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Diverse Inc Trust (DIVI)

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Thursday 31 January, 2013

Diverse Inc Trust

Half-yearly Report


THE DIVERSE INCOME TRUST PLC

HALF-YEARLY FINANCIAL REPORT FOR THE PERIOD ENDED 30 NOVEMBER 2012

The Directors present the Half-Yearly Financial Report of the Company for the
six months to 30 November 2012.


INVESTMENT OBJECTIVE AND POLICY

Investment Objective

The Company's investment objective is to provide shareholders with an
attractive level of dividends coupled with capital growth over the long term.


Investment Policy

The Company invests primarily in quoted or traded UK companies with a wide
range of market capitalisations but a long-term bias towards small and mid cap
equities. The Company may also invest in large cap companies, including FTSE
100 constituents, where it is believed that this may increase shareholder
value.

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

The Company may utilise derivative instruments including index-linked notes,
contracts for differences, covered options and other equity-related derivative
instruments for efficient portfolio management, gearing and investment
purposes. Any use of derivatives for investment purposes will be made on the
basis of the same principles of risk spreading and diversification that apply
to the Company's direct investments, as described below. The Company will not
enter into uncovered short positions.

Risk diversification

Portfolio risk will be mitigated by investing in a diversified spread of
investments. Investments in any one company shall not, at the time of
acquisition, exceed 15% of the value of the Company's investment portfolio.
Typically it is expected that the Company will hold a portfolio of between 80
and 120 securities, most of which will represent no more than 1.5% of the value
of the Company's investment portfolio as at the time of acquisition.

The Company will not invest more than 10% of its gross assets, at the time of
acquisition, in other listed closed-ended investment funds, whether managed by
the Manager or not, except that this restriction shall not apply to investments
in listed closed-ended investment funds which themselves have stated investment
policies to invest no more than 15% of their gross assets in other listed
closed-ended investment funds. In addition to this restriction, the Directors
have further determined that no more than 15% of the Company's gross assets
will, at the time of acquisition, be invested in other listed closed-ended
investment funds (including investment trusts) notwithstanding whether or not
such funds have stated policies to invest no more than 15% of their gross
assets in other listed closed-ended investment funds.

Unquoted investments

The Company may invest in unquoted companies from time to time subject to prior
Board approval. Investments in unquoted companies in aggregate will not exceed
5% of the value of the Company's investment portfolio as at the time of
investment.

Borrowing and gearing policy

The Board considers that long-term capital growth can be enhanced by the use of
gearing which may be through bank borrowings and the use of derivative
instruments such as contracts for differences. The Company may borrow (through
bank facilities and derivative instruments) up to 15% of net asset value
("NAV") (calculated at the time of borrowing).

The Board will oversee the level of gearing in the Company, and will review the
position with the Manager on a regular basis.

In the event of a breach of the investment policy set out above and the
investment and gearing restrictions set out therein, the Manager shall inform
the Board upon becoming aware of the same and if the Board considers the breach
to be material, notification will be made to a Regulatory Information Service.

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


Investment Manager

On 14 December 2012, Midas Capital Partners Limited changed its name to Miton
Capital Partners Limited.


FINANCIAL HIGHLIGHTS

 
                                  At 30 November    At 31 May 2012  Change
                                            2012         (audited)                
                                                                              
Total net assets                         £85.70m           £47.83m   79.2%
                                                                              
Number of ordinary shares in                                                  
issue                                    156.51m           100.00m   56.5%
                                                                              
Net asset value per ordinary                                                  
share                                     54.76p            47.83p   14.5%
                                                                               
Ordinary share price (mid)                57.25p            48.75p   17.4%
                                                                              
Premium to net asset value                 4.55%             1.92%       
                                                                              
Market capitalisation                    £89.60m           £48.75m   83.8%
                                                                              
Total return per ordinary                                                     
share                                      8.34p             0.43p        
                                                                              
Total dividends per ordinary                                                  
share*                                     0.80p             2.19p        
                                                                              
Ongoing charges                            1.60%             1.90%       
                                                                              

* Dividend per ordinary share includes the first interim dividend paid and
second interim dividend declared in respect of the year ending 31 May 2013 and
will differ from the amounts disclosed in the Condensed Consolidated Statement
of Changes in Equity.

 
TOTAL RETURN PERFORMANCE

                             6 months to      12 months to    From launch to  
                        30 November 2012  30 November 2012  30 November 2012  

Ordinary share price               20.3%             34.6%             18.2%  
                                                                              
Net asset value                    15.3%             21.2%             10.9%*
                                                                              

*After launch expenses.


Total return assumes that dividends are reinvested.

Source: Miton Capital Partners Limited.

 
FINANCIAL CALENDAR

January            Announcement of Half-Yearly Financial Report                
                                                                               
February           Payment of second interim dividend for period ending 31 May 
                   2013                                                        
                                                                               
May                Payment of third interim dividend for period ending 31 May  
                   2013                                                        
                                                                               
August             Payment of fourth interim dividend for period ending 31 May 
                   2013                                                        
                                                                               
August/            Announcement of Annual Results                              
September                                                                      
                                                                               
October            Annual General Meeting                                      
                                                                               
November           Payment of first interim dividend for period ending 31 May  
                   2014                                                        
                                                                               

CHAIRMAN'S STATEMENT

This is my second interim statement to shareholders for the Diverse Income
Trust ("DIT" or the "Company"), and covers the six month period ended 
30 November 2012. In July DIT concluded a first C share issue and the near 
fully invested portfolio was merged with the parent at the end of September. 
This inflow of new assets, along with appreciation of the portfolio, led to 
the total assets reaching £86m at the end of November.

2012 has not been an easy year for companies. Expectations for world economic
growth have been progressively reduced over the year and this has been
reflected in the downgrading of corporate profit forecasts. In addition,
political risks remain elevated despite some progress within the Euro area.
Many companies remain reluctant to make sizeable investments for the future
given that an economic shock could be precipitated by disagreement over the US
fiscal plans, an unfavourable change of Government in one of the key Euro
countries or possible escalation of conflict in the Middle East or China Sea.

With this in mind, equity markets have delivered surprisingly robust returns,
with the FTSE All-Share Total Return Index up 12.8% in the period. However, an
interesting trend was the increasingly discriminating nature of investors in
the period. The share prices of resilient companies with good and growing
cashflow tended to rise, whilst many of the share prices of more speculative
investments have fallen back. This explains in large part the differential
between two smallcap index returns. On a total return basis, the FTSE SmallCap
Index (ex investment companies) rose 16.5% whereas the AIM All-Share Index rose
only 0.7% in the six months. The Company's NAV total return has risen by 15.3%
in the half year. The combination of smaller companies with stable, improving
cash flows that will sustain income payments for investors, is proving an
attractive place to be.

The Company has declared two interim dividends relating to the six month period
that amount to 0.8p per share. We anticipate that the third interim dividend
will be slightly more modest than it was last year due to timing of receipts in
a seasonal period when few companies pay significant dividends.  We expect to
compensate for this in the fourth quarter as corporate distributions are more
plentiful in the March to May period. Consequently, the fourth dividend is
expected to be the largest and will also include any annual dividend increase. 

The focus of the portfolio will remain on stable businesses that are well
placed to grow their earnings as well as their dividends. These are collected
together in a broad spread of holdings, each relatively small in the context of
the overall portfolio. Although the share prices of many individual companies
will move up and down with the market, it is greatly reassuring that in the
short period of the Company's existence, the volatility of DIT's NAV has been
well below other UK Growth and Income investment trusts.

Subsequent to the half year end, DIT concluded a second C share offering which
it is anticipated will take the Company decisively above a total market value
of £100m. This will offer further improvements to the marketability of the
shares and will further dilute the fixed costs over the enlarged capital base.

It is important to keep in mind that the principal objective of DIT was to
produce a 4% annualised yield on the initial 50p issue, with a dividend growing
at an above average rate thereafter. It is believed that this objective will be
well suited to sustain relatively attractive returns. It may also provide some
stability through markets where volatility may take some time to stabilise
whilst investors adjust to a world beyond the credit boom.  Dividends paid in
the year to date have matched last year, but income projections suggest the
Company remains on track to grow revenue for the year.


Michael Wrobel

Chairman

31 January 2013

 

MANAGER'S REPORT

Background

The Company's strategy is to deliver a good and growing level of income by
investing on a multi-cap basis in companies predominately in the UK. The fund
managers continue to see more opportunity in small and mid-sized companies and
this has been reflected in the majority of the portfolio being invested outside
the FTSE 350 since launch. The managers look to mitigate risk and manage
volatility by holding a widely diverse portfolio of investments and the focus
is currently on companies with strong balance sheets.

The Company has no benchmark.

Markets

DIT was launched at a period of high volatility and global imbalances have
continued to cause uncertainties to the current time. These problems appear
deep rooted given they have built up during the preceding 20 years of credit
boom. The solution will take time to work through but the outlook for sustained
macro growth absent stimulus looks subdued. We continue to believe that this
environment will prove challenging for many large market cap companies which
could struggle to deliver revenue growth and may experience margin pressure. By
comparison, smaller companies can often continue to grow regardless of the
macro environment through exploiting niche opportunities and management
actions.

Performance

Equity market returns continue to be heavily influenced by macro events.
Between 1 June 2012 and 30 November 2012 the FTSE All-Share Total Return Index
rose 12.8%. The indices covering the smaller companies were mixed, with the
FTSE SmallCap Index (excluding investment companies) gaining 16.5% and the AIM
All-Share Index rising only 0.7%.

The average UK Growth and Income investment trusts rose 14.3% during the
period, slightly above the FTSE All-Share Index. However, it is a perennial
feature that the share prices of companies that sustain higher yields tend to
be less volatile than the market overall.

In the period the total return for the Company was 15.3%, rather more than
comparatives. Despite the choppy market conditions, it is reassuring to note
that the volatility of the Company's NAV has been markedly better than most
other funds in the sector.

Also, in the period DIT completed its first follow-on fundraising of £30m. A
second fundraising was announced in October, which was successfully completed
after the period end, raising a further £31m. The fundraisings were responding
to investor demand for the strategy and benefited existing shareholders by
lowering the expense ratio of the Company.

Dividend Income

The Company is expected to pay dividends on a quarterly basis. Dividends of
0.3p for the August quarter and 0.5p for the November quarter have been paid/
announced. In total, the Company paid a dividend of 2.02p in its first year on
an annualised basis. Going forward, the intention is to grow the Company's
annual dividend in pence per share terms using the first year as a starting
point. There will continue to be a degree of seasonality in quarterly dividend
payments as many quoted companies have December or March year ends and tend to
pay larger final dividends in the first half of the calendar year.

Portfolio

There are two major factors that contrast this Company with most others with a
similar objective. These factors have remained unchanged since launch:

1. The Company was established without a formal benchmark. Index weightings do
not carry influence when the managers select investments. Therefore the
portfolio is made up of quoted companies with a full range of market
capitalisations ranging from some microcap holdings through to some of the
largest quoted companies. This strategy is anticipated to offer shareholders an
investment portfolio with more attractive risk/reward ratios. For example, we
can avoid many of the well-researched stocks with large benchmark weightings
held by most other funds and invest more in under-researched stocks where
valuations can be more sizeably out of line with the overall market. Also, the
managers have a wider range of industry sectors to consider, thereby giving
more scope to select investments in those with the greatest growth potential.
The portfolio is invested across a broad range of sectors, but there has been a
particular focus on the providers of regular everyday products and services
such as insurance, telecoms and food. Finally, given the current expectation of
challenging trading conditions, the wider universe of potential investments
means that those with the strongest balance sheets can be prioritised. Not only
are these better placed to sustain dividend payments, but also they would have
considerable advantage over competitors that may be short of capital should
economic conditions deteriorate further.

2. The second major differential is the reduced stock specific risk of each
investment. This is achieved through typically investing between 0.5% and 1.5%
of the portfolio at purchase. So whilst DIT does hold some larger quoted
companies such as TalkTalk and TUI Travel, these stocks have no greater
weightings than other lesser researched stocks such as Zotefoams and Randall &
Quilter. Following investment, with differential share price movements some
holdings do grow and can exceed 2%, but overall most are around the 1% level.
At the end of November, under 10% of the portfolio was invested in FTSE 100
stocks, around 25% in mid-sized FTSE 250 stocks, and the remaining 65% or so in
smaller companies quoted on the Main Market and AIM Market. In particular,
companies with intrinsic value have been preferred as it is anticipated that
these have the best prospects to pay good and growing dividend income.

The managers believe that these factors together should offer enhanced
prospects for growing the Company's dividend together with a portfolio where
the capital price is less volatile than most other comparative funds.
Typically, many of the best performing holdings have been amongst those with
smaller market capitalisations and have appreciated to become the largest
portfolio holdings. However, we believe the overall portfolio remains
relatively defensive and well diversified.

 
Outlook

At the time of writing, the outlook is heavily overshadowed by on-going
European and US concerns counterbalanced to some degree by co-ordinated actions
on behalf of policy makers. The Company's investment strategy has been put
together to maximise shareholders' returns through such a challenging period.
The portfolio is largely made up of simple businesses that have the prospect of
sustaining an increase in demand for their products even if the world economy
was not expanding. Indeed, it is the belief of the managers that many other
fund managers will grow to appreciate the investment advantages of stock
picking, and that this trend may cause stocks within the portfolio to
outperform for a number of years.


Gervais Williams and Martin Turner

Miton Capital Partners Limited

31 January 2013

 

PORTFOLIO INFORMATION
as at 30 November 2012

Portfolio of investments
                                                         Valuation   % of  
                                                                      net  Yield   
Rank Company                     Sector                     £'000  assets      %¹
                                                                               
   1 Quindell Portfolio          Software & Computer        2,429     2.8    2.8 
                                 Services                                      
                                                                               
   2 CML Microsystems            Technology Hardware &      1,836     2.1    1.1 
                                 Equipment                                     
                                                                               
   3 Bioventix²                  Pharmaceuticals &          1,715     2.0    5.1 
                                 Biotechnology                                 
                                                                               
   4 Greencore                   Food Producers             1,684     2.0    3.8 
                                                                               
   5 Fairpoint²                  General Financial          1,614     1.9    5.8 
                                                                               
   6 Zotefoams                   Chemicals                  1,532     1.8    2.6 
                                                                               
   7 St Ives                     Support Services           1,460     1.7    5.5 
                                                                               
   8 Charles Taylor Consulting   General Financial          1,346     1.6    6.0 
                                                                               
   9 UK Mail                     Industrial                 1,329     1.6    6.1 
                                 Transportation                                
                                                                               
  10 Abbey Protection²           Non Life Insurance         1,321     1.5    4.7 
 
                                                                              
     Top ten investments                                   16,266    19.0       
 
                                                            
  11 Consort Medical             Health Care Equipment &    1,271     1.5    2.5 
                                 Services                                      
                                                                               
  12 888 Holdings                Travel & Leisure           1,269     1.5    1.4 
                                                                               
  13 Synthomer                   Chemicals                  1,263     1.5    2.5 
                                                                               
  14 4imprint                    Media                      1,242     1.5    4.4 
                                                                               
  15 TUI Travel                  Travel & Leisure           1,241     1.4    4.2 
                                                                               
  16 Randall & Quilter           Non Life Insurance         1,211     1.4    7.8 
     Investment Holdings²                                                      
                                                                               
  17 Wilmington                  Media                      1,210     1.4    4.9 
                                                                               
  18 Beazley                     Non Life Insurance         1,166     1.4    4.6 
                                                                               
  19 TalkTalk Telecom            Fixed Line                 1,148     1.3    4.5 
                                 Telecommunications                            
                                                                               
  20 Personal Group²             Non Life Insurance         1,130     1.3    5.4 
                                             
                                                                               
     Top twenty investments                                28,417    33.2       
                                                                               
                                             
  21 McBride                     Household Goods            1,123     1.3    3.8 
                                                                               
  22 ECO Animal Health²          Pharmaceuticals &          1,088     1.3    1.5 
                                 Biotechnology                                 
                                                                               
  23 Brightside                  Non Life Insurance         1,072     1.3    1.8 
                                                                               
  24 Brown(N) Group              General Retailers          1,069     1.2    3.7 
                                                                               
  25 Secure Trust Bank²          Banks                      1,058     1.2    3.7 
                                                                               
  26 Catlin                      Non Life Insurance         1,050     1.2    5.9 
                                                                               
  27 Chamberlin²                 Industrial Engineering     1,048     1.2    2.0 
                                                                               
  28 Playtech²                   Travel & Leisure           1,044     1.2    3.2 
                                                                               
  29 Silverdell²                 Support Services           1,044     1.2    1.5 
                                                                               
  30 BT                          Fixed Line                 1,040     1.2    3.7 
                                 Telecommunications                            
                                                                               
                                                             
     Top thirty investments                                39,053    45.5       
                                                
                                                                               
  31 Smith DS                    General Industrial         1,040     1.2    3.1 
                                                                               
  32 Amlin                       Non Life Insurance         1,033     1.2    6.0 
                                                                               
  33 Office2Office               Support Services           1,023     1.2    9.6 
                                                                               
  34 Belvoir Lettings²           Real Estate                1,020     1.2    5.0 
                                                                               
  35 Interserve                  Support Services           1,019     1.2    5.3 
                                                                               
  36 Novae Group                 Non Life Insurance         1,019     1.2    5.1 
                                                                               
  37 RSA Insurance               Non Life Insurance         1,018     1.2    7.9 
                                                                               
  38 Dairy Crest                 Food Producers             1,011     1.2    5.5 
                                                                               
  39 Numis²                      General Financial          1,010     1.2    6.3 
                                                                               
  40 KCOM                        Fixed Line                   982     1.1    6.1 
                                 Telecommunications                            
                                               
                                                                               
     Top forty investments                                 49,228    57.4       
                                                                               
     Balance held in 63 equity investments                 35,830    41.8       
                                        
     Total equity investments                              85,058    99.2       
                                            
     Fixed interest investments                             1,174     1.4       
                                               
     Total investments                                     86,232   100.6       
                                                   
     Cash and net liabilities                                (532)   (0.6)      
                                                          
     Net assets                                            85,700   100.0       

¹ Source: Interactive Data; Manager's estimate where no historic data.

² AIM/ISDX listed.



Portfolio exposure by sector

Consumer Services              16.3%
                                    
Insurance & Insurance Services 15.7%
                                    
General Financial              12.3%
                                    
Support Services               11.1%
                                    
Consumer Goods                  9.5%
                                    
Industrials                     8.8%
                                    
Technology                      7.7%
                                    
Telecommunications              5.7%
                                    
Basic Materials                 4.8%
                                    
Health Care                     4.7%
                                    
Oil & Gas                       1.5%
                                    
Utilities                       1.1%
                                    
Cash and Fixed Interest         0.8%
    

Portfolio by asset allocation

FTSE 100                        7.2%
                              
FTSE 250                       25.2%
                              
FTSE SmallCap                  25.2%
                              
FTSE Fledgling                  6.9%
                              
AIM/ISDX                       34.7%
                              
Cash and Fixed Interest         0.8%


Portfolio by spread of investment
income to 30 November 2012

FTSE 100                       12.2%
                     
FTSE 250                       26.3%
                     
FTSE SmallCap                  33.3%
                     
FTSE Fledgling                  4.0%
                     
AIM/ISDX                       23.7%
                     
International                   0.5%
                     

Estimated annual income by sector¹

Insurance & Insurance Services 20.0%
                                    
Consumer Services              15.9%
                                    
General Financial              13.7%
                                    
Support Services               12.1%
                                    
Industrials                     8.3%
                                    
Telecommunications              7.4%
                                    
Consumer Goods                  6.9%
                                    
Basic Materials                 3.8%
                                    
Health Care                     3.8%
                                    
Technology                      2.8%
                                    
Oil & Gas                       2.1%
                                    
Fixed Interest                  2.0%
                                    
Utilities                       1.2%
 
¹ Projected income based on portfolio as at 30 November 2012.

Source: Miton Capital Partners Limited.


INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY STATEMENT

Interim Management Report

The important events that have occurred during the period under review, the key
factors influencing the financial statements and the principal risks and
uncertainties for the remaining six months of the financial year are set out in
the Chairman's Statement and the Manager's Report above.

The principal risks facing the Group are substantially unchanged since the date
of the Annual Report for the period ended 31 May 2012 and continue to be as set
out in that report.

Risks faced by the Group include, but are not limited to, investment and
strategy, smaller companies, sectoral diversification, unquoted companies, use
of derivative instruments, dividends, share price volatility and liquidity/
marketability risk, gearing, key man risk, C shares, redemption facility,
taxation, compliance with laws or regulation and engagement of third party
advisers.

 
Responsibility Statement

The Directors confirm that to the best of their knowledge:

● the condensed set of financial statements has been prepared in accordance
with International Accounting Standard ("IAS") 34, Interim Financial Reporting,
as adopted by the European Union; and gives a true and fair view of the assets,
liabilities and financial position of the Company; and

● this Half-Yearly Financial report includes a fair review of the information
required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the Company during that period; and any changes in the related
party transactions that could do so.

This Half-Yearly Financial Report was approved by the Board of Directors on 
31 January 2013 and the above responsibility statement was signed on its behalf 
by Michael Wrobel, Chairman.


CONDENSED CONSOLIDATED INCOME STATEMENT
for the period to 30 November 2012

                          Period to               Period to               Period to        
                       30 November 2012       30 November 2011          31 May 2012*      
                    Revenue Capital        Revenue Capital         Revenue Capital        
                     return  return  Total  return  return   Total  return  return   Total
               Note   £'000   £'000  £'000   £'000   £'000   £'000   £'000   £'000   £'000
Gains/                                                                                  
(losses) on                                                                                 
investments                                                                            
held at fair                                                                            
value through             -   8,766  8,766       -  (3,862) (3,862)      -  (1,494) (1,494)
profit or loss                                                                              
loss                                                                                    
                                
Income          2     1,644       -  1,644   1,377       -   1,377   2,897       -   2,897 
                                                                                        
Net dealing                                                                             
gains of                                                                                                       
subsidiary               92       -     92       -       -       -      57       -      57 
                                                                                        
Investment                                                                              
management                                                                                   
fee                     (95)   (284)  (379)    (72)   (217)   (289)   (132)   (397)   (529)
                                                                                        
Other                  (242)      -   (242)   (269)      -    (269)   (494)      -    (494)
expenses                                                                                
                                            
Return                                                                                  
before                                                                                  
finance                                                                                     
costs and             1,399   8,482  9,881   1,036  (4,079) (3,043)  2,328  (1,891)    437 
taxation                                                                                
                                                                                        
Finance                   -      (1)    (1)      -       -       -       -       -       - 
costs                                                                                   
                  
Return                1,399   8,481  9,880   1,036  (4,079) (3,043)  2,328  (1,891)    437 
before                                                                                   
taxation                                                                                
                                                                                        
Taxation -                                                                              
overseas                                                                                    
withholding              (1)      -     (1)     (2)      -      (2)     (9)      –      (9)
tax                                                                                     
                       
Return for            1,398   8,481  9,879   1,034  (4,079) (3,045)  2,319  (1,891)    428 
the period                                                                              

                      pence   pence  pence   pence   pence   pence   pence   pence   pence                         
Basic and                                                                               
diluted                                                                                 
return per                                                                                 
ordinary                                                                                         
share           3      1.18    7.16   8.34    1.03   (4.08)  (3.05)   2.32   (1.89)   0.43 
                                                                                                                        
* Audited.

 

The Group does not have any income or expense that is not included in the
"return for the period". Accordingly the "return for the period" is also the
Total Comprehensive Income for the period as defined in International
Accounting Standard 1 (revised), and consequently no separate Statement of
Comprehensive Income has been presented.

The total column of this statement is the Income Statement of the Group
prepared in accordance with International Financial Reporting Standards
("IFRS"), as adopted by the European Union. The supplementary revenue return
and capital return columns are presented in accordance with the Statement of
Recommended Practice issued by the Association of Investment Companies ("AIC
SORP").

All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period.

 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period to 30 November 2012

 
                                      Share                                              
                             Share  premium  Special  Capital  Revenue           
                           capital  account  reserve  reserve  reserve   Total 
                      Note   £'000    £'000    £'000    £'000    £'000   £'000 
                                                     
As at 31 May 2012*             100        -   48,558   (1,891)   1,059  47,826 
                                                                                                                  
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the               -        -        -    8,481    1,398   9,879 
period                                                                         
                                                                                                      
Transactions with                                                              
shareholders
recorded directly to                                                          
equity:                                                                        
                                                                               
Issue of ordinary      5        57   29,176        -        -        -  29,233 
shares                                                                         
                                                                               
Expenses of share                -       (8)       -        -        -      (8)
issue                                                                          
                                                                               
Equity dividends paid  4         -        -        -        -   (1,230) (1,230)
                                           
As at 30 November              157   29,168   48,558    6,590    1,227  85,700 
2012                                                                           

                                                 
As at 30 March 2011              -        -        -        -        -       - 
                                                             
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the               -        -        -   (4,079)   1,034  (3,045)
period                                                                         
                                                           
Transactions with                                                              
shareholders  
recorded directly to                                                          
equity:                                                                        
                                                                               
Issue of ordinary              100   49,900        -        -        -  50,000 
shares                                                                         
                                                                               
Expenses of share                -   (1,322)       -        -        -  (1,322)
issue                                                                          
                                                                               
Equity dividends paid  4         -        -        -        -     (300)   (300)
                                                
As at 30 November              100   48,578        -   (4,079)     734  45,333 
2011                                                                           
                                                        
As at 30 March 2011              -        -        -        -        -       - 
                                                      
Total comprehensive                                                            
income:                                                                        
                                                                               
Net return for the               -        -        -   (1,891)   2,319     428 
period                                                                         
                                                                  
Transactions with                                                              
shareholders
recorded directly to                                                          
equity:                                                                        
                                                                               
Issue of ordinary              100   49,900        -        -        -  50,000 
shares                                                                         
                                                                               
Expenses of share                -   (1,322)       -        -        -  (1,322)
issue                                                                          
                                                                               
Equity dividends paid  4         -        -        -        -   (1,260) (1,260)
                                                                               
Transfer upon                                                                  
cancellation of share                                                          
premium account                  -  (48,578)  48,578        -        -       - 
                                                                               
Share premium                    -        -      (20)       -        -     (20)
cancellation expenses                                                          
                    
As at 31 May 2012*             100        -   48,558   (1,891)   1,059  47,826 

* Audited.


CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 November 2012

                                      30 November 30 November  31 May
                                             2012        2011    2012*
                                 Note       £'000       £'000   £'000 
                                                                     
Investments held at fair value                                          
through profit or loss                     86,232      39,497  46,488 
                         
Current assets:                                                      
                                                                     
Investments held by subsidiary                                                    
for trading                                   170           -     151 
                                                                     
Other receivables                             324         653   1,220 
                                                                     
Cash and cash equivalents                   1,034       6,370     767 
            
                                            1,528       7,023   2,138 
                                                                     
Current liabilities:                                                 
                                                                     
Other payables                             (2,060)     (1,187)   (800)
                                               
Net current (liabilities)/assets             (532)      5,836   1,338 
                                                        
Total net assets                           85,700      45,333  47,826 
                                                      
Capital and reserves:                                                
                                                                     
Share capital                     5           157         100     100 
                                                                     
Special reserve                            48,558           -  48,558 
                                                                     
Share premium account                      29,168      48,578       - 
                                                                     
Capital reserve                             6,590      (4,079) (1,891)
                                                                     
Revenue reserve                             1,227         734   1,059 
                                                  
Shareholders' funds                        85,700      45,333  47,826 
          
                                                                     
                                            pence       pence   pence              
Net asset value per                                                                                 
ordinary share                    6         54.76       45.33   47.83 

* Audited.


CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the period to 30 November 2012

                                        Period to   Period to Period to
                                      30 November 30 November    31 May
                                             2012        2011      2012*   
                                Note        £'000       £'000     £'000 
                                       
Operating activities:                                                 
                                                                      
Net return before finance                                                                                   
costs and taxation                          9,881      (3,043)      437 
                                                                        
Increase in investments                   (39,763)    (39,497)  (46,639)
                                                                      
Decrease/(increase) in                                                                                             
other receivables                             896        (653)   (1,220)
                                                                      
Increase in other payables                  1,260       1,187       800 
                     
                                          (27,726)    (42,006)  (46,622)
                        
Finance costs paid                             (1)          -         - 
                                                                      
Withholding tax paid                           (1)         (2)       (9)
                                                                      
Net cash outflows from                                                
operating activities                      (27,728)    (42,008)  (46,631)

                                            
Financing:                                                            
                                                                      
Cash inflow from placing and                                                                                  
offer for subscription                     30,000      50,000    50,000 
                                                                      
Cash outflow from expenses of                                                                                  
placing and offer for                                                                                      
subscription                                 (775)     (1,322)   (1,322)
                                                                      
Equity dividends paid                      (1,230)       (300)   (1,260)
                                                                      
Expenses incurred on share                                                                                
premium account cancellation                    -           -       (20)
                            
Net cash inflow from financing             27,995      48,378    47,398 
                                    
Increase in cash and cash                                                                                    
equivalents                                   267       6,370       767 
                                                          
Reconciliation of net cash flow                                                                           
to movements in net funds:                                           
                                                                      
Cash and cash equivalents at                                                                             
the start of the period                       767           -         - 
                                                                      
Net cash inflow from cash and                                                                    
cash equivalents                              267       6,370       767 
                                   
Cash and cash equivalents at                                                                                    
the end of the period                       1,034       6,370       767 

* Audited.


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 General Information

The consolidated financial statements, which comprise the unaudited results of
the Company and its wholly owned subsidiary, DIT Income Services Limited,
together referred to as the "Group", for the half year to 30 November 2012,
have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), as adopted by the European Union, and with the AIC SORP
dated January 2009, where the SORP is consistent with the requirements of IFRS.
These financial statements cover the six month period to 30 November 2012. The
comparatives cover the eight month period from incorporation on 30 March 2011
to 30 November 2011 and for the fourteen month period from 30 March 2011 to 31
May 2012.

The financial statements have been prepared on the basis of the accounting
policies set out in the Annual Report and Financial Statements for the period
ended 31 May 2012.

The Income Statement is only presented in consolidated form, as provided by
Section 408 of the Companies Act 2006.

The financial information contained in this report does not constitute full
statutory accounts as defined in Section 434 of the Companies Act 2006. The
financial statements for the six months to 30 November 2012 have not been
either audited or reviewed by the Company's Auditors. The information for the
period to 30 November 2011 was not for a financial year and was not audited but
was reviewed by the Company's Auditors. The information for the period ended 31
May 2012 has been extracted from the latest published Annual Report and
Financial Statements, which have been filed with the Registrar of Companies.
The Report of the Auditors on those financial statements contained no
qualification or statement under Section 498(2) or (3) of the Companies Act
2006.

The Directors consider that it is appropriate to adopt the going concern basis
in preparing the financial statements. Cash flow projections have been reviewed
and show that the Company has sufficient funds to meet both its contracted
expenditure and its discretionary cash outflows in the form of the dividend
policy. After making enquiries, and bearing in mind the nature of the Company's
business and assets, the Directors consider that the Company has adequate
resources to continue in operational existence for the foreseeable future. In
arriving at this conclusion the Directors have considered the liquidity of the
portfolio and the Company's ability to meet obligations as they fall due.


2 Income

                            Period to   Period to Period to
                          30 November 30 November    31 May
                                 2012        2011      2012
                                £'000       £'000     £'000
                                                           
Income from investments:                                   
                                                           
UK dividends                    1,370       1,242     2,475
                                                           
Unfranked dividend income         266         127       414
                                                           
UK fixed interest                   5           -         -

                                1,641       1,369     2,889
                                                           
Other income:                                              
                                                           
Deposit interest                    1           4         4
                                                           
Underwriting income                 2           4         4
                                                           
                                    3           8         8

Total income                    1,644       1,377     2,897
                                                           

3 Return per Ordinary Share

                            Period to   Period to    Period to 
                          30 November 30 November       31 May 
                                 2012        2011         2012 
                                pence       pence        pence 
                                                             
Revenue return                   1.18        1.03         2.32 
                                                             
Capital return                   7.16       (4.08)       (1.89)
 
Total return                     8.34       (3.05)        0.43 
  
Weighted average number                                      
of ordinary shares        118,527,206 100,000,000  100,000,000 

Return per share is based on the weighted average number of ordinary shares in
issue during the period.

The figures above are based on the following:

                            Period to   Period to    Period to 
                          30 November 30 November       31 May  
                                 2012        2011         2012  
                                £'000       £'000        £'000 
                                                  
Revenue return                  1,398       1,034        2,319 
                                                  
Capital return                  8,481      (4,079)      (1,891)
                
Total return                    9,879      (3,045)         428 

Normal and diluted return per share are the same as there are no dilutive
elements on share capital.

 
4 Dividends per Ordinary Share

Amounts recognised as distributions to equity holders in the period.

                        Period to    Period to    Period to  
                       30 November  30 November    31 May    
                           2012         2011        2012     
                       £'000 pence  £'000 pence  £'000 pence
                  
In respect of the                                                             
previous period:                                                                                
Fourth interim                                                                                        
dividend                 930  0.93      -     -      -     -
                                            
In respect of the                                                                                
period under review:                                                                            
First interim dividend   300  0.30    300  0.30    300  0.30
                                                            
Second interim                                                                                  
dividend                   -     -      -     -    500  0.50
                                         
Third interim                                                                                           
dividend                   -     -      -     -    460  0.46
      
                       1,230          300        1,260      

The Board has declared a second interim dividend of 0.50p per ordinary share,
payable on 28 February 2013 to shareholders registered at the close of business
on 28 December 2012. In accordance with IFRS this dividend has not been
included as a liability in these financial statements.

 
5 Called up Share Capital

On 27 June 2012, the Company published a prospectus in relation to proposals to
raise up to £50 million (before expenses) by way of a placing and offer for
subscription of C shares. Applications were received under the placing for
53,905,400 C shares and under the offer for subscription for 6,094,600 
C shares, raising an aggregate of £30 million of gross proceeds for the Company
and resulting in the issue of 60,000,000 C shares.

On 1 October 2012, the C shares were converted into ordinary shares in the
ratio of 0.9418 ordinary shares for every C share, resulting in the issue of
56,507,978 new ordinary shares. Following the conversion and at 30 November
2012 there were 156,507,978 ordinary shares in issue.

On 20 November 2012, the Company published a prospectus setting out details of
a target issue of in excess of 40 million C shares at 50 pence per C share by
way of an open offer, placing and offer for subscription.

Applications were received under the open offer for 5,675,768 C shares, under
the placing for 52,940,182 C shares and under the offer for subscription for
3,384,050 C shares, raising an aggregate of £31 million of gross proceeds for
the Company and resulting in the issue of 62,000,000 C shares. The C shares
were admitted to listing on the Official List of the UK Listing Authority and
to trading on the London Stock Exchange on 17 December 2012.


Redemption of ordinary shares

The Company has a redemption facility through which shareholders are entitled
to request the redemption of all or part of their holding of ordinary shares
annually on 31 May. The Board may, at its absolute discretion, elect not to
operate the annual redemption facility in whole or in part.


6 Net Asset Value per Ordinary Share

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


               30 November 2012         30 November 2011           31 May 2011         
            Net asset                Net asset                Net asset   
                value   Net assets       value   Net assets       value   Net assets          
            per share attributable   per share attributable   per share attributable
                pence        £'000       pence        £'000       pence        £'000
                                                                                
Ordinary                                                                        
shares                                                                          
                                                                                
- Basic and     54.76       85,700       45.33       45,333       47.83       47,826
diluted                                                                         

Net asset value per ordinary share is based on net assets at the period end and
156,507,978 ordinary shares, being the number of ordinary shares in issue at
the period end (31 May 2012 and 30 November 2011: 100,000,000 ordinary shares).


7 Transaction Costs

During the period, expenses were incurred in acquiring or disposing of
investments classified as fair value through profit or loss. These have been
expensed through capital and are included within gains on investments in the
Income Statement. The total costs were as follows:

            Period to   Period to Period to
          30 November 30 November    31 May
                 2012        2011      2012
                £'000       £'000     £'000

Purchases         245         428       570
                                           
Sales              18          37        74

                  263         465       644


8 Management Fee

Under the terms of an agreement dated 7 April 2011, the Company has appointed
Miton Capital Partners Limited (name changed from Midas Capital Partners
Limited on 14 December 2012) to be the Manager. The basis investment management
fee is calculated at the rate of one-twelfth of 1.0% of the average market
capitalisation of the Company on the last business day of each calendar month.
The basic management fee accrues daily and is payable in arrears in respect of
each calendar month. For the purpose of calculating the basic fee, the
'adjusted market capitalisation' of the Company is defined as the average daily
mid-market price for an ordinary share, multiplied by the number of ordinary
shares in issue, excluding those held by the Company in treasury, on the last
business day of the relevant month.

At 30 November 2012, an amount of £147,000 was outstanding and due to Miton
Capital Partners Limited in respect of management fees (30 November 2011 and 31
May 2012: £38,000 and £41,000 respectively).


DIRECTORS AND ADVISERS

Directors (all non-executive)        Solicitors                                           
                                     Stephenson Harwood LLP                              
Michael Wrobel                       1 Finsbury Circus                                    
Paul Craig                           London, EC2M 7SH                                         
Lucinda Riches                                                                                      
Jane Tufnell                         Stockbroker                                                 
                                     Cenkos Securities plc                                 
Secretary and Registered Office      6.7.8 Tokenhouse Yard                                       
Capita Sinclair Henderson Limited    London EC2R 7AS                                              
(trading as Capita Financial Group                                                                 
- Specialist Fund Services)          Bankers and Custodians                                    
Beaufort House                       HSBC Bank plc                                              
51 New North Road                    8 Canada Square                                             
Exeter Ex4 4EP                       London E14 5HQ                      
Telephone: 01392 412122                    
                                     Registrar and Transfer Office 
Investment Manager                   Capita Registrars                           
Miton Capital Partners Limited       Shareholder Service Department                       
10 - 14 Duke Street                  The Registry                                           
Reading RG1 4RU                      34 Beckenham Road                                     
                                     Beckenham                                            
Telephone: 0118 952 8900             Kent BR3 4TU                                                     
Website: www.mitongroup.com                                                                                             
                                     Telephone: 0871 664 0300                            
Company website                      (calls will cost 10p per minute plus              
www.mitongroup.com/dit               network charges)                                                             
                                     
Auditor                              Fax: 020 639 2342                                 
Ernst & Young LLP                    Email: [email protected]                   
1 More London Place                  Website: www.capitaregistrars.com                                                 
London SE1 2AF                                                                                         


An investment company as defined under Section 833 of the Companies Act 2006.

Registered in England No. 7584303.

A member of the Association of Investment Companies.



The Half-Yearly Financial Report will be posted to shareholders shortly. The
Report will also be available for download from the following website: 
www.mitongroup.com/dit or on request from the Company Secretary.

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

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