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Diverse Inc Trust  -  DIVI   

Half-year Report

Released 07:00 01-Feb-2018

Half-year Report

THE DIVERSE INCOME TRUST PLC

HALF-YEARLY FINANCIAL REPORT

The Directors present the Half-Yearly Financial Report of the Company for the period to 30 November 2017.

RESULTS FOR THE HALF YEAR TO 30 NOVEMBER 2017

Increased dividends A third interim dividend of 0.80p, a final dividend of 0.80p and a special dividend of 0.40p in respect of the year ended 31 May 2017 were paid to shareholders during the half year. A first interim dividend of 0.75p for the current year was declared in October 2017 and will be paid to shareholders in February 2018. A second interim dividend of 0.80p, payable in May 2018, has also been declared.

Revenue reserves of £15.2m The revenue reserves of the Group were £15.2m at the half-year end, which compares with the £11.1m annual cash cost of the four dividends paid out to shareholders in 2017.

Total return to shareholders of 2.0% This includes a modest increase in NAV plus the dividends that went ex-dividend during the period. After dividend payments, the NAV per share rose from 103.43p to 103.47p. The appreciation of 0.04% compares with a 2.0% reduction in the FTSE All-Share Index over the six months to 30 November 2017.

Summary of Results

 At 30 November                         2017         At 31 May    
            2017     
  
Change    
NAV per ordinary share 103.47p     103.43p                    -     
Ordinary share price (mid)  99.25p     102.50p               (3.2)%
Discount to NAV  (4.08)%   (0.90)%
Revenue return per ordinary share 1.90p*    4.02p  
Ongoing charges 1.13%** 1.15% 

*        For six months ended 30 November 2017. Note: comparative figure is for the full year ended 31 May 2017.

**      Estimated as at 30 November 2017. 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.

CHAIRMAN’S STATEMENT

Half year to 30 November 2017

This Report covers the six-month period ended 30 November 2017 for The Diverse Income Trust plc.

Half-year returns

The Company’s NAV rose 0.04% over the half year. The FTSE All-Share Index Capital Return fell by a modest 2.0%, whilst the FTSE SmallCap Index (excluding Investment Trusts) Capital Return fell 0.1% and the FTSE AIM All-Share Capital Return rose 3.4% over the same period.

Dividends      

During the half year, the regular dividends received from holdings within the portfolio continued to show good growth. Alongside this, our portfolio has continued to benefit from one-off special dividends, albeit at a lower level than in the last few years. The underlying strength of dividend growth is reflected in the Company’s dividends paid to shareholders, with the first interim dividend for the period increasing from 0.70p to 0.75p.

The Board has declared a second interim dividend of 0.80p per share, payable on 31 May 2018 to shareholders registered at the close of business on 23 March 2018. The ex-dividend date will be 22 March 2018. This compares to 0.70p per share last year.

We believe that the portfolio is in a strong position to continue to deliver our long-term target of regular increases in dividends paid to shareholders.

Returns since issue

Although many global equity markets have reached new highs in recent months, the best returns over the longer term have often come from many of the smaller quoted companies, particularly in the UK. Between April 2011, when the Company was first listed, and November 2017, the FTSE All-Share Index Capital Return has appreciated by 27.9%, whereas the FTSE SmallCap Index (excluding Investment Trusts) Capital Return has increased by 86.2%. Despite some spectacular returns from some AIM-listed stocks over recent quarters, the FTSE AIM All-Share Index Capital Return overall is up just 11.4% since April 2011. Collectively, the varying returns on these comparative indices underline the scope for active stock selection to outperform within the context of a long-term strategy. Over the same period, the NAV of the Company has appreciated by 106.9%.

Outlook

As company earnings have lagged the rise in equity markets in recent years, it has highlighted a growing concern regarding the absence of productivity improvements, both within the UK and overseas. In addition, despite ongoing employment growth, wages have not kept pace with inflation and this has led to changing preferences amongst many electorates. We believe that we have entered a period of flux regarding future global economic policies, of which Brexit is just one part.

One of the key features of a multi cap approach is its greater scope to navigate successfully periods of economic change. With productivity improvement under pressure, the opportunities for a multi cap strategy may become more numerous. During the most challenging periods in the past, it has often been the greater vibrancy of the smallest quoted companies that has delivered some of the best returns. The approach of our Manager is to select, across the full range of market capitalisations, companies that it believes offer the ability to grow dividends, usually derived from their investment to improve productivity. Therefore, in spite of the slowdown of the UK economy and worries over the conclusion of Brexit negotiations, we continue to believe that The Diverse Income Trust plc remains well placed to generate premium returns over the coming years.

Michael Wrobel
Chairman
31 January 2018
 

MANAGER’S REPORT

Who are the managers?

The Company’s AIFM is Miton Trust Managers Limited, a wholly-owned subsidiary of Miton Group plc.

Miton Group plc is a quoted company listed on the AIM exchange, which is characterised by its independent thinking. This is important at all times, but it may be particularly important at present, particularly due to the preference of the electorate and government economic policy change.

Miton has a team of four fund managers researching UK-quoted stocks. The day-to-day management of the Company’s portfolio is carried out by Gervais Williams and Martin Turner, who have a particular focus on researching many of the smaller quoted stocks.

Gervais Williams

Gervais joined Miton in March 2011 and is Senior Executive Director of the group. He has been an equity portfolio manager since 1985, including 17 years as Head of UK Smaller Companies and Irish Equities at Gartmore.

He won the Grant Thornton Investor of the Year Award in 2009 and 2010, and was awarded Fund Manager of the Year 2014 by What Investment?

Martin Turner

Martin joined Miton in May 2011. Martin and Gervais have had a close working relationship since 2004, and their complementary expertise and skills led to their backing a series of successful companies.

Martin qualified as a Chartered Accountant with Arthur Andersen and also has extensive experience at Rothschild, Merrill Lynch and Collins Stewart, where as Head of Small/Mid Cap Equities, his role covered their research, sales and trading activities.

What is the Company’s objective?

For decades, market returns have been strong. Progressively, the emphasis of investment strategies moved away from generating sustained absolute returns towards at least matching the return of the mainstream indices, and looking to add a degree of relative outperformance.

The problem is that uniform fund benchmarks tend to lead to uniformity in portfolio ingredients. Within equity income funds in the UK, the limited number of income stocks within the mainstream indices has led many of these funds to hold a particularly narrow range of  holdings, often forcing funds to have 5% or 10% of their portfolios invested in their largest holdings. Alongside this, many of these holdings are often duplicated within other competitor funds as well.

Whilst markets have appreciated well, these strategies have delivered attractive returns. However, at a time when the political and economic trends are changing, we believe that investors should become more intolerant of oversized stock specific risk.

Diverse was set up with this background in mind. Overall, its aim is to invest in a more wide-ranging portfolio of stocks that also pay an attractive dividend yield with the prospect of dividend growth in the future. Rather than measuring the success of Diverse with regard to the return of an equity index, our aim is to generate a premium return through a greater focus on the sustainability and organic growth of the overall portfolio income over time.

How is the investment strategy implemented?

There is good academic evidence that, over time, the very long-term return on an individual stock is principally determined by the initial yield at the time of investment and the changes to that dividend thereafter. Specifically, if the company pays growing dividends, then over time this is normally reflected in a sustained rise in its share price. In contrast, those that suffer dividend cuts are often subject to share price setbacks.

Generally, we believe it is those companies with the best ongoing productivity improvements that have the best chances to sustain and improve corporate cash flow and dividend growth going forward. After all, companies with strong cash flow are not just in a position to fund the current dividend, but equally importantly are also in a good position to grow the dividends in future.

The portfolio holdings are therefore selected for the prospect of cash paybacks on capital expenditure and, by implication, their dividend growth. We find the following five factors helpful to identify those with the most attractive risk/reward ratios and the potential for generating a sustained and growing stream of dividends:

In what way has the portfolio changed over the half year?

With the pressures on UK consumers, the principal change in the period was the reduction in the portfolio weighting in the Consumer Discretionary sector. Since the end of May, the weighting has fallen from 17.1% to 11.9% at the end of November. The Company’s holdings in Greene King and ITV were sold, along with 32Red which agreed to a takeover at a premium to the share price. Some profits were taken on the holding in IG Design, although this company mainly services international markets where consumer expenditure remains more robust.

Overseas, there was a pick-up in growth as the weakness in the US dollar led to many of the emerging economies cutting their interest rates. In anticipation of a recovery in commodity and energy prices, a number of energy and mining stocks were purchased. At the end of November, the Company had holdings in Rio Tinto, BP and Shell, as well as Diversified Gas & Oil and DS Smith. Some gold miners also appear overlooked, so holdings in Polyus, Centamin and Highland Gold have also been built up to full weightings.

Over the six-month period, the weighting in the Materials sector rose from 7.7% to 12.4%.

During the half year, many of the best contributors to return were in the Financial sector. Good examples are Burford Capital and Charles Taylor. The best contributor to returns in the half year was IG Design, which underlines the scale of the opportunities within small caps, especially those investing for productivity improvement. The greatest detractor to returns was Accrol, a UK tissue paper supplier that held back on purchasing due to overcapacity amongst its European supplies, only to be badly caught out when a shortage of raw materials led to an unexpected price increase.

The Company continues to minimise stock specific risk through limiting portfolio holdings to around 1% each. Even the stocks where the Manager has the highest conviction rarely exceed 1.5% at the time of purchase. Only three holdings in the Company were 2% or more of the portfolio at the end of November, with all the other holdings progressively smaller. Stock specific risk remains limited, with 148 stocks across a wide range of industry sectors.

Over the half year under review, the revenue per share came to 1.90p per share, which compares with 2.07p per share last year and 1.50p per share for the previous half year. Whilst the underlying ordinary dividends from the companies in the portfolio have grown well over recent years, the first half of last year was marked by an unusually large number of one off special dividends. In the half year under review, there were fewer special dividends compared with last year and this factor has obscured the ongoing trend of increases in the ordinary dividends generated by the holdings in the portfolio.

What are the prospects for the Company?

During 2017, the pronounced weakness of the US dollar led to a reduction in interest rates in many emerging economies. As their economic prospects improved, growth spilled over into many of the developed economies as well.

Generally, renewed growth is welcome, but it has come with a sharp rise in commodity and energy prices. In time, their impact on core inflation may undermine the improved market momentum. Alongside this, we worry that when the US dollar recovers, the problems of the recent past will return.

We remain hopeful that equity markets will continue to appreciate as they have over recent years, but we also remain acutely aware that, when the world suffers an economic setback, there is little scope to reduce interest rates to stimulate a recovery.

We therefore remain wary of relying too heavily on the recent improvement in investor optimism and continue to manage stock specific risk closely, through investing via a longer list of modestly-sized holdings across a wide universe of stocks. We believe that this strategy gives us, as managers, greater scope to successfully navigate the current period of economic change. Furthermore, it also limits risk, as we can select stocks with stronger balance sheets and those with specific opportunities to invest for attractive cash paybacks.

How can the Company take advantage should market volatility increase?

Over the period under review, equity markets have been quite volatile, mainly on the upside for now but in future the risk remains that markets could surprise on the downside. As an investment trust, Diverse has two strategies that can help the Company to generate a better return for shareholders through any potential period of volatility.

A FTSE 100 Put option

The first is via the purchase of a Put option. This asset has the right to sell the FTSE 100 Index at a certain level (6,500 in our case) after the stock market has fallen back. An option like this is not dissimilar to purchasing car or house insurance, in that it adds a degree of insurance to the Company’s portfolio. Were markets to suffer a major setback, then the Company could choose to sell around 40% of its current value as though the FTSE 100 Index was still at 6,500. If the FTSE 100 Index was at 4,500 for example, then the value of the Put option might be of the order of £42.5m,  a little over 10% of the current value of the Company’s assets, or maybe 13% of the value of the Company’s assets after the setback.

At that stage, the cash proceeds could then be used to purchase additional equities for the portfolio at a time when share prices were depressed. The increased holdings in the portfolio would have greater recovery potential thereafter. Alongside this, the Company would benefit from extra income from the new holdings added during this period.

However, options like this come with a cost – a bit like an insurance premium. Specifically, the time value of the Put option will gradually decay over the insured period (to September 2019 in our case), irrespective of whether the markets suffer any fluctuations or not. The initial cash cost of any Put option is therefore very important, since its resale value generally falls over time (assuming markets are relatively flat) and ultimately becomes worthless if the FTSE 100 Index does not fall significantly below 6,500 prior to September 2019.

With this in mind, the Company has been careful to find ways in which it could keep the initial cost of the Put option at the lowest possible level. It has done this in two ways:

In summary, we believe that Diverse has greater scope to take advantage of any major market setback through participating in FTSE 100 Put options, albeit that the strategy does have a modest adverse cost if markets do not drop back significantly in the period through to September 2019.

The debt facility

The Company has put in place a committed debt facility with The Royal Bank of Scotland of £25m, with scope in certain circumstances to raise this to £50m, up to a maximum of 15% of NAV. The Company pays commitment fees to have the facility that gives the Company access, at a modest cost, to significant borrowings, which we can deploy when we judge the time to be right.

Normally, the Company does not utilise the facility. This is because the key risk with debt is that, if there were a severe market sell-off, then the covenants on the debt facility could force the Company to repay some, or potentially all, of the outstanding debt after the market had dropped.

This has the disadvantage of obliging the Company to liquidate some of its portfolio holdings just at a time when share prices would be depressed. In short, a geared fund can end up at a disadvantage during a setback, whereas an ungeared portfolio can at least continue to hold its portfolio throughout the period of volatility and thereby fully participate in any subsequent market recovery.

Importantly, we believe the Company has plenty of scope to generate an attractive long-term return without relying on debt, so the fund does not need to be geared over the longer term. Generally, the plan is to ensure the Company is not significantly borrowed at a time when markets are at risk of a setback.

The great advantage of this strategy is that most of the time it is under-utilised. Therefore, the debt facility should normally be available to buy additional stocks after the market setback at, hopefully, unusually attractive entry prices. Following the market bottom, the portfolio would then have extra recovery potential – funded by the debt facility. If the market were to go on and recover, shareholders would benefit from the appreciation of the extra shares purchased during the market setback, as well as the associated extra dividend income (offset in part by the interest costs on the debt).

Conclusions

Both the FTSE 100 Put option and the debt facility aim to help the Company to have additional strategies to buy extra shares close to a market bottom, so that the Company’s returns would be enhanced were the markets to recover after a period of severe volatility.

Gervais Williams and Martin Turner
Miton Asset Management Limited
31 January 2018

RESEARCH COSTS

Regulations known as MiFiD II were introduced on 3 January 2018. One of the purposes of these regulations is to differentiate between the fees paid by funds for executing transactions within the portfolio over the year, from the fees paid for external research that helps the fund managers make well-informed investment decisions.

In the past, both of these fees were bundled together, with the transaction fees funding the access to market liquidity as well as the cost of stockbroker analysts and external economists. Since 3 January 2018, these fees have been unbundled, with execution fees remaining in place for each change in the portfolio and a separate and predetermined absolute fee agreed at the start of the period to cover external research costs.

In the past, fees for external research varied in line with the amount of transactions that were carried out over the year by the fund. In years when portfolio transactions were numerous, the fees paid for external research were higher compared to years when there were fewer portfolio transactions. The separating of the two fees will ensure the costs of each are determined independently. Given these advantages, The Diverse Income Trust moved to separate these two fees ahead of the formal date of the start of the regulations. Over 2016 and 2017, the fees paid for transactions and the fees paid for external research were determined separately and the fee paid for external research was set at a predetermined sum.

In the case of Diverse, a very large part of the stock specific research is carried out by Miton. However, Miton do recognise that they have no monopoly of wisdom and therefore they do review the opinions of external researchers when making investment decisions for the Company. The fees paid for external research by Diverse amounted to £55,000 over 2017. The Board has agreed a budget of £38,000 for 2018. In the past, these fees have not been subject to VAT, but going forward this may change, in which case the overall cost of external research for 2018 might amount to £45,000. This is less than 0.02% of the Company’s assets.

Some fund managers have proposed to pay for the external research fees themselves from 3 January 2018, and hence relieve their clients of these costs. Miton, and some other fund managers, believe that making the cost of external research an in-house matter will put the determination of the scale of external research at the risk of commercial pressures. At times when fund management groups are suffering a reduction in profits, there may be implicit pressure on fund managers to do without certain external research. This may compromise the quality of fund manager decisions, with an outcome of worse investment returns for the funds. In order to avoid these risks, Miton proposes to continue the current process that has been in place since January 2016, with the absolute costs of external research being closely managed under the independent scrutiny of the Board.
 

PORTFOLIO INFORMATION
as at 30 November 2017


Rank

Company

Sector & main activity
Valuation 
£’000 
% of net 
assets 
Yield1
1 Stobart Industrials 9,142  2.3  6.4 
2 Charles Taylor Industrials 8,139  2.1  3.9 
3 IG Design2 Consumer Goods 7,796  2.0  1.2 
4 Safecharge International2 Industrials 6,269  1.6  4.5 
5 Park2 Financials 5,722  1.4  3.3 
6 Zotefoams Basic Materials 5,512  1.4  1.5 
7 Amino Technologies2 Technology 5,312  1.3  3.3 
8 Mucklow (A&J) Financials 5,281  1.3  4.3 
9 McColl’s Retail Consumer Services 5,144  1.3  3.6 
10 Bioventix2 Healthcare 4,739  1.2  3.5 
Top 10 investments 63,056          15.9 
11 Phoenix Financials 4,737  1.2  6.4 
12 AIB Financials 4,648  1.2  1.7 
13 CML Microsystems Technology 4,641  1.1  1.4 
14 Rio Tinto Basic Materials 4,619  1.1  5.3 
15 Royal Dutch Shell ‘A’ Oil & Gas 4,389  1.1  5.9 
16 BP Oil & Gas 4,313  1.1  6.1 
17 Legal & General Financials 4,307  1.1  5.5 
18 Smith (DS) Industrials 4,264  1.1  2.8 
19 Aviva Financials 4,255  1.1   4.8 
20 Randal & Quilter2 Financials 4,235  1.1   6.7 
Top 20 investments 107,464  27.1 
21 Burford Capital2 Financials 4,192  1.1  0.6 
22 McBride Consumer Goods 4,171  1.1  1.9 
23 Shoe Zone2 Consumer Services 4,155  1.1   6.4 
24 Inspired Energy2 Industrials 4,152  1.0  2.5 
25 Polyus GDR Basic Materials 4,130  1.0  5.1 
26 RPC Industrials 4,117  1.0  2.8 
27 Morses Club2 Financials 4,113  1.0  4.7 
28 Smurfit Kappa Industrials 4,005  1.0  3.0 
29 Treatt Basic Materials 4,000  1.0   1.0 
30 EasyJet Consumer Services 4,000  1.0   4.5 
Top 30 investments 148,499  37.4 
31 Direct Line Insurance Financials 3,981  1.0  4.5 
32 Central Asia Metal2 Basic Materials 3,923  1.0  6.5 
33 Lok’n Store Financials 3,877  1.0  2.4 
34 4Imprint Consumer Services 3,872  1.0  2.4 
35 Eddie Stobart Logistics2 Industrials 3,840  1.0  3.7 
36 Concurrent Technologies2 Technology 3,822  1.0   2.8 
37 Costain Industrials 3,810  1.0  3.1 
38 Centamin Basic Materials 3,800  0.9   8.6 
39 Anglo Pacific Basic Materials 3,762  0.9  4.2 
40 Lloyds Banking Financials 3,754  0.9  4.1 
Top 40 investments 186,940  47.1 
Balance held in 99 equity instruments 190,307  48.0 
Total equity investments 377,247  95.1 
Fixed interest and convertible securities
600 Group 8% Convertible Loan Notes 14/02/2020 2,506  0.6 
Intercede Group 8% Secured Convertible Loan Notes 2021 1,550  0.4 
Active Energy 8% Loan Notes 2022 1,428  0.4 
Sirius Minerals Finance 8.5% Convertible Loan Notes 28/11/2023 (USD) 1,339  0.3 
Hurricane Energy 7.5% Convertible SNR 24/07/2022 USD 975  0.3 
St. Modwen Properties 6.25% 07/11/2019 Bonds 843  0.2 
Aggregated Micro Power 8% Secured Convertible Loan Notes 30/03/2021 565  0.1 
Sigmaroc 6% Unsecured Convertible Loan Notes 04/01/2022 (unlisted) 321  0.1 
Fixed interest and convertible investments 9,527  2.4 
Total investments 386,774  97.5 
Listed Put option
FTSE 100 – March 2019 6,500 Put 5,719  1.4 
FTSE 100 – March 2018 6,500 Put (526) (0.1)
 Traded options 5,193  1.3 
 Total investment portfolio 391,967  98.8 
Other net assets 4,824  1.2 
Net assets 396,791  100.0 

1 Source: Interactive Data. Based on historical yields and therefore not representative of future yield. Includes special dividends, where known.

2 AIM/NEX listed.

PORTFOLIO INFORMATION
as at 30 November 2017

Invested portfolio capital by sector
Financials 25.6%
Industrials 20.3%
Consumer Services 16.0%
Basic Materials 9.6%
Consumer Goods 8.1%
Technology 5.5%
Oil & Gas 3.6%
Telecommunications 3.2%
Cash and Fixed Interest 2.4%
Health Care 2.1%
Other 1.9%
Utilities 1.7%
100.0%

   

Invested portfolio capital by Index or Exchange
FTSE 100 Index 16.9%
FTSE 250 Index 14.7%
FTSE SmallCap Index 14.9%
FTSE Fledgling Index 2.9%
AIM/NEX Exchanges 37.6%
International Equities 2.0%
Other 8.6%
Cash and Fixed Interest 2.4%
100.0%

   

Portfolio investment income received in the period by Index or Exchange
FTSE 100 Index 19.2%
FTSE 250 Index 21.9%
FTSE SmallCap Index 13.9%
FTSE Fledgling Index 2.4%
AIM/NEX Exchanges 35.3%
Other 7.3%
100.0%

   

Estimated annual income by sector¹
Financials 27.3%
Industrials 19.8%
Consumer Services 15.5%
Basic Materials 10.7%
Consumer Goods 6.8%
Cash and Fixed Interest 4.5%
Telecommunications 4.2%
Oil & Gas 4.1%
Technology 3.1%
Utilities 1.8%
Health Care 1.2%
Other 1.0%
100.0%

¹ Projected income based on portfolio as at 30 November 2017.

Source: Interactive Data.
 

INTERIM MANAGEMENT REPORT AND DIRECTORS’ RESPONSIBILITY STATEMENT

Interim Management Report

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

The principal risks facing the Group are substantially unchanged since the date of the Annual Report and Accounts for the year ended 31 May 2017 and continue to be as set out in that report on pages 21 to 23.

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, engagement of third party service providers, market risk and credit and counterparty risk.

Responsibility Statement

The Directors confirm that to the best of their knowledge:

This Half-Yearly Financial Report was approved by the Board of Directors on 31 January 2018 and the above responsibility statement was signed on its behalf by Michael Wrobel, Chairman.

CONDENSED CONSOLIDATED INCOME STATEMENT

for the period to 30 November 2017

Period to
30 November 2017
Period to
30 November 2016
Year ended
31 May 2017*

Note
Revenue 
£’000 
Capital 
£’000 
Total 
£’000 
Revenue 
£’000 
Capital 
£’000 
Total 
£’000 
Revenue 
£’000 
Capital 
£’000 
Total 
£’000 
Gains on investments held at fair value through profit or loss







3,550 




3,550 








4,213 




4,213 








56,868 




56,868 
Losses on derivative contracts



(1,619)


(1,619)




(5,602)


(5,602)




(10,896)


(10,896)
Foreign exchange gains/(losses)



25 


25 




(12)


(12)




(15)


(15)
Income  2 8,169   8,169  8,788  8,788  17,019  17,019 
Management fee
(462)

(1,385)

(1,847)

(415)

(1,244)

(1,659)

(852)

(2,555)

(3,407)
Other expenses
(364)

 - 

(364)

(396)


(396)

(734)


(734)
Return on ordinary activities before finance costs and taxation




7,343 





571 





7,914 





7,977 





(2,645)





5,332 





15,433 





43,402 





58,835 
Finance costs (15) (45) (60) (6) (20) (26) (34) (100) (134)
Return on ordinary activities before taxation



 7,328 




526 




7,854 




7,971 




(2,665)




5,306 




15,399 




43,302 




58,701 
Taxation – irrecoverable withholding tax

(26)




(26)


(45)




(45)






Return on ordinary activities after taxation


7,302 



526 



7,828 



7,926 



(2,665)



5,261 



15,407 



43,302 



58,709 
pence  pence  pence  pence  pence  pence  pence  pence  pence 
Basic and diluted return:
Per ordinary share
3

 1.90 

0.14 

2.04 

2.07 

(0.69)

1.38 

4.02 

11.29 

15.31 

* Extract from audited financial statements.

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 and capital columns are presented in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies (“AIC SORP”).

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

There is no other comprehensive income and therefore the return on ordinary activities after tax is also the total comprehensive income.

The accompanying notes are an integral part of these financial statements.
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY




Note

Share
capital
£’000
Share
premium
account
£’000

Special
reserve
£’000

Capital 
reserve 
£’000 

Revenue 
reserve 
£’000 


Total 
£’000 
As at 1 June 2017* 434 192,244 45,775 142,644  15,536  396,633
Total comprehensive income:
Net return for the period - - - 526  7,302   7,828 
Transactions with shareholders
recorded directly to equity:
Equity dividends paid 4  - - - -  (7,670) (7,670)
As at 30 November 2017 434 192,244 45,775 143,170   15,168   396,791 
As at 1 June 2016*  434 192,244 45,775 99,342   11,250  349,045 
Total comprehensive income:
Net return for the period - - - (2,665) 7,926  5,261 
Transactions with shareholders
recorded directly to equity:
Equity dividends paid 4 - - - (5,752) (5,752)
As at 30 November 2016  434 192,244 45,775 96,677   13,424  348,554 

   

As at 1 June 2016* 434 192,244 45,775 99,342  11,250  349,045 
Total comprehensive income:
Net return for the year - - - 43,302  15,407  58,709 
Transactions with shareholders recorded directly to equity:
Equity dividends paid - - - (11,121) (11,121)
As at 31 May 2017* 434 192,244 45,775 142,644  15,536  396,633 

* Extract from audited financial statements.

The accompanying notes are an integral part of these financial statements.
 

CONDENSED CONSOLIDATED BALANCE SHEET



Note
30 November 
2017 
£’000 
30 November 
2016 
£’000 
31 May 
2017*
£’000 
Non-current assets:
Investments held at fair value
through profit or loss

386,774 

331,749 

384,710 
Current assets:
Derivative Contracts 5,719  6,679  1,385 
Trade and other receivables 1,441  1,292  3,337 
Cash at bank and cash equivalents
4,961 
  
9,280 

7,628 
12,121  17,251  12,350 
Current liabilities:
Derivative contracts (526)
Trade and other payables (1,578) (446) (427)
(2,104) (446) (427)
Net current assets 10,017  16,805  11,923 
Total net assets 396,791  348,554  396,633 
Capital and reserves:
Share capital – ordinary shares  5 384  384  384 
Share capital – management shares
 5

 50 

50 

50 
Share premium account  192,244  192,244  192,244 
Special reserve 45,775  45,775  45,775 
Capital reserve 143,170  96,677  142,644 
Revenue reserve  15,168  13,424  15,536 
Shareholders’ funds 396,791  348,554  396,633 
                    pence 
pence 

pence
Net asset value per ordinary share 6 103.47  90.89  103.43 

* Extract from audited financial statements.

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Period to 
30 November 
2017 
£’000 
Period to 
30 November 
2016 
£’000 
Year ended 
31 May 
2017*
£’000 
Operating activities:
Net return before taxation 7,854  5,306   58,701 
(Increase)/decrease in net investments and derivatives gains
(1,931)

1,389 

(45,972)
Purchase of investments (64,963) (21,867) (69,452)
Sale of investments 66,449  33,644  80,923 
Purchase of derivative instruments (8,902) (7,445) (7,445)
Sale of derivative instruments  3,475  3,190  3,190 
Exchange (gains)/losses on capital items                (25) 15 
Revolving loan facility in Financing (below) 40  170 
Decrease/(increase) in trade and other receivables 1,896  772  (1,273)
Increase/(decrease) in trade and other payables 1,151  (2,895) (2,914)
Withholding tax (paid)/recoverable (26) (45)
Net cash inflow from operating activities 5,018  12,049  15,951 
Financing:
Revolving credit facility drawdown  -   -  15,000 
Revolving credit facility repayment (15,000)
Revolving credit facility arrangement fee paid (63)
Revolving credit facility non commitment fee paid     (40) (45)
Revolving credit facility interest paid (62)
Equity dividends paid (7,670) (5,752) (11,121)
Net cash outflow from financing (7,710) (5,752) (11,291)
(Decrease)/increase in cash and cash equivalents (2,692) 6,297  4,660 
Reconciliation of net cash flow movements in funds:
Cash and cash equivalents at the start of the period  7,628  2,983  2,983 
Exchange movements 25  (15)
Net cash (outflow)/inflow from cash and cash equivalents  (2,692) 6,297  4,660 
Cash at the end of the period 4,961  9,280  7,628 

* Extract from audited financial statements.

The accompanying notes are an integral part of these financial statements.
 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 General Information

The consolidated financial statements, which comprise the unaudited results of the Company and its wholly-owned subsidiary, DIT Income Services Limited (together referred to as the “Group”), for the period ended 30 November 2017, have been prepared in accordance with IFRS, as adopted by the European Union, and with the AIC SORP, where the AIC SORP is consistent with the requirements of IFRS. The comparatives cover the period from 1 June 2016 to 30 November 2016 and for the year from 1 June 2016 to 31 May 2017.

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 2017.

The financial information contained in this Report does not constitute full statutory accounts as defined in the Companies Act 2006. The financial statements for the periods to 30 November 2017 and 30 November 2016 have not been either audited or reviewed by the Company’s Auditor. The information for the year ended 31 May 2017 has been extracted from the latest published Annual Report and Accounts, which have been filed with the Registrar of Companies. The Report of the Auditor 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 Group 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 Group’s business and assets, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months from the date that these financial statements were approved. In arriving at this conclusion, the Directors have considered the liquidity of the portfolio and the Group’s ability to meet obligations as they fall due.

2 Income


Period to
30 November
2017
£’000

Period to 
30 November 
2016 
£’000 

Year ended 
31 May 
2017 
£’000 
Income from investments:
UK dividends          5,928 5,750 11,456
UK REIT dividend income 104  144 286
Unfranked dividend income 1,699 2,595 4,433
UK fixed interest 355 167 694
8,086 8,656 16,869
Other income:
Bank deposit interest - - 8
Underwriting income 11  60  14
Exchange gains 72 13 63
Net dealing profit of subsidiary - 59 65
Total income 8,169 8,788 17,019

3 Return per Ordinary 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.

Period to
30 November 2017
Period to
30 November 2016
Year ended
31 May 2017
Net
 return
£’000
Per
share
pence
Net 
return 
£’000 
Per 
share 
pence 
Net
return
£’000
Per
share
pence
Revenue return  7,302 1.90 7,926  2.07  15,407 4.02
Capital return 526 0.14 (2,665) (0.69) 43,302 11.29
Total return 7,828 2.04 5,261  1.38  58,709 15.31
Weighted average number of ordinary shares

383,487,239 


383,487,239 


383,487,239

4 Dividends per Ordinary Share

Amounts recognised as distributions to equity holders in the period.

Period to
30 November 2017
Period to
30 November 2016
Year ended
31 May 2017
£’000 pence £’000 pence £’000 pence
In respect of the previous period:
Third interim dividend 3,068 0.80 2,876 0.75 2,876  0.75 
Final dividend 3,068 0.80 2,876 0.75 2,876  0.75 
Special dividend 1,534 0.40 - -
In respect of the period under review:
First interim dividend - - - - 2,684 0.70
Second interim dividend - - - - 2,684 0.70
7,620 2.00 5,752 1.50 11,121 2.90

The Board has declared a first interim dividend of 0.75p per ordinary share, payable on 28 February 2018 to shareholders registered at the close of business on 29 December 2017. The ex-dividend date was 28 December 2017. The Board has also declared a second interim dividend of 0.80p per ordinary share, payable on 31 May 2018 to shareholders registered at the close of business on 23 March 2018. The ex-dividend date will be 22 March 2018. In accordance with IFRS, these dividends have not been included as a liability in these financial statements.

5 Called-up Share Capital

The Company, which is a closed-ended investment company with an unlimited life, has a redemption facility through which shareholders are entitled to request the redemption of all or part of their holding of ordinary shares annually on 31 May in each year. The Board may, at its absolute discretion, elect not to operate the annual redemption facility in whole or in part. In respect of the 31 May 2017 Redemption Point, the Company received requests for 1,103,305 ordinary shares. All of these shares were matched with buyers and sold at a calculated Redemption Price of 103.02p per share.

The issued share capital consisted of 383,487,239 ordinary shares and 50,000 management shares as at 30 November 2017.

6 Net Asset Value

Ordinary Shares

The NAV per ordinary share and the net assets attributable at the period end were as follows:

30 November 2017 30 November 2016 31 May 2017
NAV
per share
pence
 Net assets
attributable
£’000
NAV
per share
pence
Net assets
attributable
£’000
NAV
per share
pence
Net assets
attributable
£’000
Ordinary shares:
Basic and diluted 103.47 396,791 90.89 348,554 103.43 396,633

NAV per ordinary share is based on net assets at the period end and 383,487,239 ordinary shares, being the number of ordinary shares in issue at the period end (30 November 2016: 383,487,239 and 31 May 2017: 383,487,239 ordinary shares).

Management Shares

The NAV of £1 (30 November 2016: £1 and 31 May 2017: £1) per management share is based on net assets at the period end of £50,000 (30 November 2016: £50,000 and 31 May 2017: £50,000) and 50,000 (30 November 2016: 50,000 and 31 May 2017: 50,000) management shares. The shareholders have no right to any surplus or capital or assets of the Company.

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
30 November 2017
£’000
Period to
30 November 2016
£’000
Year ended
31 May 2017
£’000
Costs on acquisitions 151 74 272
Costs on disposals 90 45 118
241 119 390

These transaction costs are dealing commissions paid to stockbrokers and stamp duty, a government tax paid on transactions (which is zero when dealing on the AIM/NEX exchanges). A breakdown of these costs is set out below:

Period to
30 November 2017
£’000

% of average
monthly net assets
Period to
30 November 2016
£’000

% of average monthly net assets
Year ended
31 May 2017
£’000

% of average monthly net assets
Costs paid in dealing commissions
                     134

0.03

72

0.02

187

0.05
Costs of stamp duty 107 0.03 47 0.01 203 0.06
241 0.06 119 0.03 390 0.11

The average monthly net assets for the six months to 30 November 2017 was £391,445,000 (30 November 2016: £342,936,000 and 31 May 2017: £355,523,000).

8 Management Fee

The management fee is 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. 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 2017, an amount of £302,000 was outstanding and due to Miton Trust Managers Limited in respect of management fees (30 November 2016: £278,000 and 31 May 2017: £305,000).

9 Fair Value Hierarchy

The Group is required to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used. The fair value hierarchy has the following levels:

Level 1 – Valued using quoted prices, unadjusted in active markets.

Level 2 – Valued by reference to valuation techniques using observable inputs for the asset or liability, other than quoted prices included in Level 1.

Level 3 – Valued by reference to valuation techniques using inputs that are not based on observable market data for the asset or liability.

The valuation techniques used by the Group are explained in the Annual Report.

The tables below set out the fair value measurements of financial assets in accordance with the fair value hierarchy into which the fair value measurements are categorised.

Financial Assets

Financial assets at fair value through profit or loss
at 30 November 2017

Level 1
£’000

Level 2
£’000

Level 3
£’000

Total
£’000
Equity investments 376,887 360 - 377,247
Derivative contracts 5,719 - - 5,719
Fixed interest bearing
securities

3,157

-

6,370

9,527
385,763 360 6,370 392,493

   

Financial assets at fair value through profit or loss
at 30 November 2016

Level 1
£’000

Level 2
£’000

Level 3
£’000

Total
£’000
Equity investments 323,489 2,197 - 325,686
Derivative contracts 6,679 - - 6,679
Fixed interest bearing securities 3,242 - 2,821 6,063
333,410 2,197 2,821 338,428

   

Financial assets at fair value through profit or loss at 31 May 2017 Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity investments 375,779 - - 375,779
Derivative contracts 1,385 - - 1,385
Fixed interest bearing securities 2,515 - 6,416 8,931
379,679 - 6,416 386,095

Financial Liabilities

Financial liabilities at fair value through profit or loss
at 30 November 2017

Level 1
£’000

Level 2
£’000

Level 3
£’000

Total
£’000
Derivative Contracts 526 - - 526

Subsidiary

The value of the subsidiary held at fair value is £1 (30 November 2016: £1 and 31 May 2017: £1) and is classified as a Level 3 investment.

The Company’s subsidiary completes trading transactions. The value of the investments held for trading in the subsidiary at 30 November 2017 are £nil (30 November 2016: £nil and 31 May 2017: £nil). The difference between the sale and purchase of assets is trading income recognised in the Income Statement.

Reconciliation of Level 3 Investments

The following table summarises the Company's Level 3 investments that were accounted for at fair value:

As at 
30 November 
2017 
Level 3 
£’000 
As at 
30 November 
2016 
Level 3 
£’000 
As at 
31 May 
2017 
Level 3 
£’000 
Opening fair value investments 6,416  3,926   3,926 
Purchase at cost  -  3,299 
Sale proceeds (1,351) (1,495)
Transfer from Level 1  -  179 
Movement in investment holding gains:
Movement in unrealised  (46) 67  686 
Closing fair value of investments 6,370   2,821   6,416 

10 Transactions with the Manager and Related Parties

The amounts paid and payable to the Manager pursuant to the management agreement are disclosed in note 8. Fees paid to the Directors in the half year to 30 November 2017 amounted to £68,000 (half year to 30 November 2016: £55,000; year ended 31 May 2017: £121,000).

There were no other identifiable related parties at the half-year end.

INVESTMENT OBJECTIVE AND POLICY

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

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

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

Risk Diversification

Portfolio risk 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 160 securities, predominantly most of which will represent no more than 1.5% of the value of the Company’s investment portfolio as at the time of acquisition.

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

Unquoted Investments

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

Borrowing and Gearing Policy

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

The Board oversees the level of gearing in the Company, and reviews the position with the Manager on a regular basis.

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

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

SHAREHOLDER INFORMATION

Capital Structure

The Company’s share capital consists of redeemable ordinary shares of 0.1p each (“ordinary shares”) with one vote per share 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 2017 and the date of this Report, there are 383,487,239 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 31 May 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 or the Company may arrange for such shares to be sold in the market at the NAV (including current period revenue) (the “Dealing Value”) prevailing at the end of May (subject to the Directors’ discretion). The Directors may elect, at their absolute discretion, to calculate the Redemption Price applying on any redemption point by reference to a separate Redemption Pool, when the Redemption Price will be calculated by reference to the amount generated upon the realisation of the 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 be subject to income tax and/or capital gains tax. In particular, private shareholders that sell their shares via the redemption mechanism could find they are subject to income tax on the gains made on the redeemed shares rather than the more usual capital gains tax on the sale of their shares in the market. However, individual circumstances do vary, so shareholders who are in any doubt about the redemption or the action that should be taken should consult their stockbroker, accountant, tax adviser or other independent financial adviser.

The relevant dates for the May 2018 Redemption Point are:

1 May 2018 Latest date for receipt of Redemption Requests and certificates for certificated shares
3.00pm on 1 May 2018 Latest date and time for receipt of Redemption Requests and TTE (transfer to escrow) instructions for uncertificated shares via CREST
5.00pm on 31 May 2018 The Redemption Point
On or before 14 June 2018 Company to notify Redemption Price and dispatch redemption monies; or

If the redemption is to be funded by way of a Redemption Pool, Company to notify the number of shares being redeemed. Notification of Redemption Price and dispatch of redemption monies to take place as soon as practicable thereafter
On or before 28 June 2018 Balance certificates to be sent to shareholders

Further details of the redemption facility are set out in the Company’s Articles of Association or are available from the Company Secretary.

Historic Dividend Record

Period/year ended 31 May: 2012 
pence 
2013
pence
2014
pence
2015   
pence   
2016
pence
2017 
pence 
2018
pence

First interim dividend

0.30 

0.30

0.30

0.40   

0.65

0.70 

0.75
Second interim dividend 0.50  0.50 0.50 0.50    0.65 0.70  0.80
Third interim dividend 0.46  0.46 0.50 0.50    0.75 0.80 
Fourth interim dividend 0.76* 0.84 0.95 1.00    -
Final dividend - - 0.50    0.75 0.80 
Special  dividend - - -    -  0.40†

2.02 

2.10

2.25

2.90**

2.80

3.40 

1.55

* The fourth interim dividend for the period ended 31 May 2012 was 0.93p but this included the benefit of the initial 13-month period. As shown above, on an annualised basis, the fourth interim dividend would have been 0.76p.

** In order to allow shareholders to vote on the dividend, a final dividend was introduced in the year ended 31 May 2015, resulting in the payment of five dividends for that year. Since then, the Company has paid three interim dividends and a final dividend in respect of each year. There has been no interruption in the dividend payment timetable as a result of this change.

† A special dividend was paid for the year ended 31 May 2017, reflecting a year when many special dividends were also paid by the companies in the portfolio.

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 Link Asset Services. In the event of queries regarding your holding, please contact the Registrar on 0871 664 0300 or on +44 (0)208 639 3399 from outside the UK (calls cost 12p per minute plus your phone company’s access charge; calls outside the UK will be charged at the applicable international rate). Lines are open 9.00am to 5.30pm, Monday to Friday, excluding public holidays in England and Wales. You can also email enquiries@linkgroup.co.uk.

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

Manager: Miton Trust Managers Limited

The Company’s Manager is Miton Trust Managers Limited, a wholly-owned subsidiary of Miton Group plc. Miton Group is listed on the AIM market for smaller and growing companies.

As at 31 December 2017, the Miton Group had £3.82 billion of assets under management.

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

Investor updates in the form of monthly factsheets are available from the Company’s website, www.mitongroup.com/dit.

GLOSSARY OF TERMS

Discount/Premium

If the share price is lower than the NAV per share, the shares are said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, the shares are said to be trading at a premium.

Dividend Yield

The annual dividend expressed as a percentage of the mid-market share price. In the case of the Company over the year under review, this comprised three interim dividends and a final dividend, which collectively are known as the ordinary dividends on the basis that they are routinely paid most years, and a special dividend, on the basis that such payments are not routine and only paid infrequently.

Gearing

Gearing refers to the level of the Company’s total debt to its equity capital. The Company may borrow money to invest in additional investments for its portfolio. If the Company’s assets grow, the shareholders’ assets grow proportionately more because the debt remains the same, but if the value of the Company’s assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Growth Stock

A stock where the earnings are expected to grow at an above-average rate, leading to a faster than average growing share price. Growth stocks do not usually pay a significant dividend.

Net Asset Value (“NAV”)

The NAV is shareholders’ funds expressed as an amount per individual share. Shareholders’ funds are the total value of all the Company’s assets, at current market value, having deducted all liabilities and prior charges at their par value (or at their asset value).

Ongoing Charges

As recommended in the AIC guidance, ongoing charges are the Group’s annualised 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.

Put Option

Purchasing a Put option can be likened to purchasing a form of financial insurance. An owner of a Put option can collect a financial benefit after an adverse event, with the scale of the benefit proportionate to the setback in the market and the remaining term of the cover. In the case of this Company, our Put option only becomes significantly valuable if the FTSE 100 Index falls back well below 6,500 prior to March 2019.

Total Net Assets

Total assets less current liabilities (before deducting prior charges and all borrowings).

Total Return

The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. Total return statistics enable the investor to make performance comparisons between trusts with different dividend policies. Any dividends (after tax) received by a shareholder are assumed to have been reinvested in either additional shares of the Company at the time the shares go ex-dividend (the share price total return) or in the assets of the Company at its NAV per share (the NAV total return).

Volatility

The term volatility relates to how much and how quickly the share price or net asset value of an investment has tended to change in the past. Those with the greatest movement in their share prices are known as having high volatility, whereas those with a narrow range of change are known as having low volatility.

Yield Stock

Yield stocks pay above-average dividends to shareholders. If the dividend grows, and the yield on the share remains constant, the share price will increase. Companies which grow their dividends faster than average are capable of delivering faster share price growth.

DIRECTORS AND ADVISERS

Directors (all non-executive) Custodian
Michael Wrobel
Paul Craig
Lucinda Riches
Calum Thomson
Jane Tufnell
Bank of New York Mellon SA/NV
London Branch
One Canada Square
London E14 5AL
Depositary
Secretary and Registered Office BNY Mellon Trust & Depositary (UK)  Limited
BNY Mellon Centre
160 Queen Victoria Street
London EC4V 4LA
Link Alternative Fund Administrators Limited
(trading as Link Asset Services)
Beaufort House
51 New North Road
Exeter EX4 4EP

Telephone: 01392 477500
Registrar and Transfer Office
Link Asset Services
Shareholder Services Department
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Telephone: 0871 664 0300
(+44 (0)208 639 3399 from outside the UK)
(calls will cost 12p per minute plus phone company’s access charge; calls from outside the UK will be charged at the applicable international rate).

Lines are open 9.00am to 5.30pm, Monday to Friday, excluding public holidays in England and Wales.

Email: enquiries@linkgroup.co.uk  
Website: www.linkassetservices.com
Alternative Investment Fund Manager or Manager
Miton Trust Managers Limited
Paternoster House
65 St Paul’s Churchyard
London EC4M 8AB
Investment Manager
Miton Asset Management Limited
Paternoster House
65 St Paul’s Churchyard
London EC4M 8AB

Telephone: 020 3714 1525
Website: www.mitongroup.com
Company website
www.mitongroup.com/dit
Auditor Solicitor
Ernst & Young LLP
25 Churchill Place
Canary Wharf
London E14 5EY
Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Stockbroker
Banker Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Bank of New York Mellon
One Piccadilly Gardens
Manchester M1 1RN

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 Company’s website: www.mitongroup.com/dit or on request from the Company Secretary.

National Storage Mechanism

A copy of the Half-Yearly Report will be submitted to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm.

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.

LEI: 2138005QFXYHJM551U45


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Half-year Report - RNS