ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR TO 31 MAY 2023
Seeking to deliver return via good
and growing dividends.
Company No: 07584303
THE DIVERSE
INCOME TRUST PLC
Cover photograph:
Galliford Try, a major construction group, used with permission.
Contents
The Company
The Key Performance Indicators i
The Nature of Trust's Investment Strategy ii
Annual Report for the Year to 31 May 2023 01
Strategic Report
Chairman’s Statement 02
Summary of Results and Financial Performance Indicators 04
Manager's Report 06
Summary of the Total Costs Involved in Managing Diverse 11
Portfolio Information 12
Business Model 14
Principal Risks and Uncertainties 15
Share Capital 19
Stakeholder Engagement 20
Management, Social, Environmental and Diversity Matters 22
Governance
Directors 24
Report of the Directors 25
Corporate Governance Statement 30
Audit Committe Report 37
Director's Remuneration Report 40
Statement of Director's Responsibilities 44
Independent Auditor's Report 46
Company and Group Accounts
Consolidated Income Statement 55
Statement of Changes in Equity 56
Balance Sheets 58
Cash Flow Statements 59
Notes to the Consolidated Financial Statements 60
Shareholder Information
Redemption of Ordinary Shares 82
Shareholder Information 83
Notice of Annual General Meeting 87
Alternative Investment Fund Managers' Directive Disclosures 93
Glossary 94
The Diverse Income Trust plc
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Annual Report 2023
The Board has the following Key Performance Indicators (KPIs) that are
used to gauge the success of the Company’s strategy and its outcome
forshareholders.
THE KEY PERFORMANCE INDICATORS
to 31 May 2023
* Alternative performance measure. Details provided in the Glossary on
pages 94 to 97.
** The Peer Group is also defined in the Glossary.
2022: (3.4%)
Peer Group**: 0.8%
Numis All-Share (comparator Index): (0.4%)
Since launch to 31 May 2023
NAV total return: 175.1%
Peer Group**: 146.5%
Comparator Index: 89.4%
Increased from 3.90p to 4.05p
The Trust has maintained an unbroken
good and growing dividend record without
distributing capital.
2022: 1.4%
Over the twelve years since listing, the
Company’s share price has largely matched
its NAV.
2022: 1.05%
0.57% for the Peer Group**
The Board pays careful attention to
expenses and believes that the Trust’s
overall costs are justifiable in the context of
its wide investment universe and premium
returns it has delivered since launch.
Further details of the ongoing charges are
provided on page 11.
NAV total return* Average Discount*
Ongoing charges*
(16.2%) 5.0%
1.09%
of NAV
Growth of ordinary dividends to
shareholders
3.8%
Annual Report 2023
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The Diverse Income Trust plc
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i
THE NATURE OF TRUST’S INVESTMENT
STRATEGY IN A SCATTER CHART
On the vertical axis of the scatter chart below UK quoted companies (including those listed on the
AIM exchange) are set out in terms of their market capitalisation. Note that the scale is logarithmic, so
that the full range of UK small and microcaps can be appreciated. The valuation ratio* of each listed
company, which is a measure of investor expectation, is included across the horizontal axis. Lower
numbers equate with lower investor expectations.
Source: Premier Miton
Most UK equity income trusts have a narrow investment universe focused on the largest market
capitalisation stocks – shown in the blue circle above. The investment universe of the Diverse Income
Trust – circled in red above – is much more wide-ranging, including both UK large caps, mid caps and
many less mature businesses listed on the AIM exchange. In the past the wider investment universe
has been instrumental in the Diverse Income Trust outperforming many others since inception.
The Trust’s strategy has the advantage that it can continue to invest in all those companies that
succeed, irrespective of their individual market capitalisations. If quoted smallcaps also outperform, as
they have in the past, (though not recently) then over time the full advantages of the Trust’s multicap
strategy should become a lot more obvious.
Valuation*
Large
Small
Low High
Principal investment universe for most
conventional UK equity income funds
Investment universe for
the Diverse Income Trust
0510 15
£1,000,000
£100,000
£10,000
£1,000
£100
£10
£1
Market Cap (£ million)
* The valuation ratio referred to here is the Price to Book ratio, defined in the Glossary on page 96.
ii
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The Diverse Income Trust plc
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Annual Report 2023
Source: Morningstar
The Diverse Income Trust plc is an investment trust
quoted on the London Stock Exchange under the
ticker code DIVI. In this report it is referred to as the
‘Company’, the ‘Trust’ and ‘Diverse’, or together with
its subsidiary, DIT Income Services Limited, as the
‘Group’.
The Board sets the Trust’s objectives and appoints
the Manager. The Board is independent of Premier
Portfolio Managers Limited (‘PPM’ or the ‘Manager’).
The NAV total return of the Trust fell 16.2% in the year
to 31 May 2023, which compares with a decline of
0.4% in the Numis All-Share Index and a 11.1% decline
in the Numis Small Cap Plus AIM Index (excluding
investment Companies). Over the twelve years
since the Trust was first listed in April 2011, its NAV
total return has been 175.1%, which compares with
a 89.4% total return from the Numis All-Share Index
and 87.5% total return from the Numis Small Cap
Plus AIM Index (excluding Investment Companies).
The line chart below outlines the total return of the
Trust since launch in April 2011. The shaded part
refers to the returns over the year to May 2023.
ANNUAL REPORT FOR THE YEAR
TO 31 MAY 2023
Our Objective
The Company's primary objective is to pay shareholders a good and growing dividend - principally
derived from those paid by a portfolio of listed UK companies. Our strategy is focused upon maximising
the potential for dividend growth, as companies that generate the greatest long-term dividend growth
are often those that deliver the best capital return.
-50
0
100
50
150
250
Diverse Income Trust
NAV Total Return
Morningstar Investment
Trust UK Equity Income
Sector
2020
2023
2012
2011
2013
2014
2015
2016
2017
2018
2022
2019
200
2021
Percentage change
Diverse Income Trust
Share Price Total Return
Company performance since launch on 28 April 2011
20.0p
18.0p
16.0p
14.0p
12.0p
10.0p
8.0p
6.0p
4.0p
2.0p
0.0p
Year ending Jun 21
Interim dividend
Year ending Jun 22 Year ending Jun23
1
4.4
Final dividend Special dividend
Galliford Try – an example of a stock in the Trust’s portfolio
A major construction group, operating as Galliford Try in England and Wales and
Morrison Construction in Scotland, with a network of regional offices which means
they can deliver high levels of customer service locally. An appreciation of risk is at
the core of the business culture. Many of their contracts operate in the public or in
regulated sectors and extend over a number of years, offering the company a degree
of resilience through the economic cycle. Following the sale of their housebuilding
division in early 2020, the group has a strong balance sheet, with its net cash
balance close to its market capitalisation. The renewed strength of their business
has been reflected in a growing stream of dividends, as shown in the chart. In June
the group confirmed that performance was strong across all operations and that,
following the resolution of a historic dispute, they would pay an additional special
dividend of 12.0p/share. Excluding this one-off distribution, analysts’ forecasts for
thedividend for the year to June 2023 equate to a yield of 5.0% as at 31 May 2023.
Galliford Try – last 3 years’ dividends
1
2023 final dividend: analysts’ estimate.
Source: Bloomberg
Annual Report 2023
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The Diverse Income Trust plc
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THE COMPANY
CHAIRMAN’S STATEMENT
To combat a surge in inflation that had been
generally underestimated, the period since the
end of 2021 has seen global interest rates rise. This
precipitated falls in bond markets, where yields
rose from absurdly low levels. Equities now have to
contend with the competing attractions of higher
deposit rates and bond yields, amid fears of an
economic downturn.
In the UK, bearish market conditions were
compounded by political instability during the first
half of our financial year, which saw three Prime
Ministers and four Chancellors of the Exchequer.
A fall of 10% in the UK market in the period to the
end of the Truss Premiership in October 2022 was
reversed by the end of May 2023, as a semblance of
policy stability was restored and the UK avoided the
recession that had been widely forecast.
The earlier fall in confidence was worst felt by
smaller companies, seen as both more exposed to
the UK domestic economy and more dependent on
increasingly expensive bank borrowings, whereas
the share prices of large cash generative companies
outperformed. Although a second half recovery
was seen across the size spectrum, the differential
performance remained. The Numis Large Cap Index
(consisting mainly of equity income stocks), as
well as outperforming smaller UK stocks, began to
perform better against major international indices,
despite fund redemptions by domestic investors.
In the year to 31 May 2023, the Numis Large Cap
Index (ex ICs) delivered a total return of +1.7%
(including 4% of dividend income). In contrast, the
share prices of many smaller listed and AIM-quoted
income stocks were weak in the year under review.
In their case ongoing UK OEIC redemptions were
not offset by global investor buying. Over the year to
May 2023 the total return on the Numis Small Cap
Plus AIM Index (ex ICs) was -11.1%.
Performance, and Dividends to shareholders
The majority of the Trust’s portfolio is typically
invested in mid and small cap income stocks.
With just over a quarter of the portfolio invested in
larger UK stocks, the Trust’s NAV total return was
down 16.2% over the year to May 2023, affected by
the weak returns from smaller companies. This
compares with the total return of +1.7% from the
Numis Large Cap Index (ex ICs) at one end of the
spectrum and -18.9% from the Numis Alternative
Markets Index (ex ICs) (covering AIM-quoted stocks)
at theother.
Despite the disappointing outcome over the past
year, taking a longer-term perspective, the Trust’s
NAV total return since issue is +175.1%, well ahead of
the total returns from the Numis Large Cap Index
(ex ICs) +85.3%, the Numis Small Cap Plus AIM Index
(ex ICs) +87.5% and the Numis Alternative Markets
Index -4.6%. No complacency is implied by this, but
the past two years have been notable for the
decoupling between the UK’s larger companies,
which attract international attention, and their
smaller siblings which have suffered from the
relative sidelining of the UK market.
The Trust’s income performance has continued
to improve. Having avoided the worst of the
wide-ranging dividend cuts during the pandemic,
the Trust’s Revenue per Share increased by 1% this
year to 4.05p. This is 2.5% higher than the Trust’s
Total returns of the Trust and various Numis indices between
April 2011 and May 2023
-20
0
50
100%
150
200
The Diverse
Income
Trust Plc
Numis Large
Cap Index
ex ICs
“ICs”: Investment Companies
Source: Morningstar
Numis Small
Cap Plus AIM
Index ex ICs
Numis Alternative
Market Index
ex ICs
85.3
87.5
-4.6
175.1
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Annual Report 2023
CHAIRMAN’S STATEMENT
pre-pandemic Revenue per Share, in contrast to the
wider UK market whose income level remains more
than 10% lower than in May 2019. The Trust increased
its dividend to shareholders this year from 3.9p to
4.05p, which includes the three interim payments
already declared and a recommended final dividend
of 1.20p to be approved at the AGM.
Market valuation and share redemptions
Given the unsettled stock market background,
the Trust’s share price traded at an average 5%
discount to its NAV over the year, while narrowing
marginally from -6.8% at 31 May 2022 to -6.2% at
31 May 2023. This compares well with the widespread
deterioration in discounts across the investment
company sector during theyear.
Since the Trust was launched, the share price has on
average traded at a minimal discount of -0.7% to its
NAV.
However, in order to keep any discount to a modest
level, each year the Board offers shareholders a
voluntary redemption. At the end of April, 37,330,005
shares were offered for redemption, representing
10.49% of the Trust’s equity. The Board redeemed
these for cash that had built up in the portfolio
in part due to the takeover of K3 Capital plc. The
redemption price was 89.35p, being the Net Asset
Value at the close of business on 30 May 2023.
Prospects
Underlying stock market trends often persist for
many years, but then change without fanfare. In
the late 1960s and early 1970s, as the decades of low
inflation came to an end, certain US mega cap stocks
(known at the time as the Nifty Fifty) outperformed,
with their perceived growth credentials attracting
ever-rising valuations. The enthusiasm for US
technology stocks in recent years (tempered by a
setback in 2022) shows someparallels.
In that earlier era, when central banks faced high
inflation, interest rates rose sharply and economic
growth was disappointing and volatile. This put
pressure on profit margins and led to a derating of
the most optimistically valued stocks. Some went on
to further success while others fell by the wayside.
At such times, investors may be driven to find
something more reassuring than adrenaline. Equity
earnings visibility and cash income count for more if
4-5% can be earned on cash deposits, whereas zero
rates encourage investment in more speculative
ideas, not all of which will come true. Growth has a
major part to play in human progress and economic
productivity but, when there is less liquidity around,
enthusiasm is likely to be allocated more sparingly.
The UK market fell out of favour in recent decades,
partly due to perceptions that it consisted of dull,
mature companies and was under-represented
in faster growth sectors. International investors
were also deterred by the uncertainty over Brexit,
with the UK economy and politics yet to adjust
fully to be comfortable with the new structures. In
addition, over the longer-term, regulatory changes
encouraged progressive equity disinvestment by the
UK pension fund industry, reducing its UK equity
holdings from around 50% of fund assets twenty-five
years ago to 6% in 2021. This removed a key domestic
source of support from companies’ growth plans.
As a result, the UK has become both lowly-rated
and under-owned. When this will change is open to
debate but there are some signs of hope from recent
policy announcements encouraging investment
in growing UK companies and reviewing potential
obstacles to companies deciding to list in the UK.
The Trust’s approach of building a diversified
portfolio of cash-generative and attractively valued
companies is inherently contrarian. With UK mid-
cap and smaller stocks currently cheaply rated
compared with a UK market that is itself lowly rated
internationally, our Managers are particularly excited
about the opportunity.
As the past two years remind us, going against the
crowd is not always rewarded in the short-term
but the longer-term is more reassuring. It is worth
recalling Warren Buffett’s aphorism that in the short
run the stock market is a voting machine but in the
long run it is a weighing machine.
Andrew Bell
Chairman
7 August 2023
Annual Report 2023
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The Diverse Income Trust plc
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STRATEGIC
REPORT
SUMMARY OF RESULTS AND FINANCIAL
PERFORMANCE INDICATORS
1
1
For an in-depth assessment of performance please refer to the Chairman's Statement on pages 2 and 3 and the Manager's Report on pages 6 to 10.
* Alternative performance measure. Details provided in the Glossary on pages 94 to 97.
Ordinary shares in issue as at 31 May 2023: 355,870,647 (2022: 361,920,105)
2022: 110.55p change: (19.6%)
NAV per ordinary share*
88.87p
2022: 4.01p
Revenue return per
ordinary share*
4.05p
2022: (1.4%)
(Discount)/premium to NAV*
(5.0%)
2022: 1.05%
Ongoing charges*
(further details on page 11)
1.09%
2022: 103.00p change: (19.0%)
Ordinary share price
83.40p
2022: 3.90p change: 3.8%
Ordinary dividends per
ordinary share
4.05p
Results in summary
to 31 May 2023
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The Diverse Income Trust plc
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Annual Report 2023
1
For an in-depth assessment of performance please refer to the Chairman's Statement on pages 2 and 3 and the Investment Manager's Report on
pages6 to 10.
The Company’s capital is invested in a
broad range of industry sectors, and
a wide range of market capitalisation
stocks, where the benefits of
diversification lead to the annualised
volatility of the Company’s NAV often
being less than that of the Numis
All-Share Index as shown in the chart
alongside.
0
10
20
40
Numis All-Share Index
annualised volatility
2020
2013
2014
2015
2016
2017
2018
2022
2019
30
2021
2023
Percentage change
Diverse Income Trust NAV
annualised volatility
NAV Volatility vs Numis All-Share index
Source: Premier Miton
Further Analysis
1
The chart details the NAV and the daily
closing share price of the Company
compared with that of the UK Equity
Income sector, which includes many of
the other trusts with a policy of mainly
investing in UK-quoted stocks with above
average dividend yields. These capital
gains figures have been supplemented
with the dividends paid over time and
hence are quoted in total return terms.
NAV and share price total returns of the Trust vs UK Equity Income sector
Source: Morningstar.
-50
0
100
50
150
250
Diverse Income Trust
NAV Total Return
Morningstar Investment
Trust UK Equity Income
Sector
2020
2023
2012
2011
2013
2014
2015
2016
2017
2018
2022
2019
200
2021
Percentage change
Diverse Income Trust
Share Price Total Return
The three interim dividends and the
proposed final dividend for the year
amount to 4.05p, compared with 3.90p in
the previous year, an increase of 3.8%. The
chart outlines the total annual dividends
declared by the Company and how these
have grown over time.
Total annual dividends declared by the Company
Source: Company
Total annual dividend
(pence per share)
Special dividends
Ordinary dividends
2.40
0.50
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.5
4.0
2.10
2.02
2.25
2.80
3.00
0.40
3.65
0.16
3.70
3.40
0.23
4.05
3.90
3.75
2012
1
2013 2014 2015
2
2016 2017 2018 2019 2020 2022 2023
3
2021
1 - The figure of 2.02p for 2012 represents 2.19p, which was the total of the four interim dividends actually paid for the initial 13-month period to 31 May
2012, recalculated proportionally as if the initial period had been 12 months.
2 - 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.
3 - Includes proposed final dividend for the current year.
Annual Report 2023
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The Diverse Income Trust plc
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STRATEGIC
REPORT
The UK stock market has started outperforming.
During globalisation, the best performing stocks
are often those drawing upon cash abundance to
accelerate their growth rate.
When interest rates increase however, they suppress
demand and usher in a scarcity of risk capital. UK
equity income stocks have a real advantage when
risk capital is scarce because they generate surplus
cash. After a long period of under-performance
during globalisation, the UK majors have started
outperforming over the last two and half years.
If UK quoted companies other than the UK majors
were to outperform as they have in the past, then
a multicap equity income strategy that includes
both may be set to outperform international stock
markets in the future.
When risk capital is scarce, quoted companies
have an advantage.
Daily transactions on the stock exchange provide
insight. The live interface between willing buyer
and seller helps every management team to keep
aware of their cost of capital. When they review
transactions, they can use this metric to determine
those with the greatest commercial upsides in the
context of the cost of any additional capital.
When market conditions are easy, the returns on
corporate transactions are hampered by wide-
ranging competition. When capital is restricted
however, quoted companies paying a stream of
dividend income retain access to institutional
capital. In short, when risk capital is scarce quoted
companies often get much higher returns on
transactions because other companies are unable to
compete for lack of risk capital.
When acquisition costs are low, the prospects for
a multicap strategy are enhanced compared with
the majors alone.
During economic recessions, the prospects for
quoted companies are sometimes enhanced by
acquiring overleveraged but otherwise viable
businesses from the receiver, debt-free and at very
lowprices.
When the acquiring business is large relative
to the scale of the acquisition, the scale of the
improvement tends to be incremental. If the
acquirer is a quoted smallcap however, the same
acquisition offers much greater upside potential, as
the value uplift is a much greater proportion of its
market capitalisation.
In short, during recessions when access to additional
debt and risk capital is scarce, there is opportunity
for AIM-listed stock to enhance theirreturns.
UK smallcaps have a long history of delivering
premium returns.
Since 1955, UK-listed companies in the bottom ten
per cent in market capitalisation terms (typically
known as "smallcaps" in the UK) have generated
much higher returns than those in all other size
bands. Furthermore, if this factor is combined with
those that stand on overlooked valuations as they
often are when they stand on premium yields, then
their returns have been even greater.
Finally, when interest rates are elevated, the returns
on the global exchanges are often more limited,
and hence any source of outperformance becomes
more important. In summary, the prospect for a
strategy dedicated to UK quoted multicap equity
income stocks, such as that of the Diverse Income
Trust portfolio, may have greater opportunity to add
value when access to debt and capital becomes
scarcer.
WHEN ACCESS TO DEBT AND RISK
CAPITAL BECOMES SCARCER...
...COUNTERINTUITIVELY, UK QUOTED
MULTICAP PROSPECTS OFTEN IMPROVE.
MANAGER’S REPORT
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The Diverse Income Trust plc
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Annual Report 2023
Any organisation that knowingly operates contrary
to the interests of the wider public, would in time
find that its social licence to operate suffered.
Hence, well managed investment portfolios need to
invest with an authentic sense of purpose, as well as
employing a successful commercial strategy.
Mainstream stocks have vast numbers of
shareholders, so typically their leadership teams
only meet a small proportion. Alongside, with
their long list of shareholders, they are offered an
extraordinarily wide range of advice regarding their
stance on environmental, social and governance
issues. The bottom line is that institutional
investors have fewer opportunities either to gauge
the authenticity of the management team’s
sense of purpose or to influence their corporate
agendasignificantly.
In contrast, there are fewer institutional smallcap
investors. So, most smallcap management teams
are keen to meet a significant portion of them, even
if they are not shareholders. Smallcap investors
therefore have greater opportunity to address
and influence their environmental, social and
governance issues.
AIM-listed companies do issue formal reports
covering non-financial metrics such as sustainability,
although these are typically less comprehensive.
Even so, the Manager can compare the content
of the sustainability reports with the detail of the
senior management’s actions. When variance is
identified, it can imply potential inauthenticity.
Many mining management teams our Manager
meets for example, say they start every meeting
with safety. And yet, in far too many cases, their
safety data isn’t covered by the first slide in their
corporate presentation and safety isn’t the first
matter of substance in their annual report.
Furthermore, as smallcap leadership teams are
smaller, they have scope to be more agile than the
majors. Typically, this is reflected in a somewhat
stronger sense of corporate purpose and motivation
than some majors.
To conclude, whilst the formal reports from a
multicap portfolio are often less comprehensive
than the majors alone, the Manager tends to
stand at an advantage when addressing the
environmental, social and governance agenda.
FURTHERMORE, WHEN ADDRESSING
THE ENVIRONMENTAL, SOCIAL AND
GOVERNANCE AGENDA…
…A UK MULTICAP PORTFOLIO HAS
NUMEROUSADVANTAGES.
MANAGER’S REPORT
Annual Report 2023
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The Diverse Income Trust plc
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STRATEGIC
REPORT
Inflation and higher interest rates are potentially
more problematic beyond globalisation. If the
current trends are sustained, we outline below
why they can drive an improved trajectory for the
Trust relative to others.
Investor interest in returns generated by
the compounding of equity dividends has
increased, and hence the UK stock market has
startedoutperforming.
During globalisation, the best performing
stocks have often been those drawing upon the
abundance of credit and risk capital to accelerate
their growth rate.
When interest rates rise however, they suppress
demand and usher in a scarcity of risk capital.
Companies generating surplus cash have major
advantages when risk capital is scarce as those
that are short of cash suffer. After a long period of
underperformance during globalisation, many of
the UK’s largest cash generative stocks have started
outperforming over recent years.
If UK smallcaps were to outperform the UK majors
as they have in the past, then a multicap equity
income strategy that includes both may be set
to perform much better relative to international
stock markets than they have during the period
ofglobalisation.
It is worth highlighting that quoted smallcap
returns are not necessarily in sync with the
fluctuations of the mainstream stock market
indices. Thus risk can be moderated by investing in
mainstream and smallcap stocks together, as in the
Diverse Income Trust portfolio.
In summary, when access to credit and risk capital
are scarcer - as at present - counterintuitively we
believe that the prospects for the Trust’s strategy
may actually have better opportunities to deliver
premium returns.
The following Q&A provide further details of the
portfolio positioning, why it has declined in market
value over the year under review and why we are
so upbeat about its prospects.
In the light of the Trust’s declining NAV over the
year to May, to what degree have the prospects of
various portfolio holdings deteriorated?
Over the year to May, the total return on the Numis
All-Share Index was -0.4%, which compares with a
0.8% return for the Peer Group. When these figures
are set alongside the return of the Trust’s NAV that
declined by 16.2%, then many might assume that
the prospects for the Trust portfolio of stocks have
deteriorated relative to those over the very largest
UK quoted companies. Interestingly, we disagree
with this conclusion.
Specifically, although the Trust’s NAV total return
has underperformed that of the Numis All-Share
Index and Peer Group significantly over the last
two years, it is notable that the Trust’s revenue
from portfolio dividends has continued to increase
steadily. Indeed, when the numerous dividend
cuts announced during 2020 are included in
the analysis, the Trust’s Revenue per Share has
recovered following the setback in 2020, whereas
the UK’s stream of dividends remains below
previous highs. In short, we ascribe the main reason
for the underperformance of UK mid and small cap
equity income share prices relative to their larger
comparatives over the last two years to a decline
in their valuation rather than to a period of inferior
trading performance and dividends.
As noted in the Chairman’s statement, over the last
two years, sales of UK-invested OEICs have been
very significant, as portfolios have been adjusted to
reflect the increase in the yields on UK bonds and
cash deposits compared with their previous ultra-
low levels. Alongside, global investors have started
to reweight their equity portfolios back into stocks
that pay good and growing dividends, and in doing
so have boosted the demand for mainstream UK
equity income stocks. This pattern has not extended
down the market capitalisation bands, so the share
prices of mid and small cap equity income stocks
have reflected the marginal sellers, and greatly
underperformed the returns of the UK mainstream
equity income stocks.
How has the Trust performed over the twelve years
since listing in April 2011?
Despite the Trust’s NAV total return underperforming
that of the Numis All-Share Index over the last two
years, this pattern differs from its returns since listing
in April 2011, of 175.1%. Over that period, the Numis
Large Cap Index (ex ICs) has generated a total return
MANAGER’S REPORT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
of 85.3%, the Numis Small Cap Plus AIM Index (exICs)
has returned 87.5% whilst the Numis Alternative
Markets Index (which are those stocks listed on the
AIM exchange) has fallen by 4.6%.
Countering this, UK investors have become more
cautious, initially worried that the UK could leave
the EU in a chaotic manner without an agreement
and, subsequently, given the uncertainty of the
global pandemic, and more recently increasing
with inflation and interest rate rises, regarding the
prospect of global recession.
It was always anticipated that a large part of the
return on Diverse Income Trust would be generated
from the receipt of good and growing dividends.
But alongside, if these grew well, it was anticipated
they might drag up the relevant share prices.
Overall, the Trust’s NAV has appreciated by 90% in
capital terms. In addition, the aggregate value of
all the dividends paid has added a further 45% of
return, so the NAV total return of the Trust is 175.1%.
The returns of the comparative indices are shown on
the bar chart below.
Total returns of the Trust and various Numis
indices between April 2011 and May 2023
As interest rate rises suppress demand, which
stocks can sustain profit margins, when others are
cutting prices to retain customers?
During globalisation, abundant imports of low-cost
goods – which typically exceeded local demand
– subdued inflationary pressures. During these
decades, when economic growth slowed, central
banks were able to engineer an economic recovery
through reducing interest rates or more latterly via
Quantitative Easing* that boosted demand. Inflation
remained subdued, as the prices of additional
goods remained determined by their plentiful
globalsupply.
Following the global pandemic and the
Ukrainian invasion, global economic supply was
compromised, and hence the economic stimulus
was accompanied by renewed inflation. To bring
this mismatch back into balance, central banks have
increased interest rates rapidly to choke off demand.
As demand moderates, suppressing demand
represents a major business challenge, as there are
fewer sales to go around. Hence, when demand
declines, it often sparks price wars that drive
down profit margins as well. The outcome is that
corporate profitability often comes under pressure,
so that over-levered companies risk insolvency.
In our view, businesses with poor customer service
are vulnerable to the loss of sales, and reduced profit
margins. Conversely, companies delivering not only
good, but outstanding levels of customer service are
more likely to retain customers even when others
are offering similar services at lower prices.
With this in mind, we question management
teams closely about whether they collect data on
customer service, so that we can select for those
delivering outstanding customer service. Whilst
such companies may not be immune to an adverse
economic trend, it is anticipated that they will show
greater resilience than others.
What is the outlook for the Trust?
As outlined on the inside cover of this report,
following the Diverse Income Trust’s recent
underperformance, most of the holdings appear to
be standing on exceptionally low valuations. But just
how out of line are they?
One way to gauge valuation is via the Price/Book
ratio. After some decades of underperformance, the
UK market is already standing at a ratio of around
1.6x, which is a substantial discount compared to US
exchanges for example.
-20
0
50
100%
150
200
The Diverse
Income
Trust Plc
Numis Large
Cap Index
ex ICs
“ICs”: Investment Companies
Source: Morningstar
Numis Small
Cap Plus AIM
Index ex ICs
Numis Alternative
Market Index
ex ICs
85.3
87.5
-4.6
175.1
MANAGER’S REPORT CONTINUED
* The definition of Quantitative Easing can be found in the Glossary on page 96.
Annual Report 2023
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The Diverse Income Trust plc
|
STRATEGIC
REPORT
MANAGER’S REPORT CONTINUED
Price to Book* ratio of the Diverse Income Trust,
the UK market and the US market as at
31May2023
In short, whereas the UK stock market is lowly
valued, the Diverse Income Trust’s portfolio appears
exceptionally lowly valued relative to international
stock markets such as the US.
Some presume that these low valuations are
justified by an unfavourable outlook for UK equities.
But such arguments don’t stand up to scrutiny.
Numerous UK-quoted stocks are capital-intensive
in nature. When capital is abundant, as during
globalisation, new participants are often quick to
compete away premium returns. But when capital
is more costly, and the supply/demand curves are
steeper, it is more difficult to raise new capital, and
premium returns in some capital-intensive areas
can persist.
Many capital-intensive businesses typically produce
a large part of their returns via a stream of good and
growing dividends. Cash compounding strategies
such as these are much less reliant on stock market
appreciation to deliver return.
Companies generating cash surpluses have the
advantage during recessions, as they can use
their cash to acquire overindebted but otherwise
viable businesses from the receiver, debt-free
at knockdown valuations. As with Next plc that
recently acquired Made.com for £3.4m versus its
previous peak market valuation of £700m, these
deals tend to accelerate earnings and dividend
growth.
Even if UK equities were similarly valued to
international comparatives, for risk diversification
reasons we would anticipate increased capital
allocations. With them being so lowly valued, we
believe that UK equity capital allocations are about
to move from a trickle into a flood.
The bottom line is that we believe the Diverse
Income Trust’s strategy now has the potential not
only to outperform the mainstream indices in the
UK, as it has done since issue, but also to outperform
international markets – as the UK stock market itself
outperforms. When the asset class in question (UK-
quoted multicap equity income stocks) starts at a
particularly low valuation, along with very modest
institutional allocations, such favourable trends can
persist over very long time periods. We believe the
prospects for the Trust’s strategy are the greatest
they have been for thirty years.
Gervais Williams and Martin Turner
7 August 2023
0
1
2
3
4
5
US Market
1 as represented by the ishares S&P500 ETF
2 as represented by the FTSE All Share Index
UK MarketDiverse Income Trust
1.6
1.2
4.0
* The definition of Price to Book ratio can be found in the Glossary on page 96.
Gervais Williams and Martin Turner came
together as a team in April 2011 and are
responsible for the day-to-day management of
the Trust’sportfolio.
Gervais Williams
Gervais joined Miton in March 2011 and is now
Head of Equities in Premier Miton. He has been
an equity fund manager since 1985, including
17 years at Gartmore. He was named Fund
Manager of the Year by What Investment? in
2014. Gervais is also a board member of the
Quoted Companies Alliance and a member of
the AIM Advisory Council.
Martin Turner
Martin joined Miton in May 2011. Martin and
Gervais have had a close working relationship
since 2004, with complementary expertise
that led them to back a series of successful
companies. Martin qualified as a Chartered
Accountant with Arthur Anderson and had
senior roles and extensive experience at Merrill
Lynch and Collins Stewart.
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The Diverse Income Trust plc
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Annual Report 2023
MANAGER’S REPORT CONTINUED A SUMMARY OF THE TOTAL COSTS
INVOLVED IN MANAGING DIVERSE
Investment trusts differ from some other forms of
collective funds in that they are set up as independent
corporations with their operations overseen by a board
that is separate from and independent of the fund
management group that manages the capital. In
addition, they are listed, with their shares traded on an
approved exchange – which in our case is the LSE.
Running costs are deducted from the total assets of
the Group on a pro-rata basis so the NAV published
each day is expressed after costs. The figures below are
the costs paid by the Group over the year under review
and are expressed as a percentage of the average net
asset value of the Group over the year to 31 May 2023 of
£346,189,000 (year to 31 May 2022: £413,468,000).
2023
%
2022
%
Fund management fees
1
0.85 0.86
Administration costs, including
Company Secretarial fees 0.04 0.03
Directors/Auditor/Depositary/
Registrar/Custodian and
Stockbroker fees 0.11 0.10
All other direct costs, including
VAT on the fees above, plus
marketing, legal, printing,
insurance and bank charges 0.09 0.06
Ongoing charges 1.09 1.05
In addition, the Group pays transaction charges
that are levied when shares are bought or sold in
the portfolio. These are dealing commissions paid
to stockbrokers and stamp duty, a Government tax
paid on transactions (which is zero when dealing on
the AIM/AQUIS exchanges).
2023
%
2022
%
Costs paid in dealing
commissions 0.02 0.02
Stamp duty, a Government tax
on transactions 0.05 0.04
Overall costs including
charges on transactions
2
1.16 1.11
The overall cost ratio of the Group for the year was
1.16%. This compares with the Group’s average NAV
total return since issue of 8.73% per annum (after the
deduction of costs).
1
Fund management fees are tiered and calculated based on the share price, so may vary in each year. With effect from 1 August 2019, the Manager received
a management fee of 0.9% per annum on the adjusted market capitalisation of the Company up to £300m, 0.8% per annum on the average market
capitalisation between £300m and £500m and 0.7% per annum on the average market capitalisation above £500m.
2
Transactions conducted by the Company also involve some cost due to the dealing spread in stock exchange prices. Spreads range from less than 1% in the
most actively traded large-cap stocks to more than 3% in the smallest, most infrequently traded stocks. The exact loss of value is difficult to determine precisely,
but is normally less than half of the dealing spread at the time of the transaction. In a large percentage of the transactions, especially in the smallest stocks,
the stock is passed through from sizeable seller to sizeable buyer on a ‘put through’ basis with potentially no loss of value through the spread. During the year
under review, this cost is believed to be very modest in comparison to the NAV.
Annual Report 2023
|
The Diverse Income Trust plc
|
STRATEGIC
REPORT
PORTFOLIO INFORMATION AS AT 31 MAY 2023
Rank Company
Sector &
main activity
Valuation
£000
% of
net assets
Yield
1
%
1 Kenmare Resources Basic Materials 7,881 2.5 9.8
2 I3 Energy
2
Energy 6,567 2.1 11.5
3 Mears Industrials 5,896 1.9 4.4
4 XPS Pensions Financials 5,859 1.8 4.6
5 CMC Markets Financials 5,516 1.7 6.9
6 MAN Financials 5,255 1.7 5.8
7 BT Telecommunications 5,095 1.6 5.2
8 Phoenix Financials 5,007 1.6 9.2
9 Just Financials 4,981 1.6 2.1
10 Galliford Try Industrials 4,934 1.5 4.9
Top 10 investments 56,991 18.0
11 Legal & General Financials 4,834 1.5 8.5
12 Hostelworld Consumer Discretionary 4,739 1.5 –
13 Tesco Consumer Staples 4,734 1.5 4.2
14 Sainsbury (J) Consumer Staples 4,568 1.5 4.8
15 Vanquis Banking Financials 4,453 1.4 7.1
16 Savannah Energy
2
Energy 4,407 1.4 –
17 Drax Utilities 4,338 1.4 3.8
18 TP ICAP Financials 4,204 1.3 8.2
19 Bloomsbury Publishing Consumer Discretionary 4,137 1.3 2.9
20 Admiral Financials 3,997 1.3 4.8
Top 20 investments 101,402 32.1
21 BAE Systems Industrials 3,922 1.2 2.9
22 Diversified Energy Energy 3,861 1.2 16.6
23 Sabre Insurance Financials 3,762 1.2 3.2
24 Paypoint Industrials 3,700 1.2 9.4
25 Plus500 Financials 3,633 1.2 5.3
26 Conduit Holdings Financials 3,630 1.1 6.0
27 Accrol
2
Consumer Staples 3,589 1.1 –
28 National Grid Utilities 3,325 1.1 5.0
29 DWF Industrials 3,241 1.0 7.9
30 ME Group international Consumer Discretionary 3,213 1.0 9.2
Top 30 investments 137,278 43.4
31 Rio Tinto Basic Materials 3,183 1.0 8.3
32 Centamin Basic Materials 3,164 1.0 6.0
33 AVIVA Financials 3,117 1.0 7.9
34 FRP Advisory
2
Industrials 3,077 1.0 4.1
35 Kitwave
2
Consumer Staples 3,064 1.0 3.5
36 BP Energy 3,024 0.9 4.5
37 Concurrent Technologies
2
Technology 2,923 0.9 2.2
38 Vistry Consumer Discretionary 2,891 0.9 7.6
39 M&G Financials 2,859 0.9 9.9
40 Lords Group Trading
2
Industrials 2,858 0.9 3.1
Top 40 investments 167,438 52.9
Balance held in 81 equity investments 111,495 35.3
Total equity investments 278,933 88.2
Fixed interest investments – –
Total equity and fixed interest investments 278,933 88.2
Listed Put Option
UKX – December 2023 5,700 Put 848 0.3
Total investment portfolio 279,781 88.5
Other net current assets 36,494 11.5
Net assets 316,275 100.0
A copy of the full portfolio of investments as at 31 May 2023 is available on the Company’s website,
www.diverseincometrust.com.
1 Source: Refinitiv. Based on historical yields and therefore not representative of future yields. Includes special dividends where applicable.
2 AIM/AQUIS listed.
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The Diverse Income Trust plc
|
Annual Report 2023
Portfolio as at 31 May 2023
Financials
Industrials
Basic Materials
Energy
Consumer
Discretionary
Consumer
Staples
Utilities
Telecomms
Real Estate
Technology
Health Care
Financials
Industrials
Basic Materials
Energy
Consumer
Discretionary
Consumer
Staples
Real Estate
Telecomms
Technology
Utilities
Health Care
Portfolio exposure by sector (%)
Actual income by sector (%)
£279.8 million
£15.8 million
30.1 18.3
9.8
10.6
2.7
6.8
10.6
39.0 11.3 8.3 4.5 4.3
3.4
0.7
0.6
16.7 7.9
2.9
4
.
1
1.2
2.9
The tables above set out how the portfolio’s capital
was deployed as at 31 May 2023. The data is shown
in terms of the classifications on which the holdings
are listed. The portfolio as at 31 May 2023 is set out
in detail on page 12, in line with that included in the
Balance Sheet on page 58.
The investment income above comprises the
income from the portfolio as included in the
Income Statement for the year ended 31 May 2023
attributable to the various sectors. The returns of the
Company are from Capital and Revenue. Investments
for the Company’s portfolio are principally selected
on their individual merits. As the portfolio evolves, the
Manager continuously reviews the portfolio’s overall
sector and index balance to ensure that it remains in
line with the underlying conviction of the Manager.
The Investment Policy is set out on pages 83 and 84,
and details regarding risk factors and diversification
and other policies are set out each year in the
AnnualReport.
The investments are held on regulated exchanges,
primarily the LSE Main Market and AIM. This provides
the ability of smaller listed companies to raise
funds. This also provides liquidity in acquisition and
disposal of shares by the Company. The Manager
actively reviews the liquidity of the investments in
the portfolio. The cash position and the available
revolving credit facility (which may be drawn upon
demand) together provide the Company with
£79m of cash resources at the balance sheet date.
This enables the Company to take advantage of
investments at opportune times.
Source: Thomson Reuters.
Annual Report 2023
|
The Diverse Income Trust plc
|
STRATEGIC
REPORT
BUSINESS MODEL
Diverse was launched on 28 April 2011. It is registered
in England as a public limited company and is
an investment company in accordance with the
provisions of Sections 832 and 833 of the Companies
Act 2006.
The principal activity of the Company is to carry
on business as an investment trust. The Company
intends at all times to conduct its affairs so as to
enable it to qualify as an investment trust for the
purposes of Sections 1158/1159 of the Corporation Tax
Act 2010 (“S1158/1159”). The Directors do not envisage
any change in this activity in the foreseeable future.
The Company has been granted approval from
HM Revenue & Customs (“HMRC”) as an investment
trust under S1158/1159 and will continue to be
treated as an investment trust company, subject to
there being no serious breaches of the conditions
forapproval.
The principal conditions that must be met for
continuing approval by HMRC as an investment
trust are that the Company’s business should
consist of “investing in shares, land or other assets
with the aim of spreading investment risk and
giving members of the company the benefit of
the results” and the Company may only retain 15%
of its investment income without distributing it as
dividend payments. The Company must also not be
a close company. The Directors are of the opinion
that the Company has conducted its affairs for the
year ended 31 May 2023 so as to be able to continue
to qualify as an investment trust.
The Company’s status as an investment trust allows
it to obtain an exemption from paying taxes on the
profits made from the sale of its investments and all
other net capital gains.
The Company has a wholly-owned subsidiary,
DIT Income Services Limited. The purpose of the
subsidiary is to invest in shorter-term holdings,
where the gains after corporation tax can be passed
up to the parent company by way of dividends,
thus improving the position of the Company’s
revenueaccount.
Investment Policy
The Company’s full investment policy is set out on
pages 83 and 84 and contains information on the
policies which the Company follows relating to
asset allocation, risk diversification and gearing, and
includes maximum exposures, where relevant.
The Company invests primarily in UK-quoted or
traded companies with a wide range of market
capitalisations but a strong long-term bias toward
small and mid-cap equities with a view to achieving
the Company’s investment objective. Currently,
the Company’s entire portfolio is predominantly
invested in publicly listed stocks, cash and
anOption.
The Manager adopts a stock-specific approach in
managing the Company’s portfolio and therefore
sector weightings will be of secondary consideration.
As a result of this approach, the Company’s portfolio
will not track any benchmark index.
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The Diverse Income Trust plc
|
Annual Report 2023
BUSINESS MODEL PRINCIPAL RISKS AND UNCERTAINTIES
The Company is exposed to a variety of risks and
uncertainties that could cause its asset price or the
income from the investment portfolio to reduce,
possibly by a sizeable percentage in the most adverse
circumstances. The Board, through delegation to
the Audit Committee, has undertaken a robust
assessment and review of the emerging and principal
risks facing the Company, together with a review
of any new risks which may have arisen during the
year, including those that would threaten its business
model, future performance, solvency or liquidity. These
risks are formalised within the Company’s risk matrix,
which is regularly reviewed by the Audit Committee.
Information regarding the Company’s internal control
and risk management procedures can be found in
the Corporate Governance Statement on page 36.
In reviewing the principal uncertainties, the Board
was cognisant of the risks relating to political and
economic uncertainty in the UK, global inflationary
pressures and the war in Ukraine.
The principal financial risks and the Company’s
policies for managing these risks, and the policy and
practice with regard to financial instruments are
summarised in note 19 to the financial statements.
The Board has also identified the following principal
risks and uncertainties:
Risk Mitigation Movement
Investment and strategy
↔
There can be no guarantee that the investment
objective of the Company will be achieved.
The Company does not follow any benchmark.
Accordingly, the portfolio of investments held by the
Company will not mirror the stocks and weightings
that constitute any particular index or indices, which
may lead to the Company’s shares failing to follow
either the direction or extent of any moves in the
financial markets generally (which may or may not
be to the advantage of shareholders).
The Manager has in place a dedicated
investment management process
which is designed to maximise the
chances of the investment objective
being achieved. The Board reviews
regular investment and financial reports
from the Manager to monitor this.
Smaller companies
↔
The Company invests primarily in quoted
UK companies with a wide range of market
capitalisations but a long-term bias toward small
and mid-cap equities. Smaller companies can be
expected, in comparison to larger companies, to
operate over a narrower range of products, have
more restricted depth of management and a higher
risk profile. In addition, the relatively small market
capitalisation of such companies can make the
market in their shares less liquid. Prices of individual
smaller capitalisation stocks could be more volatile
than prices of larger capitalisation stocks and the
risk of insolvency of many smaller companies (with
the attendant losses to investors) is higher.
The Board looks to mitigate this risk by
ensuring the Company holds a spread
of investments, achieved through
limiting the size of new holdings at the
time of investment to typically between
1% and 1.5% of the portfolio. All potential
investee companies are researched by
the Manager prior to investment.
Annual Report 2023
|
The Diverse Income Trust plc
|
STRATEGIC
REPORT
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Risk Mitigation Movement
Sectoral diversification
↔
The Company is not constrained from weighting to
any sector. This may lead to the Company having
significant exposure to portfolio companies from
certain business sectors from time to time. Greater
concentration of investments in any one sector
may result in greater volatility in the value of the
Company’s investments and consequently its NAV.
The Company seeks to achieve attractive
returns by investing in weightings that
are different from the overall market,
yet also seeks to ensure that individual
variances are not so extreme as to leave
shareholders at risk of portfolio volatility
that is unreasonably poor. Even though
there may be significant exposures to
a single sector, this will be achieved by
holding a number of different stocks in
the portfolio.
Dividend cover
↔
The Company’s investment objective includes the
aim of providing shareholders with an attractive and
growing dividend. There is no guarantee that any
dividends will be paid in respect of any financial year
or period. The ability to pay dividends is dependent
on a number of factors, including the level of
dividends earned from the portfolio and the net
revenue profits available for that purpose.
The redemption of shares pursuant to the
redemption facility may also reduce distributable
reserves to the extent that the Company is unable
to pay dividends.
The Company maintains accounting
records and produces forecasts that are
designed to reduce the likelihood that
the Company will not have sufficient
distributable resources to meet its
dividend objective.
Portfolio dividend income is carefully
monitored and there remain sufficient
revenue reserves to provide resilience
for the trust in maintaining its dividend
policy.
Share price volatility, the discount and marketability
↓
The market price of the Company’s shares, like
shares in all investment companies, may fluctuate
independently of the NAV and thus may not reflect
the underlying NAV of the shares. The shares could
trade at a discount or premium to NAV at different
times, depending on factors such as supply and
demand for the shares, market conditions and
general investor sentiment.
The portfolio of investments is subject to market
movements influenced by external economic
factors such as inflation, supply chain pressures
andpolitical instability.
The Company has in place an
annual redemption facility whereby
shareholders can voluntarily tender
their shares. The Board monitors the
relationship between the share price
and the NAV. The Company has taken
powers to re-purchase shares should
there be a sustained imbalance in
the supply and demand leading to a
discount. The Company has powers
to issue shares (only at a premium to
NAV) should there be good investment
opportunities and the size of the
Company has not become too large to
continue to meet its objectives.
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The Diverse Income Trust plc
|
Annual Report 2023
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Risk Mitigation Movement
Gearing
↔
The Company’s investment strategy may involve
the use of gearing to enhance investment returns,
which exposes the Company to risks associated with
borrowings. Gearing may be generated through the
use of options, futures, options on futures, swaps and
other synthetic or derivative financial instruments.
Such financial instruments inherently contain much
greater leverage than a non-margined purchase of
the underlying security or instrument.
While the use of borrowings should enhance the
total return on the shares where the return on the
Company’s underlying assets is rising and exceeds
the cost of borrowing, it will have the opposite effect
where the return on the Company’s underlying
assets is rising at a lower rate than the cost of
borrowing or falling, further reducing the total
return on the shares.
As a result, the use of borrowings by the Company
may increase the volatility of the NAV per share.
The Company has a revolving loan
facility in place, as detailed in note 5 to
the financial statements. The facility
has been put in place to offer the
Company the opportunity to enhance
its performance through the use of
borrowings, when appropriate. However,
the facility remained undrawn as at
31 May 2023 and, subsequently, to the
date of this report.
The Company is limited to a maximum
gearing of 15% of the net assets. There
was no gearing as at 31 May 2023
(2022: nil).
Key man risk
↔
The Company depends on the diligence, skill,
judgement and business contacts of the Manager’s
investment professionals and its future success
could depend on the continued service of these
individuals, in particular Gervais Williams.
The Company is managed by a team of
two at Premier Miton, Gervais Williams
and Martin Turner, and this moderates
the key man risk were one or the other
to leave Premier Miton’s employment.
Furthermore, the Company may
terminate the Management Agreement
should Gervais Williams cease to be
an employee of the Manager’s group
and is not replaced by a person whom
the Company considers to be of equal
or satisfactory standing within three
months of his departure.
Annual Report 2023
|
The Diverse Income Trust plc
|
STRATEGIC
REPORT
Risk Mitigation Movement
Engagement of third party service providers
↔
The Company has no employees and the Directors
have all been appointed on a non-executive basis.
Whilst the Company has taken all reasonable steps
to establish and maintain adequate procedures,
systems and controls to enable it to comply with
its obligations, the Company is reliant upon the
performance of third party service providers for its
executive function.
The Company operates through a
series of contractual relationships with
its service providers. These contracts,
supported by service level agreements
where appropriate, set out the terms
on which a service is to be provided
to the Company. The Board reviews
performance of all the service providers
both in the Board meetings and in the
Management Engagement Committee
meetings, where the terms on which
the service providers are engaged are
also reviewed. The Board also receives
assurance or internal controls reports
from key service providers. In addition,
the contracts provide the Company
with protection in the event of failure to
perform by a service provider.
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
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The Diverse Income Trust plc
|
Annual Report 2023
SHARE CAPITAL
Share Issues
At the AGM held on 18 October 2022, the Directors
were granted authority to allot ordinary shares
up to an aggregate nominal amount of £35,587
(i.e up to 35,587,000 ordinary shares, representing
approximately 10% of the issued ordinary share
capital). This authority is due to expire at the
Company’s AGM on 17 October 2023.
The Company has a block listing of ordinary shares
to be listed to the premium segment of the Official
List of the FCA and admitted to trading on the
premium segment of the LSE’s main market.
As at the year end, and as at the date of this Report,
31,929,000shares remain under the block listing.
Proposals for renewal of the Directors’ authority to
issue shares are set out on page 28.
There are no restrictions concerning the transfer
of securities in the Company or on voting rights;
no special rights with regard to control attached
to securities; no agreements between holders of
securities regarding their transfer known to the
Company; and no agreements which the Company
is party to that might affect its control following a
successful takeover bid.
Purchase of Own Shares
At the AGM held on 18 October 2022, the Directors
were granted the authority to buy back up to
53,345,009 ordinary shares. No ordinary shares have
been bought back under this authority during the
year, nor in prior years. The authority will expire at
the next AGM when a resolution for its renewal will
be proposed (see page 28 for further information).
Any shares bought back under this authority will
not be sold from treasury at a price lower than the
prevailing NAV at that time.
Treasury Shares
Shares bought back by the Company may be held
in treasury, from where they could be re-issued at
a premium to NAV quickly and cost effectively. This
provides the Company with additional flexibility in
the management of its capital base. No shares were
purchased for, or held in, treasury during the year or
since the year end.
Share Redemptions
Valid redemption requests were received under the
Company’s redemption facility for the 31 May2023
Redemption Point in relation to 37,330,005 ordinary
shares, representing 10.5% of the issued share
capital. Following the year end, all of these shares
were redeemed at a price of 89.35 pence per share
and cancelled by theCompany.
Current Share Capital
As at the year end, there were 355,870,647
ordinary shares and 50,000 management shares
(see note 9 to the financial statements) in issue,
representing 99.98% and 0.02% of the total share
capitalrespectively).
Subsequent to the year end, 37,330,005 ordinary
shares were redeemed and cancelled in respect of
the 31 May 2023 Redemption Point. As at the date
of this Report, there were therefore 318,540,642
ordinary shares in issue.
Annual Report 2023
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The Diverse Income Trust plc
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STRATEGIC
REPORT
STAKEHOLDER ENGAGEMENT
Background
Directors have a duty to make decisions that
promote the success of a company for the benefit
of shareholders as a whole. This responsibility is
formally enshrined in section 172 of the Companies
Act 2006, which stipulates that board decisions
must be made with the long-term consequences of
those decisions in mind, including consideration of
the interests of a company’s employees, suppliers,
customers and other stakeholders, the impact on
the community and the environment, and the
desirability of maintaining a reputation for high
standards of business conduct.
During the year, the Board has made a number of
decisions based on these considerations, such as
consideration of potential merger opportunities
and the purchase of a Put Option. The Board also
considers stakeholders' interests when discussing
performance and investment decisions with
theManager.
Stakeholders
As an investment trust, the Company does not
have any employees or customers. Although the
Company does have a number of contracts with
service providers including with the Manager,
the Company Secretary, the Stockbroker, and
the Depositary, it has very few suppliers with the
principal exception of a number of banks in relation
to the Company’s bank accounts. In meeting its
responsibilities under the Companies Act 2006, the
Board makes decisions to promote the success of
the Company for the benefit of its shareholders as a
whole, in the knowledge that the efficient allocation
of capital delivers results for all stakeholders.
Successful companies not only generate a
return for their investors, but also often create
employment, contribute to improved domestic
growth and generate additional tax revenues
for the government. The Board recognises that
effective capital allocation should take account of
the Company’s responsibilities to the environment
in the context of the emerging climate change
agenda as well as to the wider community. As such,
the Company always strives to meet regulators’
requirements. The following section discusses
how the actions taken by and on behalf of the
Company work towards ensuring that the interests
of all stakeholders are appropriately considered
and how those with concerns can most effectively
bring them to the attention of the Board. In line
with the FRC Guidance in relation to section 172(1)
statements, this statement focuses on stakeholders
that are considered key to the Company’s business
and therefore does not cover every stakeholder in
the Company.
Shareholders
The Board is committed to maintaining open
channels of communication and to engaging with
shareholders in a manner which they find most
meaningful, in order to ensure that decisions are taken
with the views of shareholders in mind. These include:
Annual General Meeting – The Company welcomes
and encourages attendance and participation
from shareholders at the AGM and looks forward
to hosting shareholders again at the 2023 AGM.
Shareholders have the opportunity to meet the
Directors and the Manager (Premier Portfolio
Managers Limited) and to address questions to
them directly. There is typically a presentation on
the Company’s performance and on the future
outlook;
Shareholder meetings – Unlike trading companies,
shareholders in investment companies often meet
with the investment manager rather than with
members of the board. Shareholders are able to
meet the Manager throughout the period and the
Manager provides information on the Company
and its performance on the Company’s website
and via various social medial channels. Feedback
from numerous meetings between the Manager
and shareholders is shared with the Board. The
Chairman, the Chairman of the Audit Committee
or other members of the Board are available to
meet with shareholders to understand their views
on governance and the Company’s performance
where they wish to do so. With assistance from
the Manager, the Chairman seeks meetings with
shareholders who might wish to meet with him;
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Annual Report 2023
STAKEHOLDER ENGAGEMENT
Publications – The Annual Report and Half-Year
results are made available on the Company’s
website and are circulated to those shareholders
requesting hard copies. These reports are designed
to provide shareholders with a clear understanding
of the Company’s portfolio and financial position.
This information is supplemented by a monthly
factsheet which is available on the website.
Feedback and/or questions the Company receives
from shareholders help its reporting to evolve,
the aim being to render the reports and updates
transparent and understandable;
Shareholder concerns – In the event that
shareholders wish to raise issues or concerns with
the Directors, they are welcome to do so at any
time by writing to the Chairman at the registered
office. The Senior Independent Director and
other members of the Board are also available to
shareholders if they have concerns that have not
been addressed through the normal channels; and
Investor relations updates – At every Board meeting,
the Directors receive updates from the Company’s
Stockbrokers, Panmure Gordon, and from the
Company Secretary on share trading activity, share
price performance, the Company’s share register
and investor relations.
Manager
Maintaining a close and constructive working
relationship with the Manager is crucial to the Board.
The Manager’s performance is critical for the Company
to achieve positive and consistent long-term returns
in line with its investment objectives. The Board
meets the Manager on a regular basis, both during
and outside formal Board meetings, and receives
and discusses reports and updates with the Manager
when appropriate. Further details on the relationship
with the Manager can be found on pages 33 and 34.
Suppliers
The Company relies on a diverse range of reputable
advisors for support in meeting its obligations.
The Board maintains regular contact with its key
external providers, namely the Administrator, the
Company Secretary, the Registrar, the Custodian
and the Stockbroker, and receives regular reporting
from them. Their advice, as well as their needs
and views, are regularly taken into account. The
Management Engagement Committee formally
assesses the performance of third party suppliers,
their fees and continuing appointment on an
annual basis, to ensure both that these key service
providers continue to function at an acceptable
level and that they are appropriately remunerated
to deliver the expected level of service. The Audit
Committee reviews and evaluates the financial
reporting control environments in place at key
service providers.
Regulators
The Company can only operate with the approval
of its regulators, who have a legitimate interest
in how the Company operates in the market and
treats its investors and shareholders. The Company
regularly considers the control environment in place
to ensure that it meets its various regulatory and
statutory obligations.
Environment and Community
Given the outsourced nature of the Company’s
operations, the Company has very little direct
impact on the community or the environment.
However, the Manager recognises that it can
influence an investee company’s approach to
Environmental, Social and Governance (“ESG”)
matters and discusses ESG matters with investee
companies on a regular basis. Further information
about the Company’s approach to environmental,
human rights, social and community issues is set
out on page 23.
These mechanisms for engaging with stakeholders
are kept under review by the Directors and are
discussed on a regular basis at Board meetings
to ensure that they remain effective. Should
shareholders and other stakeholders of the
Company wish to contact the Chairman, they can
do so by contacting the registered office of the
Company or by sending an email for the attention of
the Chairman at diverse_cosec@linkgroup.co.uk.
Annual Report 2023
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The Diverse Income Trust plc
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STRATEGIC
REPORT
MANAGEMENT, SOCIAL, ENVIRONMENTAL
AND DIVERSITY MATTERS
Management Arrangements
The Company appointed Premier Portfolio
Managers Limited as its Alternative Investment
Fund Manager (“AIFM”) and its Manager, following
the novation of the Appointment of Manager
agreement on 24 April 2020. PPM has been
approved as an AIFM by the UK’s FCA.
The Manager receives a management feeof
0.9%per annum on the average market
capitalisation of the Company up to £300m
and 0.8% per annum on the average market
capitalisation between £300m and £500m and 0.7%
per annum on the average market capitalisation
above £500m.
In addition to the basic management fee, and for so
long as a Redemption Pool (see page 82 for details)
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.
In accordance with the Directors’ policy on the
allocation of expenses between income and capital,
in each financial year, 75% of the management fee
payable is charged to capital and the remaining
25%to revenue.
The Management Agreement is terminable by
either the Manager or the Company giving to the
other not less than 12 months’ written notice. The
Management Agreement may be terminated
earlier by the Company with immediate effect on
the occurrence of certain events, including the
liquidation of the Manager or appointment of a
receiver or administrative receiver over the whole or
any substantial part of the assets or undertaking of
the Manager or a material breach by the Manager
of the Management Agreement which is not
remedied. The Company may also terminate the
Management Agreement should Gervais Williams
cease to be an employee of the Manager’s group
and is not replaced by a person whom the Company
considers to be of equal or satisfactory standing
within three months of his departure.
The Company has given certain market standard
indemnities in favour of the Manager in respect
of the Manager’s potential losses in carrying on its
responsibilities under the Management Agreement.
The Board appointed Bank of New York Mellon as
its Depositary and Custodian under an agreement
dated 22 July 2014. The annual fee for Depositary
services due to Bank of New York Mellon is 0.02% of
gross assets, subject to a minimum fee of £15,000
per annum. The Company and the Depositary may
terminate the Depositary Agreement with three
months’ written notice.
Company secretarial and administrative services are
provided by Link Alternative Fund Administrators
Limited, under an agreement dated 7 April 2011.
This agreement may be terminated by 12 months’
written notice subject to provisions for earlier
termination as provided therein.
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Annual Report 2023
MANAGEMENT, SOCIAL, ENVIRONMENTAL
AND DIVERSITY MATTERS
Continuing Appointment of the Manager
The Board keeps the performance of the Manager
under continual review, and the Management
Engagement Committee conducts an annual
appraisal of the Manager’s performance, and
makes a recommendation to the Board about
the continuing appointment of the Manager. It is
the opinion of the Directors that the continuing
appointment of the Manager is in the interests of
shareholders as a whole. The reasons for this view
are that the Manager has executed the investment
strategy according to the Board’s expectations and
has demonstrated superior risk-adjusted returns
relative to the broader market and the Peer Group.
The Directors also believe that by paying the
management fee calculated on a market
capitalisation basis, rather than a percentage of
assets basis, the interests of the Manager are more
closely aligned with those of shareholders.
Environmental, Human Rights, Employee, Social
and Community Issues
Since the Company does not have any employees,
the day-to-day management of these areas is
delegated to the Manager. As an investment
trust, the Company has no direct impact on the
community or the environment, and as such has no
environmental, human rights, social or community
policies.
ESG factors are central to the investment process
as misjudgements on these matters can incur
major additional costs to the portfolio holdings, as
well as undermining their equity return through
reputational damage. In company meetings,
the Manager routinely questions the corporate
management on a variety of topics, such as safety
records and the make-up of their board papers, to
ensure companies are adhering to best practice.
These questions can be quite wide ranging. For
example, the Manager has raised issues ranging
from the use of antibiotics in livestock, to how
individual companies monitor the working
conditions in the overseas plants of their suppliers.
Diversity
The Board of Directors of the Company comprises
two female and three male Directors.
The Company’s Diversity Policy acknowledges
the benefits of greater diversity, including gender
diversity, and the Board remains committed to
ensuring that the Company’s Directors bring a wide
range of skills, knowledge, experience, backgrounds
and perspectives. Details of the Company’s Diversity
Policy and the Company’s reporting against the
Listing Rule requirements are set out on pages 32
and 33.
The Strategic Report has been approved by the
Board of Directors.
On behalf of the Board
Andrew Bell
Chairman
7 August 2023
Annual Report 2023
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STRATEGIC
REPORT
DIRECTORS ALL NONEXECUTIVE
Andrew Bell (Chairman of the Board)
Andrew Bell has a depth of experience both as a non-executive director of investment trusts and
in the role of chairman. He is currently a director and the CEO of Witan Investment Trust plc. Prior
to this, his experience included positions at Barclays de Zoete Wedd, Credit Suisse First Boston,
and Carr Sheppards Crosthwaite where he spent 10 years as head of research and strategy. Andrew
was previously a non-executive director of Henderson High Income Trust plc and Framlington
Innovative Growth Trust plc, where he also chaired the audit committee for a period, and Gabelli
Value Plus+ Trust plc, where he was chairman from its launch in 2015 to 2018. Andrew was also
a director of The Association of Investment Companies from 2005 to 2015 and held the position
of chairman for the last two years of his appointment. Appointed as a Director on 1 January
2019 and as Board Chairman on 14 October 2020.
Charles Crole
Charles Crole has over 35 years of executive experience in the asset management sector across
a range of fund management responsibilities. He is currently head of Institutional at Guinness
Global Investors Ltd and the Chairman of the Investment Committee of MacRobertTrust.
He previously served as a non-executive director of Jupiter Green Investment Trust Plc.
Charles' experience in the asset management sector includes 19years at Schroder Investment
Management Ltd and 12 years at Jupiter Fund Management. In addition, he has held a
number of non-executive and trustee roles and is an associate at the Society for Investment
Professionals. Appointed as a Director on 1 February 2022.
Caroline Kemsley-Pein (Chair of the Management Engagement and Nomination
Committees)
Caroline Kemsley-Pein is a qualified solicitor and has been advising corporate clients for
over 30 years. She is a designated member of Kemsley & Company Solicitors LLP, a specialist
corporate and commercial solicitors’ practice. Caroline has extensive experience of mergers,
acquisitions and disposals of companies and businesses within the UK market, shareholder
and joint venture arrangements, corporate restructuring and complex contractual
arrangements. Appointed as a Director on 1 January 2019.
Michelle McGrade
Michelle McGrade has a depth of experience across the investment management industry,
including asset management and private wealth. Michelle is currently a non-executive
director of M&G Securities Ltd (a subsidiary of M&G established to ensure independent
oversight of their UK regulated funds) and advisor to the Investment Committee at Wealthify,
an online investment platform. Michelle was previously advisor to the Sainsbury’s Pension
Scheme’s Investment Committee, Chief Investment Officer of Virgin Money and Chief
Investment Officer of TD Direct Investing, where she was an executive committee member
and Chair of the Investment Committee. Appointed as a Director on 10 October 2019.
Calum Thomson (Chairman of the Audit Committee and Senior Independent Director)
Calum Thomson is a qualified chartered accountant with over 30 years’ experience in the
financial services industry. For 21 years, he was an audit partner at Deloitte LLP, specialising in
the asset management sector, with clients including a wide range of managers, investment
trusts, banks, sovereign wealth funds, large charities and private equity funds. During his career,
Calum has led Deloitte LLP’s global and UK asset management groups. He is a non executive
director and chairman of the audit committee of AVI Global Trust plc, Barings Emerging EMEA
Opportunities plc and abrdn Private Equity Opportunities Trust plc. Appointed as a Director on
20 December2016.
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Annual Report 2023
DIRECTORS ALL NONEXECUTIVE REPORT OF THE DIRECTORS
The Directors present their report and the financial statements for the year ended 31 May 2023.
Directors
The Directors in office at the date of this report are
shown on page 24.
In accordance with the policy adopted by the
Board, all Directors will stand for re-election at the
forthcoming AGM.
None of the Directors or any persons connected
with them had a material interest in the transactions
and arrangements of, or the agreement with, the
Manager during the year.
Substantial Shareholdings
The Directors have been informed of the following
notifiable interests in the Company’s voting rights as
at 31 May 2023:
Number of
ordinary shares
% of
voting rights
Evelyn Partners Ltd ,, .
M&G ,, .
Investec Wealth &
Investment Limited
,, .
Quilter Investors ,, .
Brewin Dolphin Plc ,, .
Merseyside Pension Fund ,, .
Evelyn Partners Ltd notified the Company
on 16 June 2023 that their holding had fallen
to 34,594,997 ordinary shares, representing
10.86% of the revised number of shares in issue
following the implementation of the Company’s
annualredemption.
Notifications are required where an investor reaches
the 3% threshold and for every 1% increase or
decrease thereafter, subject to certain exemptions.
The above holdings may therefore not be wholly
accurate statements of the actual investor holdings
at 31 May 2023 and the date of this report.
Results and Dividends
A summary of the Company’s performance during
the year and the outlook for the forthcoming year is
set out in the Strategic Report on pages 2 to 23.
A final dividend of 1.20p is recommended. The
dividends paid or payable in respect of the year
ended 31 May 2023 are set out in note 8 on page 69.
Financial Risk Management
The principal financial risks and the Company’s
policies for managing these risks are set out in
note19 to the financialstatements.
Corporate Governance
The Corporate Governance Statement on pages 30
to 36 forms part of the Report of the Directors.
Going Concern
The Directors consider that it is appropriate to adopt
the going concern basis in preparing the financial
statements. After making enquiries, and bearing in
mind the nature of the business and assets of the
Company and its subsidiary, DIT Income Services
Limited, the Directors consider that the Group 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 Group’s ability to
meet obligations as they fall due for a period of at
least 12 months from the date that these financial
statements were approved.
In making the assessment, the Directors have
considered the likely potential impacts of political
and economic uncertainty in the UK, global
inflationary pressures and the war in Ukraine on the
Company’s operations and portfolio.
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.
Viability Statement
The Directors have assessed the viability of the
Company over a three-year period, taking account
of the Company’s position and the risks as set out in
the Strategic Report. The period assessed balances
the long-term aims of the Company, the Board’s view
that the success of the Company is best assessed over
a longer time period and the inherent uncertainty of
looking out for too long a period.
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
The Board consider it appropriate to continue
to review the viability of the Company over a
three year time period which balances the long
term nature of investing against the short term
liquidity of the investments.
As part of its assessment of the viability of
the Company, the Board has considered the
emerging and principal risks and uncertainties
and the impact on the Company’s portfolio of a
significant fall in UK markets. The Directors do
not expect there to be any significant change in
the current principal risks and adequacy of the
mitigating controls in place over the period of
this assessment.
To provide this assessment, the Board has
considered the Company’s financial position
and its ability to liquidate its portfolio to meet its
expenses or other liabilities as they fall due:
• The Company invests largely in companies
listed and traded on stock exchanges. These
are actively traded, and whilst perhaps less
liquid than larger quoted companies, the
portfolio is well diversified by both number of
holdings and industry sector.
• The expenses of the Company are predictable
and modest in comparison with the assets in
the portfolio. There are no commitments that
would change that position.
• The Company has an annual redemption
facility whereby shareholders may request
that their shares are redeemed at NAV. The
Board has considered the possibility that
shareholders holding a significant percentage
of the Company’s shares request redemption.
Firstly, the Board has flexibility over the method
of redemption so as to avoid disruption
to the overall operation of the Company
in this situation. Secondly, the Company’s
investments comprise readily realisable
securities which can be sold to meet funding
requirements if necessary. The most significant
of the Company’s expenses vary in proportion
to the size of the Company.
In addition to considering the emerging and
principal risks on pages 15 to 18 and the financial
position of the Company as described above, the
Board has also considered the following factors:
• the continuing relevance of the Company’s
investment objective in the current
environment;
• the level of demand for the Company’s shares
and that since launch, the Company has been
able to issue further shares;
• the gearing policy of the Company; and
• that regulation will not increase to such an
extent that the costs of running the Company
become uneconomical.
During the year, the Board periodically
reviews key stress tests, which are provided by
the Manager and are based on correlations
from defined historical periods to review
key sensitivities to pre-determined shocks.
The Manager’s Funds Risk Committee and
Investment Oversight Committee review similar
sensitivities or stress tests on a quarterly and
monthly basis respectively. Both committees
have been satisfied when they last convened
that there were no undue risks or sensitivities of
concern for the Trust.
Accordingly, the Directors have formed the
reasonable expectation that the Company will
be able to continue in operation and meet its
liabilities as they fall due over the next three
years.
Company Culture
The Company’s defined purpose is to deliver our
investment objective: to pay shareholders a good
and growing dividend income. The Directors
believe that this will be facilitated by establishing
and maintaining a healthy corporate culture
among the Board and in its interaction with the
Manager, shareholders and other stakeholders.
REPORT OF THE DIRECTORS CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
The Board strives for its culture to be in line with
the Company’s purpose, values and strategy.
Whilst ensuring that it does not conflict with
the investment objective, the Board aims to
structure the Company’s operations in such a
manner that it takes all its stakeholders and
the impact of the Company’s operations on the
environment and community into account.
In addition, the Board promotes and monitors
the effective management or mitigation of the
risks faced by the Company.
As the Company has no employees and acts
through its Board and service providers, its
culture is represented by the values and
behaviour of those parties. Accordingly, the
Board assesses and takes account of the
organisational effectiveness of its service
providers (including “soft” factors such as
openness and teamwork) as well as their
regulatory compliance. The Board is responsible
for ensuring that the Company’s culture is
embedded in its day to day operations and it has
adopted a number of policies and practices to
facilitate this. In recognition of the Company’s
corporate and social responsibilities and to
safeguard the Company’s interests, the Board
engages with the Company’s service providers
and other stakeholders. As part of this ongoing
monitoring, the Board receives reports from
its service providers with respect to their
anti-bribery and corruption policies; Modern
Slavery Act 2015 statements; equal opportunities
and diversity policies; and greenhouse gas and
energy use reporting.
Greenhouse Gas Emissions and TCFD reporting
The Company has no greenhouse gas emissions
to report from its operations (2022: none), nor
does it have responsibility for any other emissions
producing sources under the Companies Act
2006 (Strategic Report and Directors’ Report)
Regulations 2013, including those within its
underlying investment portfolio. Where a
large company does not consume more than
40,000 kWh of energy in a reporting period, it
qualifies as a low energy user and is exempt
from reporting under these regulations. This
exemption applies to the Company.
As an investment trust without employees,
the Company is also not required to report
against the TCFD framework. However,
understanding and managing climate-
related risks and opportunities based on the
TCFD’s recommendations is a fundamental
part of Premier Miton's investment
approach, as outlined on their website,
https://www.premiermiton.com/responsibility/.
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to
include specified information in a single
identifiable section of the Annual Report or
a cross reference table indicating where the
information is set out. The Directors confirm that
there are no disclosures required in relation to
Listing Rule 9.8.4.
Audit Information
The Directors who held office at the date of
approval of the Report of the Directors confirm
that, so far as they are aware, there is no relevant
audit information of which the Company’s
Auditor is unaware; and each Director has taken
all the steps that he/she ought to have taken
as a Director to make himself/herself aware of
any relevant audit information and to establish
that the Company’s Auditor is aware of that
information.
Auditor
BDO LLP has expressed its willingness to
continue in office as Auditor of the Company
and resolutions for its reappointment and
to authorise the Audit Committee to agree
its remuneration will be proposed at the
forthcoming AGM.
Annual General Meeting
The Notice of the AGM to be held on 17 October
2023 (the “Notice”) is set out on pages 87 to 92.
REPORT OF THE DIRECTORS CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
Shareholders are being asked to vote on various
items of business, being:
• the receipt and adoption of the Strategic
Report, the Reports of the Directors and
Auditor and the audited financial statements
for the year ended 31 May 2023;
• the receipt and approval of the Directors’
Remuneration Report and the approval of the
Remuneration Policy;
• the re-election of Directors;
• the re-appointment of BDO LLP as Auditor and
the authorisation of the Audit Committee to
determine the remuneration of the Auditor;
• the approval of a final dividend;
• the granting of authorities in relation to the
allotment of shares;
• the disapplication of pre-emption rights for
certain issues of shares;
• the purchase by the Company of its own
shares; and
• the holding of general meetings on not less
than 14 clear days’ notice.
Resolutions 1 to 12 will be proposed as ordinary
resolutions and Resolutions 13 to 15 will be proposed
as specialresolutions.
Authority to Issue Shares and Disapplication of
Pre-Emption Rights
An ordinary resolution to authorise the Directors to
allot ordinary shares up to an aggregate nominal
amount of £31,854, equal to approximately 10% of
the Company’s issued ordinary share capital, will be
proposed as Resolution 12.
Resolution 13, a special resolution, is being proposed
to authorise the Directors to issue ordinary shares
for cash and to disapply the pre-emption rights of
existing shareholders in relation to issues of ordinary
shares under Resolution 12 (being in respect of up to
10% of the Company’s issued share capital as at the
date of the Notice). Shares would only be issued at a
price at or above the prevailing NAV per share.
As at the date of the Notice, the Company holds no
shares in treasury.
These authorities, if approved by shareholders,
will expire at the AGM to be held in 2024, when
resolutions for their renewal will be proposed.
The Directors will only issue new shares if they
believe it would be in the best interests of the
Company’sshareholders.
Purchase of Own Shares
Resolution 14, a special resolution, will renew the
Company’s authority to make market purchases
of up to 14.99% of the Company’s ordinary shares,
either for cancellation or placing into treasury at
the determination of the Directors. Purchases of
ordinary shares will be made within guidelines
established from time to time by the Board. Any
purchase of ordinary shares would be made only out
of the available cash resources of the Company. The
maximum price which may be paid for an ordinary
share must not be more than the higher of (i) 5%
above the average of the mid-market values of the
ordinary shares for the five business days before
the purchase is made, or (ii) the higher of the price
of the last independent trade and the highest
current independent bid for the ordinary shares.
The minimum price which may be paid is 0.1p per
ordinary share.
The Directors would use this authority to address
any significant imbalance between the supply and
demand for the Company’s ordinary shares and to
manage the discount to NAV at which the ordinary
shares trade. Ordinary shares will be repurchased
only at prices below the NAV per ordinary share,
which should have the effect of increasing the NAV
per ordinary share for remaining shareholders.
REPORT OF THE DIRECTORS CONTINUED
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Annual Report 2023
REPORT OF THE DIRECTORS CONTINUED
This authority will expire at the AGM to be held in
2024 when a resolution to renew the authority will
beproposed.
Notice Period for General Meetings
Resolution 15 is a special resolution that will give the
Directors the ability to convene general meetings,
other than annual general meetings, on a minimum
of 14 clear days’ notice. The minimum notice period for
annual general meetings will remain at 21 clear days.
The approval will be effective until the Company’s
AGM to be held in 2024, at which it is intended that
renewal will be sought. The Company will have to
offer facilities for all shareholders to vote by electronic
means for any general meeting convened on 14 days’
notice. The Directors will only call a general meeting
on 14 days’ notice where they consider it to be in the
interests of shareholders to do so and the relevant
matter is required to be dealt with expediently.
Recommendation
Full details of the above resolutions are contained in
the Notice.
The Directors consider that all the resolutions to be
proposed at the AGM are in the best interests of the
Company and its members as a whole. The Directors
unanimously recommend that shareholders vote in
favour of all the resolutions, as they intend to do in
respect of their own beneficial holdings.
Other Information
Information on future developments, the share
capital and financial risks is detailed in the
StrategicReport and the Shareholder Information
on pages 83 and 84.
By order of the Board
Link Alternative Fund Administrators Limited
Secretary
7 August 2023
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement forms part of the Report of the Directors.
The Company is committed to maintaining high
standards of corporate governance and the Board is
accountable to shareholders for the governance of
the Group’s affairs.
Statement of Compliance
The Board of Diverse has considered the principles
and recommendations of the AIC Code of Corporate
Governance for Investment Companies (“AIC Code”)
published in February 2019. The AIC Code addresses
all the principles set out in of the UK Corporate
Governance Code (“UK Code”), as well as setting
out additional principles and recommendations on
issues that are of specific relevance to investment
trusts. The Board considers that reporting against
the principles and recommendations of the AIC
Code provides better information to shareholders.
The FRC, the UK’s independent regulator for
corporate reporting and governance responsible
for the UK Code, has endorsed the AIC Code. The
terms of the FRC’s endorsement mean that AIC
members who report against the AIC Code meet
fully their obligations under the UK Code and the
related disclosure requirements contained in the
ListingRules.
A copy of the AIC Code can be obtained via the AIC
website, www.theaic.co.uk. A copy of the UK Code
can be obtained at www.frc.org.uk.
The Company has complied with the
recommendations of the AIC Code and the relevant
provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
• the role of the chief executive;
• executive directors’ remuneration; and
• the need for an internal audit function.
The Board considers that these provisions are not
relevant to the position of the Company, being
an externally-managed investment company.
In particular, all of the Company’s day-to-day
management and administrative functions are
outsourced to third parties. As a result, the Company
has no executive Directors, employees or internal
operations. The Company has therefore not reported
further in respect of these provisions.
The Board of Directors
The Board consists entirely of non-executive
Directors and has no employees.
Under the leadership of the Chairman, the Board is
responsible for all matters of direction and control
of the Company and its subsidiary, including
its investment policy and strategy, and no one
individual has unfettered powers of decision. The
Articles of Association may only be amended by way
of a special resolution of shareholders. The Directors
possess a wide range of business and financial
expertise relevant to the direction of the Company
and consider that they commit sufficient time to
the Company’s affairs. Brief biographical details of
the Directors, including details of their significant
commitments, can be found on page 24.
None of the Directors has a service contract, but
letters of appointment setting out the terms of their
appointment are in place. Directors are not entitled
to any compensation for loss of office. Copies of the
letters of appointment are available on request from
the Secretary and will be available at the AGM.
The Board has adopted a Diversity Policy, which
acknowledges the benefits of greater diversity,
including gender and ethnic diversity, and remains
committed to ensuring that the Company’s
Directors bring a wide range of skills, knowledge,
experience, backgrounds and perspectives to the
Board. Whilst the Board does not feel that it would
be appropriate to set targets as all appointments
are made on merit, the following objectives for the
appointment of Directors have been established:
• all Board appointments will be made on merit,
in the context of the skills, knowledge and
experience that are needed for the Board to be
effective; and
• long lists of potential non-executive Directors
should include diverse candidates of
appropriate merit.
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The Diverse Income Trust plc
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Annual Report 2023
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement forms part of the Report of the Directors.
Chairman
The Chairman leads the Board and is responsible for
its overall effectiveness in directing the Company.
He promotes a culture of openness and debate
and facilitates constructive Board relations and the
effective contribution of all Directors. In liaison with
the Company Secretary, he ensures that the Directors
receive accurate, timely and clear information.
The Board continually monitors the independence
of the Chairman. The current Chairman, Andrew
Bell, is deemed by his fellow independent Board
members to be independent and to have no
conflicting relationships. Mr Bell considers
himself to have sufficient time to commit to the
Company’saffairs.
Senior Independent Director
Mr Thomson holds the role of Senior Independent
Director and as such, he provides a channel for
any shareholder concerns regarding the Chairman
and takes the lead in the annual evaluation of
the Chairman by the independent Directors. In
the event the Company experiences a period of
stress, the Senior Independent Director would
work with the Chairman, the other Directors and/or
shareholders to resolve any issues.
The role and responsibilities of the Chairman and
the Senior Independent Director are clearly defined
and set out in writing, copies of which are available
on the Company’s website.
Board Operation
The Directors meet at regular Board meetings,
held at least four times a year, with additional
meetings arranged as necessary. During the year to
31 May 2023, the number of Board and Committee
meetings attended by each Director were as follows:
Scheduled
Board
meetings
Audit
Committee
meetings
Management
Engagement
Committee
meetings
Nomination
Committee
meeting
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Andrew
Bell 5 5 2 2 2 2 1 1
Charles
Crole 5 5 2 2 2 2 1 1
Caroline
Kemsley-
Pein 5 5 2 2 2 2 1 1
Michelle
McGrade 5 5 2 2 2 2 1 1
Calum
Thomson 5 5 2 2 2 2 1 1
No meetings of the Disclosure Committee were held during the year.
In addition to the scheduled Board meetings
detailed above, the Board held a number of further
ad hoc meetings to discuss matters such as
potential merger opportunities and the Put Option.
The Board also held a meeting to discuss general
strategy.
The Board has formalised arrangements under
which the Directors, in the furtherance of their
duties, may take independent professional advice at
the Company’s expense.
The Company has arranged a Directors’ and Officers’
liability insurance policy which includes cover for
legal expenses. The Company has provided each
of the Directors of the Company, subject to the
provisions of UK legislation, with an indemnity in
respect of liabilities which they may sustain or incur
in connection with the discharge of their duties as a
Director. The indemnity also covers reasonable legal
and other defence expenses, although these would
have to be repaid in the event of a conviction. Deeds
of Indemnity in favour of each of the Directors
were executed on behalf of the Company on their
appointment. There are no other qualifying third
party indemnity provisions in place.
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
CORPORATE GOVERNANCE STATEMENT CONTINUED
Board Evaluation
The Directors are aware that they need to
continually monitor and improve performance and
recognise this can be achieved through regular
Board evaluation, which provides a valuable
feedback mechanism for improving Board
effectiveness. The Board has therefore opted to
undertake an internal performance evaluation by
way of questionnaires specifically designed to assess
the strengths and independence of the Board
and the Chairman, individual Directors and the
performance of its Committees. The questionnaires
are also intended to analyse the focus of Board
meetings and assess whether they are appropriate,
or if any additional information may be required
to facilitate Board discussions. Any training needs
identified as part of the Board evaluation process
are added to the next Board meeting agenda.
The evaluation process was carried out following
the year end and was conducted by the Chairman.
Calum Thomson, as the Senior Independent
Director, led the appraisal of the Chairman.
As a result of the evaluation, the Board considers
that it, as a whole, functions effectively and that all of
the current Directors provide valuable contributions
and have the skills and experience relevant to the
future leadership and direction of the Company.
During the performance evaluation, each Director’s
continued commitment to their responsibilities and
their ability to devote the necessary time and effort
to understand the Company’s activities, objectives
and risks was assessed. All Directors were deemed
to demonstrate sufficient commitment and to
devote sufficient time to their responsibilities. The
Board acknowledges that some of its Directors
have a number of external appointments and this
is kept under close review. The majority of these
appointments are non-executive positions at
investment trusts and as the Directors are seen to be
responsive and demonstrate that they have sufficient
time to fulfill their obligations to the Company, the
Board welcomes the experience that these external
appointments bring. The Board therefore believes
that it is in the best interests of shareholders that
each of the Directors is re-elected.
Independence of Directors
In accordance with the AIC Code, the Board
has reviewed the independent status of each
individual Director and the Board as a whole. In
the Board’s opinion, all Directors are considered to
be independent of the Manager in both character
andjudgement.
The Directors have considered Michelle McGrade’s
independence in the light of her being a
non-executive director of M&G Securities Ltd, (“MGSL”),
which is a subsidiary of M&G (a significant shareholder
in the Trust). MGSL is an entity set up to provide
regulatory oversight of a specific range of M&G’s UK
regulated funds. The M&G fund that holds a significant
holding in the Trust is not overseen by MGSL. For
clarity, MGSL has a governance and oversight function
and is not involved in the investment decisions
pertaining to the funds it oversees. In accordance with
the agreed procedures discussed above, MsMcGrade
would not be permitted to vote on any issues
relating to a potential conflict. Having considered
these measures, the Board confirmed that it
considered Ms McGrade to be independent.
The Board is of the view that, having reviewed all
required factors, all Directors met, and continue
to meet, the independence criteria set out in the
AICCode.
The Board’s policy on diversity is to ensure that
the Directors on the Board have a broad range of
experience, skills and knowledge, with diversity of
thinking, background and perspective.
Appointments to the Board are made on merit
against objective criteria, having regard to the
benefits of diversity and the current and future
needs of the business and the other factors set out
in the AIC Code.
Diversity, including, but not limited to, gender,
social background, ethnicity, age, sexual orientation,
disability and professional and industry specific
knowledge, is an important consideration in
ensuring that the Board and its committees have
the right balance of skills, experience, independence
and knowledge necessary to discharge their
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The Diverse Income Trust plc
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Annual Report 2023
CORPORATE GOVERNANCE STATEMENT CONTINUED
responsibilities. The Board notes the FCA rules on
diversity and inclusion on company boards, namely,
that from accounting periods starting on or after
1 April 2022:
a) At least 40% of individuals on the Board to be
women;
b) At least one of the senior Board positions to
be held by a woman (such as Chair, SID, Chief
Executive Officer (“CEO”) or Chief Financial
Officer (“CFO”); and
c) At least one individual on the Board to be
from a minority ethnic background.
In accordance with Listing Rule 9 Annex 2.1, the
below tables, in prescribed format, show the gender
and ethnic background of the Directors at the date
of this Report.
Diversity Table:
Gender identity or sex
Number of Board
members
Percentage on the
Board
Number of
senior positions
on the Board
Men 3 60% 100%
Women 2 40% 0%
Not specified/prefer not to say – – –
Ethnic background:
Number of Board
members
Percentage on the
Board
Number of
senior positions
on the Board
White British or other White
(including minority white
groups) 5 100% 40%
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British – – –
Black/African/Caribbean/Black
British
– – –
Other ethnic group, including
Arab
– – –
Not specified/prefer not to say – – –
The data in the above tables was collected through self-reporting by the
Directors.
As at 31 May 2023 the Board comprised of five
members. The gender breakdown is as follows:
2female (40%); 3 male (60%). The ethnic diversity
target (that at least one individual on the Board is
from a minority ethnic background) has not been
met. Whilst the Board does not feel that it would
be appropriate to set targets as all appointments
must be made on merit, the Board supports the
recommendations for senior positions to be held
by female directors and ethnic representation
on the Board, and both of these factors are key
considerations in succession planning.
As an externally managed investment Company,
the Board employs no executive staff, and therefore
does not have a CEO or a CFO both of which are
deemed senior board positions by the FCA. Other
senior board positions recognised by the FCA are
the Chair of the Board and Senior Independent
Director (“SID”).
Election/re-election of Directors
Under the Company’s Articles of Association and in
accordance with the AIC Code, Directors are required
to retire at the first AGM following their appointment.
Thereafter, the Board has agreed a policy whereby
all Directors will seek annual re-election at
the Company’s AGMs. This is in line with the
recommendations of the AIC Code. The maximum
length of service for any Director, including the
Chairman, will be nine years following first election.
Board Responsibilities and Relationship with the
Manager
The Board is responsible for the determination and
implementation of the Company’s investment
policy and strategy and has overall responsibility
for the Company’s activities, including the review of
investment activity and performance, control and
supervision of the Manager. The Board’s main roles are
to create value for shareholders, to provide leadership
to the Company and to approve the Company’s
strategic objectives. The Board has adopted a
schedule of matters reserved for decision by the
Board, and specific responsibilities include: reviewing
the Company’s investments, asset allocation, gearing
policy, cash management, Peer Group performance,
investment outlook and revenue forecasts and
outlook. This schedule is reviewed regularly and is
made available on the Company's website.
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
The Company’s day-to-day functions have been
subcontracted to a number of service providers,
each engaged under separate legal agreements.
The management of the Group’s assets has been
delegated to the Manager which has discretion
to manage the assets in accordance with the
Company’s investment objective and policy.
At each Board meeting the Directors follow a
formal agenda, which is circulated in advance by
the Secretary. The Secretary and Manager regularly
provide financial information, together with briefing
notes and papers in relation to changes in the
Company’s economic and financial environment,
statutory and regulatory changes and corporate
governance best practice.
At each Board meeting, a representative from the
Manager is in attendance to present verbal and
written reports covering the Company’s activity,
portfolio and investment performance over the
preceding period. Ongoing communication with
the Board is maintained between formal meetings.
The Board and the Manager operate in a fully
supportive, co-operative and open environment.
Conflicts of Interest
The Articles of Association permit the Board to
consider and, if it sees fit, to authorise situations
where a Director has an interest that conflicts, or
may possibly conflict, with the interests of the Group.
A formal system is in place for the Board to consider
authorising such conflicts, whereby the Directors
who have no interest in the matter decide whether
to authorise the conflict and any conditions to be
attached to such authorisations.
Board Committees
During the year, the Company had four Committees
in operation, the Audit Committee, the Management
Engagement Committee, the Nomination
Committee and the Disclosure Committee. Given
the size of the Board, it is not felt appropriate for
the Company to have a separate remuneration
committee. The functions that would normally be
carried out by this committee are dealt with by the
full Board.
The terms of reference of the Committees
are available on the Company’s website at
www.diverseincometrust.com.
Audit Committee
The Audit Committee comprises all Directors and
is chaired by Calum Thomson. Andrew Bell, the
Company’s Chairman, is a member of the Audit
Committee but does not chair it. His membership
of the Audit Committee is considered appropriate
given the small size of the Board and the Chairman’s
knowledge of the financial services industry. The
Board considers that the members of the Audit
Committee have the requisite skills and experience
to fulfil the responsibilities of the Audit Committee
and competence relevant to the investment trust
sector. Mr Thomson is a qualified accountant
with over 25 years’ experience in the financial
servicesindustry.
A Report from the Chairman of the Audit
Committee is set out on pages 37 to 39.
Management Engagement Committee
The Management Engagement Committee
comprises all the Directors and is chaired by
Caroline Kemsley-Pein. The Committee meets at
least once a year to review the performance of the
Manager’s obligations under the Management
Agreement and to consider any variation to the
terms of the agreement, and reports its findings to
the Board. The Committee met twice during the
year to consider the performance of the Manager
and other service providers over the preceding
financial period.
In reaching its recommendation to the Board about
the continuing appointment of the Manager, the
Committee’s deliberations include consideration
of the fee basis for other companies in the Peer
Group, the performance of the Company against
its Peer Group, the share volatility against that of
other companies in the Peer Group and shareholder
feedback (see Continuing Appointment of the
Manager on page 23).
CORPORATE GOVERNANCE STATEMENT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
The Management Engagement Committee also
reviews annually the performance of the Secretary,
the Depositary, the Custodian and the Registrar and
any matters concerning their respective agreements
with the Company.
Disclosure Committee
The Disclosure Committee comprises all the
Directors and ensures inside information is
identified and disclosed, if necessary, in accordance
with the Market Abuse Regulation. No meetings of
the Committee were held during the year.
Nomination Committee
The Nomination Committee comprises all
Directors, as all are non-executive and considered
independent. The Nomination Committee is chaired
by Caroline Kemsley-Pein. The Committee considers
succession planning and leads the process for new
appointments, considering the skills, knowledge,
experience and diversity required for the Board. The
Committee meets at least once a year.
Stewardship Responsibilities and the Use of
Voting Rights
The Board delegates the day-to-day responsibilities
regarding the engagement with investee
companies to the Company’s Manager. However,
the Board retains oversight of this process
through regular updates from the Manager on
its engagement activities, and by reviewing the
Manager’s stewardship and voting policies.
PPM engages with the Company's underlying
investee companies on all areas of ESG, with
particular focus on governance. It is becoming ever
more prominent that companies that do not display
good governance may struggle to access capital
in the future, especially at the smaller end of the
market cap spectrum. Two areas of focus have been
board composition and remuneration, to ensure
that boards include members who are suitably
qualified and management are being appropriately
rewarded for their successes.
Concerning voting, the managers use the
independent proxy voting service Institutional
Shareholder Service (“ISS”) to provide them with
research on the proposed resolutions for each
investee company. However, they use them in a
research capacity only; the final decisions are always
taken on an active basis having considered the
merits of each on a case-by-case basis.
Company Secretary
The Board has direct access to the advice and
services of the Secretary, Link Alternative Fund
Administrators Limited, which is responsible for
ensuring that the Board and Committee procedures
are followed and that applicable regulations are
complied with. The Secretary is also responsible
to the Board for ensuring timely delivery of the
information and reports and that the relevant
statutory obligations of the Company are met.
Internal Control Review
The Directors are responsible for the risk
management and systems of internal control
relating to the Company and its subsidiary, and the
reliability of the financial reporting process and for
reviewing their effectiveness.
The Directors have reviewed and considered the
guidance supplied by the FRC on Risk Management,
Internal Control, and Related Finance and
Business Reporting and an ongoing process has
been established for identifying, evaluating and
managing the principal risks faced by the Group.
This process, which is regularly reviewed, together
with key procedures established with a view to
providing effective financial control, was in place
during the year under review and at the date of the
signing of this Report. The internal control systems
are designed to ensure that proper accounting
records are maintained, that the financial
information on which business decisions are made
and which are issued for publication is reliable and
that the assets of the Company are safeguarded.
The risk management process and Group systems of
internal control are designed to manage rather than
eliminate the risk of failure to achieve the Company’s
objectives. It should be recognised that such
systems can only provide reasonable, not absolute,
assurance against material misstatement or loss.
CORPORATE GOVERNANCE STATEMENT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
The Directors have carried out a review of the
effectiveness of the Group’s risk management and
internal control systems as they have operated
over the period and up to the date of approval of
the report and financial statements. There were
no matters arising from this review that required
further investigation and no significant failings or
weakness were identified.
Internal Control Assessment Process
Regular risk assessments and reviews of internal
controls are undertaken in the context of the
Company’s overall investment objective. The Board,
through the Audit Committee, has identified risk
management controls in four key areas: corporate
strategy; published information and compliance
with laws and regulations; relationships with service
providers; and investment and business activities. In
arriving at its judgement of what risks the Company
faces, the Board has considered the Company’s
operations in the light of the following factors:
• the nature and extent of risks which it regards
as acceptable for the Company to bear within
its overall business objective;
• the threat of such risks becoming reality;
• the Company’s ability to reduce the incidence
and impact of risk on its performance; and
• the cost to the Company and benefits related
to the Company and third parties operating
the relevant controls.
A risk matrix has been produced against which the
risks identified and the controls in place to mitigate
those risks can be monitored. The risks are assessed
on the basis of the likelihood of them happening,
the impact on the business if they were to occur and
the effectiveness of the controls in place to mitigate
them. This risk matrix is reviewed twice a year by the
Audit Committee and at other times as necessary.
The emerging and principal risks that have been
identified by the Board are set out on pages 15 to 18.
The Board reviews financial information produced by
the Manager and the Administrator on a regular basis.
Most functions for the day-to-day management
of the Company are sub-contracted, and the
Directors therefore obtain regular assurances and
information from key third party suppliers regarding
the internal systems and controls operated in their
organisations. In addition, each of the third parties
is requested to provide a copy of its report on
internal controls each year, which is reviewed by the
Audit Committee, together with letters of comfort
confirming that those controls were still in operation
at the Company’s year end.
Shareholder Relations
Communication with shareholders is given a high
priority by both the Board and the Manager and
the Directors are available to enter into dialogue
with shareholders. The Manager and the Company’s
Stockbroker, Panmure Gordon, are in regular
contact with the major institutional investors and
report the results of all meetings and the views of
those shareholders to the Board on a regular basis.
The Chairman and the other Directors are available
to attend these meetings with shareholders
ifrequired.
All shareholders are encouraged to attend and
vote at the AGM, during which the Board and the
Manager will be available to discuss issues affecting
the Company and answer any questions. Shareholders
wishing to communicate directly with the Board or
to lodge a question in advance of the AGM should
contact the Secretary at the address on page 98
or by emailing diverse_cosec@linkgroup.co.uk.
The Company always responds to letters
fromshareholders.
The Annual and Half-Yearly Reports of the Company
are prepared by the Board and its advisers to
present a full and readily understandable review of
the Company’s performance. Copies are released
to the London Stock Exchange, dispatched to
shareholders and are also available from the
Secretary or by downloading from the Company’s
website, www.diverseincometrust.com.
CORPORATE GOVERNANCE STATEMENT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
I am pleased to present the Audit Committee
Report for the year ended 31 May 2023.
Role of the Audit Committee
The primary responsibilities of the Audit Committee are:
• to monitor the integrity of the financial
statements of the Company and the Group,
and review the financial reporting process and
the accounting policies of the Company;
• to provide advice to the Board on whether
the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable,
and provides the information necessary for
shareholders to assess the Company's position
and performance, business model and
strategy;
• to keep under review the effectiveness of the
Company’s and the Group’s internal control
environment and risk management systems;
• to make recommendations to the Board in
relation to the re-appointment or removal of the
external auditor and to approve its remuneration
and terms of engagement, including the
provision of any non-audit services;
• to review the effectiveness of the audit process;
• to review and monitor the auditor’s
independence and objectivity; and
• to report to the Board on how it has discharged
its responsibilities.
The Audit Committee has direct access to the
Company’s Auditor, BDO LLP, and provides a forum
through which the Auditor reports to the Board.
Representatives of the Auditor attend meetings of
the Audit Committee on a regular basis.
Matters Considered in the Year
The Audit Committee met twice during the year
under review and once post the year end. It has:
• reviewed the internal controls and risk
management systems of the Company and its
third party service providers;
• agreed the audit plan with the Auditor,
including the principal areas of focus, and
agreed the audit fee;
• challenged the audit approach, particularly
relating to the treatment of the Put Option;
• received and discussed with the Auditor their
report on the results of the audit;
• made recommendations to the Board in
relation to the re-appointment of the Auditor;
• reviewed the Group’s financial statements
and discussed the appropriateness of the
accounting policies adopted; and
• met with the Manager to discuss and
challenge the valuation of investments.
The Audit Committee has reviewed and where
appropriate, updated the risk matrix. This is
done on a six-monthly basis. During the year
the Audit Committee reviewed the impact of
supply shortages, inflationary pressures, political
instability in the UK and the war in Ukraine on the
risksidentified.
The Audit Committee receives a report on internal
controls and compliance from the Manager’s
Compliance Officer on a six-monthly basis and
discusses this with the Manager. The Manager has
in place a compliance monitoring plan for testing
of controls as an alternative to establishing a separate
internal audit function. The Audit Committee also
receives reports from the Depositary and Custodian
at least once a year. No significant issues or
concerns arose from these reports. Reports from
the Company’s other service providers were also
reviewed and no significant matters of concern
wereidentified.
In the light of these reports and controls that are in
place, the Audit Committee does not consider that
an internal audit function would provide sufficient
additional comfort to warrant the extra costs to
theCompany.
AUDIT COMMITTEE REPORTCORPORATE GOVERNANCE STATEMENT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
The Audit Committee monitors and reviews the
effectiveness of the external audit process for
the Annual Report, including a detailed review
of the audit plan and the audit results report,
and makes recommendations to the Board on
the re-appointment, remuneration and terms of
engagement of the Auditor.
In addition to questioning the Auditor on the
approach outlined in the audit plan, the Audit
Committee challenged the Auditor about the
approach taken to audit the liquidity of the portfolio
and the fair value of the Put Option. The Audit
Committee was satisfied with the overall approach
to the audit. The review took into account the
experience and tenure of the audit partner and
team, the nature and level of services provided, and
confirmation that the Auditor has complied with
independence standards. The Audit Committee
also reviews a copy of the latest FRC Audit Quality
Inspection Report on the Auditor. The Auditor was
challenged regarding the FRC report on BDO and
in particular if any of the findings had changed
the approach adopted in the external audit of the
Company. It was confirmed that no changes had
been implemented as a result of the review and no
findings were identified that caused concern.
Significant Issue Mitigation
The valuation and ownership of the investment
portfolio including the Put Option.
The Board relies on the Administrator and the
Manager to use correct listed prices and seeks
comfort in the testing of this process through the
internal control statements. This was discussed
with the Administrator, Manager and Auditor at the
conclusion of the audit of the financial statements.
The Audit Committee has also discussed, challenged
and agreed with the Manager the use of and
approach to the valuation of listed bonds and the Put
Option. Regular updates are provided to the Directors
about the activities and valuations of any unquoted
holdings.
The Company uses the services of an independent
Depositary (The Bank of New York Mellon
(International) Limited) to hold the assets of the
Company. The Depositary checks the consistency of
its records with those of the Manager on a monthly
basis and reports to the Audit Committee twice a year.
The allocation of special dividends between
revenueand capital.
The Audit Committee has also reviewed and
confirmed with the Manager, Administrator and
Auditor the treatment of special dividends.
AUDIT COMMITTEE REPORT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Significant Issue Mitigation
Review of Going Concern and Viability At each of its meetings, the Audit Committee reviews
and discusses a Going Concern assessment paper
provided by the Manager. The paper sets out the
key reasons why the Going Concern assumption
is applicable to the Company and is accompanied
by revenue forecasts and liquidity analysis. In
addition, the Board considers this paper twice a
year, in quarters where no Audit Committee is being
held. The viability assessment is reviewed by the
Audit Committee and in particular the underlying
assumptions are subjected to sensitivityanalysis.
Following the consideration of the above matters
and its detailed review, the Audit Committee was
of the opinion that the Annual Report, taken as a
whole, is fair, balanced and understandable and
provides the information necessary for shareholders
to assess the Company’s position and performance,
business model and strategy.
Audit Fees and Non-Audit Services
An audit fee of £60,000 (inclusive of VAT) has been
agreed in respect of the audit for the year ended
31 May 2023 (2022: £49,000).
In relation to non-audit services, the Audit
Committee reviews the scope and nature of all
proposed non-audit services before engagement, to
ensure that Auditor independence and objectivity
are safeguarded. No non-audit fees were paid to
BDO LLP in the year (2022: none to BDO LLP, the
Auditor for that financial year).
Independence and Objectivity of the Auditor
The Audit Committee has considered the
independence and objectivity of the Auditor. No
non-audit services have been provided by the
Auditor. Given that the Board has indicated that it is
unlikely to carry out any further C share issues, the
level of non-audit fees is likely to remain low in the
future. Following its review of the independence
of the Auditor, the Audit Committee has been
reassured that no conflicts have arisen during
theyear.
BDO LLP were appointed as Auditor to the Company
at the 2020 AGM. Vanessa-Jayne Bradley has acted
as the Audit Partner since BDO LLP’s appointment.
Audit Tender
The Company last carried out an audit tender
during 2020, following which BDO LLP was
appointed as Auditor.
Following consideration of the performance of
the Auditor, the quality of the external audit and
the service provided during the year and a review
of their independence and objectivity, the Audit
Committee has recommended to the Board
the re-appointment of BDO LLP as Auditor to
theCompany.
Calum Thomson
Audit Committee Chairman
7 August 2023
AUDIT COMMITTEE REPORT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
The Board has prepared this report in accordance
with the requirements of the Large and
Medium-Sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013.
Ordinary resolutions for the approval of the Directors’
Remuneration Report and the Remuneration Policy
will be put to shareholders at the forthcoming AGM.
The law requires the Company’s Auditor to
audit certain of the disclosures provided. Where
disclosures have been audited, they are indicated
as such. The Auditor’s opinion is included in the
Independent Auditor’s Report on pages 46 to 54.
Statement from the Chairman
I am pleased to present the Directors’ Remuneration
Report for the year ended 31 May 2023.
Given the size of the Board, it is not considered
appropriate for the Company to have a separate
remuneration committee and the functions of this
committee are therefore carried out by the Board as
a whole. The Board consists entirely of independent
non-executive Directors and the Company has
no employees. We have not, therefore, reported
on those aspects of remuneration that relate to
executive Directors.
Directors’ fees were last increased on 1 June
2022. Following an annual review of Directors’ fees
against those of the Company's Peer Group and the
average for similar-sized investment trusts, the Board
has agreed that the Chairman's fee will increase to
£44,000 per annum, the Audit Committee Chairman's
fee to £ 35,950 per annum and the fee for the other
Directors to £31,600 per annum, to align them with
current market levels and taking inflation into account.
These changes, which are an overall increase of 3.6%,
took effect from 1 June 2023.
There will be no significant change in the way the
Remuneration Policy will be implemented in the
course of the next financial year.
Directors’ Remuneration Policy
A resolution to approve this Remuneration Policy
which was last approved at the AGM of the
Company on 14 October 2020, will be proposed
at the forthcoming AGM. If passed, the policy
provisions set out below will apply until they are next
put to shareholders for renewal of that approval,
which must be at intervals of not more than three
years, or the Remuneration Policy is varied, in
which event shareholder approval for the new
Remuneration Policy will be sought.
The Board’s policy is that remuneration of
non-executive Directors should reflect the
experience of the Board as a whole and is
determined by reference to comparable
organisations and appointments.
The level of remuneration has been set in order to
attract individuals of a calibre appropriate to the
future development of the Company and to reflect
the specific circumstances of the Company, the
duties and responsibilities of the Directors and
the value and amount of time committed to the
Company’s affairs.
The fees for the non-executive Directors are
determined within the limits (not to exceed
£500,000 per year in aggregate) set out in the
Company’s Articles of Association, or any greater
sum that may be determined by ordinary
resolutions of the Company. The Chairman does
not participate in any discussions relating to
his own fee, which is determined by the other
independent Directors. Directors are not eligible
for bonuses, share options or long-term incentive
schemes or other performance-related benefits, as
the Board does not believe that this is appropriate
for non-executive Directors. There are no pension
arrangements in place for the Directors of
theCompany.
DIRECTORS’ REMUNERATION REPORT
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The Diverse Income Trust plc
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Annual Report 2023
Under the Company’s Articles of Association, if any
Director is called upon to perform extra or special
services of any kind, they shall be entitled to receive
such sum as the Board may think fit for expenses,
and also such remuneration as the Board may think
fit, either as a fixed sum or as a percentage of profits
or otherwise, and such remuneration may, as the
Board shall determine, be either in addition to or in
substitution for any other remuneration they may
be entitled to receive.
Directors are entitled to be paid all expenses
properly incurred in attending Board or shareholder
meetings or otherwise in or with a view to the
performance of their duties.
Directors’ and Officers’ liability insurance cover
is maintained by the Company on behalf of the
Directors.
Component Director
Rate at
1 June 2023
Purpose of
Remuneration
Annual fee Chairman £44,000 Commitment as Chairman
1
Annual fee Non-executive Directors £31,600 Commitment as a non-executive Director
2
Additional fee Chairman of the Audit Committee £4,350 For additional responsibilities and time commitments
3
Annual fee Senior Independent Director £nil
Additional fee All Directors Discretionary For extra or special services performed in their role as a Director
4
Expenses All Directors N/A Reimbursement of expenses incurred in the performance of
duties as a Director
1 The Company’s policy is for the Chairman of the Board to be paid a higher fee than the other Directors to reflect the more onerous role.
2 The Company’s Articles of Association limit the aggregate fees payable to the Board of Directors to a total of £500,000 per annum.
3 The Company’s policy is for the Chairman of the Audit Committee to be paid a higher fee than the other Directors to reflect the more onerous role.
4 Additional fees would only be paid in exceptional circumstances in relation to the performance of extra or special services.
No other additional fees are payable for
membership of the Board’s committees.
Fees for any new Director appointed will be on the
above basis. Fees payable in respect of subsequent
periods will be determined following an annual
review. Any views expressed by shareholders on the
fees being paid to Directors would be taken into
consideration by the Board.
It is the Board’s policy that Directors do not have
service contracts, but Directors are provided with a
letter of appointment as a non-executive Director.
The terms of their appointment provide that
Directors shall retire and be subject to election at
the first AGM after their appointment. Thereafter,
they will be subject to annual re-election.
Compensation will not be made upon early
termination of appointment.
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
Remuneration Report
Directors’ Fees for the Period (audited)
The Directors who served in the year received the following emoluments:
Year ended 31 May 2023 Year ended 31 May 2022 Percentage change
Fees
£
Expenses
£
Total
£
Fees
£
Expenses
£
Total
£
2022 –
2023
2021 –
2022
2020 –
2021
Andrew Bell
1
(Chairman) 42,500 – 42,500 40,500 237 40,737 4.7 17.5 25.2
1
Charles Crole
2
30,500 – 30,500 9,667 – 9,667 68.3
2
N/A N/A
Caroline Kemsley-Pein 30,500 – 30,500 29,000 – 29,000 4.9 5.3 –
Michelle McGrade 30,500 – 30,500 29,000 – 29,000 4.9 5.3 –
Calum Thomson 34,700 – 34,700 33,000 – 33,000 4.9 5.1 –
168,700 – 168,700 141,167 237 141,404
1
Appointed as a Chairman on 14 October 2020.
2
Appointed as a Director on 1 February 2022.
Company Performance
The Company does not have a specific benchmark
against which performance is measured. The graph
below compares the total return (assuming all
dividends are reinvested) to holders of ordinary
shares since they were first admitted to the Official
List of the FCA, compared to the total shareholder
return of the Numis All-Share Total Return Index,
which is the closest broad index against which to
measure the Company’s performance.
Source: Premier Miton Investors
Relative Importance of Spend on Pay
The table below shows the amount spent on pay.
2023
£000
2022
£000 Change
Total remuneration paid
toDirectors 169 163 +3.7%
Investment Management fee 2,931 3,559 -17.6%
Distribution to shareholders:
– dividends 14,235 13,743 +3.6%
– share buyback/redemption 6,676 – N/A
Note: the items listed in the table above are as required by the Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 ss.20 with the exception of the investment management
fee, which has been included because the Directors believe it will help
shareholders’ understanding of the relative importance of the spend on
pay. The figures for this measure are the same as those shown in note 3 to
the financial statements. The amounts spent on the redemption of shares
are included in line with the GC100 and Investor Group guidance, as this is
considered a significantpayment. The figures for this measure are the same
as those shown in the Consolidated Statement of Changes in Equity and Cash
FlowStatement.
28/4
2011
31/5
2012
31/5
2013
31/5
2014
31/5
2015
31/5
2016
31/5
2017
31/5
2018
31/5
2022
31/5
2023
-50
0
50
250
Diverse Income Trust NAV Total Return
Numis All-Share Total Return
31/5
2019
100
150
200
31/5
2020
31/5
2021
% Change
DIRECTORS’ REMUNERATION REPORT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Directors’ Beneficial and Family Interests (audited)
There is no requirement under the Company’s Articles
of Association or the terms of their appointment for
Directors to hold shares in the Company.
The interests of the Directors and their families
in the ordinary shares of the Company as at
31 May2023 are set out below:
At 31 May 2023
Number of
ordinary shares
At 31 May 2022
Number of
ordinary shares
Andrew Bell (Chairman) 200,000 200,000
Charles Crole 19,936 9,091
Caroline Kemsley-Pein 52,458 38,289
Michelle McGrade 63,616 63,616
Calum Thomson 53,591 53,591
There have been no changes to Directors' interests
between 31 May 2023 and the date of this Report.
Voting at Annual General Meeting
The Directors’ Remuneration Report for the
year ended 31 May 2022 was approved by
shareholders at the AGM held on 18 October 2022.
The Remuneration Policy was last approved by
shareholders at the AGM held on 14 October 2020.
The votes cast by proxy were as follows:
Directors’
Remuneration Report
(AGM 2022)
Directors’
Remuneration Policy
(AGM 2020)
Number
of votes
% of
votes cast
Number
of votes
% of
votes cast
For 188,362,552 99.81 136,168,240 99.86
Against 346,013 0.18 181,012 0.13
At Chairman’s
discretion 5,444 0.01 12,199 0.01
Total votes cast 188,714,009 100 136,361,451 100
Number of votes
withheld 98,540 54,384
Approval
The Directors’ Remuneration Report was approved
by the Board on 7 August 2023.
On behalf of the Board
Andrew Bell
Chairman
7 August 2023
DIRECTORS’ REMUNERATION REPORT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
The Directors are responsible for preparing the
Annual Report and the financial statements
in accordance with UK adopted international
accounting standards and applicable law and
regulations.
Company law requires the Directors to prepare
financial statements for each financial year. Under
that law the Directors are required to prepare the
Group financial statements in accordance with UK
adopted international accounting standards. Under
company law the Directors must not approve the
financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and Company and of the profit or loss for
the Group for that period.
In preparing these financial statements, the
Directors are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and accounting estimates
that are reasonable and prudent;
• state whether they have been prepared in
accordance with UK adopted international
accounting standards, subject to any material
departures disclosed and explained in the
financial statements;
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Company will continue in
business;
• prepare a directors’ report, a strategic
report and directors’ remuneration report
which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to ensure
that the financial statements comply with the
Companies Act 2006.
They are also responsible for safeguarding the
assets of the Company and hence for taking
reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are
responsible for ensuring that the Annual Report
and accounts, taken as a whole, are fair, balanced,
and understandable and provides the information
necessary for shareholders to assess the Group’s
performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the
Annual Report and the financial statements are
made available on a website. Financial statements
are published on the Company’s website in
accordance with legislation in the United Kingdom
governing the preparation and dissemination
of financial statements, which may vary from
legislation in other jurisdictions. The maintenance
and integrity of the Company's website has been
delegated to the Manager, but the Directors
responsibility extends to the ongoing integrity of the
financial statements contained therein.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
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The Diverse Income Trust plc
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Annual Report 2023
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Directors’ responsibilities pursuant to DTR4
Each of the Directors, whose names and
functions are listed in the Board of Directors
section on page24 confirm that, to the best of
theirknowledge:
• The financial statements have been prepared
in accordance with the applicable set of
accounting standards, give a true and fair view
of the assets, liabilities, financial position and
profit and loss of the Group and Company.
• The Annual Report includes a fair review of the
development and performance of the business
and the financial position of the Group and
Company, together with a description of the
principal risks and uncertainties that they face.
In the opinion of the Board, the Annual Report
and Financial Statements taken as a whole, is fair,
balanced and understandable and it provides the
information necessary to assess the Company’s
position and performance, business model
andstrategy.
On behalf of the Board
Andrew Bell
Chairman
7 August 2023
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair
view of the state of the Group’s and of the
Parent Company’s affairs as at 31 May 2023 and
of the Group’s loss for the year then ended;
• the Group financial statements have been
properly prepared in accordance with UK
adopted international accounting standards;
• the Parent Company financial statements
have been properly prepared in accordance
with UK adopted international accounting
standards and as applied in accordance with
the provisions of the Companies Act 2006; and
• the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of The
Diverse Income Trust plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) for the year ended
31 May 2023 which comprise the Consolidated
Income Statement, the Consolidated and Parent
Company Statement of Changes in Equity, the
Consolidated and Parent Company Balance
Sheets, the Consolidated and Parent Company
Cash Flow Statements and the notes to the
financial statements, including a summary of
significant accounting policies. The financial
reporting framework that has been applied in
their preparation is applicable law and UK adopted
international accounting standards and as regards
the Parent Company financial statements, as
applied in accordance with the provisions of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial
statements section of our report. We believe that
the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Our audit opinion is consistent with the additional
report to the audit committee.
Independence
Following the recommendation of the audit
committee, we were appointed by the members
of the Parent Company on 14 October 2020 to
audit the financial statements for the year ended
31 May 2021 and subsequent financial periods.
The period of total uninterrupted engagement
including retenders and reappointments is 3 years,
covering the years ended 31 May 2021 to 31 May
2023. We remain independent of the Group and
the Parent Company in accordance with the ethical
requirements that are relevant to our audit of
the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by
that standard were not provided to the Group or the
Parent Company.
INDEPENDENT AUDITOR’S REPORT
To the members of The Diverse Income Trust plc
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The Diverse Income Trust plc
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Annual Report 2023
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the
Group and the Parent Company’s ability to continue
to adopt the going concern basis of accounting
included:
• Evaluating the appropriateness of the
Directors’ method of assessing the going
concern in light of market volatility and
the present uncertainties by reviewing
the information used by the Directors
in completing their assessment;
• Assessing the appropriateness of the Directors’
assumptions and judgements made in
their base case and stress tested forecasts
including consideration of the available cash
resources relative to forecast expenditure
and commitments and the sufficiency of the
liquidity of the portfolio;
• Checking the accuracy of historical forecasting
by agreeing to actual results.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the Group and the
Parent Company’s ability to continue as a going
concern for a period of at least twelve months
from when the financial statements are authorised
forissue.
In relation to the Parent Company’s reporting on
how it has applied the UK Corporate Governance
Code, we have nothing material to add or draw
attention to in relation to the Directors’ statement
in the financial statements about whether the
Directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of
the Directors with respect to going concern are
described in the relevant sections of this report.
Overview
Coverage 100% (2022: 100%) of Group revenue
100% (2022: 100%) of Group total assets
Key audit matters
Valuation and ownership of investments
RevenueRecognition
2023
2022
Materiality Group financial statements as a whole
£3.163m (2022: £4.000m) based on 1% (2022: 1%) of
netassets
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
An overview of the scope of our audit
Our Group audit was scoped by obtaining an
understanding of the Group and its environment,
including the Group’s system of internal control, and
assessing the risks of material misstatement in the
financial statements. We also addressed the risk of
management override of internal controls, including
assessing whether there was evidence of bias by
the Directors that may have represented a risk of
material misstatement.
We tailored our audit to ensure we have performed
sufficient work to be able to give an opinion on the
financial statements as a whole taking into account
the structure of the Group and its accounting
processes and controls. The Group is based in the
United Kingdom and has one main trading entity,
The Diverse Income Trust plc whose principal
activity is that of an Investment Trust. The Group has
one subsidiary, The Diverse Income Trust Income
Services Limited whose principal activity is to invest
in listed equities that are held for trading and for
the short term. This is not a significant component
of the Group. In respect of the non-significant
component, the Group engagement team
performed testing over subsequent events, going
concern, related parties and performed an overall
analytical review of the entity.
The Group audit engagement team carried out a full
scope audit for the Parent Company.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance
in our audit of the financial statements of the
current period and include the most significant
assessed risks of material misstatement (whether or
not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit,
and directing the efforts of the engagement team.
These matters were addressed in the context of our
audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide
a separate opinion on these matters.
INDEPENDENT AUDITOR’S REPORT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Key audit matter
How the scope of our audit addressed
the key audit matter
Valuation and ownership
ofinvestments
Note 1 and 12
The investment portfolio at the
year-end comprised of quoted
equity investments.
There is a risk that the prices used
for the listed investments held by
the Company are not reflective
of fair value and the risk that
errors made in the recording of
investment holdings result in the
incorrect reflection of investments
owned by the Company.
Therefore we considered the
valuation and ownership of
quoted investments to be the
most significant audit area as
the quoted investments also
represent the most significant
balance in the financial
statements and underpin the
principal activity of the entity.
Furthermore, we consider the
valuation disclosures to be a
significant area as they are
expected to be a key area of
interest for the users of the
financial statements.
For these reasons and the
materiality of the balance
in relation to the financial
statements as a whole, we
considered this to be a key
auditmatter.
We responded to this matter by testing
the valuation and ownership of the
whole portfolio of quoted investments.
We performed the following procedures:
• Confirmed the year end bid price was
used by agreeing to externally quoted
prices;
• Assessed if there were contra
indicators such as liquidity
considerations which may suggest the
bid price is not the most appropriate
indication of the fair value by
considering the realisation period for
individual holdings;
• Recalculate the valuation by
multiplying the number of shares held
per the statement obtained from the
custodian by the valuation per share;
and
• Obtained direct confirmation of the
number of shares held per equity
investment from the custodian
regarding all investments held at the
balance sheet date.
Key observations:
Based on our procedures, performed we
did not identify any matters to suggest
that the valuation and ownership
of quoted equity investments was
notappropriate.
INDEPENDENT AUDITOR’S REPORT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
INDEPENDENT AUDITOR’S REPORT CONTINUED
Key audit matter
How the scope of our audit addressed
the key audit matter
Revenue
Recognition
Note 1 and 2
Income arises from dividends and
interest and can be volatile but is
a key factor in demonstrating the
performance of the portfolio. As
such there may be an incentive
to recognise income as revenue
where it is more appropriately of a
capital nature.
Additionally, judgement is
required by management in
determining the allocation of
dividend income to revenue
or capital for certain corporate
actions or special dividends.
For this reason we considered
revenue recognition to be a key
audit matter.
We assessed the treatment of dividend
income from corporate actions and
special dividends and challenged if
these had been appropriately accounted
for as income or capital by reviewing
the underlying reason for issue of the
dividend and whether it could be driven
by a capital event.
We analysed the whole population of
dividend receipts to identify items for
further discussion that could indicate a
capital distribution, for example where
a dividend represents a particularly
high yield. In these instances we
performed a combination of inquiry with
management and our own independent
research, including inspection of
financial statements of investee
companies, to ascertain whether the
underlying event was indeed of a
capitalnature.
Key observations:
Based on our procedures performed
we found the judgements made by
management in determining the
allocation of income to revenue or
capital to be appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the
effect of misstatements. We consider materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we
also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
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The Diverse Income Trust plc
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Annual Report 2023
Based on our professional judgement, we determined materiality for the financial statements as a whole
and performance materiality as follows:
Group financial statements
Parent company
financialstatements
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Materiality
3,163 4,000 3,153 3,960
Basis for determining materiality
1% of net assets
Rationale for the
benchmark applied
As an investment trust, the net asset value is the key measure
of performance for users of the financial statements.
Performance materiality
2,372 3,000 2,364 2,990
Basis for determining
performance materiality
75% of materiality
Rationale for the percentage applied
for performance materiality
The level of performance materiality applied was set after
having considered a number of factors including the
expected total value of known and likely misstatements and
the level of transactions in the year.
Specific materiality
We also determined that for items relating to the income statement, a misstatement of less than materiality
for the financial statements as a whole, specific materiality, could influence the economic decisions of users.
As a result, we determined materiality for these items to be £1,453,000 (2022: £1,475,000) which is based on 10%
of revenue return before tax. We further applied a performance materiality level of 75% (2022: 75%) of specific
materiality to ensure that the risk of errors exceeding specific materiality was appropriately mitigated.
Component materiality
Materiality for the parent company, which was the only significant component, is set out in the table above.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of
£72,000 (2022: £73,000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the Annual report and accounts other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit,
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
INDEPENDENT AUDITOR’S REPORT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term
viability and that part of the Corporate Governance Statement relating to the parent company’s compliance
with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with the financial statements or our
knowledge obtained during the audit.
Going concern and
longer-term viability
• The Directors’ statement with regards to the appropriateness of adopting the going
concern basis of accounting and any material uncertainties identified; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the
period this assessment covers and why the period is appropriate.
Other Code
provisions
• Directors’ statement on fair, balanced and understandable;
• Board’s confirmation that it has carried out a robust assessment of the emerging
and principal risks;
• The section of the annual report that describes the review of effectiveness of risk
management and internal control systems; and
• The section describing the work of the Audit Committee.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit,
we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as
described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the
financial year for which the financial statements are prepared is consistent with the
financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance
with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company
and its environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Matters on which we
are required to report
byexception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or
returns adequate for our audit have not been received from branches not visited by
us; or
• the Parent Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the accounting
records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
INDEPENDENT AUDITOR’S REPORT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Responsibilities of Directors
As explained more fully in the Statement of
Directors’ Responsibilities, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view, and for such internal control as
the Directors determine is necessary to enable the
preparation of financial statements that are free
from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Directors
are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern and using the going concern basis
of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on
• Our understanding of the Group and Company
and the industry in which it operates;
• Discussion with management and those charged
with governance and the Audit Committee; and
• Obtaining and understanding of the Company’s
policies and procedures regarding compliance
with laws and regulations;
we considered the significant laws and regulations
to be Companies Act 2006, the FCA listing and DTR
rules, the principles of the AIC Code of Corporate
Governance, industry practice represented by the
AIC SORP, the applicable accounting framework,
and qualification as an Investment Trust under UK
tax legislation as any non-compliance of this would
lead to the Company losing various deductions and
exemptions from corporation tax.
Our procedures in respect of the above included:
• Agreement of the financial statement disclosures
to underlying supporting documentation;
• Enquiries of management and those charged
with governance relating to the existence of any
non-compliance with laws and regulations;
• Reviewing minutes of meeting of those charged
with governance throughout the period for
instances of non-compliance with laws and
regulations; and
• Reviewing the calculation in relation to
Investment Trust compliance to check that the
Company was meeting its requirements to retain
their Investment Trust Status.
INDEPENDENT AUDITOR’S REPORT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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GOVERNANCE
Fraud
We assessed the susceptibility of the financial
statements to material misstatement, including
fraud. Our risk assessment procedures included:
• Enquiry with management and those charged
with governance and the Audit Committee
regarding any known or suspected instances
offraud;
• Obtaining an understanding of the Group’s
policies and procedures relating to:
• Detecting and responding to the risks of fraud;
and
• Internal controls established to mitigate risks
related to fraud.
• Review of minutes of meeting of those charged
with governance for any known or suspected
instances of fraud; and
• Discussion amongst the engagement team
as to how and where fraud might occur in the
financialstatements;
Based on our risk assessment, we considered the
areas most susceptible to fraud to be management
override of controls and revenue recognition.
Our procedures in respect of the above included:
• Management override of controls:
• Testing journals which met a defined risk criteria
by agreeing to supporting documentation and
evaluating whether there was evidence of bias
by the Investment Manager and Directors that
represented a risk of material misstatement due
to fraud.
• Revenue recognition:
• The procedures as set out in the Key Audit
Matters section above.
We also communicated relevant identified laws
and regulations and potential fraud risks to all
engagement team members who were all deemed
to have appropriate competence and capabilities
and remained alert to any indications of fraud
or non-compliance with laws and regulations
throughout the audit.
Our audit procedures were designed to respond
to risks of material misstatement in the financial
statements, recognising that the risk of not detecting
a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for
example, forgery, misrepresentations or through
collusion. There are inherent limitations in the audit
procedures performed and the further removed
non-compliance with laws and regulations is from
the events and transactions reflected in the financial
statements, the less likely we are to become aware
of it.
A further description of our responsibilities is
available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the Parent Company’s members those matters
we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Parent
Company and the Parent Company’s members as
a body, for our audit work, for this report, or for the
opinions we have formed.
Vanessa-Jayne Bradley
Senior Statutory Auditor
For and on behalf of BDO LLP
Statutory Auditor
London, UK
7 August 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
INDEPENDENT AUDITOR’S REPORT CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
CONSOLIDATED INCOME STATEMENT
Year ended
31 May 2023
Year ended
31 May 2022
Notes
Revenue
return
£000
Capital
return
£000
Total
£000
Revenue
return
£000
Capital
return
£000
Total
£000
Losses on investments held at fair value through profit or loss 12 – (71,293 ) (71,293 ) – (20,655 ) (20,655 )
Foreign exchange gains/(losses) – 2 2 – (23 ) (23 )
Losses on derivatives held at fair value through profit or loss 13 – (3,907 ) (3,907 ) – (5,536 ) (5,536 )
Income 2 16,127 77 16,204 16,512 158 1 6 ,670
Management fee 3 (732 ) (2 ,199 ) (2,931 ) (890 ) (2,669 ) (3,559 )
Other expenses 4 (846 ) – (846 ) (850 ) – (850 )
Return/(loss) on ordinary activities before finance costs
andtaxation 14,549 (77,320 ) (62,771 ) 14,772 (28,725 ) (13,953 )
Finance costs 5 (11 ) (34 ) (45 ) (13 ) (41 ) (54 )
Return/(loss) on ordinary activities before taxation 14,538 (77,354 ) (62,816 ) 14,759 (28,766 ) (14 ,007 )
Taxation – irrecoverable withholding tax 6 (108 ) – (108 ) (257 ) – (257 )
Return on ordinary activities after taxation 7 14,430 (77 ,354 ) (62,924 ) 14,502 (28,7 66 ) (14, 264 )
Return per Ordinary share – basic and diluted (pence) 7 4 .05 21.72 17 .67 4.0 1 7.95 3.94
The total column of this statement is the Income Statement of the Company prepared in accordance
with UK adopted international accounting standards in conformity with the requirements of UK IFRS. 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 (“AICSORP”).
The Directors have applied the exemption under Companies Act 2006 s408 allowing the parent company’s
individual income statement to be omitted from the accounts where group accounts have been prepared.
The amount of the Company’s return for the financial year is a loss after tax of £62,924,000 (2022: loss of
£14,264,000).
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 notes on pages 60 to 81 form part of these financial statements.
INDEPENDENT AUDITOR’S REPORT CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
Group Notes
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 1 June 2022 412 197 ,039 26 22,37 8 164 ,325 15,933 400,113
Total comprehensive income:
Net return for the year – – – – (77 ,354 ) 14,430 (62,924 )
Transactions with shareholders recorded
directly toequity:
Redemption of Ordinary shares – – – (6,676 ) – – (6,676 )
Cancellation of Ordinary shares (6 ) – 6 – – – –
Expenses in relation to cancellation – – – (3 ) – – (3 )
Equity dividends paid 8 – – – – – (14 ,235 ) (14, 235 )
As at 31 May 2023 406 197 ,039 32 15,699 86,971 16 ,128 316, 275
Group Notes
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 1 June 2021 411 196,562 26 22,37 8 193, 091 15,17 4 427 ,642
Total comprehensive income:
Net return for the year – – – – (28,766 ) 14,502 (14 ,264 )
Transactions with shareholders recorded
directly toequity:
Issue of ordinary shares 1 546 – – – – 5 47
Shares bought back and cancelled – (69 ) – – – – (69 )
Equity dividends paid 8 – – – – – (13,7 43 ) (13,7 43 )
As at 31 May 2022 412 197 ,039 26 22,37 8 164,325 15,933 400 ,113
The notes on pages 60 to 81 form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES
INEQUITY
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Annual Report 2023
CONSOLIDATED STATEMENT OF CHANGES
INEQUITY
PARENT COMPANY STATEMENT OF
CHANGES IN EQUITY
Company Notes
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 1 June 2022 412 197,039 26 22,378 164,325 15,037 399,217
Total comprehensive income:
Net return for the year – – – – (77,354) 14,430 (62,924)
Transactions with shareholders recorded
directly toequity:
Redemption of Ordinary shares – – – (6,676) – – (6,676)
Cancellation of Ordinary shares (6) – 6 – – – –
Expenses in relation to cancellation – – – (3) – – (3)
Equity dividends paid 8 – – – – – (14,235) (14,235)
As at 31 May 2023 406 197,039 32 15,699 86,971 15,232 315,379
Company Notes
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 1 June 2021 411 196,562 26 22,378 193,091 14,278 426,746
Total comprehensive income:
Net return for the year – – – – (28,766) 14,502 (14,264)
Transactions with shareholders recorded
directly toequity:
Issue of ordinary shares 1 546 – – – – 547
Expense of share issue – (69) – – – – (69)
Shares bought back and cancelled – – – – – – –
Equity dividends paid 8 – – – – – (13,743) (13,743)
As at 31 May 2022 412 197,039 26 22,378 164,325 15,037 399,217
The notes on pages 60 to 81 form part of these financial statements.
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
CONSOLIDATED AND PARENT COMPANY
BALANCESHEETS
Notes
Group
31 May 2023
£000
Group
31 May 2022
£000
Company
31 May 2023
£000
Company
31 May 2022
£000
Non-current assets:
Investments held at fair value through profit or loss 12 2 78 ,93 3 377 ,591 278,933 377,591
Current assets:
Derivative instruments 13 84 8 2,48 1 848 2,481
Trade and other receivables 16 2,398 3,899 2,398 3,899
Cash and cash equivalents 3 4 , 47 6 16,543 34,476 16,543
Current liabilities:
Trade and other payables 17 (380 ) (401 ) (1,276) (1,297)
(380 ) (401 ) (1,276) (1,297)
Net current assets 3 7, 3 4 2 22,522 36,446 21,626
Total net assets 316,275 400,113 315,379 399,217
Capital and reserves:
Share capital – ordinary shares 9 356 362 356 362
Share capital – management shares 9 50 50 50 50
Share premium account 10 197 ,039 197 ,039 197,039 197,039
Capital redemption reserve 10 32 26 32 26
Special reserve 10 15,699 22,37 8 15,699 22,378
Capital reserve 10 86,971 164,325 86,971 164,325
Revenue reserve 10 16,128 15,933 15,232 15,037
Shareholders’ funds 316,275 400,113 315,379 399,217
pence pence
Net asset value per ordinary share 11 88 .87 110.55
These financial statements were approved and authorised for issue by the Board of The Diverse Income
Trust plc on 7 August 2023 and were signed on its behalf by:
Andrew Bell
Chairman
Company No: 07584303
The notes on pages 60 to 81 form part of these financial statements.
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Annual Report 2023
CONSOLIDATED AND PARENT COMPANY
BALANCESHEETS
CONSOLIDATED AND PARENT COMPANY
CASHFLOW STATEMENTS
Group
31 May 2023
£000
Group
31 May 2022
£000
Company
31 May 2023
£000
Company
31 May 2022
£000
Operating activities:
Net loss before taxation (62,816 ) (14,007 ) (62,816) (14,007)
Losses on investments and derivatives held at fair value through profit
or loss 75,200 26,191 75,200 26,191
Finance costs 53 63 53 63
Decrease/(increase) in trade and other receivables 342 (730 ) 342 (730)
(Decrease)/increase in trade and other payables (21 ) (36 ) (21) 11
Withholding tax paid (108 ) (25 7 ) (108) (257)
Net cash inflow from operating activities 12,650 11,224 12,650 11,271
Investing activities:
Purchase of investments (51,599 ) (75,7 48 ) (51,599) (75,748)
Sale of investments 80,123 91,033 80,123 91,033
Purchase of derivative instruments (4,364 ) (8 ,017 ) (4,364) (8,017)
Sale of derivative instruments 2,090 – 2,090 –
Net cash inflow from investing activities 26,250 7, 2 6 8 26,250 7,268
Financing activities:
Ordinary shares issued – 550 – 550
Expenses of share issue – (72 ) – (72)
Cancellation of shares (6,679 ) – (6,679) –
Revolving credit facility arrangement fee paid (30 ) (10 ) (30) (10)
Revolving credit facility non-utilisation fee paid (23 ) (53 ) (23) (53)
Equity dividends paid (14, 235 ) (13,7 43 ) (14,235) (13,743)
Net cash outflow from financing (20,967 ) (13,328 ) (20,967) (13,328)
Increase in cash and cash equivalents 17 ,933 5,164 17,933 5,211
Reconciliation of net cash flow movements in funds:
Cash and cash equivalents at the start of the year 16,543 11,379 16,543 11,332
Net cash inflow from cash and cash equivalents 17,9 33 5,164 17,933 5,211
Cash and cash equivalents at the end of the year 34 , 47 6 16,543 34,476 16,543
Cash and cash equivalents comprise the following:
Cash at bank 3 4 , 47 6 16,543 34,476 16,543
The notes on pages 60 to 81 form part of these financial statements.
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
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The Diverse Income Trust plc
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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COMPANY
AND GROUP
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
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Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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COMPANY
AND GROUP
ACCOUNTS
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 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 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 either 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 doubts 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 2024 Redemption
Point are:
1 May 2024 Latest date for receipt of
Redemption Requests and
certificates for certificated shares
3.00 pm on
1 May 2024
Latest date and time for receipt
of Redemption Requests and TTE
(transfer to escrow) instructions for
uncertificated shares via CREST
5.00 pm on
31 May 2024
The Redemption Point
On or before
14June 2024
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
28June 2024
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.
REDEMPTION OF ORDINARY SHARES UNAUDITED
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Annual Report 2023
REDEMPTION OF ORDINARY SHARES UNAUDITED
The Company was incorporated on 30 March 2011.
Following a placing and offer for subscription, the
ordinary shares were admitted to trading on the
London Stock Exchange on 28 April 2011.
Capital Structure
The Company’s share capital consists of redeemable
ordinary shares of 0.1p each with one vote per
share and non-voting management shares of £1
each. From time to time, the Company may issue
Cordinary shares of 1p each with one vote per share.
The Company’s shares have the following rights:
Voting: the ordinary and C shares have equal voting
rights. At shareholder meetings, members present
in person or by proxy have one vote on a show of
hands and on a poll have one vote for each share
held. Management shares are non-voting.
Dividends: the assets of the ordinary and C shares
are separate and each class is entitled to dividends
declared on their respective asset pool. The
management shares are entitled to receive, in priority
to the holders of any other class of shares, a fixed
cumulative dividend equal to 0.00001p per annum.
Capital: if there are any C shares in issue, the
surplus capital and assets of the Company shall, on
a winding-up or on a return of capital, be applied
amongst the existing ordinary shareholders and the
management shareholders pro rata according to
the nominal capital paid up on their holdings after
having deducted therefrom an amount equivalent
to the assets and liabilities relating to the C shares,
which amount shall be applied amongst the
C shareholders pro rata according to the nominal
capital paid up on their holdings of C shares.
When there are no C shares in issue, any surplus
shall be divided amongst the ordinary shareholders
and management shareholders pro rata according
to the nominal capital paid up on their holdings of
ordinary shares and management shares.
In each instance, the holders of the management
shares shall only receive an amount up to the
capital paid up on such management shares and
the management shares shall not confer the right
to participate in any surplus remaining following
payment of such amount.
As at the date of this Report, there were 318,540,642
ordinary shares in issue, none of which were held in
treasury, and 50,000 management 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.
The Board may, at its absolute discretion, elect not
to operate the annual redemption facility in whole
or in part, although it has indicated that it is minded
to approve all requests.
Further details of the capital structure can be found
in note 9 to the financial statements. Details of the
redemption facility are set out on page 82.
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
longterm.
Investment Policy
The Company invests primarily in UK-quoted or
traded companies with a wide range of market
capitalisations, but a long-term bias toward 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.
SHAREHOLDER INFORMATION
Annual Report 2023
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The Diverse Income Trust plc
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SHAREHOLDER
INFORMATION
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 100 and 180 securities,
most of which will represent no more than 1.5% of the
value of the Company’s investment portfolio as at
the time of acquisition.
The Company will not invest more than 10% of its
gross assets, at the time of acquisition, in other
listed closed-ended investment funds, whether
managed by the Manager or not, except that this
restriction shall not apply to investments in listed
closed-ended investment funds which themselves
have stated investment policies to invest no
more than 15% of their gross assets in other listed
closed-ended investment funds. In addition to this
restriction, the Directors have further determined
that no more than 15% of the Company’s gross
assets will, at the time of acquisition, be invested
in other listed closed-ended investment funds
(including investment trusts) whether or not such
funds have stated policies to invest no more than
15% of their gross assets in other listed closed-ended
investmentfunds.
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 CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Share Dealing
Shares can be traded through your usual stockbroker.
Share Register Enquiries
The register for the ordinary shares is maintained
by Link Group. In the event of queries regarding
your holding, please contact the Registrar on
0371 664 0300 (calls are charged at the standard
geographic rate and will vary by provider; 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
shareholderenquiries@linkgroup.co.uk.
Changes of name and/or address must be notified
in writing to the Registrar: Link Group, Shareholder
Services, Link Group, 29 Wellington Street, Leeds
LS14DL.
Electronic Communications from the Company
Shareholders now have the opportunity to be
notified by email when the Company’s Annual
Report, half-yearly report and other formal
communications are available on the Company’s
website, instead of receiving printed copies by post.
This has environmental benefits in the reduction of
paper, printing, energy and water usage, as well as
reducing costs to the Company.
If you have not already elected to receive electronic
communications from the Company and wish to do
so, please contact the Registrar using the details on
this page. Please have your investor code to hand.
Share Capital and Net Asset Value Information
Ordinary 0.1p shares 318,540,642*
SEDOL Number B65TLW2
ISIN Number GB00B65TLW28
The Company releases its NAV per share daily to
theLSE.
* As at 4 August 2023
Historic Dividend Record
Year ended 31 May:
2014
pence
2015
pence
2016
pence
2017
pence
2018
pence
2019
pence
2020
pence
2021
pence
2022
pence
2023
pence
First interim dividend 0.30 0.40 0.65 0.70 0.75 0.80 0.85 0.85 0.90 0.95
Second interim dividend 0.50 0.50 0.65 0.70 0.80 0.85 0.90 0.90 0.90 0.95
Third interim dividend 0.50 0.50 0.75 0.80 0.85 0.90 0.90 0.90 0.90 0.95
Fourth interim dividend 0.95 1.00 – – – – – – – –
Final dividend – 0.50 0.75 0.80 1.00 1.10 1.05 1.10 1.20 1.20
2
Special dividend – – – 0.40
3
0.23
3
0.16
3
– – – –
2.25 2.90
1
2.80 3.40 3.63 3.81 3.70 3.75 3.90 4.05
1 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 was no interruption in
the dividend payment timetable as a result of this change.
2 Proposed.
3 A special dividend was paid for the years ended 31 May 2017, 31 May 2018 and 31 May 2019, reflecting years when many special dividends were also paid by
the companies in the portfolio.
SHAREHOLDER INFORMATION CONTINUED
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The Diverse Income Trust plc
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SHAREHOLDER
INFORMATION
Share Prices
The Company’s shares are listed on the LSE under
‘InvestmentTrusts’. The share price is available on
the website, www.diverseincometrust.com.
Annual and Half-Yearly Reports
Copies of the Annual and Half-Yearly Reports
are available on the Company’s website,
www.diverseincometrust.com, or from the Secretary
on telephone number 01392 477500 or
diverse_cosec@linkgroup.co.uk.
Manager: Premier Portfolio Managers Limited
The Company’s Manager is Premier Portfolio
Managers Limited, a wholly-owned subsidiary of
Premier Miton Group plc. Premier Miton Group is
listed on AIM.
As at 30 June 2023, Premier Miton Group managed
£10.5bn of assets under management.
Members of the fund management team invest in
their own funds and are significant shareholders in
Miton Group.
Investor updates in the form of monthly factsheets
and other material that may be of interest to
shareholders are available from the Company’s
website, www.diverseincometrust.com.
Association of Investment Companies
The Company is a member of the AIC.
August 2023 Announcement of annual results
Payment of third interim
dividend
October 2023 Annual General Meeting
November 2023 Half-year end
Payment of final dividend
January 2024 Announcement of half-yearly
results
February 2024 Payment of first interim dividend
May 2024 Year end
Payment of second interim
dividend
Redemption Point
Retail Investors advised by IFAs
The Company currently conducts its affairs so
that the shares issued by the Company can be
recommended by IFAs to ordinary retail investors
in accordance with the FCA rules in relation to
non-mainstream investment products and intends
to continue to do so for the foreseeable future. The
shares are excluded from the FCA’s restrictions which
apply to non-mainstream investment products
because they are shares in an investment trust.
SHAREHOLDER INFORMATION CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
NOTICE IS HEREBY GIVEN that the twelfth ANNUAL GENERAL MEETING of The Diverse Income Trust plc will
be held on Tuesday, 17 October 2023 at 11.30 am at the offices of Stephenson Harwood LLP, 1 Finsbury Circus,
London EC2M 7SH to consider and vote on the Resolutions below.
Resolutions 1 to 12 (inclusive) will be proposed as Ordinary Resolutions and Resolutions 13 to 15 (inclusive) will
be proposed as Special Resolutions.
Resolution on
form of proxy
1 To receive and adopt the Strategic Report, Reports of the Directors and Auditor and the audited financial
statements for the year ended 31 May 2023.
Resolution 1
2 To receive and approve the Directors’ Remuneration Report for the year ended 31 May 2023. Resolution 2
3 To approve the Directors’ Remuneration Policy. Resolution 3
4 To re-elect Mr Bell as a Director of the Company. Resolution 4
5 To re-elect Mr Crole as a Director of the Company. Resolution 5
6 To re-elect Ms Kemsley-Pein as a Director of the Company. Resolution 6
7 To re-elect Ms McGrade as a Director of the Company. Resolution 7
8 To re-elect Mr Thomson as a Director of the Company. Resolution 8
9 To re-appoint BDO LLP as the Auditor of the Company to hold office from the conclusion of the meeting until
the conclusion of the next meeting at which financial statements are laid before the Company.
Resolution 9
10 To authorise the Audit Committee to determine the remuneration of the Auditor of the Company. Resolution 10
11 To declare a final dividend of 1.20p per ordinary share for the year ended 31 May 2023. Resolution 11
12 THAT:
The Directors be and are hereby generally and unconditionally authorised in accordance with Section 551
of the Companies Act 2006 (“the Act”) to exercise all the powers of the Company to allot ordinary shares
of 0.1pence each in the capital of the Company (“ordinary shares”) up to an aggregate nominal amount of
£31,854 (being approximately 10% of the issued ordinary share capital of the Company at the date of this
Notice) during the period commencing on the date of the passing of this Resolution and expiring at the
conclusion of the Annual General Meeting of the Company to be held in 2024 (unless previously renewed,
varied or revoked by the Company in general meeting) (the “Section 551 period”), but so that the Company
may, at any time prior to the expiry of the Section 551 period, make offers or agreements which would or might
require ordinary shares to be allotted after the expiry of the Section 551 period and the Directors may allot
ordinary shares in pursuance of such offers or agreements as if the authority had not expired.
Resolution 12
13 THAT:
Subject to the passing of Resolution 12, the Directors be and they are hereby empowered, in accordance with
Sections 570 and 573 of the Companies Act 2006 (“the Act”), to allot ordinary shares of 0.1 pence each in the
capital of the Company (“ordinary shares”) for cash pursuant to the authority conferred on the Directors by
Resolution 13 above, and to sell ordinary shares from treasury for cash as if Section 561(1) of the Act did not
apply to any such allotment or sale, up to an aggregate nominal amount of £31,854 (being approximately 10%
of the issued ordinary share capital of the Company at the date of this Notice), such power to expire at the
conclusion of the Annual General Meeting of the Company to be held in 2024 (unless previously renewed,
varied or revoked by the Company in general meeting) save that the Company may, at any time prior to
the expiry of such power, make an offer or enter into an agreement which would or might require ordinary
shares to be allotted or sold after the expiry of such power and the Directors may allot or sell ordinary shares in
pursuance of such an offer or agreement as if such power had not expired.
Resolution 13
This document is important and requires your immediate attention. If you are in any doubt as to the
action you should take, you are recommended to seek your own financial advice from your stockbroker
or other independent adviser authorised under the Financial Service and Markets Act 2000 immediately.
If you have sold or otherwise transferred all of your shares in The Diverse Income Trust plc (the “Company”),
please forward this document as soon as possible to the purchaser or transferee or to the stockbroker,
bank or other agent through whom the sale or transfer was effected for transmission to the purchaser
ortransferee.
NOTICE OF ANNUAL GENERAL MEETING
SHAREHOLDER INFORMATION CONTINUED
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SHAREHOLDER
INFORMATION
Resolution on
form of proxy
14 THAT:
The Company is hereby generally and unconditionally authorised in accordance with Section 701 of the Act
to make market purchases (within the meaning of Section 693(4) of the Companies Act 2006 (“the Act”)) of
ordinary shares of 0.1p each in the capital of the Company (“ordinary shares”) provided that:
a) the maximum number of ordinary shares hereby authorised to be purchased is 47,749,242 (representing
14.99% of the ordinary shares in issue at the date of this Notice);
b) the minimum price which may be paid for each ordinary share is 0.1p;
c) the maximum price which may be paid for each ordinary share shall not be more than the higher of: (i) an
amount equal to 105% of the average of the middle market quotations of ordinary shares taken from the
Daily Official List of the London Stock Exchange for the five business days immediately preceding the day
on which the contract of purchase is made; and (ii) the higher of the price of the last independent trade in
the ordinary shares and the highest then current independent bid for the ordinary shares on the London
Stock Exchange;
d) this authority will (unless previously renewed, varied or revoked by the Company in general meeting)
expire at the conclusion of the Annual General Meeting of the Company to be held in 2024;
e) the Company may make a contract of purchase for ordinary shares under this authority before this
authority expires which will or may be executed wholly or partly after its expiration; and
f) any ordinary shares bought back under the authority hereby granted may, at the discretion of the
Directors, be cancelled or held in treasury and if held in treasury, may be resold from treasury or cancelled
at the discretion of the Directors.
Resolution 14
15 THAT:
A general meeting other than an Annual General Meeting may be called on not less than 14 clear days’ notice.
Resolution 15
By order of the Board
Link Alternative Fund Administrators Limited, Secretary
Registered Office: Link Group, Broadwalk House, Southernhay West, Exeter EX1 1TS
7 August 2023
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Explanatory Notes to the Notice of Meeting
As a shareholder, you have the right to attend, speak and vote at the forthcoming AGM or at any
adjournment(s) thereof. In order to exercise all or any of these rights, you should read the following
explanatory notes to the business of the AGM.
Note 1: To be entitled to attend and vote at the meeting (and for the purpose of the determination by the Company
of the number of votes they may cast) members must be entered on the Company’s register of members at
close of business on 13 October 2023 (or in the event that the meeting is adjourned, only those shareholders
registered on the register of members of the Company as at close of business on the day which is 48 hours prior
to the adjourned meeting). Changes to entries on the register of members after that time shall be disregarded
in determining the rights of any person to attend or vote at the meeting. A member present in person or by
proxy shall have one vote on a show of hands and on a poll every member present in person or by proxy shall
have one vote for every share of which he/she is the holder.
Any question relevant to the business of the AGM may be asked at the meeting by anyone permitted to speak
at the meeting. You may alternatively submit your question in advance by letter addressed to the Secretary at
the registered office.
Note 2: A member entitled to attend and vote at this meeting may appoint one or more persons as his/her proxy to
attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the Company. To be
validly appointed, a proxy must be appointed using the procedures set out in these notes and in the notes to
any hard copy form of proxy (if applicable).
A member may appoint more than one proxy in relation to the AGM provided that each proxy is appointed to
exercise the rights attached to different shares held by that member. A member may not appoint more than
one proxy to exercise rights attached to any one share.
A member may instruct their proxy to abstain from voting on any resolution to be considered at the AGM by
marking the ‘Vote Withheld’ option when appointing their proxy. A vote withheld is not a vote in law, which
means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting
indication is given, your proxy will vote or abstain from voting at his or her discretion.
The appointment of a proxy will not prevent a member from attending the AGM and voting in person if he/she
so wishes. If you have appointed a proxy and vote at the AGM in person in respect of shares for which you have
appointed a proxy, your proxy appointment in respect of those shares will automatically be terminated.
In order for a proxy appointment to be valid, your appointment must be received no later than 11.30 am on
13 October 2023 (being 48 hours prior to the meeting excluding non-working days).
Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any other electronic voting instruction,
the proxy will vote as they think fit or, at their discretion, withhold from voting.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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SHAREHOLDER
INFORMATION
Note 3: Members may appoint a proxy online at www.signalshares.com (the “Website”) by following the on-screen
instructions, in particular at the ‘Proxy Voting’ link, by no later than the deadline set out in note 2 above. In order
to appoint a proxy using the Website, members will need to log into their Signal Shares account or register
if they have not previously done so. To register, members will need to identify themselves with their Investor
Code, which is detailed on their share certificate or available from the Company’s Registrar, Link Group, on
03716640300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate. Lines are open between 9.00am and
5.30pm, Monday to Friday, excluding public holidays in England and Wales.
Note 4: You may request a hard copy form of proxy directly from the Registrar, Link Group, on Tel: 0371 664 0300 or by
emailing shareholderenquiries@linkgroup.co.uk.
To be effective, the completed and signed form of proxy must be lodged at the offices of Link Group, PXS1,
Central Square, 29 Wellington Street, Leeds, LS1 4DL (together with any power of attorney or other authority
under which it is signed or a notarially certified copy of such power or authority) by no later than the deadline
set out in note 2 above. Alternatively, you may send any document or information relating to proxies to the
electronic address indicated on the form of proxy.
To appoint more than one proxy using a hard copy form of proxy, you may photocopy the form of proxy. Please
indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as
your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the
proxy instruction is one of multiple instructions being given. If possible, all forms should be returned together in
the same envelope.
Note 5: CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment
service may do so for this meeting by following the procedures described in the CREST Manual. CREST personal
members or other CREST sponsored members, and those CREST members who have appointed a voting
service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear’s
specifications and must contain the information required for such instructions, as described in the CREST
Manual. The message, in order to be valid, must be transmitted so as to be received by the Company’s agent ID
RA10 by the latest time for receipt of proxy appointments specified in note 2 above. For this purpose, the time
of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST
Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the
manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST
should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear does not make available special procedures in CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member
or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means
of the CREST system by any particular time. In this connection, CREST members and, where applicable, their
CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a)
of the Uncertificated Securities Regulations 2001.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Note 6: If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 11.30am on
13 October 2023 in order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours
before the time of the adjourned meeting. Before you can appoint a proxy via this process you will need to
have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as
you will be bound by them and they will govern the electronic appointment of your proxy. An electronic proxy
appointment via the Proxymity platform may be revoked completely by sending an authenticated message via
the platform instructing the removal of your proxy vote.
Note 7: In the case of joint holders of a share, where more than one of the joint holders purports to appoint a proxy
(in hard copy, by electronic means or through CREST), the vote of the senior holder who tenders a vote shall
be accepted to the exclusion of the vote or votes of the other joint holder or holders, and seniority shall be
determined by the order in which the names of the holders stand in the register. For a proxy appointment
submitted by hard copy, the signature of only one of the joint holders is required on the form of proxy.
Note 8: To change your proxy instructions, simply submit a new proxy appointment using the methods set out above.
Note that the cut-off time for receipt of proxy appointments (see note 2) also applies in relation to amended
instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.
If you submit more than one valid proxy appointment in respect of the same shares, the appointment received
last before the latest time for the receipt of proxies will take precedence.
Note 9: In order to revoke a proxy instruction, you will need to inform the Company by sending a signed notice clearly
stating your intention to revoke your proxy appointment to Link Group, Central Square, 29 Wellington Street,
Leeds, LS1 4DL. In the case of a member that is a company, the revocation notice must be executed under
its common seal or signed on its behalf by an officer of the company or a duly appointed attorney for
the company. Any power of attorney or any other authority under which the revocation notice is signed (or a
duly certified copy of such power or authority) must be included with the revocation notice. The revocation
notice must be received by Link Group no later than 11.30am on 13 October 2023. If you attempt to revoke your
proxy appointment but the revocation is received after the time specified, then your proxy appointment will
remain valid.
Note 10: A person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006
(“the Act”) to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her
and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else
appointed) as a proxy for the AGM. If a Nominated Person has no such proxy appointment right or does not wish
to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to
the exercise of voting rights.
The statements of the rights of members in relation to the appointment of proxies in note 2 above do not apply
to a Nominated Person. The rights described in this note can only be exercised by registered members of the
Company.
Note 11: As at 4 August 2023 (being the latest practicable day prior to the publication of this notice), the Company’s
issued share capital consisted of 50,000 non-voting management shares and 318,540,642 ordinary shares,
carrying one vote each, none of which were held in treasury. Therefore, the total number of voting rights
amounted to 318,540,642 votes.
Note 12: Any corporation which is a member may appoint one or more corporate representatives who may exercise on
its behalf all of its powers as a member provided that they do not do so in relation to the same shares. To be able
to attend and vote at the meeting, corporate representatives will be required to produce prior to their entry to
the meeting evidence satisfactory to the Company of their appointment.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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SHAREHOLDER
INFORMATION
Note 13: Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company
under Section 527 of the Act, the Company may be required to publish on a website a statement setting out
any matter relating to: (i) the audit of the Company’s accounts (including the Auditor’s report and the conduct
of the audit) that are to be laid before the AGM; or (ii) any circumstances connected with an auditor of the
Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in
accordance with Section 437 of the Act. The Company may not require the shareholders requesting any such
website publication to pay its expenses in complying with Sections 527 or 528 of the Act. Where the Company
is required to place a statement on a website under Section 527 of the Act, it must forward the statement to the
Company’s Auditor not later than the time when it makes the statement available on the website. The business
which may be dealt with at the AGM includes any statement that the Company has been required under
Section 527 of the Act to publish on a website.
Note 14: In accordance with Section 319A of the Act, the Company must cause any question relating to the business
being dealt with at the meeting put by a member attending the meeting to be answered. No such answer
need be given if:
a) to do so would:
(i) interfere unduly with the preparation for the meeting; or
(ii) involve the disclosure of confidential information;
b) the answer has already been given on a website in the form of an answer to a question; or
c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
As there is a possibility that shareholders will not be permitted to attend the meeting in person due to Government
guidance, and to ensure that the meeting is conducted as efficiently as possible, shareholders are encouraged to
submit any questions in advance of the meeting via email, as detailed in note 1.
Note 15: Members satisfying the thresholds in Section 338 of the Act may require the Company to give, to members of
the Company entitled to receive notice of the AGM, notice of a resolution which those members intend to move
(and which may properly be moved) at the AGM. A resolution may properly be moved at the Annual General
Meeting unless (i) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment
or the Company’s constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious.
A request made pursuant to this right may be in hard copy or electronic form, must identify the resolution of
which notice is to be given, must be authenticated by the person(s) making it and must be received by the
Company not later than six weeks before the date of the AGM.
Note 16: Members satisfying the thresholds in Section 338A of the Act may request the Company to include in the
business to be dealt with at the AGM any matter (other than a proposed resolution) which may properly be
included in the business at the AGM. A matter may properly be included in the business at the AGM unless (i)
it is defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant to this right may be in
hard copy or electronic form, must identify grounds for the request, must be authenticated by the person(s)
making it and must be received by the Company not later than six weeks before the date of the AGM.
Note 17: The Annual Report incorporating this Notice of AGM and, if applicable, any members’ statements, members’
resolutions or members’ matters of business received by the Company after the dates of this Notice will be
available on the Company’s website, www.diverseincometrust.com.
Note 18: None of the Directors has a contract of service with the Company. A copy of the letters of appointment of the
Directors will be available for inspection at the registered office of the Company and can be requested from
the Company Secretary during usual business hours on any weekday (except weekends and public holidays)
until the date of the meeting and at the place of the meeting for a period of fifteen minutes prior to and during
themeeting.
Note 19: You may not use any electronic address provided in this Notice to communicate with the Company for any
purposes other than those expressly stated.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
ALTERNATIVE INVESTMENT FUND MANAGERS’
DIRECTIVE DISCLOSURES
Alternative Investment Fund Managers’
DirectiveDisclosures
The provisions of the Alternative Investment
Fund Managers Directive (‘AIFMD’) took effect on
22 July2014. That legislation requires the AIFM to
establish and maintain remuneration policies for its
staff which are consistent with and promote sound
and effective risk management.
Pre-Investment Disclosures
The AIFM is required to make certain disclosures
available to investors in accordance with the
AIFMD. Those disclosures that are required
to be made pre-investment can be found at
www.diverseincometrust.com/documents.
AIFMD Leverage Limits
The maximum level of leverage which the Manager
may employ on behalf of the Company and the
levels as at 31 May 2023 are set out below. A figure
of 100% means that the exposure is equal to the net
asset value and the AIF has noleverage.
Leverage
exposure
Maximum gross
leverage
Maximum
commitment
Maximum Level 200% 200%
Actual Level 100% 100%
Remuneration Disclosure
Premier Portfolio Managers Limited (the ‘AIFM’) is
part of a larger group of companies within which
remuneration policies are the responsibility of a
Remuneration Committee comprised entirely
of non-executive directors. That committee has
established a remuneration policy which sets out
a framework for determining the level of fixed and
variable remuneration of staff, including maintaining
an appropriate balance between thetwo.
Arrangements for variable remuneration within the
group are calculated primarily by reference to the
performance of each individual and the profitability
of the relevant business unit. The policies are
designed to reward long-term performance and
long term profitability.
Within the group, all staff are employed by the
parent company with none employed directly by
the AIFM. The costs of a number of individuals are
allocated between the entities within the group
based on the expected amount of time devoted
toeach.
The total remuneration of those individuals who are
fully or partly involved in the activities of the AIFM in
relation to Alternative Investment Funds, including
the Company (‘AIFs’), including those whose time is
allocated between group entities, for the financial
year ending 30 September 2022, is analysed below:
Fixed Remuneration £4,265,246
Variable Remuneration £1,840,851
Total £6,106,097
Weighted FTE Headcount: 50.
12 of the staff members included in the total
remuneration figures above are considered to
be senior management or others whose actions
may have a material impact on the risk profile of
the fund. The table below provides an alternative
analysis of the remuneration data.
Aggregate remuneration of:
Significant Influence Functions £1,767,151
Senior Management Functions £83,970
Other staff £4,254,976
Total £6,106,097
The staff members included in the above analysis
support all the funds managed by the AIFM. It is
not considered feasible or useful to attempt to
apportion these figures to individual AIFs.
The AIFM’s management have reviewed the general
principles of the remuneration policy and its
application in the last year which has resulted in no
material changes to the policy.
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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SHAREHOLDER
INFORMATION
AIC
The Association of Investment Companies.
AIM
The Alternative Investment Market is a sub-market
of the London Stock Exchange. It allows smaller
companies to float shares with a more flexible
regulatory system than applicable to the main market.
Alternative Performance Measure (“APM”)
An APM is a numerical measure of the Company’s
current, historical or future financial performance,
financial position or cash flows, other than a
financial measure defined or specified in the
applicable financial framework.
The Company uses a number of APMs to provide
information in order to assist the Board and
Manager in monitoring the Company in order
for them to meet the objectives of the Company
including the management of risk. These consist
of, but are not limited to, key performance and
financial performance indicators set out in the
various relevant parts of the Report.
Annual General Meeting (“AGM”)
All public companies have an AGM every year,
and this is the opportunity for the shareholders to
confirm their approval of the Annual Report and
financial statements, the annual dividend and
the appointment of the Directors and Auditor. It
is also a good time for shareholders to meet the
non-executive Directors. The Company’s AGM will
be held on Tuesday, 17 October 2023 at 11.30am
at the offices of Stephenson Harwood LLP,
1Finsbury Circus, London EC2M 7SH. One of the
fundmanagers will give shareholders a presentation
on the current position of the Company’s portfolio
and some thoughts on the market outlook.
AQUIS Stock Exchange (“AQUIS”)
The AQUIS Stock Exchange (previously known as
NEX, ICAP Securities and Derivatives Exchange
or ISDX) operates two primary traded market
segments, the AQUIS Stock Exchange Main Market
and the AQUIS Stock Exchange Growth Market.
Both AQUIS Stock Exchanges are focused on smaller
enterprises, with the latter focused on both smaller
and medium-sized enterprises.
Discount/Premium
If the share price of an investment trust 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, this situation is called a premium.
Premium/(Discount)
Calculation Page
31 May
2023
31 May
2022
Closing NAV per share (p) 4 88.87 110.55 (a)
Closing share price (p) 4 83.40 103.00 (b)
Premium/(discount)
(c = ((b – a)/a) × 100) (%) 4 (6.16) (6.83) (c)
The discount/premium and performance is
calculated in accordance with guidelines issued by
the AIC. The discount/premium is calculated using
the NAV per share inclusive of accrued income with
debt at market value.
Dividend Yield
The annual dividend expressed as a percentage of
the mid market share price. This financial ratio shows
how much an investment pays out in dividends
relative to its stock price. The dividends are based
upon historic dividend rates and announcements
by the investment company. The dividend yield
indicates the anticipated future cashflows from the
investment contributing to the income of the Group.
Financial Conduct Authority (“FCA”)
This regulator oversees the fund management
industry, including the operation of the Company.
Financial Reporting Council (“FRC”)
The FRC regulates UK auditors and provides
guidance to accountants with the aim of promoting
better transparency and integrity in the annual
reports of quoted businesses.
GLOSSARY
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The Diverse Income Trust plc
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Annual Report 2023
GLOSSARY
FTSE 100 Put Option
A FTSE 100 Put Option is a type of derivative
contract in which the underlying value is based on
the level of the FTSE 100 index. When the Trust’s
portfolio appreciates, along with the mainstream
Stock Market, the value of the Put Option tends
to become worthless over its term (which in the
case of the Trust currently extends to December
2023). The key advantage of investing in a FTSE
100 Put Option is that at times of major market
setbacks, the valuation of the Put Option rises,
which can then offset a part of the decline of other
portfolio holdings. During the March 2020 setback
for example, the Trust was able to take profits on
its FTSE Puts after they had risen. It then bought
more UK micro-caps with the additional cash, at a
time when their share prices were low. This process
boosted the returns of the Trust through the market
setback and the subsequent recovery.
Gearing
Gearing refers to the ratio of the Company’s 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 because the debt remains the
same. 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.
Group
The Company and its subsidiary; DIT Income
Services Limited.
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.
Key Performance Indicators (“KPIs”)
KPIs are a short list of corporate attributes that are
used to assess the general progress of the business
and are outlined in this Report on the inside
frontcover.
Net Asset Value per Ordinary Share (“NAV”)
The NAV is shareholders’ funds expressed as an
amount per individual share. Shareholders’ funds are
the total value of all of the Company’s assets, at their
current market value, having deducted all liabilities
and prior charges at their par value, or at their asset
value as appropriate. The total NAV per share is
calculated by dividing the NAV by the number of
ordinary shares in issue excluding treasury shares.
The calculation is set out in Note 11 on page 72.
Numis Indices
The Numis Indices mentioned in this report
comprise the following:
Numis All-Share Index comprises all fully listed
companies on the main UK equity market.
Numis Large Cap Index ex Investment Companies
contains all the stocks that make up the largest 80%
by market value of the UK fully listed equity market.
It excludes investment companies.
Numis Smaller Companies + AIM ex Investment
Companies Index covers the smallest 10% by
market value of the UK fully listed equity market,
plus AIM stocks that meet this size limit. It excludes
investment companies.
Ongoing Charges
As recommended by the AIC in its guidance,
ongoing charges are the Company’s annualised
revenue and capital expenses (excluding finance
costs and certain non-recurring items) expressed as
a percentage of the average daily net assets of the
Company during the year. Please refer to page 11 for
details on the ongoing chargescalculation.
Peer Group
Diverse is part of the AIC’s UK Equity Income
Investment Trust sector. The trusts in this universe
are defined as trusts whose investment objective is
to achieve a total return for shareholders through
both capital and dividend growth. Typically, the
funds will have a yield on the underlying portfolio
ranging between 110% and 175% of that of the Numis
All-Share Index. They will also have at least 80% of
their assets in UK listed securities.
Annual Report 2023
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The Diverse Income Trust plc
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SHAREHOLDER
INFORMATION
Price to Book
The price to book ratio is a valuation measure which
divides a company’s share price by its asset value
per share. Lower values can imply that a company
is either an overlooked opportunity or a poorly
performing business. Higher values may suggest
a company is overvalued, unless its returns are
sustainably high.
Put Option
Put Options are most commonly used in the
stock market to protect against the decline of the
price of a stock below a specified price 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.
Quantitative Easing
Quantitative Easing is a strategy used by central
banks whereby they purchase securities to reduce
interest rates, increase the supply of money and
stimulate economic activity.
Revenue, Capital and Total return per
Ordinaryshare
The Revenue, Capital and Total returns are set out
in the in the Consolidated Income Statement on
page 55. These consist of income, less expenses and
taxation allocated between Revenue and Capital
in accordance with the AIC SORP and accounting
policies of the Group. The Revenue and Capital
returns per share together comprise the Total
return per share. The returns per ordinary share are
calculated by dividing the Revenue, Capital and
Total returns by the weighted average shares in
issue during the year excluding treasury shares. The
calculation is set out in Note 7 on page 68.
Senior Independent Director (“SID”)
The SID is a non-executive Director who can be
contacted by investors to discuss a matter of
governance when it concerns the Chairman and the
normal practice cannot be followed. The Company’s
SID is currently Calum Thomson.
SONIA (Interest Rate)
Sterling Overnight Index Average
Strike Price
When investing in a FTSE 100 Put Option, the
Strike price is the level at which the option starts
to provide portfolio protection. If a Put Option has
a Strike price of 5,700 for example, and the level of
the FTSE 100 Index is lower, the portfolio collects
the difference between the two. A Put Option also
carries value in respect of its unexpired time value,
reflecting the length of its term.
Total Assets
Total assets include investments, cash, current
assets and all other assets. An asset is an economic
resource, being anything tangible or intangible that
can be owned or controlled to produce value and to
produce positive economic value. Assets represent
the value of ownership that can be converted
into cash. The total assets less all liabilities will be
equivalent to total shareholders’ funds.
GLOSSARY CONTINUED
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The Diverse Income Trust plc
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Annual Report 2023
Total Return – NAV and Share Price Returns
Total return statistics enable the investor to make
performance comparisons between investment
trusts with different dividend policies. The total return
measures the combined effect of any dividends paid,
together with the rise or fall in the share price or NAV.
This is calculated by the movement in the share
price or NAV plus dividend income reinvested by the
Company at the prevailing NAV.
NAV Total Return Page
31 May
2023
31 May
2022
Closing NAV per share (p) 4 88.87 110.55
Add back total dividends
paid in the year ended
31 May 2023 (2022) (p) 69 4.00 3.80
Adjusted closing NAV (p) 92.87 114.35 (a)
Opening NAV per share (p) 4 110.55 118.31 (b)
NAV total return unadjusted
(c = ((a – b)/b) × 100) (%) (15.99) (3.35) (c)
NAV total return adjusted %* (16.15) (3.41)
Share Price Total Return Page
31 May
2023
31 May
2022
Closing share price (p) 4 83.40 103.00
Add back total dividends
paid in the year ended
31 May 2023 (2022) (p) 69 4.00 3.80
Adjusted closing share
price (p) 87.40 106.80 (a)
Opening share price (p) 4 103.00 119.00 (b)
Share price total
return unadjusted
(c = ((a – b)/b) × 100) (%) (15.15) (10.25) (c)
Share price total return
adjusted %* (15.37) (10.53)
* Based on NAV/share price movements and dividends being reinvested at the
relevant cum dividend NAV/share price during the year. Where the dividend
is invested and the NAV/share price falls, this will further reduce the return
or, if it rises, any increase will be greater. The source is Morningstar who have
calculated the return on an industry comparative basis.
Volatility
The term volatility describes how much and how
quickly the share price or net asset value of an
investment has tended to change in the past. Those
investments 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.
GLOSSARY CONTINUED
Annual Report 2023
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The Diverse Income Trust plc
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SHAREHOLDER
INFORMATION
Secretary and Registered Office
Link Alternative Fund Administrators Limited
(trading as Link Group)
Telephone: 01392 477500
Alternative Investment Fund Manager or Manager
Premier Portfolio Managers Limited
Eastgate Court
High Street
Guildford
Surrey GU1 3DE
Telephone: 020 3714 1525
Website: www.premiermiton.com
Company Website
www.diverseincometrust.com
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Banker
Bank of New York Mellon
One Piccadilly Gardens
Manchester M1 1RN
Depositary and Custodian
The Bank of New York Mellon (International) Limited
One Canada Square
London E14 5AL
Registrar and Transfer Office
Link Group
Shareholder Services Department
Central Square
29 Wellington Street
Leeds LS1 4DL
Telephone: 0371 664 0300
(calls are charged at the standard geographic rate
and will vary by provider; calls from outside theUK
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: shareholderenquiries@linkgroup.co.uk
Website: www.linkgroup.eu
Solicitor
Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Stockbroker
Panmure Gordon
One New Change
London EC4M 9AF
Shareholder Warning
Many companies are aware that their shareholders have received unsolicited phone calls or correspondence
concerning investment matters. These calls typically come from fraudsters operating in ‘boiler rooms’ offering
investors shares that often turn out to be worthless or non-existent, or an inflated price for shares they own. While
high profits are promised, those who buy or sell shares in this way usually lose their money. These fraudsters can
be very persistent and extremely persuasive. Shareholders are therefore advised to be very wary of any unsolicited
advice, offers to buy shares at a discount or offers of free company reports.
It is very unlikely that either the Company or the Company’s Registrar would make unsolicited telephone calls to
shareholders and that any such calls would relate only to official documentation already circulated to shareholders
and never in respect of investment ‘advice’.
If you have been contacted by an unauthorised firm regarding your shares, you can report this using the FCA helpline
on 0800 111 6768 or by using the share fraud reporting form at www.fca.org.uk/consumers/scams.
CONTACT DETAILS OF THE ADVISERS
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The Diverse Income Trust plc
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Annual Report 2023
CONTACT DETAILS OF THE ADVISERS
Eastgate Court
High Street
Guildford
Surrey GU1 3DE
-50
250
0
100
Diverse Income
Trust NAV
Total Return
UK Equity
Income Sector
Diverse Income
Trust Share Price
Total Return
COMPANY PERFORMANCE SINCE LAUNCH ON 28 APRIL 2011
Apr 2011
May 2012
May 2013
May 2014
May 2015
May 2016
May 2017
May 2018
May 2019
May 2023
May 2022
May 2021
May 2020
150
200
50
Percentage change
Total annual dividend
(pence per share)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.5
4.0
2.02
2.25
2.80
3.00
0.40
3.65
0.16
3.70
3.40
0.23
4.05
3.90
3.75
2012
1
2013 2014 2015
2
2016 2017 2018 2019 2020 2022 20232021
TOTAL ANNUAL DIVIDENDS DECLARED BY THE COMPANY
2.40
Special
dividends
Ordinary
dividends
0.50
2.10
For explanatory footnotes, see page 5.
Source: Company
Source: Morningstar