Diverse Income has reported results for the year ended 31 May 2015. Over the period the total return on net assets was 8.9% which compares favourably to a 7.5% return on the FTSE All-Share Index an 8.6% return on the FTSE Small Cap (excluding Investment Companies) Index and -4.0% return on the AIM All-Share Index.
The fund is now over £300m. the Board say they will not cary out more C share issues but will restrict expansion to tap issues of stock and them only when the Board thinks this won’t hurt performance.
The full year dividend was 2.4p, up 6.7% on the previous year. The Board is aware that some shareholders would prefer that the last dividend of each year be approved formally by shareholders at the Annual General Meeting, prior to its payment. Unfortunately, if the fourth interim dividend were to be redesignated as a final dividend, then its payment date would have to be held back for several weeks until after the AGM. The Board is now proposing that what would have been the first interim for the forthcoming year is redesignated as a final dividend for this financial year. This will not interrupt the timing of the ongoing stream of dividends paid to shareholders. The effect of this change would be that five dividends would be paid to shareholders in this year’s accounting period and that in future years there would be four dividends, comprising the three interim dividends as previously together with the newly redesignated final dividend. The Board is seeking approval of this change at the AGM. A final dividend of 0.50p per share, payable on 30 November 2015, will also be proposed at the AGM. This will not change the existing pattern of dividend payments to shareholders.
The managers’ report says the star portfolio performers in the year were Moneysupermarket, Powerflute, Amino Technologies and 4Imprint. In addition, International Greetings, which was
highlighted amongst the best performers last year, once again appreciated well. The stand-out best performer in the year was Victoria plc, a recovering carpet business, that generated so much cash that they paid out a special dividend exceeding the market capitalisation of the company at the start of the period. However, they think the valuation has risen to a premium to the market so a large part of the profits on this holding has now been taken.
Stocks that did not perform as well include many exposed to the oil price fall. The portfolio had little oil exposure but the limited number of holdings in this sector were sold into share price weakness as the oil price declined. In contrast, the holding in Gable Holdings has been retained in spite of the fact that the company greatly increased its insurance reserving. In the case of Ibex, whose share price fell on rising costs and the consequent profit downgrades, they believe this is a transitory effect as the costs were incurred in meeting strong growth in demand from their customers.
DIVI : Diverse Income caps expansion plans as it outperforms again