Half-yearly Report
THE DIVERSE INCOME TRUST PLC
HALF-YEARLY FINANCIAL REPORT FOR THE PERIOD ENDED 30 NOVEMBER 2012
The Directors present the Half-Yearly Financial Report of the Company for the
six months to 30 November 2012.
INVESTMENT OBJECTIVE AND POLICY
Investment Objective
The Company's investment objective is to provide shareholders with an
attractive level of dividends coupled with capital growth over the long term.
Investment Policy
The Company invests primarily in quoted or traded UK companies with a wide
range of market capitalisations but a long-term bias towards small and mid cap
equities. The Company may also invest in large cap companies, including FTSE
100 constituents, where it is believed that this may increase shareholder
value.
The Manager adopts a stock specific approach in managing the Company's
portfolio and therefore sector weightings are of secondary consideration. As a
result of this approach, the Company's portfolio does not track any benchmark
index.
The Company may utilise derivative instruments including index-linked notes,
contracts for differences, covered options and other equity-related derivative
instruments for efficient portfolio management, gearing and investment
purposes. Any use of derivatives for investment purposes will be made on the
basis of the same principles of risk spreading and diversification that apply
to the Company's direct investments, as described below. The Company will not
enter into uncovered short positions.
Risk diversification
Portfolio risk will be mitigated by investing in a diversified spread of
investments. Investments in any one company shall not, at the time of
acquisition, exceed 15% of the value of the Company's investment portfolio.
Typically it is expected that the Company will hold a portfolio of between 80
and 120 securities, most of which will represent no more than 1.5% of the value
of the Company's investment portfolio as at the time of acquisition.
The Company will not invest more than 10% of its gross assets, at the time of
acquisition, in other listed closed-ended investment funds, whether managed by
the Manager or not, except that this restriction shall not apply to investments
in listed closed-ended investment funds which themselves have stated investment
policies to invest no more than 15% of their gross assets in other listed
closed-ended investment funds. In addition to this restriction, the Directors
have further determined that no more than 15% of the Company's gross assets
will, at the time of acquisition, be invested in other listed closed-ended
investment funds (including investment trusts) notwithstanding whether or not
such funds have stated policies to invest no more than 15% of their gross
assets in other listed closed-ended investment funds.
Unquoted investments
The Company may invest in unquoted companies from time to time subject to prior
Board approval. Investments in unquoted companies in aggregate will not exceed
5% of the value of the Company's investment portfolio as at the time of
investment.
Borrowing and gearing policy
The Board considers that long-term capital growth can be enhanced by the use of
gearing which may be through bank borrowings and the use of derivative
instruments such as contracts for differences. The Company may borrow (through
bank facilities and derivative instruments) up to 15% of net asset value
("NAV") (calculated at the time of borrowing).
The Board will oversee the level of gearing in the Company, and will review the
position with the Manager on a regular basis.
In the event of a breach of the investment policy set out above and the
investment and gearing restrictions set out therein, the Manager shall inform
the Board upon becoming aware of the same and if the Board considers the breach
to be material, notification will be made to a Regulatory Information Service.
No material change will be made to the investment policy without the approval
of shareholders by ordinary resolution.
Investment Manager
On 14 December 2012, Midas Capital Partners Limited changed its name to Miton
Capital Partners Limited.
FINANCIAL HIGHLIGHTS
At 30 November At 31 May 2012 Change
2012 (audited)
Total net assets £85.70m £47.83m 79.2%
Number of ordinary shares in
issue 156.51m 100.00m 56.5%
Net asset value per ordinary
share 54.76p 47.83p 14.5%
Ordinary share price (mid) 57.25p 48.75p 17.4%
Premium to net asset value 4.55% 1.92%
Market capitalisation £89.60m £48.75m 83.8%
Total return per ordinary
share 8.34p 0.43p
Total dividends per ordinary
share* 0.80p 2.19p
Ongoing charges 1.60% 1.90%
* Dividend per ordinary share includes the first interim dividend paid and
second interim dividend declared in respect of the year ending 31 May 2013 and
will differ from the amounts disclosed in the Condensed Consolidated Statement
of Changes in Equity.
TOTAL RETURN PERFORMANCE
6 months to 12 months to From launch to
30 November 2012 30 November 2012 30 November 2012
Ordinary share price 20.3% 34.6% 18.2%
Net asset value 15.3% 21.2% 10.9%*
*After launch expenses.
Total return assumes that dividends are reinvested.
Source: Miton Capital Partners Limited.
FINANCIAL CALENDAR
January Announcement of Half-Yearly Financial Report
February Payment of second interim dividend for period ending 31 May
2013
May Payment of third interim dividend for period ending 31 May
2013
August Payment of fourth interim dividend for period ending 31 May
2013
August/ Announcement of Annual Results
September
October Annual General Meeting
November Payment of first interim dividend for period ending 31 May
2014
CHAIRMAN'S STATEMENT
This is my second interim statement to shareholders for the Diverse Income
Trust ("DIT" or the "Company"), and covers the six month period ended
30 November 2012. In July DIT concluded a first C share issue and the near
fully invested portfolio was merged with the parent at the end of September.
This inflow of new assets, along with appreciation of the portfolio, led to
the total assets reaching £86m at the end of November.
2012 has not been an easy year for companies. Expectations for world economic
growth have been progressively reduced over the year and this has been
reflected in the downgrading of corporate profit forecasts. In addition,
political risks remain elevated despite some progress within the Euro area.
Many companies remain reluctant to make sizeable investments for the future
given that an economic shock could be precipitated by disagreement over the US
fiscal plans, an unfavourable change of Government in one of the key Euro
countries or possible escalation of conflict in the Middle East or China Sea.
With this in mind, equity markets have delivered surprisingly robust returns,
with the FTSE All-Share Total Return Index up 12.8% in the period. However, an
interesting trend was the increasingly discriminating nature of investors in
the period. The share prices of resilient companies with good and growing
cashflow tended to rise, whilst many of the share prices of more speculative
investments have fallen back. This explains in large part the differential
between two smallcap index returns. On a total return basis, the FTSE SmallCap
Index (ex investment companies) rose 16.5% whereas the AIM All-Share Index rose
only 0.7% in the six months. The Company's NAV total return has risen by 15.3%
in the half year. The combination of smaller companies with stable, improving
cash flows that will sustain income payments for investors, is proving an
attractive place to be.
The Company has declared two interim dividends relating to the six month period
that amount to 0.8p per share. We anticipate that the third interim dividend
will be slightly more modest than it was last year due to timing of receipts in
a seasonal period when few companies pay significant dividends. We expect to
compensate for this in the fourth quarter as corporate distributions are more
plentiful in the March to May period. Consequently, the fourth dividend is
expected to be the largest and will also include any annual dividend increase.
The focus of the portfolio will remain on stable businesses that are well
placed to grow their earnings as well as their dividends. These are collected
together in a broad spread of holdings, each relatively small in the context of
the overall portfolio. Although the share prices of many individual companies
will move up and down with the market, it is greatly reassuring that in the
short period of the Company's existence, the volatility of DIT's NAV has been
well below other UK Growth and Income investment trusts.
Subsequent to the half year end, DIT concluded a second C share offering which
it is anticipated will take the Company decisively above a total market value
of £100m. This will offer further improvements to the marketability of the
shares and will further dilute the fixed costs over the enlarged capital base.
It is important to keep in mind that the principal objective of DIT was to
produce a 4% annualised yield on the initial 50p issue, with a dividend growing
at an above average rate thereafter. It is believed that this objective will be
well suited to sustain relatively attractive returns. It may also provide some
stability through markets where volatility may take some time to stabilise
whilst investors adjust to a world beyond the credit boom. Dividends paid in
the year to date have matched last year, but income projections suggest the
Company remains on track to grow revenue for the year.
Michael Wrobel
Chairman
31 January 2013
MANAGER'S REPORT
Background
The Company's strategy is to deliver a good and growing level of income by
investing on a multi-cap basis in companies predominately in the UK. The fund
managers continue to see more opportunity in small and mid-sized companies and
this has been reflected in the majority of the portfolio being invested outside
the FTSE 350 since launch. The managers look to mitigate risk and manage
volatility by holding a widely diverse portfolio of investments and the focus
is currently on companies with strong balance sheets.
The Company has no benchmark.
Markets
DIT was launched at a period of high volatility and global imbalances have
continued to cause uncertainties to the current time. These problems appear
deep rooted given they have built up during the preceding 20 years of credit
boom. The solution will take time to work through but the outlook for sustained
macro growth absent stimulus looks subdued. We continue to believe that this
environment will prove challenging for many large market cap companies which
could struggle to deliver revenue growth and may experience margin pressure. By
comparison, smaller companies can often continue to grow regardless of the
macro environment through exploiting niche opportunities and management
actions.
Performance
Equity market returns continue to be heavily influenced by macro events.
Between 1 June 2012 and 30 November 2012 the FTSE All-Share Total Return Index
rose 12.8%. The indices covering the smaller companies were mixed, with the
FTSE SmallCap Index (excluding investment companies) gaining 16.5% and the AIM
All-Share Index rising only 0.7%.
The average UK Growth and Income investment trusts rose 14.3% during the
period, slightly above the FTSE All-Share Index. However, it is a perennial
feature that the share prices of companies that sustain higher yields tend to
be less volatile than the market overall.
In the period the total return for the Company was 15.3%, rather more than
comparatives. Despite the choppy market conditions, it is reassuring to note
that the volatility of the Company's NAV has been markedly better than most
other funds in the sector.
Also, in the period DIT completed its first follow-on fundraising of £30m. A
second fundraising was announced in October, which was successfully completed
after the period end, raising a further £31m. The fundraisings were responding
to investor demand for the strategy and benefited existing shareholders by
lowering the expense ratio of the Company.
Dividend Income
The Company is expected to pay dividends on a quarterly basis. Dividends of
0.3p for the August quarter and 0.5p for the November quarter have been paid/
announced. In total, the Company paid a dividend of 2.02p in its first year on
an annualised basis. Going forward, the intention is to grow the Company's
annual dividend in pence per share terms using the first year as a starting
point. There will continue to be a degree of seasonality in quarterly dividend
payments as many quoted companies have December or March year ends and tend to
pay larger final dividends in the first half of the calendar year.
Portfolio
There are two major factors that contrast this Company with most others with a
similar objective. These factors have remained unchanged since launch:
1. The Company was established without a formal benchmark. Index weightings do
not carry influence when the managers select investments. Therefore the
portfolio is made up of quoted companies with a full range of market
capitalisations ranging from some microcap holdings through to some of the
largest quoted companies. This strategy is anticipated to offer shareholders an
investment portfolio with more attractive risk/reward ratios. For example, we
can avoid many of the well-researched stocks with large benchmark weightings
held by most other funds and invest more in under-researched stocks where
valuations can be more sizeably out of line with the overall market. Also, the
managers have a wider range of industry sectors to consider, thereby giving
more scope to select investments in those with the greatest growth potential.
The portfolio is invested across a broad range of sectors, but there has been a
particular focus on the providers of regular everyday products and services
such as insurance, telecoms and food. Finally, given the current expectation of
challenging trading conditions, the wider universe of potential investments
means that those with the strongest balance sheets can be prioritised. Not only
are these better placed to sustain dividend payments, but also they would have
considerable advantage over competitors that may be short of capital should
economic conditions deteriorate further.
2. The second major differential is the reduced stock specific risk of each
investment. This is achieved through typically investing between 0.5% and 1.5%
of the portfolio at purchase. So whilst DIT does hold some larger quoted
companies such as TalkTalk and TUI Travel, these stocks have no greater
weightings than other lesser researched stocks such as Zotefoams and Randall &
Quilter. Following investment, with differential share price movements some
holdings do grow and can exceed 2%, but overall most are around the 1% level.
At the end of November, under 10% of the portfolio was invested in FTSE 100
stocks, around 25% in mid-sized FTSE 250 stocks, and the remaining 65% or so in
smaller companies quoted on the Main Market and AIM Market. In particular,
companies with intrinsic value have been preferred as it is anticipated that
these have the best prospects to pay good and growing dividend income.
The managers believe that these factors together should offer enhanced
prospects for growing the Company's dividend together with a portfolio where
the capital price is less volatile than most other comparative funds.
Typically, many of the best performing holdings have been amongst those with
smaller market capitalisations and have appreciated to become the largest
portfolio holdings. However, we believe the overall portfolio remains
relatively defensive and well diversified.
Outlook
At the time of writing, the outlook is heavily overshadowed by on-going
European and US concerns counterbalanced to some degree by co-ordinated actions
on behalf of policy makers. The Company's investment strategy has been put
together to maximise shareholders' returns through such a challenging period.
The portfolio is largely made up of simple businesses that have the prospect of
sustaining an increase in demand for their products even if the world economy
was not expanding. Indeed, it is the belief of the managers that many other
fund managers will grow to appreciate the investment advantages of stock
picking, and that this trend may cause stocks within the portfolio to
outperform for a number of years.
Gervais Williams and Martin Turner
Miton Capital Partners Limited
31 January 2013
PORTFOLIO INFORMATION
as at 30 November 2012
Portfolio of investments
Valuation % of
net Yield
Rank Company Sector £'000 assets %¹
1 Quindell Portfolio Software & Computer 2,429 2.8 2.8
Services
2 CML Microsystems Technology Hardware & 1,836 2.1 1.1
Equipment
3 Bioventix² Pharmaceuticals & 1,715 2.0 5.1
Biotechnology
4 Greencore Food Producers 1,684 2.0 3.8
5 Fairpoint² General Financial 1,614 1.9 5.8
6 Zotefoams Chemicals 1,532 1.8 2.6
7 St Ives Support Services 1,460 1.7 5.5
8 Charles Taylor Consulting General Financial 1,346 1.6 6.0
9 UK Mail Industrial 1,329 1.6 6.1
Transportation
10 Abbey Protection² Non Life Insurance 1,321 1.5 4.7
Top ten investments 16,266 19.0
11 Consort Medical Health Care Equipment & 1,271 1.5 2.5
Services
12 888 Holdings Travel & Leisure 1,269 1.5 1.4
13 Synthomer Chemicals 1,263 1.5 2.5
14 4imprint Media 1,242 1.5 4.4
15 TUI Travel Travel & Leisure 1,241 1.4 4.2
16 Randall & Quilter Non Life Insurance 1,211 1.4 7.8
Investment Holdings²
17 Wilmington Media 1,210 1.4 4.9
18 Beazley Non Life Insurance 1,166 1.4 4.6
19 TalkTalk Telecom Fixed Line 1,148 1.3 4.5
Telecommunications
20 Personal Group² Non Life Insurance 1,130 1.3 5.4
Top twenty investments 28,417 33.2
21 McBride Household Goods 1,123 1.3 3.8
22 ECO Animal Health² Pharmaceuticals & 1,088 1.3 1.5
Biotechnology
23 Brightside Non Life Insurance 1,072 1.3 1.8
24 Brown(N) Group General Retailers 1,069 1.2 3.7
25 Secure Trust Bank² Banks 1,058 1.2 3.7
26 Catlin Non Life Insurance 1,050 1.2 5.9
27 Chamberlin² Industrial Engineering 1,048 1.2 2.0
28 Playtech² Travel & Leisure 1,044 1.2 3.2
29 Silverdell² Support Services 1,044 1.2 1.5
30 BT Fixed Line 1,040 1.2 3.7
Telecommunications
Top thirty investments 39,053 45.5
31 Smith DS General Industrial 1,040 1.2 3.1
32 Amlin Non Life Insurance 1,033 1.2 6.0
33 Office2Office Support Services 1,023 1.2 9.6
34 Belvoir Lettings² Real Estate 1,020 1.2 5.0
35 Interserve Support Services 1,019 1.2 5.3
36 Novae Group Non Life Insurance 1,019 1.2 5.1
37 RSA Insurance Non Life Insurance 1,018 1.2 7.9
38 Dairy Crest Food Producers 1,011 1.2 5.5
39 Numis² General Financial 1,010 1.2 6.3
40 KCOM Fixed Line 982 1.1 6.1
Telecommunications
Top forty investments 49,228 57.4
Balance held in 63 equity investments 35,830 41.8
Total equity investments 85,058 99.2
Fixed interest investments 1,174 1.4
Total investments 86,232 100.6
Cash and net liabilities (532) (0.6)
Net assets 85,700 100.0
¹ Source: Interactive Data; Manager's estimate where no historic data.
² AIM/ISDX listed.
Portfolio exposure by sector
Consumer Services 16.3%
Insurance & Insurance Services 15.7%
General Financial 12.3%
Support Services 11.1%
Consumer Goods 9.5%
Industrials 8.8%
Technology 7.7%
Telecommunications 5.7%
Basic Materials 4.8%
Health Care 4.7%
Oil & Gas 1.5%
Utilities 1.1%
Cash and Fixed Interest 0.8%
Portfolio by asset allocation
FTSE 100 7.2%
FTSE 250 25.2%
FTSE SmallCap 25.2%
FTSE Fledgling 6.9%
AIM/ISDX 34.7%
Cash and Fixed Interest 0.8%
Portfolio by spread of investment
income to 30 November 2012
FTSE 100 12.2%
FTSE 250 26.3%
FTSE SmallCap 33.3%
FTSE Fledgling 4.0%
AIM/ISDX 23.7%
International 0.5%
Estimated annual income by sector¹
Insurance & Insurance Services 20.0%
Consumer Services 15.9%
General Financial 13.7%
Support Services 12.1%
Industrials 8.3%
Telecommunications 7.4%
Consumer Goods 6.9%
Basic Materials 3.8%
Health Care 3.8%
Technology 2.8%
Oil & Gas 2.1%
Fixed Interest 2.0%
Utilities 1.2%
¹ Projected income based on portfolio as at 30 November 2012.
Source: Miton Capital Partners Limited.
INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY STATEMENT
Interim Management Report
The important events that have occurred during the period under review, the key
factors influencing the financial statements and the principal risks and
uncertainties for the remaining six months of the financial year are set out in
the Chairman's Statement and the Manager's Report above.
The principal risks facing the Group are substantially unchanged since the date
of the Annual Report for the period ended 31 May 2012 and continue to be as set
out in that report.
Risks faced by the Group include, but are not limited to, investment and
strategy, smaller companies, sectoral diversification, unquoted companies, use
of derivative instruments, dividends, share price volatility and liquidity/
marketability risk, gearing, key man risk, C shares, redemption facility,
taxation, compliance with laws or regulation and engagement of third party
advisers.
Responsibility Statement
The Directors confirm that to the best of their knowledge:
â— the condensed set of financial statements has been prepared in accordance
with International Accounting Standard ("IAS") 34, Interim Financial Reporting,
as adopted by the European Union; and gives a true and fair view of the assets,
liabilities and financial position of the Company; and
â— this Half-Yearly Financial report includes a fair review of the information
required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the Company during that period; and any changes in the related
party transactions that could do so.
This Half-Yearly Financial Report was approved by the Board of Directors on
31 January 2013 and the above responsibility statement was signed on its behalf
by Michael Wrobel, Chairman.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the period to 30 November 2012
Period to Period to Period to
30 November 2012 30 November 2011 31 May 2012*
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/
(losses) on
investments
held at fair
value through - 8,766 8,766 - (3,862) (3,862) - (1,494) (1,494)
profit or loss
loss
Income 2 1,644 - 1,644 1,377 - 1,377 2,897 - 2,897
Net dealing
gains of
subsidiary 92 - 92 - - - 57 - 57
Investment
management
fee (95) (284) (379) (72) (217) (289) (132) (397) (529)
Other (242) - (242) (269) - (269) (494) - (494)
expenses
Return
before
finance
costs and 1,399 8,482 9,881 1,036 (4,079) (3,043) 2,328 (1,891) 437
taxation
Finance - (1) (1) - - - - - -
costs
Return 1,399 8,481 9,880 1,036 (4,079) (3,043) 2,328 (1,891) 437
before
taxation
Taxation -
overseas
withholding (1) - (1) (2) - (2) (9) – (9)
tax
Return for 1,398 8,481 9,879 1,034 (4,079) (3,045) 2,319 (1,891) 428
the period
pence pence pence pence pence pence pence pence pence
Basic and
diluted
return per
ordinary
share 3 1.18 7.16 8.34 1.03 (4.08) (3.05) 2.32 (1.89) 0.43
* Audited.
The Group does not have any income or expense that is not included in the
"return for the period". Accordingly the "return for the period" is also the
Total Comprehensive Income for the period as defined in International
Accounting Standard 1 (revised), and consequently no separate Statement of
Comprehensive Income has been presented.
The total column of this statement is the Income Statement of the Group
prepared in accordance with International Financial Reporting Standards
("IFRS"), as adopted by the European Union. The supplementary revenue return
and capital return columns are presented in accordance with the Statement of
Recommended Practice issued by the Association of Investment Companies ("AIC
SORP").
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period to 30 November 2012
Share
Share premium Special Capital Revenue
capital account reserve reserve reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000
As at 31 May 2012* 100 - 48,558 (1,891) 1,059 47,826
Total comprehensive
income:
Net return for the - - - 8,481 1,398 9,879
period
Transactions with
shareholders
recorded directly to
equity:
Issue of ordinary 5 57 29,176 - - - 29,233
shares
Expenses of share - (8) - - - (8)
issue
Equity dividends paid 4 - - - - (1,230) (1,230)
As at 30 November 157 29,168 48,558 6,590 1,227 85,700
2012
As at 30 March 2011 - - - - - -
Total comprehensive
income:
Net return for the - - - (4,079) 1,034 (3,045)
period
Transactions with
shareholders
recorded directly to
equity:
Issue of ordinary 100 49,900 - - - 50,000
shares
Expenses of share - (1,322) - - - (1,322)
issue
Equity dividends paid 4 - - - - (300) (300)
As at 30 November 100 48,578 - (4,079) 734 45,333
2011
As at 30 March 2011 - - - - - -
Total comprehensive
income:
Net return for the - - - (1,891) 2,319 428
period
Transactions with
shareholders
recorded directly to
equity:
Issue of ordinary 100 49,900 - - - 50,000
shares
Expenses of share - (1,322) - - - (1,322)
issue
Equity dividends paid 4 - - - - (1,260) (1,260)
Transfer upon
cancellation of share
premium account - (48,578) 48,578 - - -
Share premium - - (20) - - (20)
cancellation expenses
As at 31 May 2012* 100 - 48,558 (1,891) 1,059 47,826
* Audited.
CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 November 2012
30 November 30 November 31 May
2012 2011 2012*
Note £'000 £'000 £'000
Investments held at fair value
through profit or loss 86,232 39,497 46,488
Current assets:
Investments held by subsidiary
for trading 170 - 151
Other receivables 324 653 1,220
Cash and cash equivalents 1,034 6,370 767
1,528 7,023 2,138
Current liabilities:
Other payables (2,060) (1,187) (800)
Net current (liabilities)/assets (532) 5,836 1,338
Total net assets 85,700 45,333 47,826
Capital and reserves:
Share capital 5 157 100 100
Special reserve 48,558 - 48,558
Share premium account 29,168 48,578 -
Capital reserve 6,590 (4,079) (1,891)
Revenue reserve 1,227 734 1,059
Shareholders' funds 85,700 45,333 47,826
pence pence pence
Net asset value per
ordinary share 6 54.76 45.33 47.83
* Audited.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the period to 30 November 2012
Period to Period to Period to
30 November 30 November 31 May
2012 2011 2012*
Note £'000 £'000 £'000
Operating activities:
Net return before finance
costs and taxation 9,881 (3,043) 437
Increase in investments (39,763) (39,497) (46,639)
Decrease/(increase) in
other receivables 896 (653) (1,220)
Increase in other payables 1,260 1,187 800
(27,726) (42,006) (46,622)
Finance costs paid (1) - -
Withholding tax paid (1) (2) (9)
Net cash outflows from
operating activities (27,728) (42,008) (46,631)
Financing:
Cash inflow from placing and
offer for subscription 30,000 50,000 50,000
Cash outflow from expenses of
placing and offer for
subscription (775) (1,322) (1,322)
Equity dividends paid (1,230) (300) (1,260)
Expenses incurred on share
premium account cancellation - - (20)
Net cash inflow from financing 27,995 48,378 47,398
Increase in cash and cash
equivalents 267 6,370 767
Reconciliation of net cash flow
to movements in net funds:
Cash and cash equivalents at
the start of the period 767 - -
Net cash inflow from cash and
cash equivalents 267 6,370 767
Cash and cash equivalents at
the end of the period 1,034 6,370 767
* Audited.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 General Information
The consolidated financial statements, which comprise the unaudited results of
the Company and its wholly owned subsidiary, DIT Income Services Limited,
together referred to as the "Group", for the half year to 30 November 2012,
have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), as adopted by the European Union, and with the AIC SORP
dated January 2009, where the SORP is consistent with the requirements of IFRS.
These financial statements cover the six month period to 30 November 2012. The
comparatives cover the eight month period from incorporation on 30 March 2011
to 30 November 2011 and for the fourteen month period from 30 March 2011 to 31
May 2012.
The financial statements have been prepared on the basis of the accounting
policies set out in the Annual Report and Financial Statements for the period
ended 31 May 2012.
The Income Statement is only presented in consolidated form, as provided by
Section 408 of the Companies Act 2006.
The financial information contained in this report does not constitute full
statutory accounts as defined in Section 434 of the Companies Act 2006. The
financial statements for the six months to 30 November 2012 have not been
either audited or reviewed by the Company's Auditors. The information for the
period to 30 November 2011 was not for a financial year and was not audited but
was reviewed by the Company's Auditors. The information for the period ended 31
May 2012 has been extracted from the latest published Annual Report and
Financial Statements, which have been filed with the Registrar of Companies.
The Report of the Auditors on those financial statements contained no
qualification or statement under Section 498(2) or (3) of the Companies Act
2006.
The Directors consider that it is appropriate to adopt the going concern basis
in preparing the financial statements. Cash flow projections have been reviewed
and show that the Company has sufficient funds to meet both its contracted
expenditure and its discretionary cash outflows in the form of the dividend
policy. After making enquiries, and bearing in mind the nature of the Company's
business and assets, the Directors consider that the Company has adequate
resources to continue in operational existence for the foreseeable future. In
arriving at this conclusion the Directors have considered the liquidity of the
portfolio and the Company's ability to meet obligations as they fall due.
2 Income
Period to Period to Period to
30 November 30 November 31 May
2012 2011 2012
£'000 £'000 £'000
Income from investments:
UK dividends 1,370 1,242 2,475
Unfranked dividend income 266 127 414
UK fixed interest 5 - -
1,641 1,369 2,889
Other income:
Deposit interest 1 4 4
Underwriting income 2 4 4
3 8 8
Total income 1,644 1,377 2,897
3 Return per Ordinary Share
Period to Period to Period to
30 November 30 November 31 May
2012 2011 2012
pence pence pence
Revenue return 1.18 1.03 2.32
Capital return 7.16 (4.08) (1.89)
Total return 8.34 (3.05) 0.43
Weighted average number
of ordinary shares 118,527,206 100,000,000 100,000,000
Return per share is based on the weighted average number of ordinary shares in
issue during the period.
The figures above are based on the following:
Period to Period to Period to
30 November 30 November 31 May
2012 2011 2012
£'000 £'000 £'000
Revenue return 1,398 1,034 2,319
Capital return 8,481 (4,079) (1,891)
Total return 9,879 (3,045) 428
Normal and diluted return per share are the same as there are no dilutive
elements on share capital.
4 Dividends per Ordinary Share
Amounts recognised as distributions to equity holders in the period.
Period to Period to Period to
30 November 30 November 31 May
2012 2011 2012
£'000 pence £'000 pence £'000 pence
In respect of the
previous period:
Fourth interim
dividend 930 0.93 - - - -
In respect of the
period under review:
First interim dividend 300 0.30 300 0.30 300 0.30
Second interim
dividend - - - - 500 0.50
Third interim
dividend - - - - 460 0.46
1,230 300 1,260
The Board has declared a second interim dividend of 0.50p per ordinary share,
payable on 28 February 2013 to shareholders registered at the close of business
on 28 December 2012. In accordance with IFRS this dividend has not been
included as a liability in these financial statements.
5 Called up Share Capital
On 27 June 2012, the Company published a prospectus in relation to proposals to
raise up to £50 million (before expenses) by way of a placing and offer for
subscription of C shares. Applications were received under the placing for
53,905,400 C shares and under the offer for subscription for 6,094,600
C shares, raising an aggregate of £30 million of gross proceeds for the Company
and resulting in the issue of 60,000,000 C shares.
On 1 October 2012, the C shares were converted into ordinary shares in the
ratio of 0.9418 ordinary shares for every C share, resulting in the issue of
56,507,978 new ordinary shares. Following the conversion and at 30 November
2012 there were 156,507,978 ordinary shares in issue.
On 20 November 2012, the Company published a prospectus setting out details of
a target issue of in excess of 40 million C shares at 50 pence per C share by
way of an open offer, placing and offer for subscription.
Applications were received under the open offer for 5,675,768 C shares, under
the placing for 52,940,182 C shares and under the offer for subscription for
3,384,050 C shares, raising an aggregate of £31 million of gross proceeds for
the Company and resulting in the issue of 62,000,000 C shares. The C shares
were admitted to listing on the Official List of the UK Listing Authority and
to trading on the London Stock Exchange on 17 December 2012.
Redemption of ordinary shares
The Company has a redemption facility through which shareholders are entitled
to request the redemption of all or part of their holding of ordinary shares
annually on 31 May. The Board may, at its absolute discretion, elect not to
operate the annual redemption facility in whole or in part.
6 Net Asset Value per Ordinary Share
The net asset value per ordinary share and the net asset values attributable at
the period end were as follows:
30 November 2012 30 November 2011 31 May 2011
Net asset Net asset Net asset
value Net assets value Net assets value Net assets
per share attributable per share attributable per share attributable
pence £'000 pence £'000 pence £'000
Ordinary
shares
- Basic and 54.76 85,700 45.33 45,333 47.83 47,826
diluted
Net asset value per ordinary share is based on net assets at the period end and
156,507,978 ordinary shares, being the number of ordinary shares in issue at
the period end (31 May 2012 and 30 November 2011: 100,000,000 ordinary shares).
7 Transaction Costs
During the period, expenses were incurred in acquiring or disposing of
investments classified as fair value through profit or loss. These have been
expensed through capital and are included within gains on investments in the
Income Statement. The total costs were as follows:
Period to Period to Period to
30 November 30 November 31 May
2012 2011 2012
£'000 £'000 £'000
Purchases 245 428 570
Sales 18 37 74
263 465 644
8 Management Fee
Under the terms of an agreement dated 7 April 2011, the Company has appointed
Miton Capital Partners Limited (name changed from Midas Capital Partners
Limited on 14 December 2012) to be the Manager. The basis investment management
fee is calculated at the rate of one-twelfth of 1.0% of the average market
capitalisation of the Company on the last business day of each calendar month.
The basic management fee accrues daily and is payable in arrears in respect of
each calendar month. For the purpose of calculating the basic fee, the
'adjusted market capitalisation' of the Company is defined as the average daily
mid-market price for an ordinary share, multiplied by the number of ordinary
shares in issue, excluding those held by the Company in treasury, on the last
business day of the relevant month.
At 30 November 2012, an amount of £147,000 was outstanding and due to Miton
Capital Partners Limited in respect of management fees (30 November 2011 and 31
May 2012: £38,000 and £41,000 respectively).
DIRECTORS AND ADVISERS
Directors (all non-executive) Solicitors
Stephenson Harwood LLP
Michael Wrobel 1 Finsbury Circus
Paul Craig London, EC2M 7SH
Lucinda Riches
Jane Tufnell Stockbroker
Cenkos Securities plc
Secretary and Registered Office 6.7.8 Tokenhouse Yard
Capita Sinclair Henderson Limited London EC2R 7AS
(trading as Capita Financial Group
- Specialist Fund Services) Bankers and Custodians
Beaufort House HSBC Bank plc
51 New North Road 8 Canada Square
Exeter Ex4 4EP London E14 5HQ
Telephone: 01392 412122
Registrar and Transfer Office
Investment Manager Capita Registrars
Miton Capital Partners Limited Shareholder Service Department
10 - 14 Duke Street The Registry
Reading RG1 4RU 34 Beckenham Road
Beckenham
Telephone: 0118 952 8900 Kent BR3 4TU
Website: www.mitongroup.com
Telephone: 0871 664 0300
Company website (calls will cost 10p per minute plus
www.mitongroup.com/dit network charges)
Auditor Fax: 020 639 2342
Ernst & Young LLP Email: ssd@capitaregistrars.com
1 More London Place Website: www.capitaregistrars.com
London SE1 2AF
An investment company as defined under Section 833 of the Companies Act 2006.
Registered in England No. 7584303.
A member of the Association of Investment Companies.
The Half-Yearly Financial Report will be posted to shareholders shortly. The
Report will also be available for download from the following website:
www.mitongroup.com/dit or on request from the Company Secretary.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of this announcement.
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