Half-year Report

INVESCO BOND INCOME PLUS LIMITED

HALF-YEARLY FINANCIAL REPORT FOR THE

SIX MONTHS ENDED 30 JUNE 2022

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 with dividends reinvested⁽¹⁾⁽²⁾

	For Six	For Year
	Months to	Ended
	30 June	31 December
	2022	2021
Net asset value - total return with dividends reinvested	–12.0%	+5.3%
Share price - total return with dividends reinvested	–13.3%	+4.2%

Performance Statistics

	For Six	For Six
	Months to	Months to
	30 June	30 June
	2022	2021
Revenue return per share	5.97p	5.52p
Capital return per share	(28.62p)	3.33p
Total return per ordinary share	(22.65p)	8.85p
Dividend for the period	5.50p	5.00p
Capital Statistics
	At	At
	30 June	31 December
	2022	2021
Net Assets (£000)	279,280	326,730
Net asset value per ordinary share(2)	165.67p	193.82p
Share price(1)	157.50p	187.25p
Discount(2)	(4.9)%	(3.4)%
Gearing(2)
Gross gearing	19.4%	12.0%
Net gearing	17.3%	9.5%

(1)  Source: Refinitiv.

(2)  Alternative Performance Measures (APM). See pages 17 and 18 for the explanation and calculation of APMs. Further details are provided in the Glossary of Terms and Alternative Performance Measures in the Company’s 2021 annual financial report.

Chairman’s Statement

Highlights

• On track to achieve our dividend target of 11 pence per share for the current year;

• Gearing has been increased to take advantage of the opportunities provided by a more challenging market environment.

The macroeconomic environment proved particularly challenging during the first six months of the year. Globally, inflation soared, the result of supply-side disruption combining with the impact of government efforts to stimulate demand in response to the pandemic. Russia’s catastrophic invasion of Ukraine caused further disruption to the supply of energy and food, adding fresh momentum to the seemingly inexorable rise in prices. In the UK for example, inflation skyrocketed to exceed 9.0% by the end of the second quarter and it was in this context that high yield markets experienced a difficult start to the year.

Central banks tended to portray the rise in inflation as a temporary phenomenon. While this may yet turn out to be the case, markets took a less sanguine view of developments, unsurprisingly given that official inflation forecasts have proved consistently way too optimistic. Uncertainty and market nervousness were heighted by the growing realisation that there was no immediate end in sight to the terrible conflict in Ukraine.

Against this challenging backdrop the Company’s Net Asset Value (NAV) fell by 12.0% during the first six months of the year. This is undoubtedly a disappointing start to the year, though shareholders should note that the fall in the NAV was less than that of our reference index, the ICE BofA European Currency High Yield Index, which declined by 14.4% (both figures total return, in sterling terms).

The Portfolio Managers’ Report, which follows my comments, provides shareholders with details of how Rhys and Edward have positioned the portfolio in the current challenging environment. It is noteworthy that they have gradually increased the gearing of the portfolio as high yield markets have declined, an indication, in my view, that weakness in markets often throws up attractive opportunities for the longer term investor. Net gearing rose from 9.5% at the start of the year to end the period under review at 17.3%.

The Company’s share price traded predominantly at a discount to NAV during the six months. This outcome reflected the difficult global macroeconomic environment previously highlighted. The share price ended the six month period to 30 June at a discount of 4.9% (the discount was 3.4% at the start of the six months).

While high yield securities have moved a long way to reflect the deterioration in macroeconomic prospects, market confidence remains fragile. Investors will be watching closely to see whether inflation is on course to peak and then decelerate toward central bank targets. The UK economy is barely expected to grow over the next few years and the risk of recession is rising; this is an environment where we can expect corporate failures to increase. The war in Ukraine has considerable potential to further destabilise the economic outlook in western Europe.

I have noted in previous reports that our Portfolio Managers have considerable experience of navigating the type of difficult market environment which we now find ourselves in. Our investment policy is to provide a high level of dividend income relative to prevailing interest rates and I am therefore pleased to report that we remain firmly on track to achieve our full year dividend target of 11.00 pence per share, having declared first and second interim dividends of 2.75 pence per share in respect of the current financial year.

Tim Scholefield
Chairman

18 August 2022

Portfolio Managers’ Report

Portfolio Manager

Rhys Davies, CFA, Fund Manager and Senior Credit Analyst

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 and Senior Credit Analyst

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 a fund 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

Q  What has the market background been for the management of high yield bonds in this period?

A  With interest rate expectations rising sharply and new threats to economic growth emerging, the first half of 2022 proved to be a very difficult environment for investment across a broad range of asset classes, including high yield bonds.

The ICE BofA European Currency High Yield Index (GBP hedged) returned –14.4% over the period. To give this significantly negative return some context, gilts returned –14.7% and high quality credit rating sterling investment-grade returned –14.8%. Non-investment grade BB-rated bonds returned –14.2%, B– rated bonds returned–14.4% and the weaker or riskiest lenders at CCC rated & lower returned –16.7%.

The yield of the high yield index rose from 3.43% at the end of 2021 to 7.65% at the end of June. The credit spread widened from 337bps to 648bps.

Interest rate expectations began to rise in the final months of 2021, as evidence of higher and persistent inflation emerged, and central bank rhetoric became more hawkish in response. This shift accelerated in the early months of this year, with the market moving rapidly to price in a series of rate hikes. While longer duration assets were more sensitive to this change, yields moved higher across bond markets.

As the year has continued, credit spreads have also widened. The extent of the tightening programme is itself a threat to growth, but concerns have been increased by two new factors, the invasion of Ukraine and the impact of Covid lockdowns on Chinese economic activity. In the first quarter of the year, the more interest rate sensitive, BB part of the high yield market underperformed. In recent months, the single B and CCC cohorts have been weaker, a sign of this increased focus on growth risks.

The market’s yield is now just below the level it briefly reached in March 2020. With that exceptional period aside, it is as high as it has been in the last decade. The credit spread, although not at such an extreme level, is also at the upper end of its range.

In this far less positive environment for borrowers, high yield bond supply has fallen to just €20bn in European currencies (€7.5bn net of redemptions) in the first half  of 2022. 2021 was a record year for issuance, when 307 bonds came to market, with a gross nominal value of €150bn (€88.3bn net). Given that such a large amount of financing was put in place at last year’s lower yields, many corporates may be able to wait to issue new bonds, in hope of better market conditions.

However, at some point the market will need to re-open, at terms acceptable to creditors and borrowers. We have already seen a small number of deals completed at higher coupons. This is an environment that should offer some exciting opportunities for income-oriented investors.

Although there is clear evidence in business activity and consumer confidence indices of weaker economic conditions ahead, the default rate remains low. The Moody’s measure of annual global high yield defaults was 2.1%, well below its average of 3.9%. It is predicted to rise to 3.3% over the next year.

Q  What changes have you made to the portfolio in this period?

A  The Company was active in this period, seeking to invest at the higher yield levels available in the market, while taking due regard to the risk through fundamental credit research. The level of market exposure was increased through leverage, with net gearing of the portfolio raised from 9.5% at the end of December to 17.3% at the end of June. The level of liquidity in the portfolio (defined as holdings in cash, short-dated securities and high-quality government bonds) was also reduced from 3.9% to 1.8%.

We used this to add and increase exposure to a range of bonds, including investment grade corporates and subordinated bank debt as well as high yield corporates. In investment grade we added a number of high-quality names at levels that we felt offered valuable yields for the more limited credit risk of high quality companies. In March and April, we bought Daimler Trucks 2.5% 2031 (USD) (at an average price under $86) and British Airways 8.375% 2028 (USD). In May we added two investment grade hybrid bonds, BP and Total. The Total bond, a 2036 maturity with relatively high duration, was added at an average price of €81.5, compared to its issue price of €100 in January.

Many AT1 (junior subordinated bank capital) bank bonds have traded at large discounts to par during these volatile markets. Early in the year we added instruments issued by Barclays, Deutsche Bank and Santander at prices of $87.5, $92.7 and €83.1 respectively. All three were ‘2021 vintage’ bonds, issued during strong markets with coupons that we felt were too low. We were pleased to purchase them at far more attractive yields. In recent weeks a couple of new AT1 bonds have come to the market with significantly higher coupons than were offered last year. We bought the Barclays 8.75% (GBP) and the Credit Suisse 9.75% (USD). Both have call dates in 2027.

Corporate high yield is the largest allocation in the portfolio, and it increased from 50.9% to 52.5% over the period. With weakness concentrated in the more interest rate-sensitive parts of the market in the opening quarter, we focussed our purchases on BB-rated and high-quality B-rated bonds. We added Gatwick Airport 4.375% Apr 2026 and Rolls Royce 5.75% Oct 2027 (both BB and GBP denominated). We also added a new position in Modulaire 6.75% Nov 2029, at a yield of 8.3% (EUR). In May we added BB bonds from online dating site Match, Asda and Virgin Media.

Although higher government bond yields mean that duration is now better rewarded, we have kept the modified duration of the portfolio unchanged, at 3.5.

Q  How has the Company’s portfolio performed in this period?

A  Over the six-months to 30 June 2022 the NAV per share total return was –12.0%. While this is a considerable negative return, it compares to a return of –14.4% for the ICE BofA European Currency High Yield Index (GBP hedged).

During the period, the value of the Company’s portfolio was negatively affected by both rising interest rate expectations and widening credit spreads across the markets in which we invest. Credit risk was the largest negative contributor, particularly in high yield corporate bonds and subordinated financials.

At the individual company level, the bottom performers included subordinated bank capital instruments and two bonds from issuers with some exposure to the Russian and Ukrainian markets, MHP and Frigoglass. At the beginning of the year, the portfolio held two Ukrainian corporate bonds, including MHP, accounting for approximately 0.6% of the portfolio at par. They were sold at distressed prices in March for a combined loss of approximately 0.35% to the portfolio. In both cases there was a risk of bondholders being subordinated by senior debt. Frigoglass is a Greece-based refrigeration equipment company which has production facilities in Russia. The company is working to deal with the disruption and we believe the business is still viable. We have continued to hold this bond. The top performers included several shorter-dated bonds, which were less exposed to interest rate risk.

Q  What is your outlook from here?

A  It’s clear that there are significant risks in the market. Inflation is an important factor for all fixed income investments and it will remain a key focus. High interest rates can push down on growth and corporate earnings as well as putting pressure on the balance sheets of leveraged entities. We are expecting a sustained period of rising rates. Therefore, we are also focussed on the ability of the companies whose bonds we hold to operate in this more challenging environment.

On the other hand, yields are higher, meaning that the reward for holding bonds is greater. Markets have already priced in a series of rate hikes from the Bank of England and other major central banks. Credit spreads are also wider, meaning there is some compensation for the greater risk in the corporate bond market.

We do not think that yields are high enough for the risk on some bonds, particularly in the weaker credit cohorts of the market. However, we are now in a market with a substantial number of opportunities, we think. There are bonds where we are happy, based on our fundamental credit analysis, that the yield available now is an attractive reward, which will add a valuable future income stream to the portfolio. These will underpin the ability of the Company to pay dividends. Invesco Bond Income Plus is targeting an annual dividend of 11.00 pence per share and we are confident that this is achievable.

Rhys Davies  Edward Craven
Portfolio Managers

18 August 2022

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. The principal risks that follow are those identified by the Board as the most significant after consideration of mitigating factors and not intended to cover all the risk categories as shown in the Internal Control and Risk Management section on page 14 of the 2021 annual financial report.

Category and Principal Risk Description	Mitigating Procedures and Controls
Strategic Risks
Market and Political Risk The Company invests primarily in 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, contemporary examples being the ongoing Covid-19 pandemic and the war in the Ukraine. 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.	An explanation of market risk and how this is addressed is given in note 19.1 of the 2021 annual financial report. The Portfolio Managers’ Report summarises particular macroeconomic factors affecting performance during the period and the portfolio managers’ views on those most relevant to the outlook for the portfolio.
Regulatory or Fiscal Changes 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.	The Board receives regular reports from the Manager and Company Secretary which highlight any proposed changes to the regulatory/fiscal regimes which might impact the Company. The Board has a wide knowledge of the macroeconomic environment and also holds a periodic strategy meeting which considers any such emerging risks.
Wide Discount leading to Shareholder Dissatisfaction The Company’s shares are subject to market movements and can trade at a 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.	The Board receives regular reports from both the Manager and the Company’s broker on the Company’s share price performance and level of discount (or premium), together with regular reports on marketing and meetings with shareholders and prospective investors. The Board recognises the importance of the Company’s scale in terms of the aggregate value of its shares in the market (‘market cap’) in creating liquidity and the benefit of a wide shareholder base, and has the ability to both issue and buy back shares to assist with market volatility. The foundation to this lies in solid investment performance and a high level of dividend.
Third Party Service Providers Risks
Lack of Control over, or Unsatisfactory Performance of Third Party 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.	Details of how the Board monitors the services provided by the Manager and the other TPPs, and the key elements designed to provide effective internal control, are included in the internal control and risk management section on page 14 of the 2021 annual financial report.
Cyber Risk The Company’s operational structure means that cyber risk (information technology and physical security) predominantly  arises at its TPPs. This cyber risk includes fraud, sabotage or crime perpetrated against the Company or any of its TPPs.	The Audit Committee on behalf of the Board regularly reviews TPPs’ service organisation control reports and meets with representatives of the Manager’s Investment Management, Compliance, Internal Audit and Investment Trust teams as well as the Company Secretary’s senior staff and Compliance team. The Board receives regular updates on the Manager’s and the Company Secretary’s information security arrangements. The Board monitors TPPs’ business continuity plans and testing – including their regular ‘live’ testing of workplace recovery arrangements.
Business Continuity Risk Impact of a major event, such as Covid-19, on the operations of the service providers, including any prolonged disruption.	The Manager’s business continuity plans are reviewed on an ongoing basis and the Directors are satisfied that the Manager has in place robust plans and infrastructure to minimise the impact on its operations so that the Company can continue to trade, meet regulatory obligations, report and meet shareholder requirements. The Board receives regular reports from the Manager and third-party service providers on business continuity processes and has been provided with assurance from them all insofar as possible that measures are in place for them to continue to provide contracted services to the Company.

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 Investments

AT 30 JUNE 2022

				Market
			Country of	Value	% of
Issuer/issue	Rating(1)	Industry	Incorporation	£000	Portfolio
Codere New Topco		Consumer Services	Luxembourg
11% PIK 30 Sep 2026	Caa1/CCC+/CCC			6,256
7.5% PIK 30 Nov 2027 (SUB)	Ca/NR/CC			1,352
12.75% PIK 30 Nov 2027	Caa3/CCC-/CCC			747
13.625% PIK 30 Nov 2027	Caa3/CCC-/CCC			463
				8,818	2.7
Lloyds Banking Group		Financials	UK
7.875% FRN Perpetual	Baa3/BB-/BBB			4,251
7.5% FRN Perpetual	Baa3/BB-/BBB			2,695
7.625% FRN Perpetual	Baa3/BB-/BBB			598
3.5% FRN 01 Apr 2026 (SNR)	A2/BBB+/A			388
6.375% FRN Perpetual	Baa3/BB-/BBB			130
				8,062	2.5
Teva Pharmaceutical Finance		Health Care	Netherlands
6.75% 01 Mar 2028 (SNR)	Ba2/BB-/BB			3,417
7.125% 31 Jan 2025 (SNR)	Ba2/BB-/BB			2,504
6% 31 Jan 2025 (SNR)	Ba2/BB-/BB			896
4.375% 09 May 2030 (SNR)	Ba2/BB-/BB			682
5.125% 09 May 2029 (SNR)	Ba2/BB-/BB			533
				8,032	2.4
Barclays		Financials	UK
8.875% FRN Perpetual	Ba2/NR/BB			2,707
7.25% FRN Perpetual	Ba2/B+/BB			1,752
6.375% FRN Perpetual	Ba2/B+/BB			1,101
8% FRN Perpetual	Ba2/B+/BB			571
2.75% FRN Perpetual	Baa3/BB+/BBB			283
4.375% FRN Perpetual	Ba2/B+/BB			127
				6,541	2.0
Co-Operative Bank		Financials	UK
9.5% FRN 25 Apr 2029	NR/NR/NR			3,114
6% FRN 06 Apr 2027 (SNR)	B1/NR/B			1,343
5.125% 17 May 2024 (SNR)	NR/BB-/BB			1,042
7.5% FRN 08 Jul 2026	NR/BB-/BB			799
				6,298	1.9
Aviva		Financials	UK
6.875% FRN Perpetual	Baa2/NR/BBB			4,695
8.875% Preference	NR/NR/NR			1,380
6.125% FRN 05 Jul 2043	A3/BBB+/BBB			212
				6,287	1.9
Virgin Media O2		Telecommunications	UK
4% 31 Jan 2029 (SNR)	Ba3/BB-/BB			3,024
4.25% 15 Jan 2030 (SNR)	Ba3/BB-/BB			1,525
5% 15 Apr 2027 (SNR)	Ba3/BB-/BB			904
4.875% 15 Jul 2028 (SNR)	B2/B/B			402
				5,855	1.8
Vodafone Group		Telecommunications	UK
6.25% 03 Oct 2078	Ba1/BB+/BB			2,697
7% FRN 04 Apr 2079	Ba1/BB+/BB			1,379
4.875% 03 Oct 2078	Ba1/BB+/BB			1,208
				5,284	1.6
Ziggo Bond Finance		Telecommunications	Netherlands
6% 15 Jan 2027 (SNR)	B3/B-/B			3,668
3.375% 28 Feb 2030 (SNR)	B3/B-/B			1,052
4.875% 15 Jan 2030 (SNR)	B1/B+/B			460
				5,180	1.6
DKT Finance		Financials	Denmark
9.375% 17 Jun 2023 (SNR)	Caa1/CCC+/CCC			3,411
7% 17 Jun 2023 (SNR)	Caa1/CCC+/CCC			1,718
				5,129	1.6
Petra Diamonds		Basic Materials	UK
10.5% PIK 08 Mar 2026	B3/B-/B			3,993
Common Stock	NR/NR/NR			1,011
				5,004	1.5
Albion Finance		Consumer Services	Luxembourg
8.75% 15 Apr 2027 (SNR)	B3/B/B			2,774
6.125% 15 Oct 2026 (SNR)	B1/BB-/BB			2,121
				4,895	1.5
Arqiva Broadcast Finance		Telecommunications	UK
6.75% 30 Sep 2023	B1/NR/B			4,664	1.4
Virgin Money		Financials	UK
6.375% FRN Perpetual	Ba1/NR/BB			3,797
9.25% Perpetual	Ba1/B/BB			818
				4,615	1.4
Volkswagen Financial Services		Consumer Goods	Netherlands
3.5% FRN Perpetual	Baa2/BBB-/BBB			1,711
3.875% FRN Perpetual	Baa2/BBB-/BBB			1,282
4.25% 09 Oct 2025 (SNR)	A3/BBB+/BBB			1,097
4.375% FRN Perpetual	Baa2/NR/BBB			483
				4,573	1.4
Banco BPM		Financials	Italy
5% FRN 14 Sep 2030	Ba3/NR/BB			2,884
8.75% FRN Perpetual	B2/NR/B			1,524
				4,408	1.3
Dell International		Consumer Services	USA
6.1% 15 Jul 2027 (SNR)	Baa2/BBB/BBB			3,425
6.2% 15 Jul 2030 (SNR)	Baa2/BBB/BBB			720
5.45% 15 Jun 2023 (SNR)	Baa2/BBB/BBB			213
				4,358	1.3
Rothschilds Continuation Finance		Financials	Guernsey
9% FRN Perpetual (SUB)	NR/NR/NR			3,028
FRN Perpetual	NR/NR/NR			1,213
				4,241	1.3
Telecom Italia		Telecommunications	Italy
5.303% 30 May 2024	Ba3/BB-/BB			2,769
7.721% 04 Jun 2038	Ba3/BB-/BB			1,325
				4,094	1.3
Clarios		Basic Materials	USA
8.5% 15 May 2027 (SNR)	Caa1/CCC+/CCC			3,980
6.75% 15 May 2025 (SNR)	B1/B/B			111
				4,091	1.3
Legal & General		Financials	UK
5.625% FRN Perpetual	Baa2/BBB/BBB			3,852	1.2
Eléctricité De France		Utilities	France
6% Perpetual	Ba1/B+/BB			2,282
5.875% Perpetual	Ba1/B+/BB			1,469
				3,751	1.1
Parts Europe		Consumer Goods	France
6.5% 16 Jul 2025	B3/B/B			3,473	1.1
Nationwide		Financials	UK
5.75% FRN Perpetual	Ba1/BB+/BB			2,384
5.875% FRN Perpetual	Ba1/BB+/BB			898
				3,282	1.0
Bellis		Consumer Goods	UK
4.5% 16 Feb 2026 (SNR)	B1/NR/B			1,933
4% 16 Feb 2027 (SNR)	B3/NR/B			1,326
				3,259	1.0
BCP V Modular Services		Consumer Services	UK
6.125% 30 Nov 2028	B2/B/B			2,250
6.75% 30 Nov 2029 (SNR)	Caa1/CCC+/CCC			938
				3,188	1.0
Stonegate Pub Company		Consumer Services	UK
8.25% 31 Jul 2025	B3/NR/B			3,017	0.9
Commerzbank		Financials	Germany
6.125% FRN Perpetual	Ba2/BB-/BB			2,019
8.125% 19 Sep 2023	Baa3/BB+/BB			504
4% FRN 05 Dec 2030	Baa3/BB+/BB			490
				3,013	0.9
Pension Insurance		Financials	UK
7.375% FRN Perpetual	NR/NR/BBB			3,007	0.9
IM Group		Consumer Services	France
6.625% 01 Mar 2025	B2/B-/B			2,878	0.9
Top 30 Investments				143,149	43.7
Other investments				184,717	56.3
Total investments				327,866	100.0

⁽¹⁾  Moody’s/Standard & Poor’s (S&P)/Equivalent average rating.

Abbreviations used in the above valuation:
FRN: Floating Rate Note
SNR: Senior
SUB: Subordinated Notes
PIK: Payment in Kind

Governance

Related Parties

Note 23 of the Company’s 2021 annual financial report gives details of related party transactions. The basis of these has not changed for the six months being reported. The 2021 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

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 78 of the Company’s 2021 annual financial report.

	30 June 2022		31 December 2021
	% of Cumulative		% of Cumulative
Rating	Portfolio	Total %	Portfolio	Total %
Investment Grade:
A	0.4	0.4	0.6	0.6
A-	0.5	0.9	–	0.6
BBB+	1.3	2.2	2.2	2.8
BBB	10.3	12.5	8.4	11.2
BBB–	4.2	16.7	3.9	15.1
Non-investment Grade:
BB+	6.3	23.0	6.5	21.6
BB	7.6	30.6	8.9	30.5
BB-	15.7	46.3	15.4	45.9
B+	9.2	55.5	8.2	54.1
B	22.0	77.5	20.9	75.0
B-	7.1	84.6	9.3	84.3
CCC+	7.2	91.8	7.5	91.8
CCC	1.7	93.5	0.5	92.3
CCC-	0.9	94.4	0.9	93.2
CC	0.4	94.8	–	93.2
NR* (including equity)	5.2	100.0	6.8	100.0
	100.0		100.0
Summary of Analysis
Investment Grade	16.7		15.1
Non-investment Grade	78.1		78.1
NR (including equity)	5.2		6.8
	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 Committee Chair

18 August 2022

Condensed Income Statement

FOR THE SIX MONTHS ENDED

		30 June 2022			30 June 2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000
(Loss)/profit on investments held at fair value	–	(35,983)	(35,983)	–	2,383	2,383
(Loss)/profit on derivative instruments	–	(10,990)	(10,990)	–	1,968	1,968
Exchange differences	–	(817)	(817)	–	(56)	(56)
Income – note 2	10,962	–	10,962	7,104	–	7,104
Investment management fees - note 3	(480)	(480)	(960)	(411)	(411)	(822)
Other expenses	(417)	(2)	(419)	(247)	(1)	(248)
(Loss)/profit before finance costs and taxation	10,065	(48,272)	(38,207)	6,446	3,883	10,329
Finance costs – note 3	29	29	58	10	10	20
(Loss)/profit before taxation	10,094	(48,243)	(38,149)	6,456	3,893	10,349
Taxation – note 4	(29)	–	(29)	(8)	–	(8)
(Loss)/profit after taxation	10,065	(48,243)	(38,178)	6,448	3,893	10,341
Return per ordinary share	5.97p	(28.62)p	(22.65)p	5.52p	3.33p	8.85p
Weighted average number of ordinary shares
in issue during the period			168,577,596			116,880,939

The total column of this statement represents the Company’s statement of comprehensive income, prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The (loss)/profit after taxation is the total comprehensive income. 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 2022
At 31 December 2021	297,326	23,531	5,873	326,730
Total comprehensive loss for the period	–	(48,243)	10,065	(38,178)
Dividends paid - note 5	–	–	(9,272)	(9,272)
At 30 June 2022	297,326	(24,712)	6,666	279,280
For the six months ended 30 June 2021
At 31 December 2020	167,234	26,225	4,216	197,675
Total comprehensive income for the period	–	3,893	6,448	10,341
Dividends paid - note 5	–	–	(5,088)	(5,088)
Net proceeds from issue of new shares - note 6	130,236	–	–	130,236
Cost of shares issued in respect of the merger - note 6	(144)	–	–	(144)
At 30 June 2021	297,326	30,118	5,576	333,020

Condensed Balance Sheet

	At	At
	30 June	31 December
	2022	2021
	£000	£000
Non-current assets
Investments held at fair value through profit or loss	327,866	351,534
Current assets
Derivative financial instruments – unrealised net profit	–	1,187
Amounts due from brokers	2,756	–
Margin held at brokers	2,740
Prepayments and accrued income	5,659	5,576
Cash and cash equivalents	2,998	8,168
	14,153	14,931
Current liabilities
Amounts due to brokers	(4,084)
Accruals	(541)	(640)
Derivative financial instruments – unrealised net loss	(4,007)	–
Securities sold under agreements to repurchase	(54,107)	(39,095)
	(62,739)	(39,735)
Net current liabilities	(48,586)	(24,804)
Net assets	279,280	326,730
Capital and reserves
Stated capital	297,326	297,326
Capital reserve	(24,712)	23,531
Revenue reserve	6,666	5,873
Total shareholders’ funds	279,280	326,730
Net asset value per ordinary share	165.67p	193.82p
Number of shares in issue at the period end – note 6	168,577,596	168,577,596

Condensed Statement of Cash Flows

	Six months to	Six months to
	30 June	30 June
	2022	2021
	£000	£000
Cash flow from operating activities
(Loss)/profit before finance costs and taxation	(38,207)	10,329
Tax on overseas income	(29)	(8)
Adjustment for:
Purchases of investments	(61,544)	(46,102)
Sales of investments	50,557	39,896
	(10,987)	(6,206)
Increase from securities sold under agreements to repurchase	15,012	388
Loss/(profit) on investments held at fair value	35,983	(2,383)
Net movement from derivative instruments	5,194	5,103
Increase in receivables	(2,823)	(400)
(Decrease)/increase in payables	(105)	62
Net cash inflow from operating activities	4,038	6,885
Cash flow from financing activities
Finance costs received(1)	64	23
Net cash acquired following merger	–	5,670
Share issue costs associated with the merger	–	(144)
Dividends paid – note 5	(9,272)	(5,088)
Net cash (outflow)/inflow from financing activities	(9,208)	461
Net (decrease)/increase in cash and cash equivalents	(5,170)	7,346
Cash and cash equivalents at the start of the period	8,168	2,940
Cash and cash equivalents at the end of the period	2,998	10,286
Reconciliation of cash and cash equivalents to the Balance Sheet is as follows:
Cash held at custodian	2,448	1,133
Invesco Liquidity Funds plc – Sterling	550	9,420
Bank overdraft	–	(267)
Cash and cash equivalents	2,998	10,286
Cash flow from operating activities includes:
Dividends received	115	120
Interest received	10,738	4,322

	At		At
	1 January	Cash	30 June
	2022	flows	2022
Reconciliation of net debt	£000	£000	£000
Cash and cash equivalents	8,168	(5,170)	2,998
Securities sold under agreements to repurchase	(39,095)	(15,012)	(54,107)
Total	(30,927)	(20,182)	(51,109)

(1)  Finance costs received relate to the negative interest rates on the Euro denominated financing of securities sold under agreements to repurchase (Repo financing).

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 2021 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, issued by the Association of Investment Companies in July 2022 (AIC SORP).

The revised AIC SORP issued in July 2022 is applicable for accounting periods beginning on or after 1 January 2022. The AIC SORP has no substantive changes and has been updated to reflect changes to IFRS standards and regulatory requirements. No accounting policies or disclosures have changed as a result of the revised AIC SORP.

2.  Income

	Six months to	Six months to
	30 June	30 June
	2022	2021
	£000	£000
Income from investments:
UK dividends	112	99
UK investment income – interest	3,894	2,482
Overseas dividends	4	33
Overseas investment income – interest	6,950	4,490
Deposit interest	2	–
	10,962	7,104

3.  Management Fee and Finance costs

Investment management fees and finance costs are allocated 50% capital and 50% revenue (2021: 50% to capital and 50% to revenue).

Following the merger in 2021, and with effect from 19 May 2021 the management fee was reduced from an annual fee of 0.75% to 0.65% of total assets less current liabilities, which remains payable quarterly at the reduced rate of 0.1625% (previously 0.1875%) in arrears at the end of each quarter.

In addition, and with effect from 19 May 2021, the Manager’s administration fee was removed which was paid based on an initial fee of £22,500 plus RPI increases per annum. A fixed fee of £45,000 per annum is now payable to the Manager for marketing services on behalf of the Company.

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% (2021: 0%). The overseas tax charge consists of irrecoverable withholding tax.

5.  Dividends paid on Ordinary Shares

	Six months to		Six months to
	30 June 2022		30 June 2021
	pence	£000	pence	£000
Interim dividends in respect of previous period	2.75	4,636	2.50	2,544
First interim dividend	2.75	4,636	2.50	2,544
	5.50	9,272	5.00	5,088

Dividends paid in the period have been charged to revenue (six months to 30 June 2021: charged to revenue). The increase in the amount of the dividends paid, is as result of the increase in the dividend per share and the increase in the number of shares in issue, following the merger with IPE in 2021.

A second interim dividend of 2.75p (2021: 2.75p) has been declared and will be paid on 18 August 2022 to ordinary shareholders on the register on 15 July 2022.

6.  Stated Capital, including Movements

Allotted ordinary shares of no par value.

	Six months to	Year to
	30 June	31 December
	2022	2021
Stated capital:
Brought forward	£297,326,000	£167,234,000
Net proceeds from shares issued in respect of the merger(1)	–	£130,092,000
Carried forward	£297,326,000	£297,326,000
Number of ordinary shares:
Brought forward	168,577,596	101,741,204
Issued in the period	–	66,836,392
Carried forward	168,577,596	168,577,596
Per share:
– average issue price	N/A	194.86p

(1)   The difference of £144,000 between net assets acquired of £130,236,000 in 2021 and net proceeds from shares issued in respect of the merger of £130,092,000 relates to share issue costs.

7.  Classification Under Fair Value Hierarchy

Note 20 of the 2021 annual financial report sets out the basis of classification.

There were no Level 3 holdings at any period end, and the total (not shown) is therefore the aggregate of Level 1 and Level 2.

	At 30 June 2022		At 31 December 2021
	Level 1	Level 2	Level 1	Level 2
	£000	£000	£000	£000
Financial assets designated at fair value through profit or loss:
Fixed interest securities	–	309,571	–	341,319
Convertibles	–	14,654	–	2,960
Preference	2,630	–	3,148	–
Equities	1,011	–	4,107	–
Derivative financial instruments: Forward currency contract	–	–	–	1,187
Total for financial assets	3,641	324,225	7,255	345,466
Financial liabilities designated at fair value through profit or loss:
– Derivative financial instruments: Forward currency contract	–	(4,007)	–	–
Total for financial liabilities	–	(4,007)	–	–

(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 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 2022 and the half year ended 30 June 2021 has not been audited. The figures and financial information for the year ended 31 December 2021 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

18 August 2022

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 2022 and the year ended 31 December 2021. The APMs listed here are widely used in reporting within the investment company sector and consequently aid comparability.

Discount or Premium (APM)

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 of that share. Conversely, 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. In this half-yearly financial report the discount is expressed as a percentage of the net asset value (NAV) per share and is calculated according to the formula set out below. 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.

		30 June	31 December
		2022	2021
Share price	a	157.50p	187.25p
Net asset value per share	b	165.67p	193.82p
Discount	c = (a-b)/b	(4.9)%	(3.4)%

Duration and Modified Duration

Duration measures a bond’s or fixed income portfolio’s price sensitivity to interest rate changes, measured in years. Modified duration measures the price change in a bond or fixed income portfolio, given a 1% change in interest rates. For example, a portfolio with a modified duration of 3.5 indicates that a 1% increase in interest rates would, broadly, result in a 3.5% decrease in the portfolio, not taking account of other market factors.

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
		2022	2021
		£000	£000
Securities sold under agreements to repurchase (Repo financing)		54,107	39,095
Gross borrowings	a	54,107	39,095
Net asset value	b	279,280	326,730
Gross gearing	c = a/b	19.4%	12.0%

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
		2022	2021
		£000	£000
Securities sold under agreements to repurchase (Repo financing)		54,107	39,095
Less: cash and cash equivalents (including margin cash held at brokers)		(5,738)	(8,168)
Net borrowings	a	48,369	30,927
Net asset value	b	279,280	326,730
Net gearing	c = a/b	17.3%	9.5%

Merger

Refers to the issue of new shares, by the Company, in exchange for assets acquired pursuant to a contractual scheme of reconstruction of Invesco Enhanced Income Limited as announced on 22 April 2021 and completed on 19 May 2021.

Net Asset Value (NAV)

Also described as shareholder’s 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, 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 2022		Value	Price
As at 30 June 2022		165.67p	157.50p
As at 31 December 2021		193.82p	187.25p
Change in period	a	–14.5%	–15.9%
Impact of dividend reinvestments(1)	b	2.5%	2.6%
Total return for the period	c = a+b	–12.0%	-13.3%
		Net Asset	Share
Year Ended 31 December 2021		Value	Price
As at 31 December 2021		193.82p	187.25p
As at 31 December 2020		194.29p	189.75p
Change in year	a	–0.2%	1.3%
Impact of dividend reinvestments(1)	b	5.5%	5.5%
Total return for the year	c = a+b	5.3%	4.2%

(1)  Total dividends paid during the period of 5.50p (31 December 2021: 10.50p) 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 Committee Chair)

Kate Bolsover (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 JE2 3QA

Company Secretarial Contact: Hilary Jones

01534 700000

Registered in Jersey: Number 109714

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

One Canada Square

London E14 5AL

Invesco Client Services

Invesco has a Client Services Team available from 8.30am to 6pm, Monday to Friday (excluding UK bank holidays). Please note that the Team cannot give investment advice.

0800 085 8677

www.invesco.co.uk/investmenttrusts

Registrar

Computershare Investor Services (Jersey) Limited

13 Castle Street, St Helier, Jersey JE1 1ES

If you hold your shares directly and have any queries you should contact the registrar on: [phone]

Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the UK will be charged at the applicable international rate.

Lines are open 8.30am to 5.30pm, Monday to Friday, excluding UK bank 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 [phone]

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 5.30am Monday to Friday (excluding UK bank 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.

The Company’s shares qualify to be considered as a mainstream product suitable for promotion to retail investors.

NATIONAL STORAGE MECHANISM

A copy of the Half-Yearly Financial Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at https://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: [phone]

18 August 2022

LEI: 549300JLX6ELWUZXCX14