TIDMBIPS
INVESCO BOND INCOME PLUS LIMITED
HALF-YEARLY FINANCIAL REPORT FOR THE
SIX MONTHSED 30 JUNE 2023
Unless otherwise stated, all page numbers below refer to the Half-Yearly
Financial Report on the Company's website.
Investment Objective
The Company's investment objective is to seek to obtain capital growth and high
income from investment, predominantly in high-yielding fixed-interest
securities.
Investment Policy
The Company seeks to provide a high level of dividend income relative to
prevailing interest rates mainly through investment in bonds and other fixed
-interest securities. The Company also invests in equities and other equity-like
instruments consistent with the overall objective.
Financial Information and Performance Statistics
Total Return Statistics(1)(2)
with dividends reinvested
For Six For Year
Months to Ended
30 June 31 December
2023 2022
Net asset value - total return with dividends reinvested +2.1 -10.8
Share price - total return with dividends reinvested +1.0 -5.2
Capital Statistics
At At
30 June 31 December
2023 2022
Net assets (£'000) 284,145 281,089
Net asset value per ordinary share(2) 159.90p 162.20p
Share price(1) 162.00p 166.00p
Premium(2) 1.3% 2.3%
Gearing(2)
Gross gearing 20.5% 19.1%
Net gearing 16.9% 15.7%
Performance Statistics
For Six For Six
Months to Months to
30 June 30 June
2023 2022
Revenue return per share 6.16p 5.97p
Capital return per share (2.77)p (28.62)p
Total return per ordinary share 3.39p (22.65)p
Dividend for the period 5.75p 5.50p
(1)Source: Refinitiv.
(2)Alternative Performance Measures (APM). See pages 15 and 16 for the
explanation and calculation of APMs. Further details are provided in the
Glossary of Terms and Alternative Performance Measures in the Company's 2022
annual financial report.
Chairman's Statement
Highlights
·Positive Net Asset Value total return of 2.1% in a challenging market
environment.
·Dividend increased to 5.75p.
·Share issuances continued in the period.
2023 began where 2022 left off with the outlook for inflation and hence interest
rates dominating the financial landscape. Those looking for signs that an end to
the aggressive tightening in monetary policy was close at hand found little
grounds for optimism as inflation showed worrying signs of being `sticky' and
markets priced in the prospect of interest rates remaining `higher for longer.'
Economic growth was anaemic, however the recession predicted by more hawkish
commentators was thankfully avoided. Economic theory suggests that changes in
monetary policy may well take effect over `long and variable lags' and so it is
too early to conclude that the risk of a so-called `hard landing' has passed.
Market confidence was challenged by the failure of several weaker financial
institutions. Signs that a number of weaker firms were struggling to adjust to
the impact of higher rates became apparent both in the US and in Europe, where a
clumsily-handled rescue by Swiss authorities of Credit Suisse unsettled
confidence in Additional Tier 1 (AT1) bank capital. Thankfully calm returned to
the sector as European financial authorities distanced themselves from the
approach taken by the Swiss.
The Company's Net Asset Value (NAV) total return rose by 2.1% during the first
six months of the year. Our NAV performance fell short of that of our reference
index, the ICE BofA European Currency High Yield Index (sterling hedged) total
return, which rose by 5.0%. This was in part the result of the weaker
performance of AT1 securities during the period under review. Our share price
total return rose by 1.0% reflecting the fact that we while traded at a premium
to NAV, our premium narrowed slightly from 2.3% to 1.3% during the sixmonths.
It was pleasing to see demand for shares remaining robust, particularly against
a backdrop in which investment trust discounts were wide by historical
standards. We were able to issue a total of 4.4million shares to meet demand.
Our AGM in June saw Kate Bolsover, our Senior Independent Director, retire from
the Board. As Chairman of Invesco Enhanced Income Limited (IPE) Kate played a
key role in the successful merger of IPE and City Merchants High Yield Trust in
2021. I would like to thank Kate on behalf of shareholders and the Board for
her fantastic contribution to the Company.
The Manager's Report, which follows my comments, provides shareholders with
information on the portfolio and the outlook for the high yield market. There
seems little doubt that inflation will continue to preoccupy markets during the
second half of the year and that the risk of a `hard landing' cannot be
dismissed. Nevertheless I believe it is important to keep in mind that the high
yields are elevated by historical standards and therefore provide a degree of
compensation for the uncertainty surrounding the macroeconomic outlook. Lastly,
at the half way point of our financial year, I am pleased to confirm that we
remain firmly on course to achieve our full year dividend target of 11.5 pence
per share, having declared first and second interim dividends of 2.875 pence per
share in respect of the current financial year.
Tim Scholefield
Chairman
22 August 2023
Portfolio Managers' Report
Portfolio Manager
Rhys Davies, CFA, Fund Manager
Rhys is a fund manager and senior credit analyst for the Henley-based Fixed
Interest team.
He began his investment career with Invesco in 2002, moving to the Henley Fixed
Interest team in 2003. He became a fund manager in 2014. He manages high yield
credit portfolios.
He holds a BSc (Honours) in Management Science from the University of Manchester
Management School. He is a CFA charterholder.
Deputy Portfolio Manager
Edward Craven, FCA, Fund Manager
Edward is a fund manager and senior credit analyst for the Henley-based Fixed
Interest team.
He began his career with KPMG in 2003. In 2008 he moved to The Royal Bank of
Scotland, where he worked in structured finance. He joined the team at Invesco
in 2011 as a credit analyst and became afund manager in 2020, managing multi
-asset and high yield funds.
He holds a Master's degree in Physics from the University of Bath. He is an FCA
qualified chartered accountant.
QWhat happened to bond markets in the period?
ABond markets faced the headwinds of elevated interest rates and recession
fears. Given their greater sensitivity to changes in monetary policy, government
bonds came under the most pressure, especially UK gilts, as central banks took
action to tackle sticky inflation. Higher quality corporate bonds also struggled
to gain ground. High yield bonds displayed greater resilience, outperforming
cohorts higher up the ratings scale. The ICE BofA European Currency High Yield
Index (sterling hedged) total return was 5.0% over the six-month period. B rated
bonds were the strongest part of the high yield market, returning 6.2% versus a
4.8% gain for BB rated debt. Weaker/riskier CCC and lower rated bonds generated
a return of 1.2%. By comparison, sterling investment grade finished the period
in negative territory, down 1.0%, with UK gilts faring even worse with a 3.9%
decline.
The yield on the ICE BofA European Currency High Yield Index edged down from
8.00% to 7.87%. The yield declined because the impact of rising rates was more
than offset by a tightening in spreads. The credit spread fell from 515bps to
458bps. While this may give the impression of benign credit conditions, there
were bouts of volatility within the period, particularly around March when the
spread spiked from 415bps to 562bps as concerns over the banking system in the
US spread to Europe. This period of volatility peaked in the days after the
acquisition of Credit Suisse by UBS.
While uncertainties about the state of US regional banks following the closure
of First Republic Bank resurfaced in May, credit spreads continued to tighten.
More widely, bond market valuations were weakened by further expected rises in
interest rates as the projected end of the hiking phase of the cycle was pushed
out in reaction to worse than expected inflation data. Rate expectations rose
more in the UK, where inflation remained stubbornly high.
QHow did the Company perform?
AOver the six months to 30 June 2023 the share price fell from 166p to 162p, but
with dividends reinvested, the Company delivered a positive share price total
return of 1.0%. The net asset value per sharetotal return (with dividends
reinvested) was 2.1%.
QWhat were the key contributors and detractors of performance?
AThe portfolio's exposure to credit risk was the main driver of the positive
return. Within this, high yield bonds were the largest contributor. Investment
grade, corporate hybrids and senior bank debt also contributed. Exposure to
subordinated financial debt was a small negative. The portfolio's duration
(sensitivity to interest rates) was a negative factor as interest rate
expectations rose. A rise in the value of sterling meant that the modest non
-sterling exposure in the portfolio was also negative.
The unexpected write-down of Credit Suisse Additional Tier 1 (AT1) bonds when
the bank was acquired by UBS was a negative factor. The portfolio holding in
Credit Suisse as of the end of February was 0.54%. However, the portfolio's
other holdings in AT1 and its holdings in Credit Suisse senior debt recovered
strongly after this event. While two Credit Suisse AT1s were in the bottom 10
performing bonds in the portfolio, some other financials such as Banco Comercial
Portugues and Piraeus Financial were among the portfolio's top five
contributors.
QWhat changes were made to the portfolio?
AThe Company was active in the period with a mixture of primary and secondary
market purchases. The focus of purchases was on higher quality BBrated bonds
that we feel offer a relatively attractive balance of return to risk.
We participated in a new issue from generics drug manufacturer Teva
Pharmaceutical Finance, a company that we have invested in for several years.
Other new issues purchased included lottery operator Allwyn Entertainment and
car battery manufacturer Clarios. Although these are two very different
businesses, we believe that both are well placed to weather any economic
downturn. We also bought new hybrid corporate bonds from Swedish state-owned
utility Vattenfall, Portuguese utility company EDP, Vodafone Group and BT.
In the secondary market we added to existing positions in UK holiday park
operator Center Parcs and retailer Ocado. Center Parcs is expected to perform
well again in 2023. Ocado's bonds earn an attractive yield but also have, in our
view, good potential capital upside from any good news around the company's
technology licensing. During the period of weakness in bank bonds following the
write-down of Credit Suisse's AT1s, we added to the position in Nationwide AT1.
Several bonds of companies with weaker balance sheets were sold. These included
telecom and retail names. Credit concerns led us to sell French furniture
retailer Mobilux Finance and European residential landlord Heimstaden.
Heimstaden is an example of a credit where the investment case has changed
dramatically due to a rising rate environment. The European real estate sector
is an area about which we remain cautious. We fear that some business models
built on low borrowing costs are no longer commercially viable.
Following these transactions, the allocation to corporate high yield was reduced
from 48.4% to 43.7%. Exposure to subordinated bank and insurance was gradually
increased from 30.7% to 33.7%.
We view financials as providing a more favourable risk-reward profile than
similar-rated high yield bonds with the Company holding a well-diversified
portfolio of more than 20 European banks. We continue to assess and adjust
exposures to the banking sector and while we believe fundamentals are strong for
the banks held in the trust, we are aware of the risks that a crisis of
confidence can pose to the sector and to individual banks.
In other activity, long-dated UK gilts were added and now account for 1.6% of
the portfolio.
Net gearing was increased from 15.7% to 16.9%. Gearing is one of the tools we
can use to adjust the level of risk in the portfolio to align it with the level
of opportunity we see in the market. Although the cost of borrowing has gone up,
we believe gearing is still an attractive option given the higher level of yield
we can now receive from the bonds we want to buy.
QWhat were conditions like in the primary market?
AEuropean high yield corporate supply totalled ?33 billion in the period,
according to data from JPMorgan. This is a higher level than in the whole of
2022 but not unusual compared to earlier years. Net supply was light at around
?2 billion, with the bulk of the issuance used for refinancing purposes. BB
rated bonds accounted for the majority of the deal flow with a 55% market share.
Single B bonds accounted for 36%. Sterling-denominated issuance was boosted by
Vodafone Group and BT hybrids in the second quarter of 2023.
This low level of bond supply was a technical support for the market and helps
to explain the relatively strong performance of high yield bonds despite a
weakening growth environment.
QWhat is your outlook from here?
AUncertainty around the outlook for the economy and inflation, combined with the
ongoing impact of the interest rate hiking phase of the cycle has fuelled
volatility in financial markets, leading to market strain, as seen most clearly
in the banking sector. We will continue to monitor our allocations within the
banking sector. For now, we are comfortable that the levels of yield provide an
attractive reward for the credit risks, especially with a well-diversified
spread of risk across many banks. It is certainly encouraging that attractive
yields are available from so many more sources today, but we also expect
volatility to be a defining feature of 2023. It is therefore important to remain
nimble and be prepared to sell bonds that have performed well, especially whilst
our outlook for the global economy and high yield bond markets, particularly the
weaker parts, remains cautious.
Rhys DaviesEdward Craven
Portfolio Managers
22 August 2023
Principal and Emerging Risks and Uncertainties
The Board has carried out a robust assessment of the risks facing the Company,
including those that would threaten its business model, future performance,
solvency and liquidity. As part of this process, the Board conducted a full
review of the Company's risk control summary and considered new and emerging
risks. These are not necessarily principal risks for the Company at present but
may have the potential to be in the future. In carrying out this assessment, the
Board considered the emerging risks facing the Company including geopolitical
risks such as the invasion of Ukraine by Russia, evolving cyber threats and ESG,
including climate risk. The principal risks that follow are those identified by
the Board as the most significant after consideration of mitigating factors and
are not intended to cover all the risk categories as shown in the Internal
Control and Risk Management section on page 13 of the 2022 annual financial
report.
+---------------+--------------------------------------------------------------+
|Category and |Mitigating Procedures and Controls |
|Principal Risk | |
|Description | |
+---------------+--------------------------------------------------------------+
|Strategic Risks |
+---------------+--------------------------------------------------------------+
|Market and |An explanation of market risk and how this is addressed is |
|Political Risk |given in note 19.1 to the financial statements within the 2022|
| |annual financial report. The Portfolio Managers' Report |
|The Company |summarises particular macro economic factors affecting |
|invests |performance during the period and the portfolio managers' |
|primarily in |views on those most relevant to the outlook for the portfolio.|
|fixed interest | |
|securities, the| |
|majority of | |
|which are | |
|traded on | |
|global security| |
|markets. The | |
|principal risk | |
|for investors | |
|in the Company | |
|is a | |
|significant | |
|fall and/or a | |
|prolonged | |
|period of | |
|decline in | |
|these markets. | |
|This could be | |
|triggered by | |
|unfavourable | |
|developments | |
|globally and/or| |
|in one or more | |
|regions, such | |
|as the current | |
|conflict in | |
|Ukraine, the | |
|ongoing effects| |
|of the Covid-19| |
|pandemic and | |
|other | |
|geopolitical | |
|tensions and | |
|uncertainties | |
|and their | |
|impact on the | |
|global economy.| |
|The Board | |
|cannot control | |
|the effect of | |
|such external | |
|influences on | |
|the portfolio. | |
|Market risk | |
|also arises | |
|from movements | |
|in foreign | |
|currency | |
|exchange rates | |
|and interest | |
|rates. | |
+---------------+--------------------------------------------------------------+
|Regulatory or |The Board receives regular reports from the Manager and |
|Fiscal Changes |Company Secretary which highlight any proposed changes to the |
| |regulatory/fiscal regimes which might impact the Company. |
|The Company is | |
|incorporated in| |
|Jersey which is| |
|a low tax | |
|jurisdiction | |
|subject to | |
|global | |
|scrutiny. Any | |
|adverse global | |
|regulatory or | |
|fiscal measures| |
|taken against | |
|such low tax | |
|jurisdictions, | |
|could | |
|negatively | |
|impact the | |
|Company. | |
+---------------+--------------------------------------------------------------+
|Wide Discount |The Board receives regular reports from both the Manager and |
|leading to |the Company's broker on the Company's share price performance |
|Shareholder |and level of discount (or premium), together with regular |
|Dissatisfaction|reports on marketing and meetings with shareholders and |
| |prospective investors. The Board recognises the importance of |
|The Company's |the Company's scale in terms of the aggregate value of its |
|shares are |shares in the market (`market cap') in creating liquidity and |
|subject to |the benefit of a wide shareholder base, and has the ability to|
|market |both issue and buy back shares to assist with market |
|movements and |volatility. The foundation to this lies in solid investment |
|can trade at a |performance and anattractive level of dividend. |
|premium or | |
|discount to | |
|NAV. Should the| |
|Company's | |
|shares trade at| |
|a significant | |
|discount | |
|compared to its| |
|peers, then | |
|shareholder | |
|dissatisfaction| |
|may result if | |
|shareholders | |
|cannot realise | |
|the value of | |
|their | |
|investment | |
|close to NAV, | |
|with the | |
|ultimate risk | |
|that | |
|arbitragers | |
|join the share | |
|register. | |
+---------------+--------------------------------------------------------------+
|Third Party |
|Service |
|Providers Risks |
+---------------+--------------------------------------------------------------+
|Lack of Control|Details of how the Board monitors the services provided by the|
|over, or |Manager and the other TPPs, and the key elements designed to |
|Unsatisfactory |provide effective internal control, are included in the |
|Performance of |internal control and risk management section on page 13 of the|
|Third Party |2022 annual financial report. |
|Service | |
|Providers | |
|(`TPPs') | |
| | |
|Failure by any | |
|service | |
|provider to | |
|carry out its | |
|obligations to | |
|the Company in | |
|accordance with| |
|the terms of | |
|its appointment| |
|could have a | |
|materially | |
|detrimental | |
|impact on the | |
|operations of | |
|the Company and| |
|affect its | |
|ability to | |
|pursue | |
|successfully | |
|its investment | |
|policy and | |
|expose it to | |
|reputational | |
|risk. | |
|Disruption to | |
|the accounting,| |
|payment systems| |
|or custody | |
|records could | |
|prevent the | |
|accurate | |
|reporting and | |
|monitoring of | |
|the Company's | |
|financial | |
|position. | |
+---------------+--------------------------------------------------------------+
|Cyber Risk |The Audit & Risk Committee on behalf of the Board periodically|
| |reviews TPPs' service organisation control reports and meets |
|The Company's |with representatives of the Manager's Investment Management, |
|operational |Compliance, Internal Audit and Investment Trust teams as well |
|structure means|as the Company Secretary's senior staff and Compliance team. |
|that cyber risk|The Board receives periodic updates on the Manager's and the |
|(information |Company Secretary's information security arrangements. The |
|technology and |Board monitors TPPs' business continuity plans and testing - |
|physical |including their regular `live' testing of workplace recovery |
|security) |arrangements. |
|predominantly | |
|arises at its | |
|TPPs. This | |
|cyber risk | |
|includes fraud,| |
|sabotage or | |
|crime | |
|perpetrated | |
|against the | |
|Company or any | |
|of its TPPs. | |
+---------------+--------------------------------------------------------------+
|Business |The Manager's business continuity plans are reviewed on a |
|Continuity Risk|regular basis and the Directors are satisfied that the Manager|
| |has in place robust plans and infrastructure to minimise the |
|Impact of a |impact on its operations so that the Company can continue to |
|major event, |trade, meet regulatory obligations, report and meet |
|such as Covid |shareholder requirements. |
|-19, on the | |
|operations of |The Board receives periodic reports from the Manager and TPPs |
|the service |on business continuity processes and has been provided with |
|providers, |assurance from them all insofar as possible that measures are |
|including any |in place for them to continue to provide contracted services |
|prolonged |to the Company. |
|disruption. | |
+---------------+--------------------------------------------------------------+
In the view of the Board, these principal and emerging risks and uncertainties
are as applicable to the remaining six months of the financial year as they were
to the period under review.
Thirty Largest Investment Issuers
AT 30 JUNE 2023
Market
Country of Value % of
Issuer Industry Incorporation £'000 Portfolio
Lloyds Banking Financials UK 10,362 3.2
Group
Barclays Financials UK 10,326 3.2
Co-Operative Financials UK 6,920 2.1
Bank
BNP Paribas Financials France 6,155 1.9
Aviva Financials UK 5,947 1.8
Teva Health Care Netherlands 5,685 1.7
Pharmaceutical
Finance
Codere New Topco Consumer Services Luxembourg 5,456 1.7
UK Treasury Bill Government Bonds UK 5,216 1.6
Albion Finance Consumer Services Luxembourg 5,153 1.6
Ziggo Bond Telecommunications Netherlands 5,137 1.6
Finance
Vodafone Group Telecommunications UK 5,058 1.5
Virgin Media O2 Telecommunications UK 4,893 1.5
Eléctricité De Utilities France 4,707 1.4
France
Petra Diamonds Basic Materials Bermuda 4,603 1.4
Banco BPM Financials Italy 4,484 1.4
Nationwide Financials UK 4,239 1.3
Virgin Money Financials UK 4,127 1.3
Rothschilds Financials Guernsey 4,019 1.2
Continuation
Finance
Clarios Basic Materials USA 4,007 1.2
Deutsche Bank Financials Germany 4,003 1.2
Bellis Consumer Goods UK 3,829 1.2
Sainsbury's Bank Financials UK 3,826 1.2
Legal & General Financials UK 3,502 1.1
Frigoglass Industrials Netherlands 3,494 1.1
Finance
Parts Europe Consumer Goods France 3,479 1.1
Ford Motor Consumer Goods USA 3,436 1.1
Credit
BCP V Modular Consumer Services UK 3,361 1.0
Services
ING Financials Netherlands 3,238 1.0
Ocado Consumer Goods UK 3,157 1.0
RL Finance Financials UK 3,122 1.0
Top 30 144,941 44.6
investments
Other 180,403 55.4
investments
Total 325,344 100.0
investments
Governance
Invesco Bond Income Plus Limited is a Jersey domiciled investment company and is
regulated by the Jersey Financial Services Commission.
Related Parties
Note 23 to the financial statements within the Company's 2022 annual financial
report gives details of related party transactions. The basis of these has not
changed for the six months being reported. The 2022 annual financial report is
available on the Company's section of the Manager's website at:
www.invesco.co.uk/bips.
Going Concern
The financial statements have been prepared on a going concern basis. When
considering this, the Directors took into account the annual shareholders'
continuation vote and the following: the Company's investment objective and risk
management policies, the nature of the portfolio and expenditure and cash flow
projections. As a result, they determined that the Company has adequate
resources, an appropriate financial structure, readily realisable fixed assets
to repay current liabilities and suitable management arrangements in place to
continue in operational existence for the foreseeable future.
Bond Rating Analysis
The table below reflects Standard and Poor's (`S&P') ratings. Where an S&P
rating is not available, an equivalent average rating has been used. Investment
grade is BBB- and above.
For the definitions of these ratings see the Glossary of Terms and Alternative
Performance Measures on page 81 of the Company's 2022 annual financial report.
30 June 2023 31 December 2022
Cumulative Cumulative
Rating Portfolio % Total % Portfolio % Total %
Investment Grade:
AA 1.6 1.6 - -
A+ 0.6 2.2 0.2 0.2
A- 1.2 3.4 0.8 1.0
BBB+ 1.9 5.3 2.0 3.0
BBB 12.0 17.3 10.1 13.1
BBB- 4.2 21.5 4.5 17.6
Non-investment Grade:
BB+ 8.9 30.4 6.2 23.8
BB 10.4 40.8 9.8 33.6
BB- 17.9 58.7 14.5 48.1
B+ 8.7 67.4 10.7 58.8
B 13.4 80.8 21.0 79.8
B- 7.8 88.6 5.6 85.4
CCC+ 2.5 91.1 5.5 90.9
CCC 1.4 92.5 2.8 93.7
CCC- 0.7 93.2 0.6 94.3
CC 1.6 94.8 0.6 94.9
NR* (including equity) 5.2 100.0 5.1 100.0
100.0 100.0
Summary of Analysis
Investment Grade 21.5 17.6
Non-investment Grade 73.3 77.3
NR (including equity) 5.2 5.1
100.0 100.0
* NR: not rated.
Directors' Responsibility Statement
in respect of the preparation of the Half-Yearly Financial Report
The Directors are responsible for preparing the financial report, using
accounting policies consistent with applicable law and International Financial
Reporting Standards.
The Directors confirm that to the best of their knowledge:
-the condensed set of financial statements contained within the Half-Yearly
Financial Report have been prepared in accordance with International Accounting
Standards 34 `Interim Financial Reporting';
-the interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the FCA's Disclosure Guidance and
Transparency Rules; and
-the interim management report includes a fair review of the information
required on related party transactions.
The Half-Yearly Financial Report has not been audited or reviewed by the
Company's auditor.
Signed on behalf of the Board of Directors.
Heather MacCallum
Audit & Risk Committee Chair
22 August 2023
Condensed Statement of Comprehensive Income
FOR THE SIX MONTHSED
30 June 30 June
2023 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Loss on - (9,688) (9,688) - (35,983) (35,983)
investments
held at
fair value
Profit/(loss
) on
derivative
instruments
- currency - 4,130 4,130 - (10,990) (10,990)
hedges and
CDS
Exchange - 1,575 1,575 - (817) (817)
differences
Income - 12,113 - 12,113 10,962 - 10,962
note 2
Investment (461) (461) (922) (480) (480) (960)
management
fees - note
3
Other (386) (2) (388) (417) (2) (419)
expenses
Profit/(loss 11,266 (4,446) 6,820 10,065 (48,272) (38,207)
) before
finance
costs and
taxation
Finance (420) (420) (840) 29 29 58
costs -
note 3
Profit/(loss 10,846 (4,866) 5,980 10,094 (48,243) (38,149)
) before
taxation
Taxation - - - - (29) - (29)
note 4
Profit/(loss 10,846 (4,866) 5,980 10,065 (48,243) (38,178)
) after
taxation
Return per 6.16p (2.77)p 3.39p 5.97p (28.62)p (22.65)p
ordinary
share
Weighted
average
number
of ordinary
shares
in issue 176,159,363 168,577,596
during the
period
The total columns of this statement represent the Company's statement of
comprehensive income, prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The profit/(loss) after
taxation is the total comprehensive income/(loss). The supplementary revenue and
capital columns are both prepared in accordance with the Statement of
Recommended Practice issued by the Association of Investment Companies. All
items in the above statement derive from continuing operations of the Company.
No operations were acquired or discontinued in the period.
Condensed Statement of Changes in Equity
Stated Capital Revenue
Capital Reserve Reserve Total
£'000 £'000 £'000 £'000
For the six months
ended 30 June 2023
At 31 December 2022 305,062 (32,141) 8,168 281,089
(Loss)/profit after - (4,866) 10,846 5,980
taxation
Dividends paid - note 5 (279) - (9,817) (10,096)
Net proceeds from issue 7,172 - - 7,172
of new shares - note 6
At 30 June 2023 311,955 (37,007) 9,197 284,145
For the six months
ended 30 June 2022
At 31 December 2021 297,326 23,531 5,873 326,730
(Loss)/profit after - (48,243) 10,065 (38,178)
taxation
Dividends paid - note 5 - - (9,272) (9,272)
At 30 June 2022 297,326 (24,712) 6,666 279,280
Condensed Balance Sheet
At At
30 June 31 December
2023 2022
£'000 £'000
Non-current assets
Investments held at fair value through profit or loss 325,344 317,870
Current assets
Derivative financial instruments - receivable 121,478 106,588
Margin held at brokers 1,696 582
Proceeds due from issue of new shares - 206
Income tax recoverable 3 3
Prepayments and accrued income 5,795 6,403
Cash and cash equivalents 8,546 9,082
137,518 122,864
Current liabilities
Amounts payable relating to issue of new shares - (1)
Accruals (846) (745)
Derivative financial instruments - payable (119,710) (105,148)
Securities sold under agreements to repurchase (58,161) (53,751)
(178,717) (159,645)
Net current liabilities (41,199) (36,781)
Net assets 284,145 281,089
Capital and reserves
Stated capital 311,955 305,062
Capital reserve (37,007) (32,141)
Revenue reserve 9,197 8,168
Total shareholders' funds 284,145 281,089
Net asset value per ordinary share 159.90p 162.20p
Number of shares in issue at the period end - note 6 177,702,596 173,302,596
Condensed Statement of Cash Flows
Six months to Six months to
30 June 30 June
2023 2022
£'000 £'000
Cash flow from operating activities
Profit/(loss) before finance costs and 6,820 (38,207)
taxation
Tax on overseas income - (29)
Adjustment for:
Purchases of investments (83,043) (61,544)
Sales of investments 65,881 50,557
(17,162) (10,987)
Increase from securities sold under 4,410 15,012
agreements to repurchase
Loss on investments held at fair value 9,688 35,983
Net movement from derivative (328) 5,194
instruments - currency hedges
Increase in receivables (506) (2,823)
Decrease in payables (3) (105)
Net cash inflow from operating 2,919 4,038
activities
Cash flow from financing activities
Finance cost (paid)/received(1) (736) 64
Net proceeds from issue of new shares 7,377 -
Dividends paid - note 5 (10,096) (9,272)
Net cash outflow from financing (3,455) (9,208)
activities
Net decrease in cash and cash (536) (5,170)
equivalents
Cash and cash equivalents at the start 9,082 8,168
of the period
Cash and cash equivalents at the end of 8,546 2,998
the period
Reconciliation of cash and cash
equivalents to the Balance Sheet is as
follows:
Cash held at custodian 4,826 2,448
Invesco Liquidity Funds plc - Sterling 3,720 550
Cash and cash equivalents 8,546 2,998
Cash flow from operating activities
includes:
Dividends received 191 115
Interest received 12,535 10,738
(1)Finance costs received in the six months ended 30 June 2022 relate to the
negative interest rates on the Euro denominated financing of securities sold
under agreements to repurchase (repo financing).
+----------------------------------------------+---------+-------+--------+
| |At | |At |
+----------------------------------------------+---------+-------+--------+
| |1 January|Cash |30 June |
+----------------------------------------------+---------+-------+--------+
| |2023 |flows |2023 |
+----------------------------------------------+---------+-------+--------+
|Reconciliation of net debt |£'000 |£'000 |£'000 |
+----------------------------------------------+---------+-------+--------+
|Cash and cash equivalents |9,082 |(536) |8,546 |
+----------------------------------------------+---------+-------+--------+
|Securities sold under agreements to repurchase|(53,751) |(4,410)|(58,161)|
+----------------------------------------------+---------+-------+--------+
|Total |(44,669) |(4,946)|(49,615)|
+----------------------------------------------+---------+-------+--------+
Notes to the Condensed Financial Statements
1.Basis of Preparation
The condensed financial statements have been prepared using the same accounting
policies as those adopted in the Company's 2022 annual financial report. They
have been prepared on an historical cost basis, in accordance with the
applicable International Financial Reporting Standards (IFRS), as adopted by the
European Union and, where possible, in accordance with the Statement of
Recommended Practice for Financial Statements of Investment Trust Companies and
Venture Capital Trusts, updated by the Association of Investment Companies in
July 2022 (AIC SORP).
2.Income
Six months to Six months to
30 June 30 June
2023 2022
£'000 £'000
Income from investments:
UK dividends 95 112
UK investment income - interest 4,280 3,894
Overseas dividends 53 4
Overseas investment income - interest 7,609 6,950
12,037 10,960
Other income:
Deposit interest 50 2
Other income 26 -
76 2
Total income 12,113 10,962
3.Management Fee and Finance costs
Investment management fees and finance costs are allocated 50% to capital and
50% to revenue (2022: 50% to capital and 50% to revenue).
Finance costs relate to interest payable on borrowings from securities sold
under agreements to repurchase (repo) or bank overdrafts. In some instances,
interest on repo is negative i.e. receivable and has been netted against
interest payable, shown within finance costs, as they relate to borrowings
utilised by the Company.
4.Taxation
The Company is subject to Jersey income tax at the rate of 0% (2022: 0%). The
prior period overseas tax charge consists of irrecoverable withholding tax.
5.Dividends paid on Ordinary Shares
Six Six
months to months to
30 June 30 June
2023 2022
pence £'000 pence £'000
Interim dividends in 2.875 5,008 2.750 4,636
respect of previous
period
First interim dividend 2.875 5,088 2.750 4,636
5.750 10,096 5.500 9,272
Dividends paid in the period have been charged to revenue except for £279,000
which was charged to stated capital (six months to 30June 2022: £nil). This
amount is equivalent to the income accrued on the new shares issued in the
period (see note 6).
A second interim dividend of 2.875p (2022: 2.750p) has been declared and was
paid on 18 August 2023 to ordinary shareholders on the register on 14 July 2023.
6.Stated Capital, including Movements
Allotted ordinary shares of no par value.
Six months to Year to
30 June 31 December
2023 2022
Stated capital:
Brought forward £305,062,000 £297,326,000
Net proceeds from shares issued £7,172,000 £7,736,000
Dividends paid from stated capital £(279,000) -
Carried forward £311,955,000 £305,062,000
Number of ordinary shares:
Brought forward 173,302,596 168,577,596
Issued in the period 4,400,000 4,725,000
Carried forward 177,702,596 173,302,596
Per share:
- average issue price 165.95p 164.54p
7.Classification Under Fair Value Hierarchy
Note 20 of the 2022 annual financial report sets out the basis of
classification.
There were no Level 3 holdings at 30 June 2023 (31 December 2022: one) and the
total (not shown) is therefore the aggregate of Level1, Level 2 and Level 3.
At 30 At 31
June December
2023 2022
Level 1 Level 2 Level Level 1 Level 2 Level
3 3
£'000 £'000 £'000 £'000 £'000 £'000
Financial assets designated
at fair value through profit
or loss:
- Fixed interest - 280,213 - - 294,154 1,165
securities(1)
- Convertibles - 36,481 - - 18,614 -
- Government - 5,451 - - 216 -
- Preference 2,441 - - 2,641 - -
- Equities 758 - - 1,080 - -
Derivative financial
instruments:
- Forward currency contract - 1,768 - - 1,440 -
Total for financial assets 3,199 323,913 - 3,721 314,424 1,165
(1)Fixed interest securities include both fixed and floating rate securities.
8.Status of Half-Yearly Financial Report
The financial information contained in this Half-Yearly Financial Report, which
has not been audited by the Company's auditor, does not constitute statutory
accounts as defined in Article 104 of Companies (Jersey) Law 1991. The financial
information for the half year ended 30 June 2023 and the half year ended 30 June
2022 has not been audited. The figures and financial information for the year
ended 31December 2022 are extracted and abridged from the latest audited
accounts and do not constitute the statutory accounts for that year.
By order of the Board
JTC Fund Solutions (Jersey) Limited
Company Secretary
22 August 2023
Glossary of Terms and Alternative Performance Measures
Alternative Performance Measure (`APM')
An APM is a measure of performance or financial position that is not defined in
applicable accounting standards and cannot be directly derived from the
financial statements. The calculations shown in the corresponding tables are for
the six months ended 30 June 2023 and the year ended 31 December 2022. The APMs
listed here are widely used in reporting within the investment company sector
and consequently aid comparability, providing useful additional information.
Premium/(discount) (`APM')
Premium is a measure of the amount by which the mid-market price of an
investment company share is higher than the underlying net asset
value of that share. Discount is a measure of the amount by which the mid-market
price of an investment company share is lower than the underlying net asset
value (`NAV') of that share. If the shares are trading at a premium the result
of the below calculation will be positive and if they are trading at a discount
it will be negative. In this Half-Yearly Financial Report the premium/(discount)
is expressed as a percentage of the net asset value per share and is calculated
according to the formula set out below.
30 June 31 December
2023 2022
Share price a 162.00p 166.00p
Net asset value per share b 159.90p 162.20p
Premium c = (a-b)/b 1.3% 2.3%
Modified Duration
Modified Duration is regarded as a measure of the volatility of a portfolio, as,
with all other risk factors being equal, bonds with higher durations have
greater price volatility than bonds with lower durations. Modified duration
measures the change in the value of a bond (or portfolio) in response to a
change in 100 basis-point (1%) change in interest rates. For example, in general
this would mean that a 1% rise in interest rates leads to a 1% fall in the value
of the bond or portfolio.
Gearing
The gearing percentage reflects the amount of borrowings that a company has
invested. This figure indicates the extra amount by which net assets, or
shareholders' funds, would move if the value of a company's investments were to
rise or fall. A positive percentage indicates the extent to which net assets are
geared; a nil gearing percentage, or `nil', shows a company is ungeared. A
negative percentage indicates that a company is not fully invested and is
holding net cash as described below.
There are several methods of calculating gearing and the following has been used
in this report:
Gross Gearing (`APM')
This reflects the amount of gross borrowings in use by a company and takes no
account of any cash balances. It is based on gross borrowings as a percentage of
net assets.
30 June 31 December
2023 2022
£'000 £'000
Securities sold under 58,161 53,751
agreements to repurchase (repo
financing)
Gross borrowings a 58,161 53,751
Net asset value b 284,145 281,089
Gross gearing c = a/b 20.5% 19.1%
Net Gearing or Net Cash (`APM')
Net gearing reflects the amount of net borrowings invested, i.e. borrowings less
cash and cash equivalents (incl. investments in money market funds). It is based
on net borrowings as a percentage of net assets. Net cash reflects the net
exposure to cash and cash equivalents, as a percentage of net assets, after any
offset against total borrowings.
30 June 31 December
2023 2022
£'000 £'000
Securities sold under agreement 58,161 53,751
to repurchase (repo financing)
Less: cash and cash equivalents (10,242) (9,664)
including margin
Net borrowings a 47,919 44,087
Net asset value b 284,145 281,089
Net gearing c = a/b 16.9% 15.7%
Net Asset Value (`NAV')
Also described as shareholders' funds, the NAV is the value of total assets less
liabilities. Liabilities for this purpose include current and long-term
liabilities. The NAV per ordinary share is calculated by dividing the net assets
by the number of ordinary shares in issue. For accounting purposes assets are
valued at fair (usually market) value and liabilities are valued at par (their
repayment - often nominal - value).
Return
The return generated in a period from the investments including the increase and
decrease in the value of investments over time and the income received.
Total Return
Total return is the theoretical return to shareholders that measures the
combined effect of any dividends paid together with the rise or fall in the
share price or NAV. In this Half-Yearly Financial Report these return figures
have been sourced from Refinitiv who calculate returns on an industry
comparative basis, taking the Net Asset Values and Share Prices for the opening
and closing periods and adding the impact of dividend reinvestments for the
relevant periods.
Net Asset Value Total Return (`APM)'
Total return on net asset value per share, with debt at market value, assuming
dividends paid by the Company were reinvested into the shares of the Company at
the NAV per share at the time the shares were quoted ex-dividend.
Share Price Total Return (`APM')
Total return to shareholders, on a mid-market price basis, assuming all
dividends received were reinvested, without transaction costs, into the shares
of the Company at the time the shares were quoted ex-dividend.
Net Asset Share
Six Months Ended 30 June 2023 Value Price
As at 30 June 2023 159.90p 162.00p
As at 31 December 2022 162.20p 166.00p
Change in period a -1.4% -2.4%
Impact of dividend reinvestments(1) b 3.5% 3.4%
Total return for the period c = a+b 2.1% 1.0%
Net Asset Share
Year Ended 31 December 2022 Value Price
As at 31 December 2022 162.20p 166.00p
As at 31 December 2021 193.82p 187.25p
Change in year a -16.3% -11.3%
Impact of dividend reinvestments(1) b 5.5% 6.1%
Total return for the year c = a+b -10.8% -5.2%
(1)Total dividends paid during the period of 5.75p (31 December 2022: 11.25p)
reinvested at the NAV or share price on the ex-dividend date. NAV or share price
falls subsequent to the reinvestment date consequently further reduce the
returns, vice versa if the NAV or share price rises.
Directors, Investment Manager and Administration
Directors
Tim Scholefield (Chairman)
Heather MacCallum (Audit & Risk Committee Chair and Senior Independent Director)
Christine Johnson
Caroline Dutot
Tom Quigley
Alternative Investment Fund Manager (Manager)
Invesco Fund Managers Limited
Perpetual Park
Perpetual Park Drive
Henley-on-Thames
Oxfordshire RG9 1HH
(01491 417 000
www.invesco.co.uk/investmenttrusts
Manager's Website
Information relating to the Company can be found on the Manager's website, at
www.invesco.co.uk/bips
The contents of websites referred to in this document, or accessible from links
within those websites, are not incorporated into, nor do they form part of, this
interim report.
Company Secretary, Administrator and Registered Office
JTC Fund Solutions (Jersey) Limited
PO Box 1075
28 Esplanade
St Helier
Jersey JE4 2QP
Company Secretarial Contact: Hilary Jones
01534 700000
invesco@jtcgroup.com
General Data Protection Regulation
The Company's privacy notice can be found at:
www.invesco.co.uk/bips
Corporate Broker
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Independent Auditor
PricewaterhouseCoopers CI LLP
37 Esplanade
St Helier
Jersey JE1 4XA
Depositary, Custodian & Banker
The Bank of New York Mellon (International) Limited
160 Queen Victoria Street
London EC4V 4LA
Invesco Client Services
Invesco has a Client Services Team available from 8.30am to 6.00pm every working
day. Please feel free to take advantage of their expertise by ringing:
0800 085 8677
www.invesco.co.uk/investmenttrusts
Registrar
Computershare Investor Services (Jersey) Limited
13 Castle Street
St Helier
Jersey JE1 1ES
+44 (0370) 707 4040
Shareholders who hold shares directly and not through a Savings Scheme or ISA
and have queries relating to their shareholding should contact the Registrar's
call centre on the above number.
Calls are charged at the standard geographic rate and will vary by provider.
Calls from outside the United Kingdom will be charged at the applicable
international rate. Lines are open 8.30am to 5.30pm Monday to Friday (excluding
UK public holidays).
Shareholders holding shares directly can also access their holding details via
Computershare's website:
http://www.investorcentre.co.uk/je
The Registrar provides an on-line share dealing service to existing shareholders
who are not seeking advice on buying or selling via Computershare's website
http://www.investorcentre.co.uk/je
For queries relating to shareholder dealing contact
+44 (0) 370 703 0084
Calls are charged at the standard geographic rate and will vary by provider.
Calls from outside the United Kingdom will be charged at the applicable
international rate. Lines are open 8.30am to 5.30pm Monday to Friday (excluding
UK public holidays).
Dividend Re-Investment Plan
The Registrar also manages a Dividend Re-Investment Plan for the Company.
Shareholders wishing to re-invest their dividends should contact the Registrar.
NATIONAL STORAGE MECHANISM
A copy of the Half-YearlyFinancial Report will besubmitted shortly to the
National Storage Mechanism ("NSM") and will be available for inspection at the
NSM, which is situated athttps://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Hard copies of the Half-Yearly Financial Report will be posted to shareholders.
Copies may be obtained during normal business hours from the Company's
Registered Office, JTC Fund Solutions (Jersey) Limited, PO Box 1075, 28
Esplanade, St Helier, Jersey JE4 2QP or the Manager's website via the directory
found at the following link:www.invesco.co.uk/bips.
Hilary Jones
JTC Fund Solutions (Jersey) Limited
Company Secretary
Telephone: 01534 700000
22 August 2023
LEI: 549300JLX6ELWUZXCX14
This information was brought to you by Cision http://news.cision.com
END
(END) Dow Jones Newswires
August 22, 2023 04:05 ET (08:05 GMT)
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