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Diverse Inc Trust (DIVI)

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Tuesday 12 August, 2014

Diverse Inc Trust

Annual Financial Report


THE DIVERSE INCOME TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 MAY 2014

The Directors present the Annual Financial Report of the Diverse Income Trust
plc ("The Company" or "Diverse") for the year ended 31 May 2014. The full
Annual Report and Accounts can be accessed via the Company's website,
www.mitongroup.com/dit, or by contacting the Company Secretary on 01392 477500.

STRATEGIC REPORT

RESULTS FOR THE YEAR TO 31 MAY 2014

Increased dividend per share 
The dividend per share was increased from 2.10p last year to 2.25p this year, 
representing an increase of 7.1%.

Revenue reserves increased to £1.3m 
During the year £0.8m was added to distributable revenue reserves, so the total 
retained revenue reserves for the Group are now £1.3m. 

26% growth in capital 
The NAV per share rose from 65.12p to 82.13p over the year. This has been greatly 
assisted by the general rise in the market, with the FTSE All-Share Index up 5% 
over the year to 31 May 2014.

Increase in total net assets 
Total net assets in the Company increased from £136m to £266m in the year to 
31 May 2014. A significant part of this increase reflected the performance of 
the portfolio, although the merger with Miton Income Opportunities Trust ("MIOT") 
on 30 September 2013 also added £85m of assets. The increased scale of the Company 
dilutes the fixed costs of running the Group and also adds to market liquidity in 
the shares for shareholders.


SUMMARY OF RESULTS

                                 At 31 May 2014    At 31 May 2013       Change 
                                                                               
Net asset value per ordinary             82.13p            65.12p        26.1%
share                                                                          
                                                                               
Ordinary share price (mid)               83.25p            66.00p        26.1%
                                                                               
Premium to net asset value                1.36%             1.35%            
                                                                               
Revenue return per ordinary               2.70p             2.42p             
share                                                                          
                                                                               
Total dividends per ordinary              2.25p             2.10p         7.1%
share*                                                                         
                                                                               
Ongoing charges                           1.27%             1.45%            

* Current period revenues funded more than the 7.1% increase and so £762,000
was added to revenue reserves for smooth dividend growth in the future.


CHAIRMAN'S STATEMENT

This is the third Annual Report & Accounts for The Diverse Income Trust plc and
covers the 12 month period ended 31 May 2014.

Market trends during the period were beneficial to equities, with continued
broad-based support from policy makers, including low interest rates. These
measures more than offset the trend of moderating world growth and less than
anticipated growth in corporate earnings. It was therefore another good year
for markets, with the FTSE All-Share Index delivering 5.2% in capital
appreciation.

Many multi-nationals are finding it more difficult to sustain decent growth at
a time when world growth is stagnating. In contrast, smaller businesses, by
their nature, tend to have more immature market positions. They have greater
potential to buck the trend at times of economic constraint. This contributed,
at least in part, to their outperformance during the period. The FTSE SmallCap
Index (excluding Investment Companies) rose 13.3% and the AIM All-Share Index
was up 11.7% in the year. Given the positioning of the Company's portfolio,
these trends were favourable and, along with successful stock selection,
enhanced returns. The Company's NAV was up 26.1% over the year.

The Board has already declared all four dividends for the year, which amounted
to 2.25p, an increase of 7.1% on the 2.10p paid last year. The total return per
ordinary share, including the capital appreciation reported above and the four
dividends announced during the year, amounted to 29.8% per ordinary share.

Growth of the Company and Amendments to the Manager's Fees
The Company's assets grew to £266m as at 31 May 2014, up from £136m at the end
of the previous year. In addition to the rise in the NAV of the portfolio, a
further £85m was added by the acquisition of the assets of MIOT in September
2013, via the issue of new Diverse shares. The Board was delighted that Tom
Bartlam, Chairman of MIOT, agreed to join the Board of Diverse, strengthening
our skills and experience. Tom has been appointed to Chair the Audit Committee
and I thank Jane Tufnell for her sound guidance of this Committee since the
Company's launch.

Subsequent to the year end, the Company announced that it had raised an
additional £50m through a C share issue. Once this capital has been invested,
it will be merged with the ordinary shares, and this should bring the size of
the Company to just over £320m.

The increasing size of the Company means that shareholders benefit from the
lower ratio of the fixed charges, as these are spread over a larger pool of
assets, and improved daily liquidity in the Company's shares.

Given the growth in the Company, the Board has agreed a revised management fee
structure with the Manager, with effect from 26 June 2014, such that the fee
paid on the market capitalisation of the Company above £300m will be 0.8%. The
fee on the market capitalisation up to £300m will remain unchanged at 1.0%.

AIFMD
Following the implementation of the Alternative Investment Fund Managers'
Directive ("AIFMD"), the Company has appointed a Miton Group company, PSigma
Unit Trust Managers Limited, as its Alternative Investment Fund Manager. The
management agreement has been amended with no change to the commercial terms
(other than that discussed above), and the day-to-day investment management
arrangements remain unchanged. The Company has appointed Bank of New York
Mellon as its Depositary and Custodian. Further details about the management
agreement and the depositary and custody arrangements for the Company are set
out below.

Authority to Issue Shares
At the forthcoming Annual General Meeting, the Board will once again be seeking
the renewal of the Company's authority to issue up to 10% of ordinary shares.
This authority is as previously approved at the 2013 Annual General Meeting.

In the recent C share issue prospectus, the Board indicated that it was
unlikely to carry out any further C share issues. The Company is now of
sufficient scale that it can consider issuing new shares via a tap issue if
this was considered to be in shareholders' interests. These would only be
considered if there were sufficiently attractive investment opportunities, and
if the shares of the Company traded at a premium to the underlying NAV at the
time.

Annual General Meeting
The Company's third Annual General Meeting is being held at 11.30 am on
Tuesday, 21 October 2014. It will be held at the offices of Stephenson Harwood
LLP, 1 Finsbury Circus, London EC2M 7SH. At this meeting you can meet
representatives of the Board, and also hear a presentation by the managers on
their reasoning for the current positioning of the portfolio. We plan to put a
webcast of the presentation on our website for those who are unable to attend.

Outlook
Equity markets have enjoyed a very substantial rise since the launch of the
Company, in large part due to expansive central bank policies, perhaps, rather
more than the prospects for promising economic growth. The US has started to
reduce its Quantitative Easing ("QE") programme and other central banks are
likely to follow. With economic growth remaining anaemic, the environment for
corporate earnings growth remains challenging.

The Company's principal objective remains to deliver an attractive and growing
dividend, and for this reason the portfolio has to remain fully invested
largely irrespective of the outlook. However, the cost of portfolio insurance
has recently dropped to levels similar to those of the mid-2000s. Against this
background, the Company has invested around 1.6% of the portfolio to purchase
some downside protection by way of a Put option, covering approximately
one-third of the portfolio, extending through to June 2015. Full details are
outlined below.

The focus remains on investing in a broad spread of companies with strong
balance sheets that are selected for their potential to deliver attractive
earnings and dividend growth, even in fluctuating economic circumstances. The
Board is therefore confident that the Company remains well-placed to continue
to deliver premium returns in the future.

Michael Wrobel
Chairman
12 August 2014


MANAGER'S REPORT

Portfolio
Overall, the Company has been kept fairly fully invested during the period.
Many of the holdings purchased in previous years have continued to trade well
over the period, and even after their share price appreciation, most still have
attractive risk/reward ratios. Most of the holdings in the portfolio have
traded in line with expectations through the results season. Strong performers
in the year have been Greencore, Staffline, International Greetings and
Bioventix, which have risen by around 100% or more in the period. However,
picking out individual stocks is not especially relevant given that the
portfolio is so well diversified. The premium return during the year is rather
more reflective of the overall strategy of adding value rather than a few
stocks performing especially strongly. The Company holds a portfolio of 133
holdings, widely diversified in terms of sectors. Therefore, the stock specific
risk on each individual holding should be limited if they disappoint.

A summary of the weightings of the portfolio split by different criteria, and
the largest 40 holdings are outlined below.

Performance over the Last Year
During the year, the outperformance of smaller companies and income stocks
enhanced returns for shareholders. In addition, active stock selection also
added value.

Attribution analysis suggests that the portfolio's bias towards both income
stocks and smaller companies was beneficial in the year. There was also a good
contribution from active stock selection.

In addition, the underlying growth of dividend income was also good over the
year. The effect was masked to some degree by the increase in the number of
shares in issue for the Company due to the takeover of MIOT. However, both the
third and fourth interim dividends were increased during the year, with the
total dividend up 7.1% on the previous year.

In the year under review, the total return on each ordinary share was 29.8%
(including the dividends declared during the year).

Current Market Trends and Outlook
Most professional investors naturally concentrate their attention on the
largest positions, where high-conviction decisions on a stock, sector or market
can be reflected in sizeable capital allocations. Smaller companies are
comparatively miniscule, so any allocation to this area normally requires a
more patient approach. Allocations to smaller companies have been reduced
during the credit boom when returns elsewhere have been good, but beyond the
credit boom as world growth moderates, there are fewer attractive alternatives.

Market appreciation over the year to 31 May 2014 was once again driven by the
expansive effects of QE, although progress became more uncertain as the US
Federal Bank reduced its QE activities. The bid for AstraZeneca - the largest
UK corporate bid ever - and Vodafone's distribution of its holding in Verizon,
did ensure that the FTSE 100 Index finished the year to May on a high note.

However, as QE within the US continues to fade, market trends have become
increasingly reliant upon the potential for corporate earnings growth, where
recent trends have been challenging.

Interestingly, the FTSE MidCap Index performance also became more problematic
towards the end of the period. Many investors are suggesting that there are
limited attractive areas for investing. Perhaps as a result, there has been an
increase in institutional smaller company allocations for the first time in
years. The Diverse strategy has been set up to take advantage of these changing
market trends.

1. The portfolio selects from a universe of UK quoted stocks with a full range
of market capitalisations. Prior to the credit boom, smaller company stocks
have a long history of outperformance.

2. Secondly, income stocks tend to outperform. This seems counter-intuitive, as
normally income stocks have relatively modest growth expectations. However,
that is the reason they outperform. Low expectations normally equate with low
valuations. High income stocks still carry downside risk of course, most
especially if they cannot sustain their forecast dividends. However, the `bird
in the hand' effect often turns out to be more valuable than the `two potential
birds in the bush' at times when growth is limited.

3. Finally, value can be added via active stock picking. Larger companies are
well researched and therefore stock picking is highly competitive. Smaller
companies by their nature are less researched, and so there is greater scope
for active managers to add value through stock picking.

Although UK growth may moderate and interest rates may increase, we remain
upbeat about the potential for many of the holdings in the portfolio to
continue to deliver growth. That said, share prices will naturally fluctuate,
so, as Managers, we have sought to limit market risk. The details of a Put
option held in the portfolio and how this may change in value if markets became
more unsettled are detailed below. In addition, on a look-through basis, the
cash balances held by some holdings exceed the aggregate borrowings of other
holdings (note this analysis does not include the lease commitments in the
underlying companies). All these factors give us confidence that the Company
remains well positioned with a portfolio that will hopefully deliver a growing
dividend.

Gervais Williams and Martin Turner
Miton Asset Management Limited
12 August 2014


WHAT ARE THE ADVANTAGES OF USING A PUT OPTION AS PART OF THE DIVERSE STRATEGY?

As reported in the Half-Yearly Report, in November 2013 the Company purchased a
Put option.

Put options are different to ordinary shares which make up the vast majority of
the Diverse portfolio. Although the price of Put options is principally driven
by the movement of an index, the relationship is inversely correlated.
Therefore, whereas most stocks rise when markets are buoyant, Put options tend
to fall in value. Conversely, when markets fall back, Put options tend to rise
in value. One key advantage of holding a Put option in the portfolio is that it
reduces the daily NAV fluctuations. The reason most funds do not use them is
that Put options are time limited, often extending to no more than a few
quarters; their value also decays over time. Using them generally reduces the
volatility for investors, but at a cost. The Put option has been purchased to
protect the Company's NAV against a significant setback in the market.

We believe that, as a general rule, the most dependable way to generate an
attractive return for shareholders over the long term is by investing in a
portfolio of individual businesses with promising prospects on a bottom-up
basis. For most, there is little value to reducing market risk through the
purchase of a Put option, given that corporate profits tend to gradually grow
over time with productivity growth and inflation. Although options are
frequently traded, in general most expire at the end of their term worthless.
With this in mind, it is only worth considering utilising Put options within
the context of a portfolio when the initial purchase costs are unusually low,
and the potential benefits to shareholders could be sizeable.

However, we do take a greater interest in the running costs of holding a Put
option. When these are high, it is self-evident that the risk/reward ratio is
unattractive. However, when the time decay cost comes down to very low levels,
then the risk/reward ratio becomes more attractive. It will be noted that prior
to the credit crunch, when markets were exceptionally buoyant, the price of
volatility fell to very low levels. However, during the global financial
crisis, the price of volatility rose several multiples above its previous
level. The price of volatility is a key part of the cost of a Put option, and
it has recently fallen to levels not dissimilar to those seen at the best
stages of the credit boom. The running cost of a Put option appears low at
present.

Since 2009, markets have risen a lot faster than the modest inflation and
corporate profit growth. Of course, the 2009 market levels may not be any more
accurate than its current level, but this may indicate that QE may have caused
markets to rise rather more than justified by fundamentals. Given that the US
is now planning to reduce QE, the scope for markets to appreciate as rapidly as
they have in the past few years appears more limited, and it may be that if
there were an unexpected adverse event they could fall back.

A key objective of the Company is to find ways to grow the dividend. The
strategy involves selecting the portfolio from amongst all quoted companies for
those with the best prospects. The Company does not have a formal index
benchmark, so the individual stock positions are all relatively minor in
absolute terms, and as a result the returns are not heavily dependent upon the
success or otherwise of a few large holdings, but rather on the selection of a
broad range of stocks.

It is believed that the risk/reward ratio has become sufficiently attractive
for the portfolio to invest around 1.6% of the capital in a Put option. The
option has a notional value that equated to around one-third of the capital of
the Company at the time. If the FTSE 100 Index and the price of volatility
remain as they were at the time of the purchase of the Put option, then the
value of this holding will reduce the NAV of the Company by 0.08% on average
per month.

The Company has little need to hold precautionary cash with a Put option, so if
the markets remain buoyant then the portfolio remains well positioned to fully
participate in that market rise. This will maximise the further potential for
the Company to continue to add value through successful stock selection.
Conversely, if markets were to fall back, then the value of the Put option
would rise and could become significant in the context of the whole Company. At
those times, its rise in value might offset the reduction in the regular
portfolio to some degree. Better still, the Put option could then be sold so
the scale of the portfolio could be increased at a time when market prices were
depressed. Of course, probably the most likely outcome is that somehow markets
muddle along somewhere in the middle, and the value of the Put option
fluctuates along the way. The cost of the option was 1.6% of the portfolio, but
the notional value reflects how much the option would be worth if the FTSE 100
Index were to go to zero. The notional value of the Put option is £68.8m.
However, we believe that the added value from the stock selection in the
portfolio would more than offset the time value decay of the Put option.

Terms of the option

Strike Price
This is the level of the FTSE 100 at which the Put option technically begins to
protect against a further market fall. The cost of buying a Put option at the
current FTSE 100 level is highly onerous so the purchased option is at the
5,800 level. In truth, the strategy is not seeking to protect the Company
against a minor move in the markets, but rather against a more significant
setback.

Duration
The Put option will expire on 19 June 2015. It will therefore have time value
for half of the current year and half of the next year. If markets were to fall
back, the extended time value could become significantly more valuable. An
option of this duration is better placed to take full advantage should the
price of volatility rise.

Notional Value
The cost of the option is only 1.6% of the portfolio, but the notional value
reflects how much the option would be worth if the FTSE 100 Index went to zero.
The notional value of the Put option is £68.8m.


PORTFOLIO INFORMATION AS AT 31 MAY 2014

                                 Sector & main      Valuation   % of net   Yield¹ 
Rank  Company                    activity               £'000     assets        % 
                                                                                 
1     Charles Taylor Consulting  Industrials            5,274        2.0      3.6 
                                                                                
2     SQS Software²              Technology             5,173        1.9      1.7 
                                                                                
3     Fairpoint²                 Financial Services     5,104        1.9      4.1 
                                                                                
4     Safestyle²                 Consumer Services      4,866        1.8      2.7 
                                                                                
5     Stobart                    Industrials            4,499        1.7      4.0 
                                                                                
6     Randall & Quilter          Insurance Services     4,178        1.6      5.3 
      Investment Holdings²                                                      
                                                                                
7     Bioventix²                 Health Care            4,106        1.5      3.2 
                                                                                
8     Shoe Zone²                 Consumer Services      3,947        1.5      7.0 
                                                                                
9     Powerflute²                Basic Materials        3,795        1.4      2.8 
                                                                                
10    Secure Trust Bank          Financial Services     3,787        1.4      2.4 
                                                                                
      Top 10 investments                               44,729       16.7      
   
                                                                                
11    DX Group²                  Industrials            3,738        1.4      5.0 
                                                                                
12    St Ives                    Industrials            3,689        1.4      3.2 
                                                                                
13    Conviviality Retail²       Consumer Services      3,654        1.4      5.0 
                                                                                
14    CML Microsystems²          Technology             3,516        1.3      1.1 
                                                                                
15    Cable & Wireless           Telecommunications     3,381        1.3      4.5 
      Communications                                                            
                                                                                
16    UK Mail                    Industrials            3,381        1.3      3.4 
                                                                                
17    Provident Financial        Financial Services     3,251        1.2      4.1 
                                                                                
18    Personal Group²            Insurance Services     3,249        1.2      3.6 
                                                                                
19    Interserve                 Industrials            3,231        1.2      3.3 
                                                                                
20    Novae Group                Insurance Services     3,148        1.2      4.0 
                                                                                
      Top 20 investments                               78,967       29.6         
          
                                                                      
21    Bloomsbury Publishing      Consumer Services      3,075        1.2      3.5 
                                                                                
22    Talk Talk Telecom          Telecommunications     3,031        1.1      3.7 
                                                                                
23    A&J Mucklow                Financial Services     3,025        1.1      4.5 
                                                                                
24    Dairy Crest                Consumer Goods         2,959        1.1      4.6 
                                                                                
25    Amlin                      Insurance Services     2,948        1.1      5.5 
                                                                                
26    KCOM                       Telecommunications     2,941        1.1      5.0 
                                                                                
27    Esure                      Insurance Services     2,876        1.1      3.5 
                                                                                
28    Go-Ahead                   Consumer Services      2,839        1.1      3.7 
                                                                                
29    Amino Technologies²        Technology             2,832        1.1      3.9 
                                                                                
30    Juridica Investments²      Financial Services     2,830        1.1      7.6 
                                                                                
      Top 30 investments                              108,323       40.7         
             
                                                                   
31    Lancashire Holdings        Financial Services     2,825        1.1      7.5 
                                                                                
32    RPC Group                  Industrials            2,798        1.0      2.5 
                                                                                
33    Catlin                     Insurance Services     2,793        1.0      5.9 
                                                                                
34    4imprint                   Consumer Services      2,780        1.0      2.5 
                                                                                
35    Zotefoams²                 Basic Materials        2,716        1.0      1.9 
                                                                                
36    Direct Line Insurance      Insurance Services     2,682        1.0      5.0 
                                                                                
37    Macfarlane                 Industrials            2,654        1.0      4.0 
                                                                                
38    Segro                      Financial Services     2,620        1.0      4.2 
                                                                                
39    Legal & General            Insurance Services     2,589        1.0      4.0 
                                                                                
40    Friends Life               Insurance Services     2,588        1.0      6.8 
                                                                                
Top 40 investments                                    135,368       50.8         

                                                                                
Balance held in 89 equity                             128,012       48.1         
investments                                                                     
                                                                                
Total equity investments                              263,380       98.9         
                                                                                
William Sinclair 8% Convertible                         2,650        1.0         
Loan Notes 17/12/2018 (unlisted)                                                
                                                                                
St. Modwen Properties 6.25%                               863        0.3         
07/11/2019 Bonds                                                                   
                                                                                
Private & Commercial Finance 6%                           356       0.1         
30/09/2016 Notes                                                                
                                                                                
Fixed interest investments                              3,869       1.4         
                                                                                
Total investments                                     267,249     100.3         
                                                                                
Listed Put option                                                               
                                                                                
FTSE 100 - June 2015, 5,800 Put                         1,293       0.5        
                                                                                
Other net liabilities                                  (2,139)     (0.8)        
                                                                                
Net assets                                            266,403     100.0         

¹ Source: Interactive Data. Based on historical yields. Manager's estimate
where no historical data.

² AIM/ISDX listed.

A copy of the full portfolio of investments as at 31 May 2014 is available on
the Company's website, www.mitongroup.com/dit.


Portfolio exposure by sector
                                                 %
                                                  
Consumer Services                             17.0
                                                  
Insurance Services                            15.8
                                                  
Financial Services                            15.5
                                                  
Support Services                              12.7
                                                  
Industrials                                    7.6
                                                  
Technology                                     6.9
                                                  
Consumer Goods                                 6.2
                                                  
Telecommunications                             6.0
                                                  
Basic Materials                                4.5
                                                  
Health Care                                    4.2
                                                  
Oil & Gas                                      1.6
                                                  
Cash/Fixed Interest and Other                  1.1
                                                  
Utilities                                      0.9
                                                  
                                             100.0


Portfolio asset by Index or Exchange
                                                 %
                                                  
FTSE 100 Index                                 9.3
                                                  
FTSE 250 Index                                22.2
                                                  
FTSE SmallCap Index                           17.2
                                                  
FTSE Fledgling Index                           6.2
                                                  
AIM/ISDX Exchanges                            39.9
                                                  
Other                                          4.1
                                                  
Cash/ Fixed Interest and Other                 1.1
                                                  
                                             100.0


Portfolio investment income by Index or Exchange
                                                 %
                                                  
FTSE 100 Index                                11.3
                                                  
FTSE 250 Index                                33.0
                                                  
FTSE SmallCap Index                           19.1
                                                  
FTSE Fledgling Index                           4.9
                                                  
AIM/ISDX Exchanges                            30.8
                                                  
Fixed Interest and Other                       0.9
                                                  
                                             100.0


Estimated annual income by sector¹
                                                 %
                                                  
Insurance Services                            19.1
                                                  
Financial Services                            18.7
                                                  
Consumer Services                             15.3
                                                  
Industrials                                    9.3
                                                  
Telecommunications                             7.0
                                                  
Support Services                               5.9
                                                  
Basic Materials                                5.5
                                                  
Consumer Goods                                 5.5
                                                  
Technology                                     3.7
                                                  
Health Care                                    3.5
                                                  
Cash/Fixed Interest and Other                  3.3
                                                  
Oil & Gas                                      2.2
                                                  
Utilities                                      1.0
                                                  
                                             100.0

¹ Projected income based on portfolio as at 31 May 2014.

Source: Miton Asset Management Limited and Interactive Data


Investment Objective
The Company's investment objective is to provide shareholders with an
attractive and growing 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 toward 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 is 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 140 securities, predominantly 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
(calculated at the time of borrowing).

The Board oversees the level of gearing in the Company, and reviews 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 the London Stock Exchange.

No material change will be made to the investment policy without the approval
of shareholders by ordinary resolution.


BUSINESS MODEL

Diverse was launched on 28 April 2011. It is registered in England as a public
limited company and is an investment company in accordance with the provisions
of Sections 832 and 833 of the Companies Act 2006.

The principal activity of the Company is to carry on business as an investment
trust. The Company intends at all times to conduct its affairs so as to enable
it to qualify as an investment trust for the purposes of Sections 1158/1159 of
the Corporation Tax Act 2010 ("S1158/1159"). The Directors do not envisage any
change in this activity in the foreseeable future.

The Company has been granted approval from HM Revenue & Customs ("HMRC") as an
investment trust under S1158/1159 and will continue to be treated as an
investment trust company, subject to there being no serious breaches of the
conditions for approval.

The principal conditions that must be met for continuing approval by HMRC as an
investment trust are that the Company's business should consist of "investing
in shares, land or other assets with the aim of spreading investment risk and
giving members of the company the benefit of the results" and the Company must
distribute a minimum of 85% of all its income as dividend payments. The Company
must also not be a close company. The Directors are of the opinion that the
Company has conducted its affairs for the year ended 31 May 2014 so as to be
able to continue to qualify as an investment trust.

The Company's status as an investment trust allows it to obtain an exemption
from paying taxes on the profits made from the sale of its investments and all
other net capital gains. Investment trusts offer a number of advantages for
investors, including access to investment opportunities that might not be open
to private investors and to professional stock selection skills at lower cost.

The Company has a wholly owned subsidiary, DIT Income Services Limited. The
purpose of the subsidiary is to invest in shorter-term holdings, where the
gains after corporation tax can be passed up to the parent company by way of
dividends, thus improving the position of the Company's revenue account.

Investment Policy
The Company's full investment policy set out above contains information on
the policies which the Company follows relating to asset allocation, risk
diversification and gearing, and includes maximum exposures, where relevant.

The Company invests primarily in quoted or traded UK companies with a wide
range of market capitalisations but a long-term bias toward small and mid cap
equities with a view to achieving the Company's investment objective.

The Manager adopts a stock specific approach in managing the Company's
portfolio and therefore sector weightings will be of secondary consideration.
As a result of this approach, the Company's portfolio will not track any
benchmark index.


PERFORMANCE AND RISKS

Key Performance Indicators
The Board reviews the Company's performance by reference to a number of Key
Performance Indicators ("KPIs") and considers that the most relevant KPIs are
those that communicate the financial performance and strength of the Company as
a whole. The Board and the Manager monitor the following KPIs:

• NAV performance, relative to comparable investment trusts and open-ended
funds and to various UK stock market indices.

The NAV at 31 May 2014 was 82.13p per share (2013: 65.12p). The Company's total
return increased by 29.8% over the year. This compares favourably with its peer
group, where the average was a 12.8% increase. By comparison, the total return
on the FTSE All-Share Index was 8.9%, on the FTSE SmallCap Index (excluding
Investment Companies) was 23.9%, and on the AIM All-Share Index was 12.7%.

• NAV volatility

The Company has an objective to deliver attractive returns whilst having an eye
to constraining volatility relative to other similar investment trusts. For the
year to 31 May 2014, the Company's NAV had a volatility of 6.0%. This compares
to the peer group where the average was 10.7%.

• Movements in the Company's share price

The Company's share price increased by 29.8% over the year on a total return
basis. This compares favourably with its peer group, where the average increase
was 12.4%.

• The discount of the share price in relation to the NAV

The Company has an objective to keep the discount to NAV at a minimum. Over the
year to 31 May 2014, the Company has maintained an average premium to NAV of
3.2%.

• The Company's dividend growth rate

The Company has an objective to deliver an attractive and growing dividend. In
the year, the Company paid dividends totalling 2.25p, representing a yield of
2.9% (based on an average share price of 77.9p). The Company grew this dividend
by 7.1% compared to the previous year. This compares to its peer group, where
the average estimated growth rate was 3.8%*.

• Ongoing charges

The ongoing charges for the year to 31 May 2014 amounted to 1.27% (2013: 1.45%)
of total assets.

* Average of the other UK Equity Trusts that have reported over the previous
twelve months.

Dividends
Dividends totalling 2.25p per ordinary share have been paid or declared in
respect of the year ended 31 May 2014 as follows:

First interim          0.30p paid on 29 November 2013                      
dividend:                                                                  
                                                                           
Second interim         0.50p paid on 28 February 2014                      
dividend:                                                                  
                                                                           
Third interim          0.50p paid on 31 May 2014                           
dividend:                                                                  
                                                                           
Fourth interim         0.95p payable on 29 August 2014                     
dividend:                                                                  

Shareholders will have the option to vote on the dividend payment policy of the
Company at the forthcoming Annual General Meeting (see full Annual Report and
Accounts for further details).

Principal Risks and Uncertainties
The Company is exposed to a variety of risks and uncertainties that could cause
its asset price or the income from the investment portfolio to reduce, possibly
by a sizeable percentage in the most adverse circumstances. The principal
financial risks and the Company's policies for managing these risks and the
policy and practice with regard to the financial instruments are summarised in
note 18 to the financial statements.

The Board has also identified the following additional risks and uncertainties:

Investment activity and strategy                                               
        
Risk: There can be no guarantee that the investment objective of the Company   
will be achieved.                                                              
                                                                               
The Company does not follow any benchmark. Accordingly, the portfolio of       
investments held by the Company will not mirror the stocks and weightings that 
constitute any particular index or indices, which may lead to the Company's    
shares failing to follow either the direction or extent of any moves in the    
financial markets generally (which may or may not be to the advantage of       
shareholders).                                                                 
                                                                               
Mitigation: The Manager has in place a dedicated investment management process 
which is designed to maximise the chances of the investment objective being    
achieved. The Board reviews regular investment and financial reports from the  
Manager to monitor this.                                                       
                                                                               
Smaller companies                                                              
                                                                               
Risk: The Company will invest primarily in quoted UK companies with a wide     
range of market capitalisations but a long-term bias toward small and mid cap  
equities. Smaller companies can be expected, in comparison to larger companies,
to be less mature businesses, have more restricted depth of management and a   
higher risk profile. In addition, the relatively small market capitalisation of
such companies can make the market in their shares illiquid. Prices of smaller 
capitalisation stocks are often more volatile than prices of larger            
capitalisation stocks and the risk of insolvency of many smaller companies     
(with the attendant losses to investors) is higher.                            
                                                                               
Mitigation: The Board looks to mitigate this risk by ensuring the Company holds
a spread of investments, achieved through limiting the size of new holdings at 
the time of investment to typically between 1% and 1.5% of the portfolio. All  
potential investee companies are researched by the Manager prior to investment.
                                                                               
Sectoral diversification                                                       
                                                                               
Risk: The Company is not constrained from weighting to any sector. This may    
lead to the Company having significant exposure to portfolio companies from    
certain business sectors from time to time. Greater concentration of           
investments in any one sector may result in greater volatility in the value of 
the Company's investments and consequently its NAV.                            
                                                                               
Mitigation: The Company seeks to achieve attractive returns by investing in    
weightings that are different from the overall market, yet also seeks to ensure
that individual variances are not so extreme as to leave shareholders at risk  
of portfolio volatility that is unreasonably poor. Even though there may be    
significant exposures to a single sector, this will be achieved by holding a   
number of different stocks in the portfolio.                                   
                                                                               
Dividends                                                                      
                                                                               
Risk: The Company's investment objective includes the aim of providing         
shareholders with an attractive and growing dividend. There is no guarantee    
that any dividends will be paid in respect of any financial year or period. The
ability to pay dividends is dependent on a number of factors, including the    
level of dividends earned from the portfolio and the net revenue profits       
available for that purpose.                                                    
                                                                               
The redemption of shares pursuant to the redemption facility may also reduce   
distributable reserves to the extent that the Company is unable to pay         
dividends.                                                                     
                                                                               
Mitigation: The Company maintains accounting records and produces forecasts    
that are designed to reduce the likelihood that the Company will not have      
sufficient distributable resources to meet its dividend objective.             
                                                                               
Share price volatility and liquidity/marketability risk                        
                                                                               
Risk: The market price of the Company's shares, like shares in all investment  
companies, may fluctuate independently of the NAV and thus may not reflect the 
underlying NAV of the shares. The shares could trade at a discount or premium  
to NAV at different times, depending on factors such as supply and demand for  
the shares, market conditions and general investor sentiment.                  
                                                                               
Mitigation: The Company has in place an annual redemption facility whereby     
shareholders can voluntarily tender their shares. The Board monitors the       
relationship between the share price and the NAV. The Company has taken powers 
to re-purchase shares should there be an imbalance in the supply and demand    
leading to a discount. Since launch, however, the Company's shares have traded 
at a consistent premium to NAV. The Company also has powers to issue shares    
(only at a premium to NAV) should there be good investment opportunities and   
the size of the premium to net assets may give rise to the risk of share price 
volatility.                                                                    
                                                                               
Gearing                                                                        
                                                                               
Risk: The Company's investment strategy may involve the use of gearing to      
enhance investment returns, which exposes the Company to risks associated with 
borrowings. Gearing may be generated through the use of options, futures,      
options on futures, swaps and other synthetic or derivative financial          
instruments. Such financial instruments inherently contain much greater        
leverage than a non-margined purchase of the underlying security or instrument.
                                                                               
While the use of borrowings should enhance the total return on the shares where
the return on the Company's underlying assets is rising and exceeds the cost of
borrowing, it will have the opposite effect where the return on the Company's  
underlying assets is rising at a lower rate than the cost of borrowing or      
falling, further reducing the total return on the shares.                      
                                                                               
As a result, the use of borrowings by the Company may increase the volatility  
of the NAV per share.                                                          
                                                                               
Mitigation: The Company has an overdraft facility in place, as detailed in note
16 to the financial statements. At 31 May 2014, the Company had drawn down    
£3.7m of the available facility.                                                
                                                                               
The Company is limited to a maximum gearing of 15% of the net assets. There was
gearing of 1.4% at 31 May 2014 (2013: nil).                                    
                                                                               
Key Man Risk                                                                   
                                                                               
Risk: The Company depends on the diligence, skill, judgement and business      
contacts of the Manager's investment professionals and its future success could
depend on the continued service of these individuals, in particular Gervais    
Williams.                                                                      
                                                                               
Mitigation: The Company may terminate the Management Agreement should Gervais  
Williams cease to be an employee of the Manager's group and is not replaced by 
a person whom the Company considers to be of equal or satisfactory standing    
within three months of his departure.                                          
                                                                               
Redemption Facility                                                            
                                                                               
Risk: The operation of the annual redemption facility may lead to a more       
concentrated and less liquid portfolio which may adversely affect the Company's
performance and value. Further, redemptions may also adversely affect the      
secondary market liquidity of the ordinary shares.                             
                                                                               
Mitigation: The Board would seek to mitigate the risk of substantial           
redemptions being requested by maintaining a regular flow of communication with
shareholders and the achievement of the investment objectives of the Company.  
Under the Articles of Association, the Board may, at its absolute discretion,  
elect not to operate the redemption facility on any given Redemption Point,    
although the Board does not generally expect to exercise this discretion, save 
in the interests of shareholders as a whole.                                   
                                                                               

SHARE CAPITAL

Share Issues
On 15 February 2013, the Company announced that it had agreed heads of terms
with the board of Henderson Fledgling Trust plc (subsequently renamed Miton
Income Opportunities Trust plc ("MIOT")) in respect of a future merger of the
two companies (the "Scheme"). Under the Scheme, and as set out in the
prospectus and circular dated 30 August 2013, MIOT shareholders would receive
Diverse shares valued at a premium of 2.5% to the NAV as at the effective date
of the Scheme. The consideration for the issue of new Diverse shares was the
transfer to Diverse of the entire investment portfolio of MIOT, following the
setting aside of such amounts as required to meet its outstanding and
contingent liabilities, by way of a scheme of reconstruction. At a General
Meeting held on 23 September 2013, the Directors were granted the authority to
allot ordinary shares up to an aggregate nominal amount of £150,000 in
connection with the allotment of ordinary shares to MIOT shareholders.

On 30 September 2013, 115,684,143 ordinary shares were issued to MIOT
shareholders on the basis of 7.1965 ordinary shares for every MIOT share held.
These shares commenced trading on the London Stock Exchange on 1 October 2013.

At the Annual General Meeting held on 22 October 2013, the Directors were
granted the authority to allot ordinary shares up to an aggregate nominal
amount of £20,800. No shares have been issued under this authority.

As at the year end, the Company's share capital consisted of 324,377,450
ordinary shares and 50,000 management shares (see note 8 to the financial
statements).

At a General Meeting held on 7 December 2012, the Directors were granted the
authority to allot C shares on a fully pre-emptive basis up to an aggregate
nominal amount of £3,000,000, representing 300,000,000 C shares. This authority
was renewed at the Annual General Meeting held on 22 October 2013 in respect of
an aggregate nominal amount of £2,380,000.

Subsequent to the year end, on 23 June 2014, 100,000,000 C shares of 1p each
were issued under an Open Offer, Placing and Offer for Subscription at an issue
price of 50p each, raising an aggregate of £50 million of gross proceeds for
the Company. The C shares commenced trading on the London Stock Exchange on 
26 June 2014.

Following the above transaction and as at the date of this Report, there were
324,377,450 ordinary shares (representing 76.4% of voting capital) and
100,000,000 C shares representing 23.6% of voting capital) in issue.

The remaining authorities to issue shares are due to expire at the Company's
Annual General Meeting to be held on 21 October 2014. Proposals for their
renewal are set out in the full Annual Report and Accounts.

There are no restrictions concerning the transfer of securities in the Company
or on voting rights; no special rights with regard to control attached to
securities; no agreements between holders of securities regarding their
transfer known to the Company; and no agreements which the Company is party to
that might affect its control following a successful takeover bid.

Purchase of Own Shares
At the Annual General Meeting of the Company held on 22 October 2013, the
Directors were granted the authority to buy back up to 31,283,126 ordinary
shares. No ordinary shares have been bought back under this authority. The
authority will expire at the next Annual General Meeting when a resolution for
its renewal will be proposed.

Treasury Shares
Shares bought back by the Company may be held in treasury, from where they
could be re-issued at a premium to NAV quickly and cost effectively. This
provides the Company with additional flexibility in the management of its
capital base. No shares were purchased for, or held in, treasury during the
year or since the year end.

Share Redemptions
Valid redemption requests were received under the Company's redemption facility
for the 31 May 2014 Redemption Point in relation to 69,892 ordinary shares. As
permitted under the Company's Articles of Association, these shares were
matched with buyers and were sold at a calculated Redemption Price of 81.86p.


MANAGEMENT, SOCIAL, ENVIRONMENTAL AND DIVERSITY MATTERS

Management Arrangements
During the year, the Company's investments were managed by Miton Asset
Management Limited under an agreement dated 7 April 2011. On 1 January 2014,
the agreement was novated from Miton Capital Partners Limited to Miton Asset
Management Limited. The management fee was calculated at the rate of
one-twelfth of 1.0% per calendar month of the average market capitalisation of
the Company's shares for the relevant month and payable monthly in arrears. In
addition to the basic management fee, and for so long as a Redemption Pool is
in existence, the Manager is entitled to receive from the Company a fee
calculated at the rate of one-twelfth of 1.0% per calendar month of the NAV of
the Redemption Pool on the last business day of the relevant calendar month.

With effect from 26 June 2014, it has been agreed that the management fee would
be amended such that the fee would be 1.0% on the market capitalisation of the
Company up to £300m and 0.8% on the market capitalisation above £300m.

In accordance with the Directors' policy on the allocation of expenses between
income and capital, in each financial year 75% of the management fee payable is
charged to capital and the remaining 25% to revenue.

On 22 July 2014, the Company appointed PSigma Unit Trust Managers Limited
("PUTM"), a Miton Group Company, as the Company's Alternative Investment Fund
Manager ("AIFM") on the terms of and subject to the conditions of a new
investment management agreement (the "Management Agreement") between the
Company and PUTM. PUTM has been approved as an AIFM by the UK's Financial
Conduct Authority.

The existing investment management agreement between the Company and Miton
Asset Management Limited, which is not authorised as an AIFM, has been
terminated. Miton Asset Management Limited has been appointed by PUTM as
investment manager to the Company pursuant to a delegation agreement, so there
will be no change to the day-to-day investment management arrangements.

The arrangements in respect of the management fee and notice period remain
unchanged.

The Management Agreement is terminable by either the Manager or the Company
giving to the other not less than 12 months' written notice. The Management
Agreement may be terminated earlier by the Company with immediate effect on the
occurrence of certain events, including the liquidation of the Manager or
appointment of a receiver or administrative receiver over the whole or any
substantial part of the assets or undertaking of the Manager or a material
breach by the Manager of the Management Agreement which is not remedied. The
Company may also terminate the Management Agreement should Gervais Williams
cease to be an employee of the Manager's group and is not replaced by a person
whom the Company considers to be of equal or satisfactory standing within three
months of his departure.

The Company has given certain market standard indemnities in favour of the
Manager in respect of the Manager's potential losses in carrying on its
responsibilities under the Management Agreement.

The Board has also appointed Bank of New York Mellon as its Depositary and
Custodian, under an agreement dated 22 July 2014. The annual fee for depositary
services due to Bank of New York Mellon will be 0.025% of gross assets, subject
to a minimum fee of £15,000 per annum.

Company secretarial and administrative services are provided by Capita Sinclair
Henderson Limited, under an agreement dated 7 April 2011, for an annual fee of
£108,000, increasing annually in line with the UK Retail "all items" Index. The
fees are paid in equal monthly instalments in arrears. This agreement may be
terminated by 12 months' written notice subject to provisions for earlier
termination as provided therein.

Continuing Appointment of the Manager
The Board keeps the performance of the Manager under continual review, and the
Management Engagement Committee conducts an annual appraisal of the Manager's
performance, and makes a recommendation to the Board about the continuing
appointment of the Manager. It is the opinion of the Directors that the
continuing appointment of PUTM and Miton Asset Management Limited is in the
interests of shareholders as a whole. The reasons for this view are that the
Manager has executed the investment strategy according to the Board's
expectations and has demonstrated superior risk-adjusted returns relative to
the broader market and the peer group.

The Directors also believe that by paying the investment management fee
calculated on a market capitalisation basis, rather than a percentage of assets
basis, the interests of the Manager are more closely aligned with those of
shareholders. As set out in the Chairman's Statement, the Board has agreed a
revised management fee structure, which will be on a tiered basis going
forward.

Environmental, Human Rights, Employee, Social and Community Issues
The Company does not have any employees and the Board consists entirely of
non-executive Directors. Day-to-day management of the business is delegated to
the Manager. As an investment trust, the Company has no direct impact on the
community or the environment, and as such has no environmental, human rights,
social or community policies. In carrying out its investment activities and in
relationships with suppliers, the Company aims to conduct itself responsibly,
ethically and fairly.

Gender Diversity
The Board of Directors of the Company comprises two female and three male
Directors.

On behalf of the Board
Michael Wrobel
Chairman
12 August 2014

Going Concern

The Directors consider that it is appropriate to adopt the going concern basis
in preparing the financial statements. Although the Company had net current
liabilities as at 31 May 2014, 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 for a period of at least 12 months from the date
that these financial statements were approved.

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.


The full Annual Report contains the following statements regarding
responsibility for the financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the Group
financial statements in accordance with applicable United Kingdom law and those
International Financial Reporting Standards ("IFRS") as adopted by the European
Union.

Under company law the Directors must not approve the financial statements
unless they are satisfied that they present fairly the financial position,
financial performance and cash flows of the Group for that year.

In preparing the Group financial statements, the Directors are required to:

• select suitable accounting policies in accordance with IAS 8: 'Accounting
Policies, Changes in Accounting Estimates and Errors' and then apply them
consistently;

• present information, including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information;

• provide additional disclosures when compliance with specific requirements in
IFRS is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the Group's financial position and
financial performance;

• state that the Group has complied with IFRS, subject to any material
departures disclosed and explained in the financial statements; and

• make judgements and estimates that are reasonable and prudent.

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the Group financial statements comply with the Companies
Act 2006 and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration Report
and Corporate Governance Statement that comply with that law and those
regulations, and for ensuring that the Annual Report includes information
required by the Listing Rules of the Financial Conduct Authority.

The financial statements are published on the Company's website,
www.mitongroup.com/dit, which is maintained on behalf of the Company by the
Manager. Under the Management Agreement, the Manager has agreed to maintain,
host, manage and operate the Company's website and to ensure that it is
accurate and up-to-date and operated in accordance with applicable law. The
work carried out by the Auditor does not involve consideration of the
maintenance and integrity of this website and accordingly, the Auditor accepts
no responsibility for any changes that have occurred to the financial
statements since they were initially presented on the website. Visitors to the
website need to be aware that legislation in the United Kingdom covering the
preparation and dissemination of the financial statements may differ from
legislation in their jurisdiction.

We confirm that to the best of our knowledge:

• the Group financial statements, prepared in accordance with IFRS as adopted
by the European Union, give a true and fair view of the assets, liabilities,
financial position and profit of the Group;

• this Annual Report includes a fair review of the development and performance
of the business and the position of the Group together with a description of
the principal risks and uncertainties that it faces; and

• the Annual Report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and strategy.

On behalf of the Board
Michael Wrobel
Chairman
12 August 2014


NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 May 2014 and 31 May 2013 but is derived 
from those accounts. Statutory accounts for 2013 have been delivered to
the Registrar of Companies, and those for 2014 will be delivered in due course.
The Auditor has reported on those accounts; their report was (i) unqualified,
(ii) did not include a reference to any matters to which the Auditor drew
attention by way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The
text of the Auditor's report can be found in the Company's full Annual Report
at: www.mitongroup.com/dit.


CONSOLIDATED INCOME STATEMENT

                                   Year ended                Year ended          
                                   31 May 2014               31 May 2013           
                          Revenue  Capital    Total  Revenue  Capital    Total 
                  Note      £'000    £'000    £'000    £'000    £'000    £'000 
                                                                               
Gains on            11          -   45,836   45,836        -   28,196   28,196 
investments held                                                               
at fair value                                                                  
through profit or                                                              
loss                                                                           
                                                                               
Income               2      8,953        -    8,953    4,765        -    4,765 
                                                                               
Investment           3       (583)  (1,750)  (2,333)    (256)    (767)  (1,023)
management fee                                                                 
                                                                               
Other expenses       4       (577)       -     (577)    (532)       -     (532)
                                                                               
Return on                   7,793   44,086   51,879    3,977   27,429   31,406 
ordinary                                                                       
activities before                                                              
finance costs and                                                              
taxation                                                                       
                                                                               
Finance costs -                (6)     (19)     (25)      (3)      (9)     (12)
overdraft                                                                      
interest paid                                                                  
                                                                               
Return on ordinary          7,787   44,067   51,854    3,974   27,420   31,394 
activities before                                                              
taxation                                                                       
                                                                               
Taxation -           5        (73)       -      (73)     (25)       -      (25)
irrecoverable                                                                  
withholding tax                                                                
                                                                               
Return on            6      7,714   44,067   51,781    3,949   27,420   31,369 
ordinary                                                                       
activities after                                                               
taxation                                                                       
                                                                               
                            pence    pence    pence    pence    pence    pence 
                                                                               
Return per           6       2.70    15.41    18.11     2.42    16.85    19.27 
ordinary share                                                                 
                                                                               
Return per C         6          -        -        -     0.63     4.32     4.95 
share                                                                          

The total column of this statement is the Income Statement of the Group prepared 
in accordance with IFRS, as adopted by the European Union. The supplementary 
revenue and capital 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 year.

The notes form part of these financial statements.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                  Share                                                     
                         Share  premium  Special  Capital    Revenue                     
                       capital  account  reserve  reserve    reserve     Total  
Group                    £'000    £'000    £'000    £'000      £'000     £'000 
                                                                               
As at 1 June 2013          209   59,337   48,558   25,529      2,276   135,909 
                                                                               
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the           -        -        -   44,067      7,714    51,781 
year                                                                           
                                                                               
Transactions with                                                              
shareholders recorded                                                          
directly to equity:                                                            
                                                                               
Issue of ordinary          116   85,000        -        -          -    85,116 
shares                                                                         
                                                                               
Expenses of share            -     (780)       -        -          -      (780)
issue                                                                          
                                                                               
Equity dividends paid        -        -        -        -     (5,623)   (5,623)
                                                                               
As at 31 May 2014          325  143,557   48,558   69,596      4,367   266,403 


                                  Share                                                                     
                         Share  premium  Special   Capital  Revenue                         
                       capital  account  reserve   reserve  reserve      Total   
Group                    £'000    £'000    £'000     £'000    £'000      £'000 
                                                                               
As 1 June 2012             100        -   48,558    (1,891)   1,059     47,826 
                                                                               
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the           -        -        -    27,420    3,949     31,369 
year                                                                           
                                                                               
Transactions with                                                              
shareholders recorded                                                          
directly to equity:                                                            
                                                                               
Issue of ordinary          109   60,891        -         -        -     61,000 
shares                                                                         
                                                                               
Expenses of share            -   (1,554)       -         -        -     (1,554)
issue                                                                          
                                                                               
Equity dividends paid        -        -        -         -   (2,732)    (2,732)
                                                                               
As at 31 May 2013          209   59,337   48,558    25,529    2,276    135,909 

The notes form part of these financial statements.


PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

                                 Share         
                        Share  premium    Special   Capital    Revenue  
                      capital  account    reserve   reserve    reserve    Total                                     
Company                 £'000    £'000      £'000     £'000      £'000    £'000                                  
                                                                               
As at 1 June 2013         209   59,337     48,558    25,529      2,276  135,909 
                                                                               
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the         -         -          -    44,067      7,327   51,394 
year                                                                           
                                                                               
Transactions with                                                              
shareholders                                                                   
recorded directly                                                              
to equity:                                                                     
                                                                               
Issue of ordinary         116   85,000          -         -          -   85,116 
shares                                                                         
                                                                               
Expenses of share           -     (780)         -         -          -     (780)
issue                                                                          
                                                                               
Equity dividends            -        -          -         -     (5,623)  (5,623)
paid                                                                           
                                                                               
As at 31 May 2014         325  143,557     48,558    69,596      3,980  266,016 


                                 Share         
                        Share  premium    Special   Capital    Revenue  
                      capital  account    reserve   reserve    reserve    Total                                     
Company                 £'000    £'000      £'000     £'000      £'000    £'000     
                 
As at 1 June 2012         100        -     48,558    (1,891)     1,002   47,769 
                                                                               
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the          -        -          -    27,420      4,006   31,426 
year                                                                           
                                                                               
Transactions with                                                              
shareholders                                                                   
recorded directly                                                              
to equity:                                                                     
                                                                               
Issue of ordinary         109   60,891          -         -          -   61,000 
shares                                                                         
                                                                               
Expenses of share           -   (1,554)         -         -          -   (1,554)
issue                                                                          
                                                                               
Equity dividends            -        -          -         -     (2,732)  (2,732)
paid                                                                           
                                                                               
As at 31 May 2013         209   59,337     48,558    25,529      2,276  135,909 

The notes form part of these financial statements.


CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS
                                  Group       Group      Company       Company  
                                 31 May      31 May       31 May        31 May 
                                   2014        2013         2014          2013
                        Note      £'000       £'000        £'000         £'000                                        
Non-current assets:                                                            
                                                                               
Investments held at       11    267,249     128,897      267,249       128,897        
fair value through                                                             
profit or loss                                                          
                                                                               
Current assets:                                                                
                                                                               
Derivative instruments    12      1,293           -        1,293             - 
                                                                               
Trade and other           15      1,769       6,609        1,769         6,609 
receivables                                                                    
                                                                               
Cash and cash                       130         893            -           893 
equivalents                                                                    
                                                                               
                                  3,192       7,502        3,062         7,502 
                                                                               
Current liabilities:                                                           
                                                                               
Bank overdraft            16     (3,724)          -       (3,724)            - 
                                                                               
Trade and other           16       (314)       (490)        (571)         (490)
payables                                                                       
                                                                               
                                 (4,038)       (490)      (4,295)         (490)
                                                                               
Net current                        (846)      7,012       (1,233)        7,012 
(liabilities)/assets                                                           
                                                                               
Total net assets                266,403     135,909      266,016       135,909 
                                                                               
Capital and reserves:                                                          
                                                                               
Share capital              8        325         209          325           209 
                                                                               
Share premium account      9    143,557      59,337      143,557        59,337 
                                                                               
Special reserve            9     48,558      48,558       48,558        48,558 
                                                                               
Capital reserve            9     69,596      25,529       69,596        25,529 
                                                                               
Revenue reserve            9      4,367       2,276        3,980         2,276 
                                                                               
Shareholders' funds             266,403     135,909      266,016       135,909 
                                                                               
                                  pence       pence                            
                                                                               
Net asset value per       10      82.13       65.12                            
ordinary share                                                                 

These financial statements were approved by the Board of The Diverse Income
Trust plc on 12 August 2014 and were signed on its behalf by:

Michael Wrobel
Chairman

Company no.: 7584303

The notes form part of these financial statements.


CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS

                                     Group     Group   Company   Company 
                                    31 May    31 May    31 May    31 May
                                      2014      2013      2014      2013 
                                     £'000     £'000     £'000     £'000                             
Operating activities:                                                    
                                                                         
Net return before taxation          51,854    31,394    51,467    31,451 
                                                                         
Gains on investments held at fair  (45,836)  (28,196)  (45,836)  (28,196)
value                                                                    
                                                                         
Purchases of investments           (76,311)  (78,718)  (76,311)  (78,718)
                                                                         
Sales of investments                72,370    19,130    72,370    19,130 
                                                                         
Purchase of derivative              (4,060)        -    (4,060)        - 
instruments                                                              
                                                                         
Increase in accrued income             (95)       (7)      (95)       (7)
                                                                         
Increase in other receivables         (644)     (508)     (644)     (508)
                                                                         
Increase in other payables              17       191        17       191 
                                                                         
Movement in investments by               -       151         -         - 
subsidiary                                                               
                                                                         
Net cash outflow from operating     (2,705)  (56,563)   (3,092)  (56,657)
activities before taxation                                               
                                                                         
Taxation:                                                                
                                                                         
Withholding tax paid                   (73)      (25)      (73)      (25)
                                                                         
Financing:                                                               
                                                                         
C shares issued                          -    61,000         -     61,000
                                                                         
Expenses of share issue               (780)   (1,554)     (780)   (1,554)
                                                                         
Equity dividends paid               (5,623)   (2,732)   (5,623)   (2,732)
                                                                         
Cash received from acquisition of    4,694         -     4,694         - 
MIOT                                                                     
                                                                         
Movement in loan from subsidiary         -         -       257       324 
                                                                         
Net cash (outflow)/inflow from      (1,782)   56,689    (1,525)   57,013 
financing and taxation                                                   
                                                                         
(Decrease)/increase in cash and     (4,487)      126    (4,617)      356 
cash equivalents                                                         
                                                                         
Reconciliation of net cash flow                                          
to movements in net funds:                                               
                                                                         
Cash and cash equivalents at the       893       767       893       537 
start of the year                                                        
                                                                         
Net cash (outflow)/inflow from      (4,487)      126    (4,617)      356 
cash and cash equivalents                                                
                                                                         
Cash and cash equivalents at the    (3,594)      893    (3,724)      893 
end of the year                                                          
                                                                         
Cash and cash equivalents                                                
                                                                         
Comprise the following:                                                  
                                                                         
Cash at bank                           130       893         -       893 
                                                                         
Bank overdraft                      (3,724)        -    (3,724)        - 
                                                                         
                                    (3,594)      893    (3,724)      893 

The notes form part of these financial statements.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General Information and Significant Accounting Policies
The Diverse Income Trust plc is a company incorporated and registered in
England and Wales. The principal activity of the Company is that of an
investment trust company within the meaning of Sections 1158/1159 of the
Corporation Tax Act 2010.

The Group's annual financial statements for the year ended 31 May 2014 have
been prepared in conformity with IFRS as adopted by the European Union, which
comprise standards and interpretations approved by the International Accounting
Standards Board ("IASB"), and as applied in accordance with the provisions of
the Companies Act 2006. The annual financial statements have also been prepared
in accordance with the AIC SORP issued in January 2009 for the financial
statements of investment trust companies and venture capital trusts, except to
any extent where it is not consistent with the requirements of IFRS.

Basis of Preparation
The accounting policies adopted in preparing the current year's financial
statements are consistent with those of the previous year. In order to better
reflect the activities of an investment trust company and in accordance with
guidance issued by the AIC, supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been prepared
alongside the Income Statement.

The financial statements have been prepared on a going concern basis and on the
basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Group's ability to continue as a
going concern and are satisfied that the Group has the resources to continue in
business for the foreseeable future. Furthermore, the Directors are not aware
of any material uncertainties that may cast significant doubt upon the Group's
ability to continue as a going concern, having taken into account the liquidity
of the Company's investment portfolio and the Group's financial position in
respect of its cash flows, borrowing facilities and investment commitments (of
which there are none of significance). Therefore, despite the net current
liability position as at 31 May 2014, the consolidated financial statements
have been prepared on the going concern basis.

The financial statements are presented in sterling, which is the Group's
functional currency as the UK is the primary environment in which it operates,
rounded to the nearest £'000, except where otherwise indicated.

Basis of Consolidation
The Group financial statements consolidate the financial statements of the
Company and its wholly-owned subsidiary, DIT Income Services Limited, drawn up
to 31 May 2014.

The subsidiary is consolidated from the date of its acquisition, being the date
on which the Company obtained control, and will continue to be consolidated
until the date that such control ceases. Control comprises the power to govern
the financial and operating policies of the investee so as to obtain benefit
from its activities and is achieved through direct or indirect ownership of
voting rights. The financial statements of the subsidiary are prepared for the
same reporting year as the parent Company, using consistent accounting
policies. All inter-company balances and transactions, including unrealised
profits arising from them, are eliminated.

As permitted by Section 408 of the Companies Act 2006, the Company has not
presented its own Income Statement. The amount of the Company's return for the
financial year dealt with in the financial statements of the Group is a profit
after tax of £51,394,000 (2013: £31,426,000).

Segmental Reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business. The Group primarily invests in
companies listed in the UK.

Accounting Developments
The accounting policies adopted are consistent with those of the previous
financial year, except that the following new standard has been adopted in the
current year:

In May 2011, the IASB issued IFRS 13 `Fair Value Measurement'. IFRS 13
establishes a single source of guidance under IFRS for all fair value
measurements. IFRS 13 does not change when an entity is required to use fair
value, but rather provides guidance on how to measure fair value under IFRS
when fair value is required or permitted. In particular, it unifies the
definition of fair value as the price at which an ordinary transaction to sell
an asset or to transfer a liability would take place between investor
participants at the measurement date. It also replaces and expands the
disclosure requirements about fair value measurements in other IFRSs, including
IFRS 7 `Financial Instruments: Disclosures'. This standard became effective for
accounting periods beginning on or after 1 January 2013 and requires specific
disclosures on fair value but has not materially affected the fair value
measurements made by the Company.

The IASB has issued the following relevant standards and interpretations which
are not effective for the year ended 31 May 2014 and have not been applied in
preparing these financial statements.

International Accounting Standards (IAS/IFRSs)             Effective for       
                                                           periods beginning on
                                                           or after            
                                                                               
IAS 27   Reissued as IAS 27 Consolidated and Separate      1 January 2014      
         Financial Statements (as amended in 2011)                             
                                                                               
IAS 28   Investments in Associates and Joint Ventures      1 January 2014      
                                                                               
IFRS 9   Financial Instruments: Classification and         1 January 2014      
         Measurement                                                           
                                                                               
IFRS 10  Consolidated Financial Statements                 1 January 2014      
                                                                               
IFRS 11  Joint Arrangements                                1 January 2014      
                                                                               
IFRS 12  Disclosure of Interests in Other Entities         1 January 2014      

The Group does not believe that there will be a material impact on the
consolidated financial statements from the adoption of these standards/
interpretations.

Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts in the Balance Sheet, the
Income Statement and the disclosure of contingent assets and liabilities at the
date of the financial statements. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future period if the revision affects both current and
future periods. There were no accounting estimates or significant judgements in
the current period.

Valuation of Investments
The Group's business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth. This
portfolio of financial assets is managed and its performance evaluated on a
fair value basis, in accordance with a documented investment strategy, and
information about the portfolio is provided internally on that basis to the
Group's Board of Directors.

Accordingly, upon initial recognition the Group designates the investments `at
fair value through profit or loss'. They are included initially at fair value,
which is taken to be their cost (excluding expenses incidental to the
acquisition which are written off in the Income Statement, and allocated to
`capital' at the time of acquisition). When a purchase or sale is made under a
contract, the terms of which require delivery within the time-frame of the
relevant market, the investments concerned are recognised or derecognised on
the trade date. Subsequent to initial recognition, investments are valued at
fair value through profit or loss. For listed investments, this is deemed to be
bid market prices or closing prices for SETS stocks sourced from the London
Stock Exchange. SETS is the London Stock Exchange electronic trading service
covering most of the market including all FTSE 100 constituents and the most
liquid constituents of the FTSE 250 Index along with some other securities.
Changes in fair value of investments not designated as held for trading are
recognised in the Income Statement as a capital item. On disposal, realised
gains and losses are also recognised in the Income Statement as capital items.

Gains and losses arising from changes in fair value are included in net profit
or loss for the period as a capital item in the Income Statement and are
ultimately recognised in the capital reserve.

The investment in the subsidiary company, DIT Income Services Limited, is held
at cost (£1) (2013: £1). Investments held as current assets by the subsidiary
undertaking are classified as `held for trading', and are at fair value.
Profits or losses on investments held for trading are taken to revenue in the
Income Statement.

All investments for which fair value is measured or disclosed in the financial
statements are categorised within the fair value hierarchy in note 11,
described as follows, based on the lowest significant applicable input:

Level 1 reflects financial instruments quoted in an active market.

Level 2 reflects financial instruments whose fair value is evidenced by
comparison with other observable current market transactions in the same
instrument or based on a valuation technique whose variables include only data
from observable markets.

Level 3 reflects financial instruments whose fair value is determined in whole
or in part using a valuation technique based on assumptions that are not
supported by prices from observable market transactions in the same instrument
and not based on available observable market data. For investments that are
recognised in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by
re-assessing the categorisation (based on the lowest significant applicable
input) at the date of the event that caused the transfer.

Derivative Instruments - held for Trading
Derivatives, including Index Put options, which are listed investments are
classified as financial assets or liabilities held for trading. They are
initially recorded at cost (being the premium paid to purchase the option) and
are subsequently valued at fair value at the close of business at the year end
and included in fixed assets or current assets/liabilities depending on their
maturity date.

Changes in the fair value of derivative instruments are recognised as they
arise in the Income Statement.

Cash and Cash Equivalents
Cash comprises cash in hand, overdrafts and demand deposits. Cash equivalents
are short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to insignificant risk of changes in
value.

For the purpose of the Statement of Cash Flows, cash and cash equivalents
consist of cash and cash equivalents as defined above, net of outstanding bank
overdrafts when applicable.

Income
Dividends received from UK registered companies are accounted for net of
imputed tax credits. Dividends from overseas companies are shown gross of any
non-recoverable withholding taxes which are described separately in the Income
Statement.

Dividends receivable on quoted equity shares are taken to revenue on an
ex-dividend basis. Dividends receivable on equity shares where no ex-dividend
date is quoted are brought into account when the Company's right to receive
payment is established. Fixed returns on non-equity shares are recognised on a
time-apportioned basis.

Special dividends are taken to revenue or capital account depending on their
nature. In deciding whether a dividend should be regarded as a capital or
revenue receipt, the Board reviews all relevant information as to the reasons
for the sources of the dividend on a case by case basis.

When the Company has elected to receive scrip dividends in the form of
additional shares rather than in cash, the amount of the cash dividend forgone
is recognised as income. Any excess in the value of the cash dividend is
recognised in the capital column.

All other income is accounted for on a time-apportioned accruals basis using
the effective interest rate method and is recognised in the Income Statement.

Expenses and Finance Costs
All expenses are accounted for on an accruals basis. On the basis of the
Board's expected long-term split of total returns in the form of capital and
revenue returns of 75% and 25% respectively, the Company charges 75% of its
investment management fee and finance costs to capital. All other
administrative expenses are charged through the revenue column in the Income
Statement.

Expenses incurred directly in relation to placings and offers for subscription
of shares are deducted from equity and charged to the share premium account.

Taxation
Deferred tax is provided on an undiscounted basis in accordance with IFRS 19 on
all timing differences that have originated, but not reversed, by the Balance
Sheet date based on tax rates that are expected to apply in the period when the
liability is settled or the asset is realised. Deferred tax assets are only
recognised if it is considered more likely than not that there will be suitable
profits from which the future reversal of timing differences can be deducted.
In line with the recommendations of the SORP, the allocation method used to
calculate the tax relief on expenses charged to capital is the "marginal"
basis. Under this basis, if taxable income is capable of being offset entirely
by expenses charged through the revenue account, then no tax relief is
transferred to the capital account.

No taxation liability arises on gains from sales of fixed asset investments by
the Company by virtue of its investment trust status. However, the net revenue
(excluding UK dividend income) accruing to the Company is liable to corporation
tax at the prevailing rates.

Dividends Payable to Shareholders
Dividends to shareholders are recognised as a liability in the period in which
they are paid or approved in general meetings and are taken to the Statement of
Changes in Equity. Dividends declared and approved by the Company after the
Balance Sheet date have not been recognised as a liability of the Company at
the Balance Sheet date.

Capital Reserve
Gains or losses on disposal of investments and changes in the fair value of
investments held at the year end are recognised in the Income Statement and
subsequently transferred to the capital reserve.

Also, certain other expenses are charged to this reserve in accordance with the
expenses policy above.

Special Reserve
The special reserve was created by a cancellation of the share premium account
by order of the High Court in February 2012. It can be used for the repurchase
of the Company's ordinary shares and for other corporate purposes. Its main
purpose is to allow the Company to meet annual redemption requests for ordinary
shares. The costs of repurchasing ordinary shares and meeting annual redemption
requests, including related stamp duty and transaction costs, are also charged
to the special reserve.

Share Capital
The Company classifies financial instruments issued as financial liabilities or
equity instruments in accordance with the substance of the contractual terms of
the instruments. The share capital of the Company comprises of redeemable
ordinary shares ("ordinary shares"), C shares, when in issue, and management
shares.

The Company is a closed-ended investment company with an unlimited life. The
ordinary shares are not puttable instruments because redemption is conditional
upon certain market conditions and/or Board approval. As such, they are not
required to be classified as debt under IAS 32 `Financial Instruments:
Disclosure and Presentation'.

As defined in the Articles of Association, redemption of ordinary shares is at
the sole discretion of the Directors, therefore the ordinary shares have been
classified as equity.

The issuance, acquisition and resale of ordinary shares are accounted for as
equity transactions and no gain or loss is recognised in the Income Statement.

2 Income

                                                Year ended           Year ended
                                               31 May 2014          31 May 2013
                                                     £'000                £'000
                                                                               
Income from investments:                                                       
                                                                               
UK dividends                                         5,784                3,486
                                                                               
UK REIT dividend income                                133                   57
                                                                               
Unfranked dividend income                            2,457                1,035
                                                                               
UK fixed interest                                      166                   40
                                                                               
                                                     8,540                4,618
                                                                               
Other income:                                                                  
                                                                               
Bank deposit interest                                    -                    2
                                                                               
Net dealing profit of subsidiary                       387                  143
                                                                               
Underwriting income                                     26                    2
                                                                               
Total income                                         8,953                4,765


3 Investment Management Fee

                                  Year ended               Year ended         
                                  31 May 2014              31 May 2013               
                          Revenue   Capital  Total  Revenue   Capital   Total    
                            £'000     £'000  £'000    £'000     £'000   £'000
                                                                               
Investment management fee     583     1,750  2,333      256       767   1,023

Under the terms of an agreement dated 7 April 2011, the Company has appointed
Miton Asset Management as the Manager. The basic investment management fee is
calculated at the rate of one-twelfth of 1.0% of the adjusted 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 and C share (when in issue), multiplied
by the number of relevant shares in issue, excluding those held by the Company
in treasury, on the last business day of the relevant month. In addition, the
Manager is entitled to receive a management fee on any Redemption Pool, as
detailed in the Strategic Report above.

At 31 May 2014, an amount of £227,000 (2013: £226,000) was outstanding and due
to Miton Asset Management in respect of management fees.

As discussed above, with effect from 26 June 2014, it has been agreed that the
management fee would be amended such that the fee would be 1.0% on the market
capitalisation of the Company up to £300m and 0.8% on the market capitalisation
in excess of £300m.


4 Other Expenses

                                                      Year ended     Year ended
                                                     31 May 2014    31 May 2013
                                                           £'000          £'000
                                                                               
Secretarial services                                         108            120
                                                                               
Auditor's remuneration for:                                                    
                                                                               
Audit of the Group's financial statements                     31             28
(payable by the Company only)                                                  
                                                                               
Other assurance related services*                              -              -
                                                                               
Directors' fees (see the Directors'                          122            105
Remuneration Report in the full Annual                                         
Report)                                                                        
                                                                               
Other expenses                                               316            279
                                                                               
                                                             577            532

* Amounts paid to the Company's Auditor in connection with the calculation of
the formula asset values and resulting conversion ratios for the acquisition of
MIOT of £21,000 inclusive of VAT (2013: £22,000 for review of C share
conversion ratios) are included in share issue costs.


5 Taxation

                               Year ended                   Year ended                   
                               31 May 2014                  31 May 2013             
                         Revenue Capital    Total   Revenue   Capital     Total
                           £'000   £'000    £'000     £'000     £'000     £'000
                                                                               
Overseas withholding          73       -       73        25         -        25
tax suffered                                                                   

The current taxation charge for the year is lower than the standard rate of
corporation tax in the UK of 21%. The differences are explained below.


                                  Year ended                 Year ended         
                                  31 May 2014                31 May 2013        
                          Revenue   Capital    Total  Revenue  Capital   Total 
                            £'000     £'000    £'000    £'000    £'000   £'000 
                                                                               
Return on ordinary          7,787    44,067   51,854    3,974   27,420  31,394 
activities before                                                              
taxation                                                                       
                                                                               
Theoretical tax at UK       1,765     9,990   11,755      947    6,534   7,481 
corporation tax rate of                                                        
22.67% (2013: 23.83%)                                                          
                                                                               
Effects of:                                                                    
                                                                               
- UK dividends that are    (1,310)        -   (1,310)    (830)       -    (830)
not taxable                                                                    
                                                                               
- Overseas dividends that    (515)        -     (515)    (247)       -    (247)
are not taxable                                                                
                                                                               
- Other non-taxable             -         -        -       (2)       -      (2)
income                                                                         
                                                                               
- Realised dealing gains      (88)        -      (88)     (32)       -     (32)
                                                                               
- Unrealised dealing            -         -        -       (2)       -      (2)
gains                                                                          
                                                                               
- Non-taxable investment        -   (10,391) (10,391)       -   (6,719) (6,719)
gains                                                                          
                                                                               
- Overseas taxation            73         -      (73)      25        -      25 
suffered                                                                       
                                                                               
- Expenses not deductible       -         -        -       10        -      10 
for tax                                                                        
                                                                               
- Unrelieved expenses         148       401      549      156      185     341 
                                                                               
Actual current tax charge      73         -       73       25        -      25 


Factors That May Affect Future Tax Charges
The Company has excess management expenses of £4,257,000 (2013: £2,200,000)
that are available to offset future taxable revenue. At 31 May 2014, the Group
has not recognised a deferred tax asset of £851,000 (2013: £506,000),
calculated using the standard rate of corporation tax in the UK of 21%, in
respect of these accumulated expenses as they will only be recoverable to the
extent that there is sufficient future taxable revenue. It is unlikely that the
Company will generate sufficient taxable income in the future to utilise these
expenses to reduce future tax charges and therefore no deferred tax charge has
been recognised.

In addition, deferred tax is not provided on capital gains and losses arising
on the revaluation or disposal of investments because the Company meets (and
intends to continue for the foreseeable future to meet) the conditions for
approval as an investment trust company under HMRC rules.


6 Return per Share

Ordinary Shares

The return per ordinary share is based on the net profit after taxation of 
£51,781,000 (2013: £28,343,000) and on 286,027,365 (2013: 147,044,788) ordinary
shares, being the weighted average number of ordinary shares in issue during
the year.

The return per ordinary share detailed above can be further analysed between
revenue and capital as follows:

                            Year ended                     Year ended                 
                           31 May 2014                    31 May 2013          
                    Revenue Capital          Total   Revenue  Capital         Total
                                                                               
Basic and diluted                                                              
                                                                               
Net profit (£'000)    7,714  44,067         51,781     3,563   24,780      28,343    
                                     
                                                                               
Weighted average                       286,027,365                      147,044,788
number of                                                                      
ordinary shares                                                                
in issue                                                                       
                                                                               
Return per             2.70   15.41          18.11      2.42    16.85         19.27
ordinary share                                                                 
(pence)                                                                        

C Shares
The return per C share is based on the net profit after taxation of £nil 
2013: £3,026,000) and on nil (2013: 61,136,364) C shares, being the weighted 
average number of C shares in issue during the periods in issue.

The return per C share detailed above can be further analysed between revenue
and capital as follows:

                              Year ended                   Year ended                    
                             31 May 2014                  31 May 2013             
                        Revenue  Capital   Total   Revenue   Capital      Total
                                                                               
Basic and diluted                                                              
                                                                               
Net profit (£,000)            -        -       -       386     2,640      3,026
                                                                               
Weighted average                               -                     61,136,364
number of C shares                                                             
in issue                                                                       
                                                                               
Return per C share            -        -       -      0.63      4.32       4.95
(pence)                                                                        


7 Dividends per Ordinary Share

Amounts recognised as distributions to equity holders in the year.

                                           Year ended             Year ended         
                                          31 May 2014            31 May 2013         
                                                   pence                  pence
                                       £'000   per share      £'000   per share
                                                                               
In respect of the previous                                                     
period:                                                                        
                                                                               
Fourth interim dividend                1,753        0.84        930        0.93
                                                                               
In respect of the year under                                                   
review:                                                                        
                                                                               
First interim dividend                   626        0.30        300        0.30
                                                                               
Second interim dividend                1,622        0.50        782        0.50
                                                                               
Third interim dividend                 1,622        0.50        720        0.46
                                                                               
Dividends distributed during the       5,623        2.14      2,732        2.19
year                                                                           

The Directors have declared a fourth interim dividend in respect of the year
ended 31 May 2014 of 0.95p per ordinary share payable on 29 August 2014 to all
shareholders on the register at close of business on 27 June 2014. The total
dividends payable in respect of the financial year for the purposes of the
income retention test for Section 1158 of the Corporation Tax Act 2010 are set
out below.

                                                       Year ended     Year ended
                                                      31 May 2014    31 May 2013
                                                            £'000          £'000      
                                                                               
Revenue available for distribution by way of                7,714          3,949 
dividends for the year                                                         
                                                                               
First interim dividend of 0.30p (2013: 0.30p) per            (626)          (300)
ordinary share                                                                 
                                                                               
Second interim dividend of 0.50p (2013: 0.50p) per         (1,622)          (782)
ordinary share                                                                 
                                                                               
Third interim dividend of 0.50p (2013:0.50p) per           (1,622)          (720)
ordinary share                                                                 
                                                                               
Declared fourth interim dividend of 0.95p                  (3,082)        (1,753)
(2013: 0.84p) per ordinary share                                                      
                                                                               
Estimated revenue reserve retained for the year               762            394 


8 Called Up Share Capital

                                     31 May 2014                31 May 2013
                                   number  £'000              number  £'000
Ordinary shares 0.1p                                                       
each:                                                                      
                                                                           
Opening balance               208,693,307    209         100,000,000    100
                                                                           
Issue of ordinary             115,684,143    116         108,693,307    109
shares                                                                     
                                                                           
                              324,377,450    325         208,693,307    209

During the year, the Company issued 115,684,143 ordinary shares as a result of
the acquisition of MIOT, receiving assets totalling £85,116,000. As a result of
this transaction, there were 324,377,450 ordinary shares in issue as at 31 May
2014.

After related costs of the issue, £84,220,000 was credited to the share premium
account.

Redemption of Ordinary Shares
The Company, which is a closed-ended investment company with an unlimited life,
has a redemption facility through which shareholders are entitled to request
the redemption of all or part of their holding of ordinary shares on an annual
basis on 31 May in each year. As set out in the Articles of Association, the
Board may, at its absolute discretion, elect not to operate the annual
redemption facility in whole or in part. Accordingly, the ordinary shares have
been classified as equity.

At 31 May 2014, the Company had received redemption requests for 69,982
ordinary shares. All of those shares were matched with buyers at the same
calculated redemption price and were settled on 13 June 2014. Following this,
the issued share capital and voting rights remained unchanged at 324,377,450
ordinary shares.

Management Shares
The 50,000 management shares with a nominal value of £1 each were allotted to
Miton Group plc on 30 March 2011, the parent company of the Manager, on the
basis of an undertaking to pay one-quarter of their nominal value on or before
30 March 2016 and the balance on demand. The management shares are non-voting
and non-redeemable and, upon a winding-up or on a return of capital of the
Company, shall only receive the fixed amount of capital paid up on such shares
and shall confer no right to any surplus capital or assets of the Company.

As at 31 May 2014, no amounts had been paid up (2013: £nil).


9 Reserves

                             Share               Capital     Capital   
                           premium    Special    reserve     reserve   Revenue      
                           account    reserve   realised  unrealised   reserve    
2014                         £'000      £'000      £'000       £'000     £'000           
                                                                               
Opening balance             59,337     48,558       (295)     25,824     2,276 
                                                                               
Premium on issue of         85,000          -          -           -         - 
ordinary shares                                                                
                                                                               
Expenses of share issue       (780)         -          -           -         - 
                                                                               
Net gains on realisation         -          -     19,066           -         - 
of investments                                                                 
                                                                               
Unrealised net increase          -          -          -      29,537         - 
in value of investments                                                        
                                                                               
Unrealised net decreases         -          -          -      (2,767)        - 
in value of derivative                                                         
instruments                                                                    
                                                                               
Management fees/finance          -          -     (1,769)          -         - 
costs charged to capital                                                       
                                                                               
Equity dividends paid            -          -          -           -    (5,623)
                                                                               
Revenue return on                -          -          -           -     7,714 
ordinary activities                                                            
after tax                                                                      
                                                                               
Closing balance            143,557     48,558     17,002      52,594     4,367 

 
                             Share               Capital     Capital   
                           premium    Special    reserve     reserve   Revenue      
                           account    reserve   realised  unrealised   reserve    
2013                         £'000      £'000      £'000       £'000     £'000 
                                 
Opening balance                  -     48,558     (1,173)       (718)    1,059 
                                                                               
Premium on issue of         60,891          -          -           -         - 
ordinary shares                                                                
                                                                               
Expenses of share issue     (1,554)         -          -           -         - 
                                                                               
Net gains on realisation         -          -      1,654           -         - 
of investments                                                                 
                                                                               
Unrealised net increase          -          -          -      26,542         - 
in value of investments                                                        
                                                                               
Management fees/finance          -          -       (776)          -         - 
costs charged to capital                                                       
                                                                               
Equity dividends paid            -          -          -           -    (2,732)
                                                                               
Revenue return on                -          -          -           -     3,949 
ordinary activities                                                            
after tax                                                                      
                                                                               
Closing balance             59,337     48,558       (295)     25,824     2,276 

At a General Meeting of the Company held on 6 April 2011, a resolution was
passed approving the cancellation of the Company's share premium account.

The Court subsequently confirmed this cancellation on 22 February 2012 and an
amount of £48,558,000 was transferred from the Company's share premium account
to its special reserve. This amount can be treated as a distributable reserve
for all purposes permitted by the Companies Act 2006 (as amended), and will
enhance substantially the ability of the Company to meet annual redemption
requests and to buy-back its own shares either into treasury or for
cancellation.


10 Net Asset Value per Ordinary Share

The net asset value per ordinary share and the net asset values attributable at
the year end were as follows:

                  Net asset value    Net assets  Net asset value     Net assets
                        per share  attributable        per share   attributable
                      31 May 2014   31 May 2014      31 May 2013    31 May 2013 
                            pence         £'000            pence          £'000
                                                                               
Ordinary shares             82.13       266,403            65.12        135,909
- Basic and                                                                    
diluted                                                                        

Net asset value per ordinary share is based on net assets at the year end and
324,377,450 ordinary shares (2013: 208,693,307), being the number of ordinary
shares in issue at the year end.


11 Investments

Group and Company                                 31 May 2014      31 May 2013
                                                        £'000            £'000
Investment portfolio summary:                                                  
                                                                               
Opening book cost                                     103,073           47,206 
                                                                               
Opening investment holding gains/                      25,824             (718)
(losses)                                                                       
                                                                               
Total investments designated at fair                  128,897           46,488 
value                                                                          


Group and Company                                 31 May 2014      31 May 2013 
                                                        £'000            £'000 
Analysis of investment portfolio                                               
movements                                                                      
                                                                               
Opening valuation                                     128,897           46,488 
                                                                               
Movements in the period:                                                          
                                                                            
Purchases at cost                                      75,749           78,217 
                                                                               
Acquisition of the MIOT portfolio                      80,374                - 
                                                                               
Stamp duty thereon                                        369                - 
                                                                               
Sales - proceeds                                      (66,743)         (24,004)
                                                                               
      - gains on sales                                 19,066            1,654 
                                                                               
Increase in investment holding gains                   29,537           26,542 
                                                                               
Closing valuation                                     267,249          128,897 
                                                                               
Closing book cost                                     211,888          103,073 
                                                                               
Closing investment holding gains                       55,361           25,824 
                                                                               
                                                      267,249          128,897 

A list of the largest portfolio holdings by their fair value is shown above.

Included in the Balance Sheet at fair value, with the exception of the
Company's investment in William Sinclair Holdings 8% Convertible Loan Notes
(purchased during the year and valued at £2,650,000 at 31 May 2014), the
investments are all equities or bonds which are listed either on the Official
List or quoted on AIM/ISDX in the UK.

The William Sinclair Loan Note is an unlisted investment held at its original
purchase cost and is a reasonable approximation of its fair value as at 31 May
2014 representing approximately 1% of total net assets. This has been
classified as a `Level 3' investment in the fair value hierarchy as disclosed
below.

As at 31 May 2014, the investments were registered in the names of the nominees
of HSBC Bank plc, as custodian to the Company. There were no contingent
liabilities in respect of the investments held at the end of the year. On 
22 July 2014, following the arrangements to implement AIFMD, the Company
terminated the Custody Agreement with HSBC and duly appointed Bank of New York
Mellon as its Depositary and Custodian. The investments are now registered in
the name of BONY OCS Nominees Ltd.

                                               Year ended            Year ended
                                              31 May 2014           31 May 2013
                                                    £'000                 £'000

Transaction costs:                                     70                   460
                                                                               
Costs on acquisitions                                                          
                                                                               
Costs on disposals                                    119                    52
                                                                               
                                                      189                   512


                                               Year ended            Year ended
                                              31 May 2014           31 May 2013
                                                    £'000                 £'000
Analysis of capital gains/(losses)                                             
                                                                               
Gains on sales of investments                      19,066                 1,654
                                                                                
Losses on open derivative instruments              (2,767)                    -
- see note 12                                                                  
                                                                               
Movement in investment holding gains               29,537                26,542
                                                                               
                                                   45,836                28,196

Fair Value Hierarchy
IFRS 7 requires classification of financial instruments measured at fair value
at one of three levels according to the relative reliability of the inputs used
to estimate the fair values.

Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.

The valuation techniques used by the Company are explained in the accounting
policies in note 1 under the heading `Valuation of Investments'. At 31 May
2014, all the Company's financial assets at fair value through profit or loss
(including the listed Put option) are included in Level 1 with the exception of
William Sinclair Loan Notes, as described above, and the investment in the
subsidiary, which are both classified as a Level 3 investment (2013: same).

Valuation Process for Level 3 Investments
Investments classified within level 3 have significant unobservable inputs.
Level 3 investments can typically include unlisted equity and corporate debt
securities and over the counter ("OTC") derivative instruments. As observable
prices are not available for these securities, the Group has used valuation
techniques to derive the fair value. In respect of the unquoted instruments, or
where the market for a financial instrument is not active, fair value is
established by using recognised valuation methodologies, in accordance with
International Private Equity and Venture Capital ("IPEVC") Valuation
Guidelines. New investments are initially carried at cost, for a limited
period, being the price of the most recent investment in the investee. This is
in accordance with IPEVC Guidelines as the cost of recent investments will
generally provide a good indication of fair value. Fair value is the amount for
which an asset could be exchanged between knowledgeable, willing parties in an
arm's length transaction.

Other than the investment in its trading subsidiary (DIT Income Services
Limited) the Group has one other Level 3 investment, being the holding in
William Sinclair Convertible Loan Notes. As this was a new investment purchased
during the year, the loan notes were initially purchased at par value and have
been fair valued in accordance with the above policy by the Board of Directors.
There are no other significant unobservable inputs with the measurement of its
fair value at this stage and there have been no changes in valuation techniques
during the year.

12 Derivative Contracts
Typically, derivative contracts serve as components of the Company's investment
strategy and are utilised primarily to structure and hedge investments, to
enhance performance and reduce risk to the Group (the Company does not
designate any derivative as a hedging instrument for hedge accounting
purposes). The derivative contracts that the Company may hold from time to time
or issue include: index-linked notes, contracts for differences, covered
options and other equity-related derivative instruments.

Derivatives often reflect, at their inception, only a mutual exchange of
promises with little or no transfer of tangible consideration. However, these
instruments can involve a high degree of leverage and are very volatile. A
relatively small movement in the underlying value of a derivative contract may
have a significant impact on the profit and loss and net assets of the Group.

The Company's investment objective sets limits on investments in derivatives
with a high risk profile. The Manager is instructed to closely monitor the
Company's exposure under derivative contracts and any use of the 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. The Company will not enter into uncovered short positions.

As at 31 May 2014, the Group has positions in the following type of derivative:

Options
Options are contractual agreements that convey the right, but not the
obligation, for the purchaser either to buy or sell a specific amount of a
financial instrument at a fixed price, either at a fixed future date or at any
time within a specified period.

The Company purchases either Put or Call options through regulated exchanges
and OTC markets. Options purchased by the Company provide the Company with the
opportunity to purchase (Call options) or sell (Put options) the underlying
asset at an agreed-upon value either on or before the expiration of the option.
The Company is exposed to credit risk on purchased options only to the extent
of their carrying value, which is their fair value.

During the year, and as discussed in more detail above, the Company purchased a
FTSE 100 - June 2015 5,800 Put option. At the Balance Sheet date, the Put
option had a fair value of £1,293,000 with a notional portfolio exposure of 
£68,800,000. Unrealised holding losses of £2,767,000 are included within the net
investment result, as detailed in the table in note 11.

13 Substantial Share Interests
The Company has notified interests in 3% or more of the voting rights of 
34 (2013: 7) investee companies (none of which are closed-end investment funds).
However, the Board does not consider any of the Company's other equity
investments to be individually material in the context of the financial
statements.

14 Investment in Subsidiary
The Company owns the whole of the issued ordinary share capital (£1) of DIT
Income Services Limited, an investment dealing company registered in England
and Wales. The subsidiary is held at cost of £1 and has provided loans to the
Company amounting to £257,000 at 31 May 2014 (2013: £nil).

15 Trade and Other Receivables

                                    Group                       Company              
                           31 May 2014  31 May 2013   31 May 2014     31 May 2013
                                 £'000        £'000         £'000           £'000

Amounts due from brokers            59        5,686            59           5,686
                                                                               
Dividends receivable             1,508          893         1,508             893
                                                                               
Accrued income                     102            7           102               7
                                                                               
Taxation recoverable                30            4            30               4
                                                                               
Cash due from MIOT                  48            -            48               -
                                                                               
Prepayments and other               22           19            22              19
debtors                                                                        
                                                                               
                                 1,769        6,609         1,769           6,609


16 Trade and Other Payables

                                      Group                      Company          
                            31 May 2014   31 May 2013   31 May 2014   31 May 2013
                                  £'000         £'000         £'000         £'000
                                                                                
Bank overdraft                    3,724             -         3,724             -
                                                                               
Amounts due to brokers                -           193             -           193
                                                                               
Other creditors                     314           297           314           297
                                                                               
Amounts due to                        -             -           257             -
subsidiary                                                                     
                                                                               
                                  4,038           490         4,295           490

As at 31 May 2014, the Company had an uncommitted multi-currency overdraft
facility agreement with HSBC Bank plc, under which the bank made available an
aggregate amount equal to the lesser of:

i. £7,500,000; and
   
ii. 15% of custody assets from time to time
   
The purpose of the facility is for short-term liquidity and it has no fixed
term but is subject to review from time to time, at least on an annual basis.
Interest is payable monthly in arrears on the amount of the facility
outstanding at the rate of 1.75% above the applicable base rate set by the
bank. In addition, a fee of £15,000 per annum is payable on each anniversary
date.

The facility is secured by a floating charge over the Company's assets. The
overdraft facility with HSBC was drawn down by £3,724,000, at 31 May 2014 
(31 May 2013: £nil).

Following the year end, the Company's overdraft facility with HSBC was
withdrawn when custody was switched to Bank of New York Mellon as part of the
arrangements to implement AIFMD. The Board expects shortly to be able to agree
borrowing facilities on broadly similar terms to those previously available to
the Company.

17 Capital Commitments and Contingent Liabilities
As at 31 May 2014, there were no outstanding commitments or contingent
liabilities (2013: none).

18 Analysis of Financial Assets and Liabilities

Investment Objective and Policy
The Group's investment objective and policy are detailed above.

The Group's investing activities in pursuit of its investment objective involve
certain inherent risks.

The Group's financial instruments comprise:

• shares and debt securities held in accordance with the Group's investment
objective and policies;

• derivative instruments for efficient portfolio management, gearing and
investment purposes;

• cash,liquid resources and short-term debtors and creditors that arise from
its operations; and

• current asset investments held by its subsidiary.

The risks identified arising from the Group's financial instruments are market
risk (which comprises market price risk, interest rate risk and foreign
currency exposure), liquidity risk and credit and counterparty risk. The Group
may enter into derivative contracts to manage risk, and has taken out a listed
Put option against the FTSE 100 Index during the year. The Board reviews and
agrees policies for managing each of these risks, which are summarised below.
These policies have remained unchanged since the beginning of the accounting
year.

Market Risk
Market risk arises mainly from uncertainty about future prices of financial
instruments used in the Group's business. It represents the potential loss the
Group might suffer through holding market positions by way of price movements,
interest rate movements and exchange rate movements. The Manager assesses the
exposure to market risk when making each investment decision and these risks
are monitored by the Manager on a regular basis and the Board at quarterly
meetings with the Manager.

Market price risk
Market price risk (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of investments.

The Board manages the risks inherent in the investment portfolio by ensuring
full and timely reporting of relevant information from the Manager. Investment
performance and exposure are reviewed at each Board meeting.

The Group's exposure to other changes in market prices as at 31 May 2014 on its
equity and debt investments and listed Put index option held at fair value
through profit or loss was £264,673,000 (2013: £127,699,000).

A 10% increase in the market value of its listed equity investments at 31 May
2014 would have increased net assets attributable to shareholders by £26,467,000 
(2013: £12,770,000). An equal change in the opposite direction would have 
decreased the net assets and net profit available to shareholders by an equal 
and opposite amount. The analysis is based on closing balances only and is not 
representative of the year as a whole.

Interest rate risk
Interest rate movements may affect the level of income receivable on cash
deposits and payable on its overdraft facility. The Group's financial assets
and liabilities, excluding short-term debtors and creditors, may include
investment in fixed interest securities, such as UK corporate debt stock, whose
fair value may be affected by movements in interest rates. The majority of the
Group's financial assets and liabilities, however, are non-interest bearing. As
a result, the Group's financial assets and liabilities are not subject to
significant amounts of risk due to fluctuations in the prevailing levels of
market interest rates. There was limited exposure to interest bearing
liabilities during the year ended 31 May 2014 (2013: same).

The possible effects on the fair value and cash flows that could arise as a
result of changes in interest rates are taken into account when making
investment decisions. The Board imposes borrowing limits to ensure gearing
levels are appropriate to market conditions.

As disclosed in note 16, during the year the Company had an uncommitted
multi-currency overdraft facility with HSBC Bank plc. The Company had drawn
down £3,724,000 of the facility as at the Balance Sheet date (2013: £nil).

As detailed above, at 31 May 2014 the Company held three (2013: two) fixed
income securities representing 1.4% of the total investment portfolio 
2013: 0.9%).

The interest rate profile of the Group (excluding short-term debtors and
creditors) was as follows:

                                               Weighted     
                                                average                        
                                               interest   Floating              
                                                   rate       rate   Fixed rate             
As at 31 May 2014                                     %      £'000        £'000
                                                                               
Assets and liabilities                                                         
                                                                               
Fixed interest securities                          7.43          -        3,869
                                                                               
Cash at bank                                          -        130            -
                                                                               
Bank overdraft                                        -     (3,724)           -
                                                                               
                                                            (3,594)       3,869


                                               Weighted     
                                                average                        
                                               interest   Floating              
                                                   rate       rate   Fixed rate             
As at 31 May 2013                                     %      £'000        £'000
                                                                               
Assets and liabilities                                                         
                                                                               
Fixed interest securities                          6.17          -        1,198
                                                                              
Cash at bank                                          -        893            -
                                                                               
                                                               893        1,198

The weighted average interest rate is based on the current yield of each asset,
weighted by its market value.

The weighted average fixed interest rate is based on the current yield of each
asset, weighted by its current market value. The maturity dates and nominal
interest rates on these investments held at fair value through profit or loss
are shown in the portfolio information above. The weighted average years to
maturity are 4.55 years (2013: 5.56 years).

The floating rate assets and liabilities consist of cash deposits on call
earning interest at the prevailing market rates and the bank overdraft, with
interest payable at the rate of 1.75% above the prevailing bank base rate
(currently 0.50%).

The interest rate risk sensitivity of the Group on its floating rate assets and
liabilities is given below:

The Group receives interest on cash deposits over £25,000 at the rate of 0.03%.
The interest received in the year amounted to £nil (2013: £2,000). The Group
also had a bank overdraft position of £3,724,000 at the year-end out of a
maximum facility available of £7,500,000.

If interest rates had been 500 basis points higher or lower and all other
variables were held constant, the Group's net assets and profit for the year
ended 31 May 2014 would decrease/increase by £181,000 (2013: decrease/increase
by £45,000). This is attributable to the Group's exposure to interest rates on
its floating rate cash balances and bank overdraft as at the year ended 31 May
2014, and is not considered by the Directors to be representative for the year
as a whole.

Foreign currency risk
Although the Company's performance is measured in sterling, a proportion of the
Group's assets may be either denominated in other currencies or are in
investments with currency exposure. Any income denominated in a foreign
currency is converted into sterling upon receipt. At the Balance Sheet date,
all the Group's assets were denominated in sterling and accordingly the only
currency exposure the Group has is through the trading activities of its
investee companies.

Liquidity Risk
Liquidity risk is not considered to be significant as the Group's assets
primarily comprise mainly cash and readily realisable securities, which can
under normal conditions be sold to meet funding commitments if necessary. They
may, however, be difficult to realise in adverse market conditions. The Group
can achieve short-term flexibility by the use of its overdraft facility.

The maturity profile of the Group's financial liabilities of £4,038,000 (2013:
£490,000) are all due in one year or less.

Credit and Counterparty Risk
Credit risk is the risk of financial loss to the Group if the contractual party
to a financial instrument fails to meet its contractual obligations.

The maximum exposure to credit risk as at 31 May 2014 was £7,061,000 (2013: 
£8,700,000). The calculation is based on the Group's credit risk exposure as at
31 May 2014 and this may not be representative for the whole year.

The Group's listed investments are held on its behalf by HSBC Bank plc acting
as the Group's custodian. Bankruptcy or insolvency of the custodian may cause
the Group's rights with respect to securities held by the custodian to be
delayed. The Board monitors the Group's risk by reviewing the custodian's
internal controls report.

Where the Manager makes an investment in a bond, corporate or otherwise, the
credit rating of the issuer is taken into account so as to minimise the risk to
the Group of default.

Investment transactions are carried out with a number of brokers whose
creditworthiness is reviewed by the Manager. Transactions are ordinarily
undertaken on a delivery versus payment basis whereby the Group's custodian
bank ensures that the counterparty to any transaction entered into by the Group
has delivered on its obligations before any transfer of cash or securities away
from the Group is completed.

Cash is only held at banks that have been identified by the Board as reputable
and of high credit quality.

None of the Group's assets are past due or impaired (2013: same).

Derivatives
The Manager may use derivative instruments in order to `hedge' the market risk
of part of the portfolio. The Manager reviews the risks associated with
individual investments and where they believe it appropriate, may use
derivatives to mitigate the risk of adverse market (or currency) movements. The
Manager discusses regularly the hedging strategy with the Board.

At the year end, there was one derivative contract open (2013: nil). The FTSE
100 Put option aims to provide a limited degree of protection from a fall in
the value of the FTSE 100 Index and has a strike price of 5,800, and would not
materially impact the portfolio returns if a large market movement did occur.
There were no other derivative contracts entered into during the year (2013:
same).

Fair Values of Financial Assets and Financial Liabilities
All financial assets and liabilities of the Group are either carried in the
Balance Sheet at fair value through profit or loss, or the Balance Sheet amount
is a reasonable approximation of fair value (2013: same).

Capital Management Policies
The Company's capital management objectives are:

• to ensure that it will be able to continue as a going concern; and

• to maximise the income and capital return over the long-term to its equity
shareholders through an appropriate balance of equity capital and `debt'.

As stated in the investment policy, the Company has authority to borrow up to
15% of net asset value through a mixture of bank facilities and certain
derivative instruments. There were borrowings of £3,724,000 as at 31 May 2014
(2013: £nil). Also, as a public company the minimum share capital is £50,000.

                                                     2014                  2013
                                                    £'000                 £'000
                                                                               
The Company's capital at 31 May comprised:                                     
                                                                               
Debt:                                                                          
                                                                               
Bank overdraft facility                             3,724                     -
                                                                               
Equity:                                                                        
                                                                               
Equity share capital                                  325                   209
                                                                               
Retained earnings and other reserves              266,078               135,700
                                                                               
Total shareholders' funds                         266,403               135,909
                                                                                
Debt as a % of net assets                            1.40%                    -

The Board, with the assistance of the Manager, monitors and reviews the broad
structure of the Company's capital on an ongoing basis. This review includes:

• the planned level of gearing, which takes into account the Manager's view of
the market;

• the need to buy back shares for cancellation or treasury, which takes account
of the difference between the net asset value per share and the share price
(i.e. the level of share price discount or premium);

• the need for new issues of equity shares; and

• the extent to which revenue in excess of that which is required to be
distributed should be retained.

The Company's objectives, policies and processes for managing capital have
remained unchanged since its launch.


19 Transactions with the Manager and Related Parties
The amounts paid to the Manager, together with details of the investment
management contract, are disclosed in note 3. The existence of an independent
Board of Directors demonstrates that the Company is free to pursue its own
financial and operating policies and therefore, under the AIC SORP, the Manager
is not considered to be a related party.

The Company's related parties are its Directors. Fees paid to the Company's
Board are disclosed in the Directors' Remuneration Report in the full Annual
Report.

There are no other identifiable related parties at the year end.

20 Post Balance Sheet Events
Subsequent to the year end and as set out in the Chairman's Statement, the
Company announced that it had raised an additional £50m through a C share
issue. Once this capital has been invested, it will be merged with the ordinary
shares and this should bring the size of the Company to just over £320m.


ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on Tuesday, 21 October 2014
at 11.30 am, at the offices of Stephenson Harwood LLP,1 Finsbury Circus, London
EC2M 7SH.


NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Accounts will be submitted shortly to the
National Storage Mechanism ("NSM") and will be available for inspection at the
NSM, which is situated at: www.morningstar.co.uk/uk/nsm

ENDS

Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of, this announcement.

a d v e r t i s e m e n t