The Diverse Income Trust Plc - Half-year Financial Report
HALF-YEARLY FINANCIAL REPORT
The Directors present the Half-Yearly Financial Report of the Company for the period to
RESULTS FOR THE HALF YEAR TO
Summary of Trust Financial Results over the half year to
30 November
30 November 2024 31 May 2025 Change
2025
Revenue return per ordinary 2.83p 2.63p 4.87p 7.6%
share1
Ordinary dividends per ordinary 2.15p 2.05p 4.50p 4.9%
share
NAV per ordinary share1 113.21p 100.25p 106.69p 6.1%
Ordinary share price 104.50p 91.80p 103.00p 1.5%
Discount to NAV1 (7.7%) (8.4%) (3.5%)
1 For an in-depth assessment of performance please refer to the Chair's Statement on pages 2 and 3 and the Manager's Report on pages 6 to 7.
Revenue return per ordinary share, NAV per ordinary share and Discount to NAV defined in the Glossary.
Ordinary shares in issue as at
CHAIR'S STATEMENT
The Company's portfolio is tilted towards opportunities amongst smaller companies, which presented a headwind during this reporting period. Since the period end, strong absolute and relative performance has resumed, with a NAV total return of +10% to 4th February also ahead of the 7.5% rise in the Deutsche Numis All Share Index.
This report covers the half year to
Short-term interest rates have been on a generally declining trend which has helped to support investor confidence during a period where, outside the US, economic growth has been lacklustre and buffeted by uncertainty over
Half-year returns
The Company's NAV total return was +8.5% over the half year, which compares with a 12.5% total return from the Deutsche Numis All Share Index. The
The Company's Revenue Earnings per Share amounted to 2.83p to the end of November, a rise of 7.6% over the comparable figure of 2.63p last year. The Board has already declared a first interim dividend of 1.05p per share for the current year which, together with the second interim dividend of 1.10p declared with these results means that shareholder dividends for the period amount to 2.15p, vs 2.05p last year. It is anticipated that, in combination, the four dividends for the current year will represent an increase over those paid in the previous year.
Returns since the Trust was first listed in
Over the longer-term, since its inception in 2011, the Company has delivered a NAV total return of +295.5%, well ahead of the +170.2% total return on the Deutsche Numis All Share Index. Expressed at an annual rate, the Company's NAV total return has compounded at +9.9% p.a., nearly 3% p.a. ahead of the +7.0% p.a. return from the wider
Share Issuance and Redemptions
The Company's discount widened, from 3.5% at the end of May to 8.0% at the end of November. Although a discount to NAV has persisted since 2019, since launch in 2011 the trust has on average traded close to its NAV, at an average discount of 1.8%, significantly narrower than other equity income trusts.
Since its initial launch, the Company has raised £159.8m of additional capital, but it has now returned £223.8m to redeeming shareholders. This includes the £79.2m capital redemption paid in November.
Since 2012, the Company has offered shareholders an annual option to redeem up to 100% of their shares at either the prevailing net asset value at the redemption point, or (if a redemption pool is created) the realised value of the assets attributable to the redeeming shares). During the first decade of its life, redemptions were minimal but the past three years have seen significant redemptions, most recently (in 2025) amounting to 30.8% of the outstanding shares in 2025.
As a result, the size of the Company has reduced substantially. So, whilst the facility has provided liquidity for those wishing to sell their shares, this has had an impact on remaining shareholders' ability to deal in size in the market. Consequently, the Board has taken time to consider whether alternative routes to limiting the discount would work more effectively. In debating these issues, the Board is cognisant that removing the redemption facility without replacing it with something of equivalent value or effectiveness would be inappropriate and Boards elsewhere have been criticised when established mechanisms have seen changes detrimental to shareholders' interests.
Proposed change in share redemption and discount management
With this in mind, the Board has considered a range of options, which have been discussed with key institutional shareholders, that would enable shareholders to remain exposed to the Company's current investment strategy. The strategy has outperformed the
The possibilities include replacing the annual redemption with an active share buyback policy defending a narrow level of discount throughout the year, coupled with providing regular opportunities for shareholders to vote on whether they wish the Company to continue. Noting the indications of support from leading shareholders for the strategy, discussion has also focused on removing the discount risk altogether by offering shareholders the opportunity to switch to an open-ended fund managed according to the same strategy by the same investment team. A further announcement will be made in due
course.
Board succession
As noted in the
Twelve month total returns of the Trust and various Deutsche Numis indices
%
NAV Total Return 8.5
Deutsche Numis All Share Index 12.5
Deutsche Numis Small Cap Index ex ICs* 7.4
Deutsche Numis Alternative Markets Index ex ICs* 1.4
* Investment Companies Source: Morningstar
Prospects
Although confidence has waned in the
Prospects for 2026 are likely to be helped by the lagged effect of interest rate cuts made during 2025 and by the structuring of the 2025 Budget measures, which front-loaded government spending increases, while deferring the balancing tax increases needed to maintain market confidence to the end of the decade.
The US is also expected to have relatively loose fiscal policy in 2026, with mooted tax rebates for consumers as the
As noted earlier and in recent reports, the
Within the
Chair
INVESTMENT MANAGER'S REPORT
The day-to-day fund managers with the responsibility for the makeup of the Trust's portfolio.
Gervais joined Miton in
Martin joined Miton in
Market trends over the past decade
During the past decade, globalisation has driven exceptional growth in the US technology majors, and in doing so has reshaped investor behaviour.
Globalisation has enhanced the growth of the large US technology majors known as the Magnificent Seven or "Mag7". Over the past decade, this group has collectively delivered a total return of 27 times in sterling terms, compared to around 3 times from mainstream global stock market indices.
Investors have significantly increased their exposure to the Mag7, withdrawing capital from most other listed stocks worldwide.
These persistent outflows have had an impact on valuations, depressing share prices and amplifying underperformance.
Many mature companies, predominantly large caps generating surplus cashflow, have mitigated the impact of persistent capital withdrawals through share repurchases.
Less mature, smaller companies that are building future market positions lack the surplus cashflow to buy back their shares, with the result that persistent institutional selling has significantly depressed their share prices.
As a result, US technology valuations now appear very demanding, whereas many
Recent market trends
As political attitudes move from globalisation to nationalism, we anticipate that asset market gyrations will become more volatile.
Prior to the start of the period under review, in April, global stock markets suffered a sharp drawdown.
This was followed by a strong recovery in the Mag7, which rose 31.7% in sterling terms over the ensuing six months to 30 November, outpacing most other comparatives.
However, rising nationalist uncertainty has prompted many investors to begin to diversify away from the risk of excessive market concentration by allocating to equity income strategies.
As a result, over the first 11 months of 2025, the Deutsche Numis Large Cap Index rose by 23.2%, compared to a sterling return from the Mag7 of 17.3% over the same period.
We find it instructive that during previous periods of political and economic instability, the equity income bias of the
Changes to the portfolio
Over the half year we undertook some significant changes to the portfolio to reflect evolving market conditions.
Strong returns in gold mining stocks led us to take profits in Pan African Resources and Thor Exploration, while the Greatland Gold holding was sold in full.
The portfolio has retained a large weighting to mining, however, with the purchase of additional copper mining holdings such as ACG Metals.
Profits were taken on several of the Trust's Financials Sector holdings. We sold out of investment manager
It is unusual for the Trust to invest outside the
Finally, property companies Land Securities and
Changes to portfolio industry sector weightings
The Financials sector weighting has been the largest portfolio weighting for many years, as it includes several subsectors with prospects that in our view are not closely correlated with one another.
Nonetheless, we reduced its weighting from 42.0% to 30.6% over the half year. This was principally the result of profit taking on a number of holdings that had outperformed, with their valuations rising towards fair value in our view.
The reduction in the Financials sector weighting was reallocated primarily to the Materials, Real Estate, Energy, and Utilities sectors, each of which increased by between 2.5% and 3.5%.
The Trust's portfolio is now more diversified than previously, which reflects our view that a world dominated by nationalist politics is more uncertain.
The Trust's returns
As noted above, the substantial outperformance of Mag7 stocks over the last 10 years has resulted in quoted smallcaps share prices becoming unusually depressed due to the withdrawal of global capital.
Many smallcap holdings in the Trust's portfolio have underperformed mainstream stocks for some years, including over the period under review, but their weak returns are not generally related to disappointing trading, and many have continued to demonstrate future confidence by regularly increasing their dividends.
Given the multicap nature of the Trust's strategy, at 8.5% its NAV total return reflects a mix of the Deutsche Numis All Share Index total return of 12.6% and the Deutsche Numis Smaller Companies Plus AIM Index return of 6.5%.
This return was similar to the
In isolation, the Trust's returns over the six months to November may raise questions as to whether the strategy has continued to add value. When the half year outcome is set in the context of the longer-term trends however, we believe the position is clearer.
While the dividends paid by the
Furthermore, since the half year end, the Trust's NAV has continued to appreciate significantly and now exceeds its previous 2021 peak.
Both factors provide strong evidence that the strategy has continued to be successful, despite the abnormal
What were the principal contributors and detractors to the Trust's performance during the 2025 financial year?
Largest 5 contributors to performance % Pan African Resources 2.97 Secure Trust Bank 1.01 Galliford Try Holdings 0.92 Hunting 0.58 Concurrant Technologies 0.57 Largest 5 detractors from performance % Paypoint (0.65) Kenmare Resources (0.56) B&M European Value Retail (0.41) ME Group International (0.34) Bioventix (0.29) Source: Premier Miton
Outlook
One of the features of the exceptional returns generated by the Mag7 is that many global investors are currently tolerating large stock specific and industry sector correlation risks.
As other parts of the global markets start to outperform, we believe these risks will come to be seen as unacceptable.
In the meantime, equity income stocks, including many in the
When
As nationalism prevails, economic setbacks may create acquisition opportunities for cashflow-rich companies, as seen with HSBC's purchase of SVB
In addition, the increasing dominance of passive investing strategies enhances the potential for adding value through stock selection in our view.
In our view,
PORTFOLIO INFORMATION
as at
Sector & main Yield*
Rank Company activity Valuation £000 % of net assets
%
1 Galliford Try Industrials 6,006 3.3 3.0
2 Concurrent Technology 5,457 2.9 0.5
Technologies**
3 CMC Markets Financials 5,042 2.7 4.8
4 TP ICAP Financials 4,856 2.6 2.0
5 Yu Group** Utilities 4,376 2.4 1.5
6 PayPoint Industrials 4,348 2.3 5.8
7 NewRiver REIT Real Estate 3,842 2.1 4.8
8 AVIVA Financials 3,765 2.0 2.0
9 Rio Tinto Basic Materials 3,566 1.9 2.0
10 ACG Metals Basic Materials 3,460 1.9 -
Top 10 investments 44,718 24.1
11 Ithaca Energy Energy 3,138 1.7 12.1
12 TruFin** Financials 3,132 1.7 -
13 Plus500 Financials 3,131 1.7 2.3
14 Pan African Basic Materials 3,063 1.7 1.8
Resources
15 Sabre Insurance Financials 3,055 1.6 5.3
16 Diversified Energy Energy 3,053 1.6 1.8
17 BT Telecommunications 3,040 1.6 3.2
18 Hunting Energy 3,039 1.6 1.3
19 Primary Health Real Estate 2,925 1.6 -
Properties
20 Bluenord ASA Energy 2,902 1.6 -
Top 20 investments 75,196 40.5
21 AO World Consumer 2,902 1.6 -
Discretionary
22 Atalaya Mining Basic Materials 2,892 1.6 0.8
23 Zotefoams Basic Materials 2,835 1.5 1.2
24 M&G Financials 2,809 1.5 2.5
25 MAN Financials 2,706 1.5 2.0
26 Personal Group** Financials 2,700 1.5 5.0
27 Legal & General Financials 2,687 1.5 2.5
28 Sainsbury (J) Consumer Staples 2,657 1.4 4.3
29 National Grid Utilities 2,508 1.4 1.4
30 Tesco Consumer Staples 2,485 1.3 1.1
Top 30 investments 102,377 55.3
31 Victorian Plumbing** Consumer 2,468 1.3 1.0
Discretionary
32 Secure Trust Bank Financials 2,465 1.3 1.2
33 Engie Utilities 2,332 1.3 -
34 Pennon Utilities 2,311 1.2 -
35 ME Group Consumer 2,271 1.2 2.4
international Discretionary
36 Norcros Industrials 2,232 1.2 3.6
37 Kenmare Resources Basic Materials 2,193 1.2 2.8
38 Vodafone Telecommunications 2,040 1.1 4.2
39 Greencoat UK Wind Financials 2,036 1.1 5.8
40 Energean Energy 1,993 1.1 4.7
Top 40 investments 124,718 67.3
Balance held in 62 56,044 30.3
equity investments
Total investment 180,762 97.6
portfolio
Other net current 4,424 2.4
assets
Net assets 185,186 100.0
* Based on historical yields and therefore not representative of future yields. Includes special dividends where applicable. Yield is calculated based on the total dividend rate earned for the period 1 June to
** AIM/AQUIS listed.
Portfolio as at
Portfolio exposure by sector (%) - £180.8 million Financials 30.6 Basic Materials 13.2 Energy 11.0 Industrials 10.4 Consumer Discretionary 8.1 Utilities 6.9 Real Estate 5.3 Consumer Staples 5.1 Technology 5.1 Telecommunications 3.0 HealthCare 1.3 100.0
Actual income by sector (%) - £5.8 million Financials 40.4 Industrials 13.5 Energy 12.6 Technology 7.6 Real Estate 5.2 Basic Materials 5.2 Consumer Staples 4.5 Consumer Discretionary 4.1 Telecommunications 3.8 Utilities 1.8 HealthCare 1.3 100.0
FURTHER INFORMATION
It will also be submitted shortly in full unedited text to the
ENDS
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
