Information  X 
Enter a valid email address

Diverse Inc Trust (DIVI)


Monday 27 January, 2014

Diverse Inc Trust

Half-yearly Report


The Directors present the Half-Yearly Financial Report of the Company for the
six months ended 30 November 2013.

The Diverse Income Trust plc is an investment trust quoted on the London Stock
Exchange with a total investment portfolio valued at £254m as at 30 November
2013. It is referred to as the Company or as Diverse in the text of this
Report. The Company has a Board that is independent of the Investment Manager.

This Report covers the Company's progress in the six months to 30 November
2013. The net asset value ("NAV") has risen strongly due to favourable market
conditions and the Manager's excellent stock selection. The annual returns
should be read in the context of the longer-term trends, with a good and
growing dividend being a key measure of success.


+22% Total return to shareholders  
+19% NAV rise per share            
0.8p Interim dividends in half year

19% growth in capital - The NAV per share rose from 65.12p to 77.62p over the six
months. The general market has not appreciated significantly, but smaller
stocks have substantially outperformed in the period.

Diverse merged with Miton Income Opportunities Trust plc - "MIOT", formerly known
as Henderson Fledgling Trust plc, merged with the Company on 30 September 2013
adding £85m of assets. As at 30 November 2013, the Company's assets were £252m.
The increase in scale will reduce the ongoing charges ratio and increase market
liquidity for shareholders.

Additional management resource - Miton welcomed Bill Mott and Eric Moore to their
team of UK equity managers with the acquisition of PSigma Asset Management.
They bring additional experience in selecting shares with good and growing
income, particularly in the larger stock universe.

Potential for increased dividend - The two dividends declared so far this year
were unchanged at 0.3p and 0.5p, but portfolio revenue is heavily skewed
towards the March to May period. As previously, the fourth dividend is
anticipated to be the largest and will include any increase in the total annual

Summary of Results

                                    At 30 November     At 31 May            
                                              2013          2013    Change  
Equity shareholders' funds (£'000)         251,794       135,909      85.3%
Net asset value per ordinary share           77.62p        65.12p     19.2%
Ordinary share price (mid)                   79.25p        66.00p     20.1%
Premium to net asset value                    2.10%         1.35%         
Total return per ordinary share              13.68p        19.27p          
Ongoing charges                               1.29%*        1.45%         

* Estimated as at 30 November 2013. Ongoing charges are the Company's
annualised revenue and capitalised expenses (excluding finance costs and
certain non-recurring items) expressed as a percentage of the average monthly
net assets of the Company during the year.


Half Year to 30 November 2013

This is my third interim statement to shareholders and covers the six month
period ended 30 November 2013.

The capital return on the FTSE All-Share Index was just 2.1% in the period,
whereas the FTSE SmallCap Index (excluding Investment Companies) rose 15.9% and
the AIM All-Share Index rose 13.4%. The Company's NAV return was 19.2%, which
contributed to a 21.6% total return per ordinary share.

A lack of capital investment by many larger companies may be one reason for
the lacklustre economic growth across the globe. As growth expectations have
moderated, investors are starting to take a greater interest in allocating
additional capital to the smallest quoted companies. The key fact is that
smaller businesses have the potential to grow even at times of economic
constraint, and this factor is becoming more appreciated. Prior to the credit
boom, when the UK economy grew modestly, smaller UK quoted companies
outperformed for decades. The Company is well positioned for this trend with
around two-thirds of the portfolio invested in smaller UK quoted companies.


The Company's assets grew to £252m at the end of the period, not only due to
the NAV appreciation, but also because of the takeover of Miton Income
Opportunities Trust plc, which added £85m of assets. The daily liquidity in the
Company's shares has therefore improved further during the period and the
ongoing charges ratio will be lower in future through spreading the fixed costs
over a larger pool of assets.

The Company has declared two interim dividends, together amounting to 0.8p per
share, for this six month period. Portfolio dividend payments are heavily
skewed towards the March to May period so, as previously, our fourth dividend
is anticipated to be the largest, and will include any increase in the annual


The principal objective of Diverse at launch was to produce a 4% annualised
yield on the initial 50p issue price, with a dividend growing thereafter at a
rate above the average UK market. For this reason, the portfolio has to remain
fully invested largely irrespective of the equity market prospects.

However, market trends could be becoming more uncertain. Equity markets have
enjoyed a very substantial rise over the last five years, principally due to
expansive central bank policy rather than decent economic growth. It may be
that the current positive trends persist and the Company is well positioned
should markets appreciate further. At some point, central banks will have to
wind down their policy of Quantitative Easing and some commentators believe
that if this happens soon, it might undermine the markets.

The rise in UK equities and increase in investor confidence has meant that the
cost of market insurance has declined to levels similar to those of the
mid-2000s. The Company has therefore invested around 1.6% of the portfolio to
purchase some downside protection, covering approximately one-third of the
portfolio, extending through to June 2015. Full details are outlined below.

The focus of the portfolio remains on a broad spread of companies with strong
balance sheets that are well placed to grow their earnings as well as their
dividends, even in fluctuating economic circumstances. We remain confident that
the portfolio is well-placed to continue to deliver premium returns in the

Michael Wrobel
24 January 2014



The six month period has been marked by divergent market trends:

• Returns on the largest companies have been rather indifferent since 22 May
2013 when the US Federal Reserve announced that they may consider moderating
their Quantitative Easing ("QE") bond purchases as the US economy recovers. The
FTSE All-Share Index only rose 2.1% in the six months to 30 November 2013.

• In contrast, there has been greater interest in smaller companies, especially
the smallest stocks, where few institutional investors have significant
weightings. The FTSE SmallCap Index (excluding Investment Companies) rose 15.9%
in the half year, and even the AIM All-Share Index rose 13.4%.

Since the middle of 2011, markets have rallied rather faster than earnings
growth, and it has reached a stage where earnings growth may need to accelerate
to justify any further rise. The good news is that growth expectations have
indeed been upgraded in the UK, and largely sustained in the US during the
period. But elsewhere, although there is some talk of a more established
recovery, mainland Europe still remains in recession, and growth prospects have
been downgraded in many emerging economies.

The key advantage of smaller companies is their potential to deliver growth
somewhat independently of the general economic trends. During the credit boom,
growth was plentiful, both in large and smaller companies, and in developed and
developing economies. More recently, world growth has become more limited, so
investors are beginning to renew their interest in smaller stocks. If
sustained, this is a promising trend for the future.

The criteria used for selecting portfolio stocks

There are five criteria that the managers use to determine the scope for the
business to deliver good and growing dividends.

The prospect of turnover growth - If a business is to sustain and grow its
dividend, then the portfolio needs to invest in companies that will generate
more cash in the coming years. Without decent turnover growth, this is
near-impossible to achieve over time.

Sustained or improving margins - A business needs to deliver significant value to
its customer base if it is to sustain decent margins. Unexpected cost increases
cannot be charged on to customers if they are anything less than delighted with
their suppliers. Turnover growth will not lead to improved cash generation if
declining margins offset it.

A forward-looking management team - Businesses often need to make commercial
decisions on incomplete information. A thoughtful and forward-looking team has
a better chance of making better decisions.

Robust balance sheet - There are disproportionate advantages to having the
independence of a strong balance sheet in a period of elevated economic and
political risks. Conversely, corporates with imprudent borrowings can risk the
total loss of shareholders' capital.

Low expectation valuation - Many of the most exciting stocks enjoy higher stock
market valuations but almost none can consistently beat the high expectations
baked in to their share prices. Those with low expectations tend to be less
vulnerable to disappointment, but conversely can enjoy excellent share price
rises if they surprise on the upside.

Companies that best meet these criteria on a prospective basis are believed to
be best positioned to deliver attractive returns to shareholders, as well as
offering moderated risk.

These criteria, used in reverse, can also be useful in determining the timing
of portfolio stocks that should be considered for divestment. So a business in
danger of suffering a period of turnover declines, for example, would naturally
be expected to generate less cash flow in future years and thereby struggle to
sustain their current dividend over time, let alone grow it.


Over the half year to 30 November 2013, the Company delivered a total return of
21.6%. During the period, the Company merged with Miton Income Opportunities
Trust plc, and this transaction grew the Company by an additional £85m of
capital. Generally, the Company was largely fully invested throughout the
period, although the borrowing facility was not greatly used.

Following the growth of the Company, the portfolio continues to hold a widely
diversified list, now totalling 131 holdings. The largest 40 stocks in the
portfolio are listed below. It will be noted that most holdings are around 1%
of the portfolio. On occasions, when the risk/reward ratio appears particularly
attractive, some holdings are purchased to take them up to around 1.5% of the
portfolio. With differential share price moves, some of these holdings can move
up to slightly larger percentages. However, the overall volatility of the
portfolio has been well below other trusts in the UK Growth and Income sector.
In part, this is related to the wide diversification within the portfolio, and
in part to the naturally lower volatility of higher income stocks, especially
those with strong balance sheets.

The Company launched on the London Stock Exchange on 28 April 2011. Since that
time, on a price basis, the FTSE All-Share Index has appreciated by 12.5%, with
the FTSE SmallCap Index (excluding Investment Companies) up by 43.5%, although
the FTSE AIM All-Share has fallen by 10.2%. The NAV return on the Company over
that period has been 57.9%.


The change in attitudes to smaller quoted stocks is still nascent. Institutions
find it difficult to invest significant capital in smaller companies which are,
by their nature, small in scale and under-researched. Yet prior to the credit
boom, institutional portfolios were fully weighted in smaller companies given
their key advantage tends to fuel sizeable outperformance. We believe that
institutional weightings in the smallest stocks will gradually be rebuilt over
the coming years.

The portfolio is invested in a wide range of individual stocks that, together,
offer the prospect of good and growing dividend income. Although smaller
companies have recently enjoyed a period of outperformance, we continue to
identify plenty of holdings where valuations appear far too low. Although there
are some in the FTSE 100 Index which we find attractive, they are fairly
limited in number. For that reason, the portfolio has only 9.4% of its capital
invested in these stocks. There are a greater number in the FTSE 250 or MidCap
indices and, therefore, the Company holds 22.4% in this area of the market.
Overall, around one-third of the portfolio is invested in the largest 350
stocks, which implies that around two-thirds is invested in the remaining
universe of some 1,250 quoted stocks, with around 38.0% invested in AIM listed

In December 2013, the Company purchased a Put option that amounted to 1.6% of
the portfolio. Full details of the reasoning are outlined below.

Gervais Williams and Martin Turner
Miton Asset Management Limited
24 January 2014

What are the advantages of using a Put option as part of the Diverse strategy?

As noted above, in December 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.

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

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 at a
premium rate to most others. 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 equates to around one-third of the capital of
the Company. 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. 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


The Put option will expire on 19 June 2015. It will therefore have time value
for the whole of the current year and one 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.

as at 30 November 2013

                                                      Valuation   % of net   Yield*
Rank Company                  Sector & main activity      £'000     assets        %
1    Randall & Quilter             
     Investment Holdings**    Non Life Insurance          5,129        2.0     4.7 

2    SQS Software**           Software & Computer         4,808        1.9     1.4 
3    Quindell Portfolio**     Software & Computer         4,688        1.9       - 
4    Charles Taylor                
     Consulting               Financial Services          4,507        1.8     4.3 

5    Fairpoint**              Financial Services          4,479        1.8     4.4 
6    Conviviality Retail**    Food and Drug Retailers     4,145        1.6       - 
7    CML Microsystems         Technology Hardware &                                     
                              Equipment                   3,717        1.5     1.0 

8    Plus500**                Financial Services          3,712        1.5       - 
9    Greencore                Food Producers              3,703        1.5     2.1 
10   Secure Trust Bank**      Banks                       3,603        1.4     2.3 

Top 10 investments                                       42,491       16.9        

11   St Ives                  Support Services            3,501        1.4     3.7
12   Lancashire Holdings      Non Life Insurance          3,428        1.4     7.6
13   Interserve               Support Services            3,422        1.4     3.2
14   Novae                    Non Life Insurance          3,280        1.3     3.5
15   Dairy Crest              Food Producers              3,273        1.3     4.1
16   UK Mail                  Industrial                                                
                              Transportation              3,259        1.3     3.3

17   Bloomsbury Publishing    Media                       3,160        1.3     3.2
18   KCOM                     Fixed Line                  3,143        1.2     4.6
19   Huntsworth               Media                       3,133        1.2     5.1
20   Abbey Protection**       Non Life Insurance          3,112        1.2     4.6

Top 20 investments                                       75,202       29.9        

21   Cable & Wireless         Fixed Line                                                
                              Telecommunications          3,042        1.2     5.2

22   Stobart                  Industrial Transport        3,031        1.2     4.3
23   Bioventix**              Pharmaceuticals &           2,882        1.2     3.6
24   Vodafone                 Mobile                                                    
                              Telecommunications          2,862        1.1     4.9

25   Amino Technologies**     Technology Hardware &                                     
                              Equipment                   2,848        1.1     3.4

26   Amlin                    Non Life Insurance          2,823        1.1     5.4
27   Belvoir Lettings**       Real Estate Investment                                    
                              & Services                  2,819        1.1     3.4

28   Powerflute**             Forestry & Paper            2,780        1.1     3.8
29   Esure                    Non Life Insurance          2,747        1.1       -
30   Air Partner              Travel and Leisure          2,679        1.1     3.6

Top 30 investments                                      103,715       41.2        

31   Catlin                   Non Life Insurance          2,666        1.1     5.5
32   Ibex Global**            Support Services            2,648        1.1       - 
33   Personal Group**         Non Life Insurance          2,646        1.0     4.4
34   TalkTalk Telecom         Fixed Line                                                
                              Telecommunications          2,570        1.0     4.0

35   Macfarlane               General Industrials         2,563        1.0     4.0
36   4imprint                 Media                       2,532        1.0     2.6
37   RPC                      General Industrials         2,531        1.0     3.0
38   Staffline**              Support Services            2,509        1.0     1.6
39   Direct Line Insurance    Non Life Insurance          2,491        1.0     3.4
40   Provident Financial      Financial Services          2,485        1.0     5.0

Top 40 investments                                      129,356       51.4        

Balance held in 89 equity investments                   119,358       47.4        

Total equity investments                                248,714       98.8        

Fixed interest and convertible                            
investments                                               1,221        0.5        

                                                        249,935       99.3        

Derivative instruments - listed                                                
Put option                                                                     
FTSE 100 - June 2015 5,800 Put                            3,616        1.4        

Total investment portfolio                              253,551      100.7        

Other net current liabilities                            (1,757)      (0.7)       

Net assets                                              251,794      100.0        

* Source: Interactive Data. Based on historic yields. New issues left blank in
the absence of historic data.

** AIM/ISDX listed.

as at 30 November 2013

Portfolio exposure by sector               
Consumer Services                     16.8%
Insurance & Insurance Services        16.0%
Financial Services                    14.1%
Industrials                            9.9%
Technology                             8.8%
Support Services                       8.3%
Consumer Goods                         7.6%
Telecommunications                     5.5%
Health Care                            4.8%
Basic Materials                        3.9%
Oil & Gas                              2.0%
Cash and Fixed Interest/Convertibles   1.2%
Utilities                              1.1%


Portfolio by asset allocation              
FTSE 100                               9.4%
FTSE 250                              22.4%
FTSE SmallCap                         16.8%
FTSE Fledgling                         8.8%
AIM/ISDX                              38.0%
Other                                  3.4%
Cash and Fixed Interest/Convertibles   1.2%


Portfolio by spread of investment 
income to 30 November 2013

FTSE 100                              12.5%
FTSE 250                              29.3%
FTSE SmallCap                         22.1%
FTSE Fledgling                         4.7%
AIM/ISDX                              28.6%
Fixed Interest and Other               2.8%


Estimated annual income by sector*   
Insurance & Insurance Services        19.8%
Financial Services                    16.8%
Consumer Services                     14.6%
Industrials                            8.6%
Telecommunications                     8.1%
Support Services                       7.5%
Consumer Goods                         7.3%
Basic Materials                        4.5%
Health Care                            4.2%
Technology                             3.6%
Oil & Gas                              2.8%
Utilities                              1.2%
Fixed Interest/Convertibles            1.0%


*Projected income based on portfolio as at 30 November 2013.
Source: Interactive Data.


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 year ended 31 May 2013 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

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 Group; 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 Group 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 
24 January 2014 and the above responsibility statement was signed on its behalf by
Michael Wrobel, Chairman.

for the period to 30 November 2013

                                               Six months ended          Six months ended            Year ended
                                               30 November 2013          30 November 2012           31 May 2013*
                                           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 on investments held at fair                                                                                      
value through profit or loss                                                                                           

                                                 -   31,920  31,920        -    8,766  8,766        -   28,196  28,196 
Income                                 2     3,264        -   3,264    1,736        -  1,736    4,765        -   4,765 
Investment management  fee                    (242)    (726)   (968)     (95)    (284)  (379)    (256)    (767) (1,023)
Other expenses                                (275)       -    (275)    (242)       -   (242)    (532)       -    (532)

Return before finance
costs and taxation                           2,747   31,194  33,941    1,399    8,482  9,881    3,977   27,429  31,406 

Finance costs                                   (2)      (5)     (7)       -       (1)    (1)      (3)      (9)    (12)

Return before taxation                       2,745   31,189  33,934    1,399    8,481  9,880    3,974   27,420  31,394 
Taxation - overseas                                                                                                    
withholding tax                                (10)       -     (10)      (1)       -     (1)     (25)       -     (25)

Return for the period                        2,735   31,189  33,924    1,398    8,481  9,879    3,949   27,420  31,369 

                                             pence    pence   pence    pence    pence  pence    pence    pence   pence 
Basic and diluted return:                                                                                              
Per ordinary share                     3      1.10    12.58   13.68     1.18     7.16   8.34     2.42    16.85   19.27 
Per C share                            3         -        -       -        -        -      -     0.63     4.32    4.95 

* 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

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


                             Share  premium  Special Capital  Revenue          
                           capital  account  reserve reserve  reserve    Total 
                      Note   £'000    £'000    £'000   £'000    £'000    £'000 

As at 31 May 2013*             209   59,337   48,558  25,529    2,276  135,909 

Total comprehensive                                                            
Net return for the               
period                           -        -        -  31,189    2,735   33,924 

Transactions with
recorded directly to                                                           
Issue of ordinary      
shares                   5     115   85,369        -       -        -   85,484 

Expenses of share                
issue                            -   (1,144)       -       -        -   (1,144)

Equity dividends paid    4       -        -        -       -   (2,379)  (2,379)

As at 30 November              
2013                           324  143,562   48,558  56,718    2,632  251,794 

As at 1 June 2012              100        -   48,558  (1,891)   1,059   47,826 

Total comprehensive                                                            
Net return for the               
period                           -        -        -   8,481    1,398    9,879 

Transactions with
recorded directly to

Issue of ordinary               
shares                          57   29,176        -       -        -   29,233 

Expenses of share                -       (8)       -       -        -       (8)
Equity dividends paid    4       -        –        -       -   (1,230)  (1,230)

As at 30 November              
2012                           157   29,168   48,558   6,590    1,227   85,700 

As at 1 June 2012              100        -   48,558  (1,891)   1,059   47,826 

Total comprehensive income:                                                    
Net return for the year          -        -        -  27,420    3,949   31,369 

Transactions with shareholders                                                 
recorded directly to equity:                                                   
Issue of ordinary shares       109    60,891       -       -        -   61,000 

Expenses of share issue          -    (1,554)      -       -        -   (1,554)

Equity dividends paid    4       -         -       -       -   (2,732)  (2,732)

As at 31 May 2013*             209    59,337  48,558  25,529    2,276  135,909 

* Audited.


                                          30 November   30 November    31 May
                                                 2013          2012      2013*
                                    Note        £'000         £'000     £'000 

Investments held at fair value                                               
through profit or loss                        249,935        86,232   128,897 

Current assets:                                                              
Derivative instruments                          3,616             -         - 
Investments held for trading                      222           170         - 
Trade and other receivables                     3,983           324     6,609 
Cash and cash equivalents                           -         1,034       893 

                                                7,821         1,528     7,502 
Current liabilities:                                                         
Trade and other payables                         (571)       (2,060)     (490)
Bank overdraft                                 (5,391)            -         - 

                                               (5,962)       (2,060)     (490)

Net current assets/(liabilities)                1,859          (532)    7,012 

Total net assets                              251,794        85,700   135,909 

Capital and reserves:

Share capital                         5           324           157       209 
Share premium account                         143,562        29,168    59,337 
Special reserve                                48,558        48,558    48,558 
Capital reserve                                56,718         6,590    25,529 
Revenue reserve                                 2,632         1,227     2,276 

Shareholders' funds                           251,794        85,700   135,909 

                                                pence         pence     pence 
Net asset value per ordinary share    6         77.62         54.76     65.12 

* Audited.


                                                               Six          Six     
                                                            months       months     Year      
                                                             ended        ended    ended  
                                                       30 November  30 November   31 May
                                                              2013         2012     2013*
                                                             £'000        £'000    £'000 

Operating activities:                                                                 
Net return before finance costs and taxation                33,941        9,881   31,406 
Increase in investments                                   (121,260)     (39,763) (82,258)
Decrease/(increase) in trade and other receivables           2,626          896   (5,389)
Increase/(decrease) in trade and other payables                 81        1,260     (310)
Increase in derivative instruments                          (3,616)           -        -  

                                                           (88,228)     (27,726) (56,551)

Finance costs paid                                              (7)          (1)     (12)
Withholding tax paid                                           (10)          (1)     (25)

Net cash outflows from operating activities                (88,245)     (27,728) (56,588)

Shares issued from C share conversions                           -       30,000   61,000 
Proceeds from issue of ordinary shares to acquire MIOT                                
investment portfolio                                        85,484            -        - 
Expenses of share issues                                    (1,144)        (775)  (1,554)
Equity dividends paid                                       (2,379)      (1,230)  (2,732)

Net cash inflow from financing                              81,961       27,995   56,714 

(Decrease)/increase in cash and cash equivalents            (6,284)         267      126 

Reconciliation of net cash flow to movements in (net                                  
Cash and cash equivalents at the start of the period           893          767      767 
Net cash (outflow)/inflow from cash and cash equivalents    (6,284)         267      126 

(Net debt)/cash at the end of the period                    (5,391)       1,034      893 

* Audited.


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 2013,
have been prepared in accordance with 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 2013. The comparatives cover the six month period from 1 June 2012
to 30 November 2012 and for the twelve month period from 1 June 2012 to 31 May

The financial statements have been prepared on the basis of the accounting
policies set out in the Annual Report and Financial Statements for the year
ended 31 May 2013.

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 2013 and 30 November
2012 have not been either audited or reviewed by the Company's Auditors. The
information for the year ended 31 May 2013 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

                                     Six months        Six months             Year 
                                          ended             ended            ended 
                                    30 November       30 November           31 May 
                                           2013              2012             2013 
                                          £'000             £'000            £'000

Income from investments:                                        
UK dividends                              2,446             1,370            3,486 
UK REIT dividend income                      24                 -               57 
Unfranked dividend income                   589               266            1,035 
UK fixed interest                            35                 5               40 

                                          3,094             1,641            4,618 

Other income:                                                   
Deposit interest                              -                 1                2 

Underwriting income                           -                 2                2

Net dealing profit of subsidiary            170                92              143

Total income                              3,264             1,736            4,765 

3 Return per Share

Ordinary Shares:

                                Six months ended     Six months ended       Year ended
                                30 November 2013     30 November 2012      31 May 2013
                                      Net    Per           Net    Per       Net    Per
                                   return  share        return  share    return  share
                                    £'000  pence         £'000  pence     £'000  pence

Revenue return                      2,735   1.10         1,398   1.18     3,563   2.42
Capital return                     31,189  12.58         8,481   7.16    24,780  16.85

Total return                       33,924  13.68         9,879   8.34    28,343  19.27

Weighted average number of                                                   
ordinary shares                      247,886,842          118,527,206      147,044,788

C Shares:

                                Six months ended     Six months ended       Year ended
                                30 November 2013     30 November 2012      31 May 2013
                                   Net       Per        Net       Per      Net     Per
                                return     share     return     share   return   share
                                 £'000     pence      £'000     pence    £'000   pence

Revenue return                       -         -          -         -      386    0.63
Capital return                       -         -          -         -    2,640    4.32

Total return                         -         -          -         -    3,026    4.95

Weighted average 
number of C shares                             -                    -       61,136,364

Returns per share are based on the weighted average number of shares in issue
during the period. 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.


                                      Six months ended      Six months ended        Year ended
                                      30 November 2013      30 November 2012       31 May 2013
                                       £'000     pence       £'000     pence     £'000   pence

In respect of the previous                                                    
Fourth interim dividend                  1,753    0.84         930      0.93       930    0.93

In respect of the period under                                                
First interim dividend                     626    0.30         300      0.30       300     0.30
Second interim dividend                      -       -           -         -       782     0.50
Third interim dividend                       -       -           -         -       720     0.46

                                         2,379    1.14       1,230      1.23     2,732     2.19

The Board has declared a second interim dividend of 0.5p per ordinary share,
payable on 28 February 2014 to shareholders registered at the close of business
on 27 December 2013. In accordance with IFRS, this dividend has not been
included as a liability in these financial statements.

5 Called up Share Capital

During the six month period to 30 November 2013, the Company issued 115,684,143
ordinary shares as a result of the merger with Miton Income Opportunities Trust
plc, raising gross proceeds of £85,484,000. Following this transaction, there
were 324,377,450 ordinary shares in issue as at 30 November 2013.

The surplus of net proceeds received from the issue of new shares over the par
value of such shares was £85,369,000 and has been credited to the share premium

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 2013            30 November 2012                   31 May 2013
               Net asset     Net asset     Net asset     Net asset       Net asset     Net asset
                   value         value         value         value           value         value
               per share  attributable     per share  attributable       per share  attributable
                   pence         £'000         pence         £'000           pence         £'000

Basic and          
diluted            77.62       251,794         54.76        85,700           65.12       135,909

Net asset value per ordinary share is based on net assets at the period end and
324,377,450 ordinary shares, being the number of ordinary shares in issue at
the period end (30 November 2012: 156,507,978 and 31 May 2013: 208,693,307
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:

                      Six months ended    Six months ended     Year ended
                      30 November 2013    30 November 2012    31 May 2013
                                 £'000               £'000          £'000

Costs on acquisitions              489                 245            460
Costs on disposals                  40                  18             52

                                   529                 263            512

8 Management Fee

Under the terms of an agreement dated 7 April 2011, the Company appointed Miton
Capital Partners Limited (name changed from Midas Capital Partners Limited on
14 December 2012) to be the Manager. On 1 January 2014, the Investment
Management Agreement was novated from Miton Capital Partners Limited to Miton
Asset Management Limited. The basic 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 2013, an amount of £213,000 was outstanding and due to Miton
Capital Partners Limited in respect of management fees (30 November 2012: 
£147,000 and 31 May 2013: £226,000).


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

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

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 around 120
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

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 will oversee 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.


Directors (all non-executive)            Solicitors

Michael Wrobel                           Stephenson Harwood LLP
Tom Bartlam                              1 Finsbury Circus
Paul Craig                               London EC2M 7SH
Lucinda Riches
Jane Tufnell                             Stockbroker

Secretary and Registered Office          Cenkos Securities plc
                                         6.7.8 Tokenhouse Yard
Capita Sinclair Henderson Limited        London EC2R 7AS
(trading as Capita Asset Services)
Beaufort House                           Bankers and Custodians
51 New North Road
Exeter EX4 4EP                           HSBC Bank plc
Telephone: 01392 412122                  8 Canada Square
                                         London E14 5HQ
Investment Manager
                                         Registrar and Transfer Office
Miton Asset Management Limited 
51 Moorgate                              Capita Asset Services
London EC2R 6BH                          Shareholder Services Department
                                         The Registry
Telephone: 0118 338 4033                 34 Beckenham Road
Website:              Beckenham
                                         Kent BR3 4TU
Company website                   Telephone: 0871 664 0300
                                         (calls will cost 10p per minute plus
Auditor                                  Network charges)

Ernst & Young LLP                        Fax: 020 639 2342
1 More London Place                      Email: [email protected]
London SE1 2AF                           Website:

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: 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