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Diverse Inc Trust (DIVI)


Thursday 29 January, 2015

Diverse Inc Trust

Half-yearly Report


The Directors present the Half-Yearly Financial Report of the Company for the
period to 30 November 2014.

The Diverse Income Trust plc is an investment trust quoted on the London Stock
Exchange ("LSE") with total net assets of £308m as at 30 November 2014. 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 Manager.

This Report covers the Company's progress in the six months to 30 November 2014.
The net asset value ("NAV") has fallen by 3.2% as markets have been more
unsettled. The Company has also declared two interim dividends in the period,
amounting to 0.9p versus 0.8p in the equivalent period last year. 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.


-1.1% Total return to shareholders  
-3.2% NAV per share                 
 0.9p Interim dividends in half year

£50m of additional capital raised via a C share issue - This additional capital
was raised in June 2014 to take specific advantage of the unsettled markets in
smaller company stocks over the summer, and led to total net assets in the
Company reaching £308m at 30 November 2014.

Increased dividends for the period - The first interim dividend for the year was
increased from 0.3p to 0.4p, in part to bring it more in line with the second
and third dividends of 0.5p. The second interim dividend will be unchanged at
0.5p. As previously, because portfolio revenue is heavily skewed towards the
March to May period, the fourth dividend is anticipated to be the largest and
will include any increase in the total annual dividend.

Summary of Results

                                 At 30 November     At 31 May               
                                           2014          2014      Change     
NAV per ordinary share                    79.54p        82.13p       (3.2)% 

Ordinary share price (mid)                81.00p        83.25p       (2.7)% 

Premium to NAV                             1.84%         1.36%            

Revenue return per ordinary                1.64p*        2.70p             

Ongoing charges                            1.25%**       1.27%            

* For six months ended 30 November 2014. Note: comparative figure is for the
full year ended 31 May 2014.

** Estimated as at 30 November 2014. 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 2014

This Report covers the six month period ended 30 November 2014 for The Diverse
Income Trust plc.

World growth slowed in the period and therefore most businesses are now finding
it distinctly harder to sustain decent growth in their revenues and dividends.
The modest fall of the FTSE All-Share Index of just 1.7% in the six month
period somewhat understates the wider adverse trend in market indices. This is
more evident in the FTSE SmallCap (excluding Investment Trusts) Index, which
fell 6.6% over the six months to November, whilst the AIM All-Share Index was
down 11.0% in the same period. The NAV of the Company fell 3.2% by way of

The Board declared the fourth interim dividend for the previous year of 0.95p
in June, up from 0.84p in 2013. With the improving income within the portfolio,
the first interim dividend for the current year was also increased from 0.30p
to 0.40p, in part to bring it more into balance with the second and third
interim dividends last year. A second interim dividend of 0.50p was declared in

The total return per ordinary share, including the capital reduction reported
above and the two dividends announced in the half year, amounted to a modest
reduction of 1.1% per ordinary share over the period.

£50m of Capital Raised in a C Share Issue

Smaller quoted companies have greater growth potential than larger companies.
During times of broad economic expansion this differential is less relevant.
However, with the slowdown in world growth, this factor currently carries
greater weight. Therefore, following the dip in some smaller company share
prices over the summer, the Company raised an additional £50m of capital via a
C share issue. This capital was over 90% invested by the end of September, and
the C share portfolio was merged with the core portfolio on 8 October 2014.

Now that the Company has reached around £300m in terms of scale, the Board
considers that it is unlikely to carry out any further C share issues. However,
should there be some further attractive investment opportunities, the Company
has the scope to issue small parcels of stock via tap issues, if appropriate.


The principal objective of the Company remains to deliver attractive and
growing dividend income. Whilst all companies (including smaller quoted
companies) may find the lack of world growth a challenge going forward, smaller
stocks have greater potential to buck the wider trend. In addition, many of the
companies in the portfolio have unusually strong balance sheets, so they are
better positioned to sustain dividends, even during tough times. Finally, many
of the smaller quoted companies have better dividend cover than some larger
companies, offering greater opportunity for them to increase dividends.

Around one-third of the portfolio is invested in a short list of selected mid
and large cap stocks that are hopefully continuing to generate some dividend
growth. Around two-thirds of the portfolio is invested in the smaller quoted
stocks where we believe the dividend growth potential is rather greater. Each
holding is relatively modest in scale so that stock specific risk is moderated
for our shareholders too. The Board is confident that the Company remains
well-placed to continue to deliver premium returns in the future.

Michael Wrobel
28 January 2015



At the start of the period under review, markets were generally close to their
best levels of the year. Despite a slight wobble in August, the FTSE 100
remained close to these levels until the second half of September, when
expectations on world growth became more cautious. The oil price is a good
illustration: the WTI Crude Oil price dropped below $90 per barrel at the
beginning of October, and thereafter progressively fell to just $66 by the end
of November.

Japan is a major exporter of industrial equipment and manufactured goods, and
the major fall in their exchange rate delivered a deflationary pulse to other
economies around the world. The sizeable fall in the exchange rate of the Yen
at this time worsened deflationary pressures further.

A combination of these effects drove G7 Government bond yields down. For
example, in the UK the yield on 10-year Gilts fell from around 2.4% at the end
of September to just 1.9% by the end of November. This underlines just how much
growth expectations have moderated, especially towards the end of the period.

So although the FTSE All-Share Index only fell 1.7% in the six month period,
the overall market trend was rather more adverse. The index had a sizeable
pullback in mid-October, followed by a recovery towards the end of November.
But shortly after the end of the period under review, equity indices once again
dropped significantly, reflecting the lower expectations for corporate growth
in the coming year.

Smaller company indices tend to move more gradually, so the general market
trend was rather more evident. The FTSE SmallCap (excluding Investment
Companies) Index fell 6.6% over the six months to 30 November 2014, and the AIM
All-Share Index fell 11.0%.

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 2014, the Company delivered a negative total
return of 1.1%. Although it is always disappointing to deliver a negative
return, we note that this return is rather less negative than the comparative
smaller companies indices.

All corporates find it harder to grow when world growth moderates, but the
extra growth potential of smaller companies becomes more obvious at times when
economies are stagnating. The outperformance of the Company in the period is
attributable to the fact that much of the portfolio is invested in those
smaller quoted companies that have generally continued to pay good and growing
dividends in spite of the deteriorating economic trend. These holdings have
often been selected because they also have strong balance sheets, with either
modest net debt or, frequently, net cash balances.

In terms of attribution, the detractors to performance included Stobart Group,
which has sold half of its trucking business to degear the company. Stobart
intends to build up usage of Southend Airport and its biomass business, but as
yet this growth momentum is still to come through. The share prices of both DX
Group and UK Mail were affected by adverse sentiment in the parcels market and
with Amazon announcing it was going to deliver its parcels directly in future,
and CML Microsystems, a business that designs silicon chips that control memory
boards, fell back when one of its major distributors pulled out of their
sector. We continue to believe these volumes will be replaced in time through
other routes to market.

In spite of the adverse market trend, there were plenty of stocks in the
portfolio that rose during the period. For example, Powerflute, the paper
making company, completed an acquisition that substantially enhanced its
earnings and hopefully its dividend growth going forward. Bioventix, another
long-term holding in the portfolio, announced good figures and substantially
increased its dividend for the year; although its share price has already
performed strongly, it is still yielding around 3.6% on a prospective basis
with the increase in its dividend payment.

There have been several new issues over the period, and many of the smaller
companies are coming to market with regular businesses generating good and
growing cash flow capable of funding decent dividend growth over the coming
years. Two such issues, Shoe Zone, a discount shoe retailer, and Quartix, a
telematics business that helps optimise the operation of van fleets, were both
issued at attractive valuations and then went on to outperform.

Since the Company was first listed at the end of April 2011, the NAV has risen
by 60.0%. This compares with a rise of 13.9% in the FTSE All-Share Index, 39.9%
in the FTSE SmallCap (excluding Investment Companies) Index and a fall of 21.1%
in the AIM All-Share Index. It is worth emphasising that many of the AIM stocks
which are not paying dividends and are exploring for new commodities have
fallen back severely; in contrast, the AIM stocks that pay good and growing
dividends (such as most of those held in the Company's portfolio) have
generated attractive returns. 


The portfolio positioning remains consistent with prior years. Around 12% is
invested in stocks that form part of the FTSE 100, with around 21% of the
portfolio invested in mid cap stocks. Overall, around one-third of the
portfolio comprises mid and large cap stocks. There are some that continue to
have attractive dividend growth, but with world growth stalling, many are
finding it harder to grow, and some may be vulnerable to cutting their

In contrast, many smaller companies have not been under pressure to pay
dividends during the credit boom, so their dividend cover tends to be somewhat
higher. However, with interest rates remaining lower for longer, many investors
are now asking for smaller quoted companies to consider increasing their
dividend distributions. After all, they are in a better position to grow
dividends than mainstream stocks. This is in part due to their higher dividend
cover, but also often because they have unusually strong balance sheets.
Indeed, some smaller companies do buck the wider economic trend and sustain
growth too. The bottom line is that around two-thirds of the portfolio is
invested in smaller companies that are growing their dividends rather faster
than larger stocks.

Therefore, we continue to believe that the Company is well-positioned to
continue to generate faster dividend growth than many others.

Gervais Williams and Martin Turner
Miton Asset Management Limited
28 January 2015

The Rationale for Holding the FTSE 100 Put Option

The Company has held a Put option to sell the FTSE 100 Index at 5,800 any time
prior to the middle of June 2015 for the last 12 months, covering a little
under one-third of the capital value of the portfolio. Our view is that an
option like this should only be purchased when its cost appears modest by
historical standards. This tends to occur after markets have appreciated for
some years, and at times when confidence in further appreciation is at a
cyclical high. These factors came together at the end of 2013, just prior to
the events in the Crimea.

The key advantage for shareholders of holding a Put option is that, should
markets suffer a significant setback, then the market value of the Put option
tends to rise. In part this is proportional to the scale of the market setback,
and in part it is related to the duration of the remaining term of the option.
It is possible that the market value of the option might be a multiple of its
initial cost at such a time. The advantage for shareholders is that the option
could then be sold to bring in additional capital in the Company at a time when
share prices were depressed. This could be used to buy additional income
stocks, at a time when their prices were abnormally low, on hopefully more
attractive dividend yields. The effect would be to boost the dividend income
generated by the Company, as well as increasing the portfolio's ability to
participate in any subsequent market recovery.

Some may question why a FTSE 100 Put option should be purchased, given that the
portfolio has a multi cap focus. Around a third of the portfolio is held in mid
and larger companies, so there is a relatively good overlap, with a FTSE 100
option covering around one-third of the portfolio. In addition, a FTSE 100 Put
option is regularly traded, so the daily NAV fully reflects the market value of
the option each day. Finally, being a popular instrument, the cost of a Put
option is much lower than a specialist instrument covering other indices such
as the FTSE All-Share or the FTSE SmallCap Indices. Furthermore, at times of
market distress when the option might want to be sold, market volume in the
FTSE 100 Put option tends to be better than other more obscure instruments.

However, despite the unsettled market conditions, it is probable that the FTSE
100 Index will not fall back prior to June 2015 sufficiently to make the sale
of the option attractive. This is why Put options should only be purchased when
the cost is relatively modest. In our case, the loss of value is only 0.07% or
so each month over the period to June 2015. We believe that this is relatively
modest in the context of the overall returns generated by the Company since

as at 30 November 2014

                                                         Valuation   % of net  Yield*
Rank  Company                    Sector & main activity      £'000     assets      % 

1     Powerflute **              Basic Materials             5,663        1.8    1.9 

2     Shoe Zone **               Consumer Services           5,635        1.8      -***

3     Charles Taylor Consulting  Industrials                 5,469        1.8    3.8 

4     SQS Software **            Technology                  5,468        1.8    1.5 

5     Fairpoint **               Financial Services          5,028        1.6    4.9 

6     Bioventix **               Health Care                 4,771        1.6    3.4 

7     Safestyle **               Consumer Services           4,702        1.5    3.2 

8     Go-Ahead                   Consumer Services           4,489        1.5    3.2 

9     Provident Financial        Financial Services          4,369        1.4    3.8 

10    Direct Line Insurance      Financial Services          4,219        1.4    7.7 

Top 10 investments                                          49,813       16.2        

11    Juridica Investments **    Financial Services          4,050        1.3   13.4 

12    Huntsworth                 Consumer Services           3,965        1.3    6.7 

13    A&J Mucklow Group          Real Estate                 3,919        1.3    4.1 
                                 Investment Trusts                              

14    Friends Life               Insurance Services          3,878        1.3    5.7 

15    Amlin                      Insurance Services          3,809        1.2    5.9 

16    Amino Technologies **      Technology                  3,765        1.2    3.0 

17    Randall & Quilter           
      Investment Holdings **     Insurance Services          3,733        1.2    7.0
18    St Ives                    Industrials                 3,718        1.2    3.8 

19    Conviviality Retail **     Consumer Services           3,683        1.2    5.6 

20    Novae Group                Insurance Services          3,681        1.2    5.0 

Top 20 investments                                          88,014       28.6        

21    Park Group **              Financial Services          3,664        1.2    4.1 

22    Cable & Wireless           Telecommunications          3,654        1.2    5.3 

23    Burford Capital **         Financial Services          3,651        1.2    2.6 

24    Vodafone                   Telecommunications          3,644        1.2    4.7 

25    TalkTalk Telecom           Telecommunications          3,626        1.2    4.0 

26    AstraZeneca                Health Care                 3,606        1.2    2.3 

27    Legal & General            Insurance Services          3,570        1.2    4.0 

28    Beazley                    Insurance Services          3,550        1.2    3.3 

29    Catlin Group               Insurance Services          3,497        1.1    5.7 

30    Personal Group **          Insurance Services          3,403        1.1    4.1 

Top 30 investments                                         123,879       40.4        

31    4imprint                   Consumer Services           3,391        1.1    2.1 

32    Quartix Holdings **        Technology                  3,384        1.1      -***

33    Interserve                 Industrials                 3,381        1.1    3.8 

34    Bloomsbury Publishing      Consumer Services           3,377        1.1    3.6 

35    Sky                        Consumer Services           3,348        1.1    3.4 

36    Segro                      Financial Services          3,321        1.1    3.9 

37    RPC Group                  Industrials                 3,205        1.0    2.7 

38    Aviva                      Insurance Services          3,205        1.0    3.0 

39    Dairy Crest                Consumer Goods              3,171        1.0    4.2 

40    Macfarlane                 Industrials                 3,128        1.0    4.3 

Top 40 investments                                         156,790       51.0        

Balance held in 86 equity investments                      139,060       45.2        

Total equity investments                                   295,850       96.2        

Fixed interest and convertible                               3,649        1.2        
                                                           299,499       97.4        

Derivative instruments - listed                                                
Put option                                                                     

FTSE 100 - June 2015 5,800 Put                                 683        0.2        

Total investment portfolio                                 300,182       97.6        

Other net current assets                                     7,390        2.4        

Net assets                                                 307,572      100.0        

* Source: Interactive Data. Based on historic dividends and therefore not
representative of future yield.

** AIM/ISDX listed.

*** New issues intentionally left blank in the absence of historic data.

as at 30 November 2014

Portfolio exposure by sector        
Industrials                    19.7%
Consumer Services              17.5%
Financial Services             16.6%
Insurance Services             11.9%
Technology                      6.4%
Cash/Fixed Interest and Other   6.3%
Telecommunications              5.9%
Health Care                     4.7%
Basic Materials                 4.7%
Consumer Goods                  4.3%
Oil & Gas                       1.2%
Utilities                       0.8%

Portfolio by asset allocation       
FTSE 100 Index                 12.4%
FTSE 250 Index                 21.0%
FTSE SmallCap Index            17.0%
FTSE Fledgling Index            4.5%
AIM/ISDX Exchanges             37.9%
Cash/Fixed Interest and Other   7.2%


Portfolio by spread of investment income to 30 November 2014

FTSE 100 Index                 15.6%
FTSE 250 Index                 24.6%
FTSE SmallCap Index            18.3%
FTSE Fledgling Index            4.4%
AIM/ISDX Exchanges             32.1%
Fixed Interest and Other        5.0%


Estimated annual income by sector*  
Financial Services             21.1%
Industrials                    19.6%
Insurance Services             16.3%
Consumer Services              14.1%
Telecommunications              7.2%
Cash/Fixed Interest and Other   5.0%
Health Care                     3.8%
Basic Materials                 3.6%
Consumer Goods                  3.4%
Technology                      3.0%
Oil & Gas                       2.2%
Utilities                       0.7%


* Projected income based on portfolio as at 30 November 2014.

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 2014 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, dividends, share price
volatility and liquidity/marketability risk, gearing, key man risk, redemption
facility and market risk.

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 
28 January 2015 and the above responsibility statement was signed on its behalf by
Michael Wrobel, Chairman.

for the period to 30 November 2014

                                                  Period to                  Period to                Year ended        
                                              30 November 2014           30 November 2013            31 May 2014*       

                                          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 

(Losses)/gains on investments held                                                                                     
at fair value through profit or loss            -   (8,298) (8,298)        -   31,920  31,920        -   45,836  45,836 

Income                                  2   6,955        -   6,955     3,264        -   3,264    8,953        -   8,953 

Investment management  fee                   (377)  (1,131) (1,508)     (242)    (726)   (968)    (583)  (1,750) (2,333)

Other expenses                               (341)       -    (341)     (275)       -    (275)    (577)       -    (577)

Return on ordinary activities before                                                                                   
finance costs and taxation                  6,237   (9,429) (3,192)    2,747   31,194  33,941    7,793   44,086  51,879 

Finance costs - overdraft interest                                                                                     
paid                                           (1)      (4)     (5)       (2)      (5)     (7)      (6)     (19)    (25)

Return on ordinary activities before                                                                                   
taxation                                    6,236   (9,433) (3,197)    2,745   31,189  33,934    7,787   44,067  51,854 

Taxation - irrevocable                                                                                                 
withholding tax                               (26)       -     (26)      (10)       -     (10)     (73)       -     (73)

Return on ordinary activities after                                                                                    
taxation                                    6,210   (9,433) (3,223)    2,735   31,189  33,924    7,714   44,067  51,781 

                                            pence    pence   pence     pence    pence   pence    pence    pence   pence 
Basic and diluted return:                                                                                              

Per ordinary share                      3    1.64    (2.49)  (0.85)     1.10    12.58   13.68     2.70    15.41   18.11 
Per C share                             3       -        -       -         -        -       -        -        -       - 

* 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 1 June 2014*              325  143,557   48,558   69,596    4,367  266,403 

Total comprehensive                                                            

Net return for the                
period                            -       -         -   (9,433)   6,210   (3,223)

Transactions with                                                              
recorded directly to                                                           

Issue of ordinary          
shares                    5      62  50,000         -        -        -   50,062

Expenses of share                 
issue                             -  (1,291)        -        -        -   (1,291)

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

As at 30 November 2014          387 192,266    48,558   60,163    6,198  307,572 

As at 1 June 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     116  85,368         -        -        -   85,484

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

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

As at 30 November 2013          325 143,561    48,558   56,718    2,632  251,794 

As at 1 June 2013*              209  59,337    48,558   25,529    2,276  135,909 

Total comprehensive income:                                                    

Net return for the 
year                              -       -         -   44,067    7,714   51,781 

Transactions with 
recorded directly to 

Issue of ordinary 
shares                    5     116  85,000         -        -        -   85,116 

Expenses of share 
issue                             -    (780)        -        -        -     (780)
Equity dividends paid     4       -       -         -        -   (5,623)  (5,623)

As at 31 May 2014*              325 143,557    48,558   69,596    4,367  266,403 

* Audited.


                                          30 November   30 November   31 May 
                                                 2014          2013     2014*
                                    Note        £'000         £'000    £'000 

Non-current assets:                                                          

Investments held at fair value                                               
through profit or loss                        299,499       249,935  267,249 

Current assets:
Derivative instruments                            683         3,616    1,293 

Investments held for trading                        -           222        - 

Trade and other receivables                     1,631         3,983    1,769 

Cash and cash equivalents                       7,647             -      130 

                                                9,961         7,821    3,192 

Current liabilities:                                                         

Bank overdraft                                      -        (5,391)  (3,724)

Trade and other payables                       (1,888)         (571)    (314)

                                               (1,888)       (5,962)  (4,038)

Net current assets/(liabilities)                8,073         1,859     (846)

Total net assets                              307,572       251,794  266,403 

Capital and reserves:                                                        

Share capital                          5          387           325      325 

Share premium account                         192,266       143,561  143,557 

Special reserve                                48,558        48,558   48,558 

Capital reserve                                60,163        56,718   69,596 

Revenue reserve                                 6,198         2,632    4,367 

Shareholders' funds                           307,572       251,794  266,403 

                                                pence         pence    pence 

Net asset value per ordinary share     6        79.54         77.62    82.13 

* Audited.


                                                             Period to    Period to    Year ended
                                                           30 November  30 November        31 May           
                                                                  2014         2013          2014*
                                                                 £'000        £'000         £'000 

Operating activities:                                                                 

Net return before taxation                                      (3,192)      33,941        51,879 

Increase in investments                                        (31,740)    (121,260)      (49,777)

Decrease/(increase) in trade and other receivables                 296        2,626          (739)

Increase in trade and other payables                             1,574           81            17 

Increase in derivative instruments                                   -       (3,616)       (4,060)

                                                               (33,062)     (88,228)       (2,680)

Finance costs paid                                                  (1)          (7)          (25)

Withholding tax paid                                               (26)         (10)          (73)

Net cash outflows from operating activities                    (33,089)     (88,245)       (2,778)


Shares issued                                                   50,000            -             - 

Expenses of share issues                                        (1,291)      (1,144)         (780)

Equity dividends paid                                           (4,379)      (2,379)       (5,623)

Proceeds from issue of ordinary shares to acquire MIOT                                
investment portfolio                                                 -       85,484         4,694 

Net cash inflows/(outflows) from financing                      44,330       81,961        (1,709)

Increase/(decrease) in cash and cash equivalents                11,241       (6,284)       (4,487)

Reconciliation of net cash flow to movements in (net                                  

Cash and cash equivalents at the start of the period            (3,594)         893           893 

Net cash inflow/(outflow) from cash and cash equivalents        11,241       (6,284)       (4,487)

Cash/(net debt) at the end of the period                         7,647       (5,391)       (3,594)

* 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 period ended 30 November 2014,
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. The comparatives cover the period from 1 June 2013 to 
30 November 2013 and for the year from 1 June 2013 to 31 May 2014.

The financial statements have been prepared on the basis of the accounting
policies set out in the Annual Report and Accounts for the year ended 
31 May 2014.

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 periods to 30 November 2014 and 30 November 2013
have not been either audited or reviewed by the Company's Auditors. The
information for the year ended 31 May 2014 has been extracted from the latest
published Annual Report and Accounts, 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  Year ended
                                 30 November  30 November      31 May
                                        2014         2013        2014
                                       £'000        £'000       £'000

Income from investments:                                        

UK dividends                           5,357        2,446       5,784

UK REIT dividend income                   90           24         133

Unfranked dividend income              1,200          589       2,457

UK fixed interest                        184           35         166

                                       6,831        3,094       8,540

Other income:                                                   

Deposit interest                           1            -           -

Underwriting income                       46            -          26

Waiver fee income                         66            -           -

Exchange losses                           (2)           -           -

Net dealing profit of subsidiary          13          170         387

Total income                           6,955        3,264       8,953

3 Return per Share

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.

Ordinary Shares:

                                     Period to       Period to       Year ended 
                                    30 November     30 November     31 May 2014 
                                       2014             2013                  
                                      Net    Per      Net    Per      Net    Per
                                   return  share   return  share   return  share
                                    £'000  pence    £'000  pence    £'000  pence

Revenue return                      6,210   1.64    2,735   1.10    7,714   2.70

Capital return                     (9,433) (2.49)  31,189  12.58   44,067  15.41

Total return                       (3,223) (0.85)  33,924  13.68   51,781  18.11

Weighted average number of                                                   
ordinary shares                      377,834,482     247,886,842     286,027,365

C Shares:

C shares were issued as described in the prospectus published on 30 May 2014
and were converted into ordinary shares on 8 October 2014 (see note 5). No
dividends were paid to C shareholders.

4 Dividends per Ordinary Share

Amounts recognised as distributions to equity holders in the period.

                                    Period to       Period to      Year ended  
                                   30 November     30 November    31 May 2014  
                                      2014            2013                     
                                   £'000   pence   £'000   pence   £'000  pence

In respect of the previous                                                     

Fourth interim dividend            3,081    0.95   1,753    0.84   1,753   0.84  

In respect of the period under                                                 

First interim dividend             1,298    0.40     626    0.30     626   0.30 

Second interim dividend                -       -       -       -   1,622   0.50 

Third interim dividend                 -       -       -       -   1,622   0.50 

                                   4,379    1.35   2,379    1.14   5,623   2.14 

The Board has declared a second interim dividend of 0.5p per ordinary share,
payable on 27 February 2015 to shareholders registered at the close of business
on 30 December 2014. In accordance with IFRS, this dividend has not been
included as a liability in these financial statements.

5 Called-up Share Capital

On 30 May 2014, the Company published a prospectus in relation to proposals to
raise in excess of £30 million (before expenses) by way of an open offer,
placing and offer for subscription of C shares. Applications were received
under the open offer for 27,742,524 C shares, under the placing for 68,630,656
C shares and under the offer for subscription for 3,626,820 C shares, raising
an aggregate of £50 million of gross proceeds for the Company and resulting in
the issue of 100,000,000 C shares on 26 June 2014.

On 8 October 2014, the C shares were converted into ordinary shares in the
ratio of 0.6231 ordinary shares for every C share, resulting in the issue of
62,309,789 new ordinary shares. Following the conversion and at 30 November
2014, there were 386,687,239 ordinary shares in issue.

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 NAV per ordinary share and the NAVs attributable at the period end were as

                    30 November 2014       30 November 2013          31 May 2014     
                    NAV           NAV      NAV           NAV      NAV           NAV
                    per  attributable      per  attributable      per  attributable
                  share                  share                  share             
                  pence         £'000    pence         £'000    pence         £'000


Basic and         
diluted           79.54       307,572    77.62       251,794    82.13       266,403

NAV per ordinary share is based on net assets at the period end and 386,687,239
ordinary shares, being the number of ordinary shares in issue at the period end
(30 November 2013: 324,377,450 and 31 May 2014: 324,377,450 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  Year ended
                      30 November 2014 30 November 2013 31 May 2014
                                 £'000            £'000       £'000

Costs on acquisitions              248              489          70

Costs on disposals                  38               40         119

                                   286              529         189

8 Management Fee

With effect from 26 June 2014, the management fee was amended such that the fee
would be calculated at the rate of one-twelfth of 1.0% per calendar month on
the average market capitalisation of the Company's shares up to £300m and
one-twelfth of 0.8% per calendar month on the average market capitalisation
above £300m, payable monthly in arrears. Prior to this, the management fee was
calculated at the rate of one-twelfth of 1.0% per calendar month of the average
market capitalisation of the Company's shares.

In addition to the basic management fee, and for so long as a Redemption Pool
is in existence, the Manager is entitled to receive from the Company a fee
calculated at the rate of one-twelfth of 1.0% per calendar month of the NAV of
the Redemption Pool on the last business day of the relevant calendar month.

At 30 November 2014, an amount of £258,000 was outstanding and due to Miton
Trust Managers Limited in respect of management fees (30 November 2013: 
£213,000 and 31 May 2014: £227,000 due to Miton Asset Management Limited).


Investment Objective

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

Investment Policy

The Company invests primarily in quoted or traded UK companies with a wide
range of market capitalisations but a long-term bias 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 is mitigated by investing in a diversified spread of
investments. Investments in any one company shall not, at the time of
acquisition, exceed 15% of the value of the Company's investment portfolio.
Typically it is expected that the Company will hold a portfolio of between 80
and 140 securities, predominantly most of which will represent no more than
1.5% of the value of the Company's investment portfolio as at the time of

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 NAV (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 LSE.

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


Capital Structure

The Company's share capital consists of redeemable ordinary shares of 0.1p each
with one vote per share ("ordinary shares") and non-voting management shares of
£1 each ("management shares"). From time to time, the Company may issue C
ordinary shares of 1p each ("C shares") with one vote per share.

As at 30 November 2014 and the date of this report, there are 386,687,239
ordinary shares in issue, none of which are held in treasury, and 50,000
management shares.

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 on
an annual basis on 31 May in each year. Redemption Request forms are available
upon request from the Company's Registrar.

Shareholders submitting valid requests for the redemption of ordinary shares
will have their shares redeemed at the Redemption Price. The Directors may
elect, at their absolute discretion, to calculate the Redemption Price applying
on any redemption point by reference to the Dealing Value per ordinary share or
by reference to a separate Redemption Pool.

The Board may, at its absolute discretion, elect not to operate the annual
redemption facility on any given Redemption Point, or to decline in whole or
part any redemption request, although the Board does not generally expect to
exercise this discretion, save in the interests of shareholders as a whole.

A redemption of ordinary shares may have both income tax and capital gains tax
implications for individual shareholders.

Full details of the redemption facility are set out in the Company's prospectus
dated 7 April 2011, or are available from the Secretary.

May 2015 Redemption Point

The following are the relevant dates for the May 2015 Redemption Point:

29 April 2015    Latest date for receipt of Redemption Requests for certificated
3.00 pm on       Latest date for receipt of Redemption Requests and TTE         
29 April 2015    instructions for uncertificated shares via CREST               
5.00 pm on       Redemption Point                                               
29 May 2015                                                                       
By 12 June 2015  Company to notify Redemption Price and dispatch redemption     
By 26 June 2015  Balance certificates to be sent to shareholders                

Share Dealing

Shares can be traded through your usual stockbroker.

Share Prices

The Company's ordinary shares are listed on the LSE. The mid-market prices are
quoted daily in the Financial Times under 'Investment Companies'.

Share Register Enquiries

The register for the ordinary shares is maintained by Capita Asset Services. In
the event of queries regarding your holding, please contact the Registrar on
0871 664 0300 (calls cost 10p per minute plus network extras) or email 
[email protected]

Changes of name and/or address must be notified in writing to the Registrar:
Capita Asset Services, Shareholder Services Department, The Registry, 34
Beckenham Road, Beckenham, Kent, BR3 4TU.

Manager: Miton Asset Management Limited

The Company's Manager is Miton Asset Management Limited, a wholly-owned
subsidiary of Miton Group plc. Miton Group is a leading multi-asset and equity
fund management specialist listed on the AIM market for smaller and growing

As at 31 December 2014, the Miton Group had £2.05 billion of assets under

Members of the fund management team invest in their own funds and are
significant shareholders in the Miton Group.

In order to comply with the Alternative Investment Fund Managers' Directive
("AIFMD"), the Company's previous investment management agreement with Miton
Asset Management Limited was terminated, and the Company appointed PSigma Unit
Trust Managers Limited as its Alternative Investment Fund Manager ("AIFM") with
effect from 22 July 2014. Miton Asset Management Limited has been appointed by
the AIFM as investment manager to the Company pursuant to a delegation
agreement. Subsequent to this appointment, PSigma Unit Trust Managers has
changed its name to Miton Trust Managers Limited. There has been no change to
the fee structure or the portfolio management arrangements as a result of these

Investor updates in the form of monthly factsheets are available from the
Company's website,


Directors (all non-executive)       Solicitor 
Michael Wrobel                      Stephenson Harwood LLP                     
Tom Bartlam                         1 Finsbury Circus                          
Paul Craig                          London EC2M 7SH                            
Lucinda Riches                                                                 
Jane Tufnell

Secretary and Registered Office     BNY Mellon Trust & Depositary (UK)  Limited                           
                                    BNY Mellon Centre                          
Capita Sinclair Henderson Limited   160 Queen Victoria Street
(trading as Capita Asset Services)  London EC4V 4LA
Beaufort House                                             
51 New North Road
Exeter EX4 4EP                      Custodian                                  

Telephone: 01392 412122             Bank of New York Mellon SA/NV
                                    London Branch
                                    One Canada Square              
Alternative Investment              London E14 5AL                              
Fund Manager                                                  
Miton Trust Managers Limited        Stockbroker                                                                       
51 Moorgate
London EC2R 6BH                     Cenkos Securities plc                     
                                    6.7.8 Tokenhouse Yard                      
                                    London EC2R 7AS                      
Miton Asset Management Limited      Banker
51 Moorgate
London EC2R 6BH                     Bank of New York Mellon                                                          
                                    One Piccadilly Gardens
Telephone: 020 3714 1525            Manchester M1 1RN                   
                                    Registrar and Transfer Office
Company website
                                    Capita Asset Services                   Shareholder Services Department                                            
                                    The Registry            
                                    34 Beckenham Road            
Auditor                             Beckenham                               
                                    Kent BR3 4TU                          
Ernst & Young LLP                                                     
1 More London Place                 Telephone: 0871 664 0300                               
London SE1 2AF                      (calls will cost 10p per minute plus
                                    network charges)                           

                                    Email: [email protected]            

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