112 15.0
Exploration & Production
Anadarko Petroleum USA 4,589 3.3
Peyto Exploration & Development Canada 3,988 2.8
Crescent Point Energy Trust Units Canada 2,654 1.9
Niko Resources Asia 2,434 1.7
Vermilion Energy Canada 2,233 1.6
Nexen Canada 1,320 0.9
Denbury Resources USA 1,201 0.9
Encana Canada 1,139 0.8
Newfield Exploration USA 453 0.3
Newfield Exploration put option 18/06/11 USA (10) (0.0)
Nexen call option 16/07/11 Canada (66) (0.0)
Anadarko Petroleum call option 20/08/11 USA (73) (0.1)
19,862 14.1
Copper
Freeport McMoRan Copper & Gold Asia 5,329 3.8
Southern Copper Latin 3,678 2.6
America
Antofagasta Latin 1,794 1.3
America
Katanga Mining 14% S/Nts 30/11/13 Africa 694 0.5
11,495 8.2
Coal
Coal & Allied Australia 5,397 3.9
Straits Asia Resources Asia 2,668 1.9
China Shenhua Energy China 2,150 1.5
10,215 7.3
Oil Services
Schlumberger USA 3,644 2.6
SBM Offshore Europe 1,315 0.9
Precision Drilling Trust Canada 941 0.7
Baker Hughes USA 674 0.5
Baker Hughes put option 18/06/11 USA (12) (0.0)
6,562 4.7
Aluminium
Alcoa USA 2,950 2.1
Alumina Australia 2,149 1.5
5,099 3.6
Gold
Kinross Canada 3,056 2.2
IAMGOLD Africa 897 0.6
High River Gold 8% Convertible Bonds Africa 414 0.3
31/12/11*
Petropavlovsk Russia 295 0.2
4,662 3.3
Iron Ore
Kumba Iron Ore South Africa 4,522 3.2
4,522 3.2
Fertilizers
Agrium USA 2,246 1.6
Potash Corporation of Saskatchewan Canada 1,598 1.1
Mosaic Canada 344 0.3
Potash Corporation of Saskatchewan call Canada (39) (0.0)
option 16/07/11
4,149 3.0
Nickel
International Nickel Indonesia Asia 2,039 1.4
Eramet Europe 790 0.6
2,829 2.0
Zinc
Nyrstar Europe 2,724 1.9
2,724 1.9
Oil Sands
Suncor Energy Canada 1,273 0.9
Cenovus Energy Canada 1,257 0.9
2,530 1.8
Distribution
Enbridge Income Fund Trust Canada 2,243 1.6
2,243 1.6
Tin
Minsur Latin 2,165 1.5
America
2,165 1.5
Platinum
Impala Platinum South Africa 2,051 1.5
2,051 1.5
Portfolio 140,555 100.0
†Includes preference shares
* Unquoted investment at Directors' valuation
All investments are in ordinary shares unless otherwise stated.
The total number of holdings as at 31 May 2011 was 58 (30 November 2010: 55)
The total number of open options as at 31 May 2011 was 6 (30 November 2010: 9)
The negative valuations of £279,000 in respect of options held represent the
notional cost of repurchasing the contracts at market prices as at 31 May 2011.
Consolidated Statement of Comprehensive Income
for the six months ended 31 May 2011
Revenue £'000 Capital £'000 Total £'000
Year Year Year
Six months ended ended Six months ended ended Six months ended ended
31.05.11 31.05.10 30.11.10 31.05.11 31.05.10 30.11.10 31.05.11 31.05.10 30.11.10
Notes (unaudited)(unaudited) (audited)(unaudited)(unaudited) (audited)(unaudited)(unaudited) (audited)
Income from
investments
held at fair
value through
profit or loss 2 2,592 1,981 3,610 - - - 2,592 1,981 3,610
Other income 2 853 1,185 2,200 - - - 853 1,185 2,200
----- ----- ----- ------ ----- ------ ------ ----- ------
Total revenue 3,445 3,166 5,810 - - - 3,445 3,166 5,810
----- ----- ----- ------ ----- ------ ------ ----- ------
Gains on
investments
held at fair
value through
profit or loss - - - 11,615 5,102 16,773 11,615 5,102 16,773
----- ----- ----- ------ ----- ------ ------ ----- ------
3,445 3,166 5,810 11,615 5,102 16,773 15,060 8,268 22,583
----- ----- ----- ------ ----- ------ ------ ----- ------
Expenses
Investment
management fee 3 (206) (141) (282) (616) (424) (848) (822) (565) (1,130)
Other expenses 4 (133) (128) (260) - - - (133) (128) (260)
----- ----- ----- ------ ----- ------ ------ ----- ------
Total operating
expenses (339) (269) (542) (616) (424) (848) (955) (693) (1,390)
----- ----- ----- ------ ----- ------ ------ ----- ------
Net profit before
finance costs
and taxation 3,106 2,897 5,268 10,999 4,678 15,925 14,105 7,575 21,193
----- ----- ----- ------ ----- ------ ------ ----- ------
Finance costs (11) (3) (9) (33) (9) (27) (44) (12) (36)
----- ----- ----- ------ ----- ------ ------ ----- ------
Net profit on ordinary
activities before
taxation 3,095 2,894 5,259 10,966 4,669 15,898 14,061 7,563 21,157
Taxation (223) (237) (779) 91 - (120) (132) (237) (899)
----- ----- ----- ------ ----- ------ ------ ----- ------
Net profit
for the period 6 2,872 2,657 4,480 11,057 4,669 15,778 13,929 7,326 20,258
===== ===== ===== ====== ===== ====== ====== ===== ======
Earnings per
ordinary share 6 3.17p 3.53p 5.85p 12.22p 6.21p 20.61p 15.39p 9.74p 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 net profit of the Company for the six months was
£13,929,000 (six months to 31 May 2010: £7,326,000; year to 30 November 2010:
£20,258,000). Details of dividends paid and proposed at the balance sheet date
are given in note 5.
Consolidated Statement of Changes in Equity
for the six months ended 31 May 2011
Ordinary Share
share premium Special Capital Revenue
capital account reserve reserves reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000
For the six months
ended 31 May 2011
(unaudited)
At 30 November 2010 905 20,748 71,223 30,059 2,913 125,848
Total comprehensive
income:
Net profit for
the period - - - 11,057 2,872 13,929
Transactions with
owners, recorded
directly to equity:
Dividends paid 5(b) - - - - (2,602) (2,602)
--- ------ ------ ------ ----- -------
At 31 May 2011 905 20,748 71,223 41,116 3,183 137,175
--- ------ ------ ------ ----- -------
For the six months
ended 31 May 2010
(unaudited)
At 30 November 2009 756 1,223 70,219 14,281 3,781 90,260
Total comprehensive
income:
Net profit for
the period - - - 4,669 2,657 7,326
Transactions with
owners, recorded
directly to equity:
Proceeds of sale of
shares from treasury - 24 649 - - 673
Dividends paid 5(b) - - - - (2,121) (2,121)
--- ------ ------ ------ ----- -------
At 31 May 2010 756 1,247 70,868 18,950 4,317 96,138
--- ------ ------ ------ ----- -------
For the year ended 30
November 2010
(audited)
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 to
ordinary shares 149 19,501 - - - 19,650
Proceeds of sale of
shares from treasury - 24 1,004 - - 1,028
Dividends paid 5(b) - - - - (5,348) (5,348)
--- ------ ------ ------ ----- -------
At 30 November 2010 905 20,748 71,223 30,059 2,913 125,848
--- ------ ------ ------ ----- -------
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserve. Purchase and sale costs amounted to
£22,000 and £11,000 respectively for the six months ended 31 May 2011 (six
months ended 31 May 2010: £16,000 and £15,000; year ended 30 November 2010:
£35,000 and £25,000).
Consolidated Statement of Financial Position
as at 31 May 2011
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
Note (unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value
through profit or loss 140,555 96,267 126,285
------- ------ -------
Current assets
Other receivables 2,546 1,283 1,519
Cash and cash equivalents - 3,338 374
------- ------ -------
2,546 4,621 1,893
------- ------ -------
Total assets 143,101 100,888 128,178
------- ------ -------
Current liabilities
Other payables (1,134) (416) (2,330)
Bank overdrafts (4,792) (4,334) -
------- ------ -------
(5,926) (4,750) (2,330)
------- ------ -------
Net assets 137,175 96,138 125,848
======= ====== =======
Equity attributable to equity
holders
Ordinary share capital 905 756 905
Share premium account 20,748 1,247 20,748
Special reserve 71,223 70,868 71,223
Capital reserves 41,116 18,950 30,059
Revenue reserve 3,183 4,317 2,913
------- ------- -------
Total equity 137,175 96,138 125,848
======= ======= =======
Net asset value per ordinary
share 6 151.56p 127.63p 139.05p
======= ======= =======
Consolidated Cash Flow Statement
for the six months ended 31 May 2011
Six months Six months
ended ended Year ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash outflow from operating
activities before financial
activities (2,533) (2,450) (17,805)
----- ----- ------
Financing activities
Shares sold from treasury - 673 -
Shares issued - - 20,678
Equity dividends paid (note 5b) (2,602) (2,121) (5,348)
----- ----- ------
Net cash (outflow)/inflow from
financing activities (2,602) (1,448) 15,330
----- ----- ------
Decrease in cash and cash
equivalents (5,135) (3,898) (2,475)
Effect of foreign exchange rate
changes (31) (18) (71)
----- ----- ------
Change in cash and cash
equivalents (5,166) (3,916) (2,546)
Cash and cash equivalents at
start of period 374 2,920 2,920
----- ----- ------
Cash and cash equivalents at end
of period (4,792) (996) 374
----- ----- ------
Comprised of:
Cash at bank - 3,338 374
Bank overdrafts (4,792) (4,334) -
----- ----- ------
(4,792) (996) 374
===== ===== ======
Reconciliation of net income before taxation to net cash flow from operating
activities
Six months Six months
ended ended Year ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Profit before taxation 14,061 7,563 21,157
Gains on investments held at fair
value through profit or loss
including transaction costs (11,615) (5,102) (16,773)
(Increase)/decrease in other
receivables (392) (210) (49)
(Decrease)/increase in other
payables (652) (7) 859
Increase in amounts due from
brokers (634) (177) (684)
Increase in amounts due to
brokers 18 - 533
Movements in investments held at
fair value through profit or loss (2,646) (5,353) (23,647)
Movements in cash fund held at
fair value through profit or loss - 1,422 1,422
Taxation paid (432) (422) (397)
Taxation on investment income
included within gross income (241) (164) (324)
----- ----- ------
Net cash outflow from operating
activities (2,533) (2,450) (17,805)
===== ===== ======
Notes to the Financial Statements
1. Principal activity
The principal activity of the Company is that of an investment trust company
within the meaning of sub-section 1158-1165 of the Corporation Tax Act 2010.
The principal activity of the subsidiary, BlackRock Commodities Securities
Income Company Limited, is investment dealing and options writing.
Basis of preparation
The half yearly financial statements have been prepared using the same
accounting policies as set out in the Company's annual report and financial
statements for the year ended 30 November 2010 (which were prepared in
accordance with IFRS as adopted by the EU and as applied in accordance with the
provisions of the Companies Act 2006) and in accordance with International
Accounting Standard 34. Insofar as the Statement of Recommended Practice
("SORP") for investment trust companies and venture capital trusts issued by
the Association of Investment Companies ("AIC"), revised in January 2009 is
compatible with IFRS, the financial statements have been prepared in accordance
with guidance set out in the SORP. The taxation charge has been calculated by
applying an estimate of the annual effective tax rate to any profit for the
period.
2. Income
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment income:
Overseas listed dividends 2,274 1,656 3,037
Fixed interest 159 160 307
UK listed dividends 159 165 266
----- ----- -----
2,592 1,981 3,610
----- ----- -----
Other operating income:
Deposit interest - 8 17
Option premium income 853 1,177 2,183
----- ----- -----
853 1,185 2,200
----- ----- -----
Total income 3,445 3,166 5,810
===== ===== =====
Option premium income is stated after deducting transaction costs incurred on
the purchase and sale of investments.
3. Investment management fee
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Revenue:
Investment management fee 206 141 282
--- --- -----
Capital:
Investment management fee 616 424 848
--- --- -----
Total:
Investment management fee 822 565 1,130
=== === =====
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.
4. Other expenses
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Custody fee 11 12 24
Auditors' remuneration:
- audit services 11 11 22
- other audit services* 5 5 5
Directors' emoluments 42 31 69
Registrar's fee 17 8 25
Other administrative costs 47 61 115
--- --- ---
133 128 260
=== === ===
* Other audit services for the period ended 31 May 2011 relate to the review of
the half yearly financial report.
5. Dividends
(a) Dividends declared
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
First interim dividend for the period
ended 28 February 2011 of 1.400p
(2010: 1.375p) 1,267 1,036 1,036
Second interim dividend for the
period ended 31 May 2011 of 1.400p
(2010: 1.375p) 1,267 1,039 1,039
Third interim dividend for the period
ended 31 August 2010 of 1.375p
(2009: 1.35p) - - 1,039
First special dividend for the period
ended 31 August 2010 of 1.00p
(2009: 0.00p) - - 756
Second special dividend for the
period ended 1 October 2010 of 0.52p
(2009: 0.00p) - - 393
Fourth interim dividend for the
period ended 30 November 2010 of 1.475p
(2009: 1.45p) - - 1,335
----- ----- -----
2,534 2,075 5,598
===== ===== =====
A first interim dividend for the period ended 28 February 2011 of £1,267,000
(1.400p per ordinary share) was paid on 21 April 2011 to shareholders on the
register at 25 March 2011. A second interim dividend of £1,267,000 (1.400p per
ordinary share) is proposed and will be paid on 22 July 2011 to shareholders on
the register at 1 July 2011. This dividend has not been accrued in the
financial statements for the six months ended 31 May 2011, as under IFRS,
interim dividends are not recognised until paid. Dividends are debited directly
to reserves.
The third and fourth interim dividends will be declared in September 2011 and
December 2011 respectively.
(b) Dividends paid
Under IFRS final dividends, if any, are not recognised until approved by
the shareholders. They are debited directly to reserves. The dividends
disclosed in the table below have been considered in view of the requirements
of section 1158 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 were as follows:
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
First interim dividend for the period
ended 28 February 2011 of 1.400p
(2010: 1.375p) 1,267 1,036 1,036
Second interim dividend for the
period ended 31 May 2011 of 1.400p
(2010: 1.375p) - - 1,039
Third interim dividend for the period
ended 31 August 2010 of 1.375p
(2009: 1.35p) - - 1,039
First special dividend for the period
ended 31 August 2010 of 1.00p
(2009: 0.00p) - - 756
Second special dividend for the
period ended 1 October 2010 of 0.52p
(2009: 0.00p) - - 393
Fourth interim dividend for the
period ended 30 November 2010 of 1.475p
(2009: 1.45p) 1,335 - -
Fourth interim dividend for the
period ended 30 November 2009 of 1.45p
(2008: 1.4625p) - 1,085 1,085
----- ----- -----
2,602 2,121 5,348
===== ===== =====
6. Consolidated earnings per ordinary share and net asset value per ordinary
share
Six months Six months Year
ended ended ended
31 May 31 May 30 November
2011 2010 2010
(unaudited) (unaudited) (audited)
Net revenue return attributable to
ordinary shareholders (£'000) 2,872 2,657 4,480
Net capital return attributable to
ordinary shareholders (£'000) 11,057 4,669 15,778
------- ------ -------
Total earnings attributable to
ordinary shareholders (£'000) 13,929 7,326 20,258
------- ------ -------
Equity shareholders funds (£'000) 137,175 96,138 125,848
------- ------ -------
The weighted average number of
ordinary shares in issue during each
period, on which the earnings per
ordinary share was calculated, was: 90,508,000 75,204,783 76,543,554
The actual number of ordinary shares
in issue (excluding treasury shares)
at the period end, on which the net
asset value was calculated, was: 90,508,000 75,325,662 90,508,000
The number of ordinary shares in issue
(including treasury shares) at the
period end, was: 90,508,000 75,600,000 90,508,000
Revenue earnings per share 3.17p 3.53p 5.85p
Capital earnings per share 12.22p 6.21p 20.61p
------- ------- -------
Total earnings per share 15.39p 9.74p 26.46p
------- ------- -------
Net asset value per share 151.56p 127.63p 139.05p
Share price (mid-market) 150.50p 127.75p 143.00p
======= ======= =======
7. Ordinary share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number number £'000
Allotted, issued 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 31 May 2011 90,508,000 - 90,508,000 905
========== ======== ========== =========
8. Related party disclosure
BlackRock Investment Management (UK) Limited ("BlackRock") provides management
and administration services to the Company under a contract which is terminable
on six months' notice. Details of the fees receivable by BlackRock in relation
to these services are set out in note 3.
The fees due to BlackRock for the six months ended 31 May 2011 amounted to
£822,000 (six months ended 31 May 2010: £565,000 and the year ended 30 November
2010: £1,130,000). At the period end £158,000 was outstanding in respect of
these fees (six months ended 31 May 2010: £176,000 and the year ended
30 November 2010: £742,000).
The Board consists of five non-executive Directors all of whom, with the
exception of Mr Ruck Keene, are considered to be independent by the Board.
Mr Ruck Keene is an employee of the Investment Manager and is deemed to be
interested in the Company's management agreement.
None of the Directors has a service contract with the Company. The Chairman
receives an annual fee of £28,000, the Chairman of the Audit and Management
Engagement Committee receives an annual fee of £21,000 and each other Director
receives an annual fee of £18,000, with the exception of Mr Ruck Keene who has
waived his entitlement to fees.
The interests of the Directors in the ordinary shares of the Company are shown
below, and are unchanged at the date of this report.
31 May
2011
A C Hodson 150,000
D A S Gibbs 22,454
M R Merton -
J G Ruck Keene 14,000
H van der Klugt 28,727
9. Contingent liabilities
There were no contingent liabilities at 31 May 2011 (2010: nil).
10. Publication of non-statutory accounts
The financial information contained in this half yearly financial report does
not constitute statutory accounts as defined in section 435 of the Companies
Act 2006. The financial information for the six months ended 31 May 2011 and 31
May 2010 has not been audited.
The information for the year ended 30 November 2010 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the Auditors on those accounts contained
no qualification or statement under sections 498(2) or (3) of the Companies Act
2006.
11. Annual results
The Board expects to announce the annual results for the year ended 30 November
2011, as prepared under IFRS, in mid January 2012. Copies of the annual results
announcement can be obtained from the Secretary on 020 7743 3000. The annual
report should be available at the beginning of February 2012, with the Annual
General Meeting being held in March 2012.
Independent Review Report
to BlackRock Commodities Income Investment Trust plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half yearly financial report for the six month period ended
31 May 2011 which comprises the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Changes in Equity, Consolidated Statement of
Financial Position, Consolidated Cash Flow Statement, Reconciliation of Net
Income before Taxation to Net Cash Flow from Operating Activities, and the
related notes. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in International Standard on Review Engagements (UK and Ireland) 2410 "Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we have formed.
Directors'responsibilities
The half yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half yearly financial report in accordance with the Listing Rules of the
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Company are
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 2006. The condensed set of financial statements
included in this half yearly financial report has been prepared in accordance
with the Accounting Standards Board Statement "Half Yearly Financial Reports".
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the six month period ended 31 May 2011 is not prepared, in
all material respects, in accordance with the Accounting Standards Board
Statement "Half Yearly Financial Reports" and the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
21 July 2011
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
21 July 2011
33 King William Street
London EC4R 9AS
END
The Half Yearly Financial Report will also be available on the BlackRock
Investment Management website at
http://www.blackrock.co.uk/content/groups/uksite/documents/literature/emea02013601.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.
Tuesday, 14th May 2024
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