Invesco Bond Income Plus Ltd - Annual Financial Report
Annual Financial Report for the year ended
The following text is extracted from the Annual Financial Report of the Company for the year ended
Financial Information and Performance Statistics
Net asset value – total return with dividends reinvested
2023 2022 Total return dividends reinvested(1)(2) Net asset value 11.7% -10.8% Share price 10.5% -5.2% Capital Statistics At 31 December 2023 2022 change % Net assets (£’000) 304,629 281,089 +8.4 Net asset value per ordinary share(2) 168.58p 162.20p +3.9 Share price(1) 171.00p 166.00p +3.0 Premium(2) 1.4% 2.3% Gearing(2) – gross gearing 15.8% 19.1% – net gearing 12.4% 15.7% Performance Statistics Year Ended 31 December 2023 2022 Revenue return per ordinary share 12.23p 12.47p Capital return per ordinary share 5.71p (32.98)p Total return 17.94p (20.51)p Dividend per ordinary share for the year 11.50p 11.25p +2.2% Ongoing Charges Ratio(2) 0.91% 0.86%
(1) Source: LSEG Data and Analytics.
(2) Alternative Performance Measure (APM). See Glossary of Terms and Alternative Performance Measures on pages 76 to 78 of the financial report for details of the explanation and reconciliations of APMs.
Chairman’s Statement
Highlights
• Share price increased by 10.5% and NAV increased by 11.7%, both on a total return basis with dividends reinvested (1) .
•
Dividend of
• Share price traded at an average premium of 1.6% throughout the year and 7.4m shares were issued at an average premium of 1.5%.
• During 2023 7.4m shares were issued and subsequent to the year end up to the date of this report a further 10.1m shares have been issued.
Inflation prospects continued to dominate financial markets in 2023 and monetary conditions tightened further as central banks fought to drive inflation back to within target ranges. In the
Early in the year market confidence was further tested by signs that weaker financial companies were struggling to adjust to the impact of higher interest rates. The most notable casualty was Credit Suisse which was eventually acquired by
Toward the latter part of the year signs that inflation may have peaked finally started to emerge. Sentiment was helped by the fact that economic activity proved surprisingly resilient despite the tightening in monetary policy which began in late 2021 and the high yield market ended the year on an upbeat note.
Performance
The Company’s NAV and share price total returns for the year were 11.7% and 10.5% respectively, the difference between the NAV and share price return the result of the modest contraction in the share price premium over the course of the year. The 11.7% NAV return was slightly below the 13.8% achieved by the ICE Bank of America Merrill Lynch European High Yield Index (‘the Index’) but above the average return of 8.0% for funds in the Investment Association Sterling Strategic Bond Sector. The underperformance against the Index was primarily the result of a number of challenges concerning specific investments which are discussed in the Portfolio Managers’ Report which follows.
The Company’s investment performance continues to compare satisfactorily with the Index over the longer term. For the three and five years to the end of 2023 the Company’s NAV total return was 5.0% and 27.3% respectively compared to total returns of 5.9% and 23.1% for the Index.
Income Account
Our investment policy is to provide a high level of dividend income relative to prevailing interest rates and we were able to meet this objective despite the elevated returns available from bank and building society savings accounts. Furthermore, we were able to increase the dividend payable to shareholders for a third successive year. We announced a dividend for 2023 of
May of 2024 will see the third anniversary of the merger of
In my opinion this reflects a number of compelling features. First, we are the largest company in our AIC Sector and our size means that we are in a relatively strong position to spread the fixed costs of running the Company. Secondly, we are able to use a number of discretionary actions available to us as an
Discount/Premium
The vast majority of investment trusts traded at wide discounts to their NAV’s throughout 2023, in my view largely a reflection of the rapid rise in inflation and consequent tightening in monetary policy. It is therefore pleasing to report that BIPS was one of a small proportion of investment trust companies whose share price consistently traded at a premium to NAV during 2023.
We closed the year at a premium of 1.4% having started 2023 at a 2.3% premium and we were able to issue a total of 7,400,000 shares during the year to meet demand. Shares were issued at an average premium to NAV of 1.5%. Demand for shares continued to be strong into the start of 2024 and this allowed us to undertake a successful placing and retail offer in February which raised gross proceeds of £13.35 million. All told, since the start of the year we have issued a further 10,101,727 shares.
Gearing
The Company’s policy on borrowing is set by the Board and remains unchanged. The maximum amount of borrowing is 30% of total assets. The decision to gear the portfolio within this framework rests with the Manager and is determined by the Manager’s assessment of risk and return within the high yield market. The Company maintained a geared portfolio throughout 2023 and as at
Ongoing Charges
Our preferred cost measure is the Company’s ongoing charges ratio (‘OCR’) details of which can be found on page 13. The OCR for the year was 0.91% compared to 0.86% in the previous year. The Board remains focussed on ensuring that the costs incurred in managing your company are competitive and it is therefore pleasing to note that your Company had the lowest OCR within its AIC sector at the time of writing this report.
The Board
In
This is the second year in which the Company is reporting on board diversity targets announced by the
2023 saw our first participation in the Board Apprentice programme. This is a scheme which allows individuals to gain first-hand experience of the functioning and dynamics of boards and is dedicated to increasing diversity and equality. After a successful first year with the scheme the Board has decided that it will continue to participate in the programme.
AGM
The AGM will be held on
Outlook
I have little doubt that inflation statistics will remain a key focus of attention over the next six months or so. Optimists will hope that inflation is on track to meet central bank targets and hence that the upward march of interest rates is reversed. An outcome where inflation is tamed without a substantial contraction in economic activity would provide a favourable backdrop for high yield markets in 2024.
The potential for a ‘soft landing’ to be derailed cannot be dismissed. Military conflict now seems to be the norm with fighting in the
Economists have long argued that the full impact of changes in interest rates might only become apparent after the elapse of ‘long and variable lags’. This notion may well go someway to explain why the
These then are the main risks as I see them to a soft landing over the next year or so. Nevertheless in the event that the macroeconomic environment turns out to be tougher than expected I remain very confident that the Company will extend its long track record of providing a high level of income relative to prevailing interest rates in 2024.
Chairman
(1) Alternative Performance Measure (‘APM’). See Glossary of Terms and Alternative Performance Measures on pages 76 to 78 of the financial report for details of the explanation and reconciliations of APMs.
Portfolio Managers’ Report
Q&A
Portfolio Manager
Rhys Davies, CFA, Fund Manager
Rhys is a fund manager for the Invesco Fixed Interest Europe team, based in our Henley office.
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
Deputy Portfolio Manager
Edward is a fund manager for the Invesco Fixed Interest Europe team, based in our Henley office.
He began his career with
He holds a Master’s degree in Physics from
the
Q: How would you summarise the year for bond investors?
A: 2023 was an eventful year for the bond markets but it delivered positive returns for investors. After very rapid interest rate rises and widening credit spreads in 2022, the starting yield for corporate bonds in 2023 was good – a yield to maturity of 5.8% for sterling investment grade and 8.0% for European high yield. Both markets began the year positively. However, optimism faded after a couple of months, as inflation proved more persistent than anticipated.
Weakness in the fixed interest rate markets continued for most of the year.
On the credit side, problems in the banking sector pushed spreads wider in the first quarter. The initial focus was on a number of regional US banks. However, investor concern spread, culminating in a crisis of confidence in Credit Suisse. The bank, which had recorded losses and been associated with several high-profile scandals in recent years, was acquired by
Over the summer, the prospect of rates staying higher for longer grabbed investors’ attention, pushing up government bond yields. But this trend proved short-lived. Rate expectations changed sharply as we entered the final quarter, on signs of weaker inflation and more accommodative rhetoric from central bankers. The bond market rallied strongly to the end of the year.
High yield bonds delivered positive returns in every quarter. They were the strongest part of the market.
Reflective of this ‘risk-on’ stance, in
For the year as a whole, the ICE BofA European Currency High Yield Index returned 13.8% (on a sterling-hedged basis). The rally in November and December alone saw a return of more than 6%. The yield dropped from 8.0% in January to 6.8% and the spread over government bonds narrowed from 515bps to 411bps.
Q: How did the Company perform?
A:
Over the 12 months to 31
Q: What factors contributed and detracted from these returns?
A: This year we started with a higher level of income which provided a firm base for returns. This was contrary to 2022 when returns were dominated by the impact of interest rates. Rate hikes pushed down prices across the bond market and the lower levels of income then prevailing offered little protection, resulting in losses.
Both interest rate exposure and credit risk were positive factors. As would be expected from a portfolio focussed on higher-yielding bonds, credit risk was a large contributor, with returns from exposure to investment grade corporates and hybrid capital as well as corporate high yield. Notwithstanding the weakness in March, subordinated financial capital instruments were also a positive factor for the full year.
A number of banks were among the top
10 returning holdings, including subordinated bank capital instruments issued by Lloyds Banking Group,
Our portfolio had exposure to
The biggest detractors from returns also included Codere New Topco and
Q: How did supply and demand affect the market?
A: For the second year in a row, net supply to the high yield bond market was very low. While more bonds were issued than in 2022, redemptions also increased. According to data from JP Morgan, this meant that net issuance in the European market was just €2.7 billion. This dearth of supply was an important technical support for the market.
Corporates reacted to the very low interest rate environment of 2020 and 2021 by raising large amounts of debt, which has strengthened their positions and reduced the need to raise finance in the far less supportive markets since. This should continue to support the sector for some time. Further out, re-financing is a key risk for the market.
The bonds that were issued came predominantly from stronger companies and offered higher coupons than for several years. Demand for them was strong.
Q: How has the portfolio changed?
A: We continue to feel that this is a positive environment for bond investment. Yields are higher, providing a good entry level and a valuable income cushion. Interest rates are relatively high and it looks likely that they have peaked and will fall over time. This provides a supportive backdrop.
We have added bonds with what we see as attractive levels of coupon or yield, which will help us to provide income for the trust in the years to come. In many cases we have done this through investment in relatively high quality bonds and companies. We are pleased that we can do this as we are wary of the risks that exist in the lower quality parts of our universe.
Over the year, the credit quality profile of the portfolio has been improved. More than a quarter is now allocated to investment grade-rated bonds, a relatively high level in the history of this portfolio. Exposure to high yield-rated bonds has fallen overall. Within this, the BB rating has been increased while B and CCC have been reduced.
While we have reduced exposure to high yield companies, we have been happy to take some more exposure to subordinate debt in stronger companies, through corporate hybrid bonds. These are junior bonds, but the issuing companies are typically large, investment grade-rated names. We have also added to subordinated financials, including banks. Following the sell-off in March, both banks and regulators have taken steps to ensure the continuing health of the AT1 market and it has performed well. AT1 bonds continue to form a reasonably significant part of the overall portfolio.
We have been able to add bonds throughout the year that we are very comfortable holding and which echo the much more creditor-friendly market in which we are now operating. BT issued a GBP BB+ 8.375% hybrid bond (2028 call).
Net gearing on the portfolio was reduced slightly over the course of the year, from 15.7% to 12.4%. This reflects both a more cautious outlook and the greater availability of income in the market as yields remain relatively high and more high-coupon bonds are issued. While the cost of borrowing through the use of repo financing has risen significantly during the year, there remains a net benefit to shareholders in terms of yield in utilising this form of financing.
Q: How is Environmental, Social and Governance (‘ESG’) integrated in the investment process?
A: ESG factors are important elements in our analysis of bonds and bond issuers and play a significant role not just in our research but in our decisions on the opportunity that securities represent. However, we are not bound by any specific ESG criteria in managing the portfolio.
We incorporate ESG issues in our process as we evaluate new ideas, in our engagement with companies and as an element of ongoing portfolio monitoring. ESG ratings and ESG metrics are a starting point for further analysis and engagement. Where ESG issues are flagged, we, in partnership with Invesco's specialist ESG team, target ESG research and dialogue towards those companies.
In 2023, our Henley-based team within Invesco’s Fixed Income group had 128 ESG engagements – either meetings dedicated to ESG or ESG discussions within a wider meeting.
Engagements with individual companies covered normal ESG topics such as carbon emissions, commitments to temperature pathway targets and net zero targets, diversity in boards and management and corporate governance. In several cases they also focused on Sustainability-Linked Bonds, where, for example, the coupon of bonds being issued by the company were tied to ESG-related targets.
Engagements also covered broader themes that relate to industries. For example, our ESG analyst attended an event on the Home of the Future, covering a range of topics relating to decarbonisation of buildings. This theme has implications for several areas of the portfolio, including not just house builders but materials suppliers and banks (mortgages).
The ESG team provides formalised ESG portfolio monitoring. This is a rigorous process and includes a meeting to go through the portfolio from an ESG perspective. It is important to note that ESG ratings can be useful as a tool or a flag. Our approach to ESG means that investment teams make their own subjective conclusions about the ESG characteristics of each investment held and about the overall ESG characteristics of the portfolio.
Q: What is your outlook for 2024?
A:
Inflation will likely be less of a concern for markets from here.
The credit rating profile of the portfolio has shifted over the course of the last two years to a more cautious stance. This reflects our view that many high yield borrowers will face challenges in an environment of higher borrowing costs. It also protects against the risk of an economic slowdown.
The debate on recession risk will continue. It is uncertain whether an economic slowdown will happen, but we have far more certainty about the risks that higher borrowing costs pose to the high yield bond market. We are wary of those borrowers with higher leverage, whose balance sheets were put together in a very different borrowing environment. Even factoring in further declines in interest rates and yields, these companies may not be able to refinance at an affordable level.
Overall, we remain positive on the asset class. Yields continue to look attractive, and we have a strong preference for higher coupon bonds as they are issued, especially after the strong capital gains in the final two months of 2023. Given the uncertainties around the economic outlook and the focus on upcoming economic data we think there is a strong chance that this year will be another volatile one for our markets.
Rhys Davies
Portfolio Managers
Business Review
Purpose, Business Model and Strategy
The Company’s purpose is to generate returns over the long-term for its shareholders by investing their pooled capital to achieve the Company’s investment objective through the application of its investment policy (set out below) and with the aim of spreading investment risk.
The strategy the Board follows to achieve the objective is to set investment policy and risk guidelines, together with investment limits, and to monitor how they are applied.
The business model the Company has adopted to achieve its objective is to contract investment management and administration to appropriate external service providers, who are subject to oversight by the Board. The principal service providers are:
–
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In addition to the management and administrative functions of the Manager and the Company Secretary, the Company has contractual arrangements with
The Board has oversight of the Company’s service providers, and monitors them on a formal and regular basis. The Board has a collegiate culture and pursues its fiduciary responsibilities with independence, integrity and diligence, taking advice and outside views as appropriate and constructively challenging and interacting with service providers, including the Manager. The portfolio managers responsible for the day-to-day management of the portfolio are Rhys Davies, Portfolio Manager and
The Company is an alternative investment fund for the purposes of the Alternative Investment Fund Managers Directive.
Investment Objective and Policy
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 Investment Objective.
This Investment Policy should be read in conjunction with the descriptions of Investment Style, Investment Limits, Derivatives and Currency Hedging, and Borrowings set out below.
Investment Style
The Manager seeks to ensure that the portfolio is diversified, having regard to the nature and type of securities (including duration, credit rating, performance and risk measures and liquidity) and the geographic and industry sector composition of the portfolio. The Company may hold both illiquid securities (for example, securities where trading volumes are relatively low and unlisted securities) and concentrated positions (for example, where a high proportion of the Company’s total assets are comprised of a relatively small number of investments).
Investment Limits
– the Company may invest in fixed-interest securities, including but not restricted to preference shares, loan stocks (convertible and redeemable), corporate bonds and government stocks, up to 100% of total assets;
– investments in equities may be made up to an aggregate limit of 20% of total assets;
– the aggregate value of holdings of shares and securities in a single issuer or company, including a listed investment company or trust, will not exceed 15% of the value of the Company’s investments; and
– investments in unlisted investments will not exceed 10% of the Company’s total assets for individual holdings and 25% in aggregate.
All the above limits are measured at the time a new investment is made.
Derivatives and Currency Hedging
The Company may enter into derivative transactions (including options, futures, contracts for difference, credit derivatives and interest rate swaps) for the purposes of efficient portfolio management. The Company will not enter into derivative transactions for speculative purposes.
Efficient portfolio management may include reduction of risk, reduction of cost and enhancement of capital or income through transactions designed to hedge all or part of the portfolio, to replicate or gain synthetic exposure to a particular investment position where this can be done more effectively or efficiently through the use of derivatives than through investment in securities or to transfer risk or obtain protection from a particular type of risk which might attach to portfolio investments.
The Company may hedge against exposure to changes in currency rates to the full extent of any such exposure.
Borrowings
The Company’s borrowing policy is determined by the Board, which has set a maximum of 30% of the Company’s total assets. This limit may be varied from time to time in the light of prevailing circumstances, but has not been changed since the Company’s incorporation in its current form. The Manager has discretion to borrow within the limit set by the Board. Any borrowings are covered by investments in matching currencies to manage exposure to exchange rate fluctuations.
The Board has reviewed the methods of financing available to the Company including repo financing whereby a company participates in sale and repurchase arrangements in connection with its portfolio. Under these arrangements, a company sells fixed interest securities and is contractually obliged to repurchase them at a fixed price on a fixed date, whilst retaining economic exposure to the securities sold. The difference between the (lower) sale price and the later purchase price is the cost (effectively interest) of the repo financing. Repo financing agreements are in place and may be used subject to the aggregate 30% ceiling. At the year end, the sum borrowed using this method was £48.1 million (2022: £53.8 million). This represents gross gearing of 15.8% with cash and cash equivalents including margin of 3.4% giving net gearing of 12.4% (2022: gross gearing of 19.1% with cash and cash equivalents including margin of 3.4% giving net gearing of 15.7%) (1) .
(1) Alternative Performance Measure (‘APM’). See Glossary of Terms and Alternative Performance Measures on pages 76 to 78 of the financial report for details of the explanation and reconciliations of APMs.
Key Performance Indicators
The Board reviews performance by reference to a number of Key Performance Indicators which include the following:
• Performance
• Dividends
• Premium/Discount
• Ongoing Charges Ratio
Performance
As the Company’s objective is to seek to obtain capital growth and high income, the performance is best measured in terms of total return. There is no single index against which the Company’s performance may be meaningfully assessed. Therefore, the Board refers to a variety of relevant data and this is reflected in both the Chairman’s Statement and the Portfolio Managers’ Report on pages 6 to 11. The Manager has a long-term horizon and consequently the Board pays close attention to returns over three and five years in its assessment of investment performance. As explained in the Chairman’s Statement, the Board has noted the performance in the year and is satisfied with the longer term performance of the portfolio.
Dividends and Dividend Payment Policy
Dividends form a key component of the total return to shareholders and after its merger with
The Board’s Dividend Payment Policy is to pay dividends on a quarterly basis in May, August, November and February in respect of each accounting year. The timing of these regular three-monthly payments means that shareholders do not have an opportunity to vote on a final dividend. Recognising the importance of shareholder engagement, and although not required by any regulation, shareholders are given an opportunity to vote on this policy at the forthcoming AGM.
Premium/Discount
The Board monitors the price of the Company’s shares in relation to their net asset value and the premium/discount at which the shares trade. Powers are taken each year to issue and buy back shares, which can assist short term management, however the level of discount or premium is mostly a function of investor sentiment and demand for the shares, over which the Board may have limited influence. The ideal would be for the shares to trade close to their net asset value. The graph on page 13 shows the premium/discount through the year, ending with a premium of 1.4%.
Ongoing Charges Ratio
The expenses of managing the Company are carefully monitored by the Board. The standard measure of these is the ongoing charges ratio (OCR), which is calculated by dividing the sum of such expenses over the course of the year, including those charged to capital, by the average net asset value. This ongoing charges ratio provides a guide to the effect on performance of annual operating costs. The Company’s ongoing charges ratio for the current year was 0.91%, compared to 0.86% for the previous year which reflects the general increase in inflation during the year and a higher marketing spend aimed at capitalising on current opportunities for the Company. Your Board continues to believe that costs remain competitive compared to those of similar products.
Investment Process
At the core of the portfolio managers’ philosophy is a belief in active investment management. They seek to invest where they see the potential for attractive returns and to avoid risks that they do not think are well rewarded. Fundamental principles drive a genuinely active investment approach, with a strong emphasis on value.
The investment process comprises four key elements to deliver the information the portfolio managers use to make their decisions:
• top down, macroeconomic analysis – examining the factors that shape the economy;
• credit analysis using internal and external research with a view to maximising returns from acceptable and understood credit risk exposure;
• value assessment, considering the risk/return profile of any bond in relation to cash, core government bonds and the rest of the fixed interest universe; and
• risk considerations, analysing all holdings to allow for a comprehensive understanding of risks involved to ensure diversification of the portfolio.
The portfolio managers enter into the majority of positions with a view to holding them until their call or maturity date and their investment process is based on making investments where the yield to maturity or call appears to them to be at least an adequate reward for the risk. The nature of the high yield market and the Company’s mandate mean that there will be occasions when the value the portfolio managers assessed in an investment is fully realised by the market. On these occasions, they may exit the position before maturity.
The portfolio managers believe that it is good investment practice to try and keep the level of turnover low, whilst at the same time recognising that this should not at any time act as a deterrent to effective portfolio management. Turnover will generally be very low due to the long term nature of many of the holdings, and given the closed end nature of the Company, the portfolio managers are not presented with regular daily inflows and outflows which require managing.
The portfolio managers also consider the aspects of environmental, social and governance (‘ESG’) details of which are given on pages 18 to 21.
Internal Control and Risk Management
The Directors have overall responsibility for the Company’s system of internal controls and are responsible for reviewing the effectiveness of these controls. This includes safeguarding of the Company’s assets. The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.
As part of the process, the Committee has identified five risk categories: strategic; investment management; third party service providers; regulation and corporate governance; and operational. An explanation of these categories follows.
Strategic Risk
The Board sets the Company’s strategy, including setting its objective and how this should be achieved. The Board assesses the performance of the Company in the context of the market and macro conditions and gives direction to, and monitors, the Manager’s actions, and those of other third parties, on behalf of the Company.
Investment Management Risk
Investment management covers management of the portfolio together with cash management, gearing and hedging, all being areas the portfolio managers can control, and which generate the Company’s investment performance.
Third Party Service Providers Risk
The Company has no employees and its Directors are appointed on a non-executive basis. The Company is reliant on Third Party Service Providers (‘TPPs’) for its executive functions. The Company’s most significant TPPs are the Manager, to which portfolio management is delegated, Fund Accounting and the Company Secretary. Other significant TPPs are the corporate broker, depositary, custodian, registrar and auditor.
Regulation and Corporate Governance Risk
The Company is required to comply with many regulations. For the year under review these included but were not limited to, the provisions of the Companies (Jersey) Law 1991, the
Operational Risk
Operational risk covers the day to day operational matters mainly at the Manager, but also at other TPPs.
A matrix of the risks, set out according to their assessed risk levels after mitigation, enables the Directors to concentrate on those risks that are most significant, and also forms the basis of the list of principal risks and uncertainties on pages 15 and 16. The ratings take into account the Board’s risk appetite and the ongoing monitoring by the Manager.
Oversight of the control environment is based on the Company’s relationship with its TPPs, all of which have clearly defined lines of responsibility, delegated authority, and control procedures and systems. The Company’s main TPPs, the Manager, Fund Accounting and the Company Secretary, all have, a ‘Three Lines of Defence Model’, which is embedded into their risk management systems.
The effectiveness of the Company’s internal control and risk management system is reviewed at least twice a year by the Committee. The Committee received and considered, together with representatives of the Manager, reports in relation to operations and systems of internal controls of the Manager, Company Secretary, accounting administrator, custodian and registrar. The Committee also receives regular reports from the Company Secretary’s compliance officer and the Manager’s internal audit and compliance departments. The Committee also received a comprehensive and satisfactory report from the depositary at the year end Committee meeting. The Company’s risk management policies and procedures for financial instruments are set out in note 19 on pages 63 to 69.
Due diligence is undertaken before any contracts are entered into with any third party service provider. The Manager regularly reviews, against agreed service standards, the performance of TPPs through formal and informal meetings, and by reference to third party independently audited control reports. The results of the Manager’s reviews are reported to and reviewed by the Committee. These various reports and reviews did not identify any significant failings or weaknesses which were relevant to the Company during the year and up to the date of this Annual Financial Report. If any had been identified, the required remedial action would have been taken.
Reporting to the Board at each board meeting comprises, but is not limited to: financial reports, including any hedging and gearing; performance against relevant indices and the Company’s peers; the portfolio managers’ review, including of the market, the portfolio, transactions and prospects; revenue forecasts; and investment monitoring against investment guidelines. The portfolio managers are permitted discretion within these investment guidelines, which are set by the Board. Compliance with the guidelines is monitored daily by the Manager. Any proposed variation to these guidelines is referred to the
The Board, through the Management Engagement Committee, formally reviews the performance of the Manager, the Company Secretary and the other key TPPs annually. The Board has reviewed and accepted both the Manager’s and Company Secretary’s whistleblowing policy under which staff of both
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, 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 ongoing conflicts in
______________________________________________________________________________ |Category and Principal Risk |Mitigating Procedures and Ongoing | |Description |Controls | |______________________________________|_______________________________________| |Strategic Risk | | |______________________________________|_______________________________________| |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 |An explanation of market risk and how | |period of decline in these markets. |this is addressed is given in note 19.1| |This could be triggered by |to the financial statements. The | |unfavourable developments globally |Portfolio Managers’ Report summarises | |and/or in one or more regions, such as|particular macro economic factors | |the current conflicts inUkraine and |affecting performance during the year | |the Middle East and other geopolitical|and the portfolio managers’ views on | |tensions and uncertainties and their |those most relevant to the outlook for | |impact on the global economy. The |the portfolio. | |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 Fiscal Changes | | |______________________________________|_______________________________________| |The Company is incorporated in Jersey | | |which is a low tax jurisdiction |The Board receives regular reports from| |subject to global scrutiny. Any |the Manager and Company Secretary which| |adverse global regulatory or fiscal |highlight any proposed changes to the | |measures taken against such low tax |regulatory/fiscal regimes which might | |jurisdictions, could negatively impact|impact the Company. | |the Company. | | |______________________________________|_______________________________________| |Wide Discount leading to Shareholder | | |Dissatisfaction | | |______________________________________|_______________________________________| | |The Board receives regular reports from| | |both the Manager and the Company’s | | |broker on the Company’s share price | |The Company’s shares are subject to |performance and level of discount (or | |market movements and can trade at a |premium), together with regular reports| |premium or discount to NAV. Should the|on marketing and meetings with | |Company’s shares trade at a |shareholders and prospective investors.| |significant discount compared to its |The Board recognises the importance of | |peers, then shareholder |the Company’s scale in terms of the | |dissatisfaction may result if |aggregate value of its shares in the | |shareholders cannot realise the value |market (‘market cap’) in creating | |of their investment close to NAV, with|liquidity and the benefit of a wide | |the ultimate risk that arbitragers |shareholder base, and seeks authority | |join the share register. |to both issue and buy back shares to | | |assist with market volatility. The | | |foundation to this lies in solid | | |investment performance and an | | |attractive level of dividend. | |______________________________________|_______________________________________| |Third Party Service Providers Risk | | |______________________________________|_______________________________________| |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 |Details of how the Board monitors the | |materially detrimental impact on the |services provided by the Manager and | |operations of the Company and affect |the other TPPs, and the key elements | |its ability to pursue successfully its|designed to provide effective internal | |investment policy and expose it to |control, are included in the internal | |reputational risk. Disruption to the |control and risk management section on | |accounting, payment systems or custody|page 14. | |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 with representatives of the | |The Company’s operational structure |Manager’s Investment Management, | |means that cyber risk (information |Compliance, Internal Audit and | |technology and physical security) |Investment Trust teams as well as the | |predominantly arises at its TPPs. This|Company Secretary’s senior staff and | |cyber risk includes fraud, sabotage or|Compliance team. The Board receives | |crime perpetrated against the Company |periodic updates on the Manager’s and | |or any of its TPPs. |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 | | |______________________________________|_______________________________________| | |The Manager’s business continuity plans| | |are reviewed on a regular 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 | |Impact of a major event, such as |obligations, report and meet | |Covid-19, on the operations of the |shareholder requirements. | |service providers, including any | | |prolonged disruption. |The Board receives periodic 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. | |______________________________________|_______________________________________|
Viability Statement
This Company is an investment company whose business consists of investing the pooled funds of its shareholders to provide them with capital growth and a high income over the long term, predominantly from a portfolio of high yielding fixed income securities. Long term for this purpose is considered to be at least five years and the Directors have assessed the Company’s viability over that period. However, the life of the Company is not intended to be limited to that or any other period.
The main risk to the Company’s continuation is a significant fall in markets or a prolonged period of decline due to political uncertainty or other macro factors outside the Company’s control. This could lead to shareholder dissatisfaction through failure to meet the Company’s investment objective, through poor investment performance or the investment policy not being appropriate in prevailing market conditions, any of which could affect the demand for and liquidity of the Company’s shares. Accordingly, market and political/fiscal risks, are deemed by the Board to be the key principal risks of the Company and are given particular consideration in the continuing assessment of its long term viability.
The Company’s investment objective and policy are kept under review. The continued relevance of the investment objective and policy are underlined by the Company’s annual continuation vote. Last year nearly 100% of the votes registered were in favour of continuation and the Board has no reason to believe that the continuation resolution will not be passed at the forthcoming and subsequent AGMs.
Performance derives from returns for risk taken. The Portfolio Managers’ Report on pages 9 to 11 sets out the current investment strategy of the portfolio managers. Whilst there has been an increase in the credit quality of the portfolio during the year, it remains the case that the portfolio continues to contain a high level of relatively high-yielding non-investment grade bonds and these carry a higher risk of default than investment grade paper. This is discussed further in note 19 to the financial statements. The Board has adopted investment limits within which the portfolio managers operate. The Directors and the portfolio managers constantly monitor the portfolio, its ratings and default risk. A bond rating analysis of the portfolio at the year end is shown on page 24. Exposure is weighted towards higher quality issuers where the risk of default is considered to be more remote.
Performance has been strong for many years through different, and difficult, market cycles – as shown by the ten year total return performance graph on page 13. The investment policy has been stress tested by market events in recent times by both global and domestic events such as Covid-19 and the conflict in
Performance and demand for the Company’s shares are not things that can be forecast. Indeed, whilst recent geopolitical and macroeconomic events may impact the Company, there are no current indications that performance or demand for the Company's shares may be permanently affected by such events over the next five years so as to affect the Company’s viability.
As described in note 19.2 to the financial statements on page 67 liquidity risk is not viewed by the Directors as a significant risk. The majority of the Company’s assets are readily realisable and amount to many times the value of its short term liabilities and annual operating costs. The Company is permitted to borrow up to a maximum of 30% of the Company’s total assets and currently has no long-term debt obligations.
Based on the above analysis, the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their assessment and the Directors consider that the Company’s investment strategy will continue to serve shareholders well over the longer term.
Investment Management
As noted earlier, the Manager provides investment management and certain administrative services to the Company. The agreement is terminable by either party giving no less than three months’ prior written notice and subject to earlier termination without compensation in the event of a material breach of the agreement or the insolvency of either party. The management fee is payable quarterly in arrears and is equal to 0.1625% of the value of the Company’s total assets under management less current liabilities at the end of the relevant quarter. In addition, the Manager was paid a fee of £133,000 during the year for marketing services.
The portfolio managers responsible for the day-to-day management of the portfolio are Rhys Davies, Portfolio Manager, and
The Manager’s Responsibilities
The Directors have delegated to the Manager the responsibility for the investment management activities of the Company, for seeking and evaluating investment opportunities and for analysing the accounts of investee companies. The Manager has full discretion to manage the assets of the Company in accordance with the Company’s stated objectives and policies as determined from time to time by the Board and approved by shareholders. Within the guidelines specified by the Board, the Manager has discretion to make purchases and sales, make and withdraw cash deposits, enter into underwriting commitments and exercise all rights over the investment portfolio. The Manager also advises on currency exposures and borrowings.
Assessment of the Manager
The performance of the Manager is reviewed continuously by the Board and the ongoing requirements of the Company and services received are assessed annually with reference to key performance indicators as set out on page 13.
The Management Engagement Committee is responsible for reviewing the Manager. Based on its recent review of activities, the Board believes that the continuing appointment of
Financial Position
The Company’s balance sheet on page 55 shows the assets and liabilities at the year end. The
Company has repo financing agreements in place, with an amount of £48.1 million (2022: £53.8
million) borrowed at year end, representing gross gearing of 15.8% (2022: 19.1%) and net gearing of 12.4% (2022: 15.7%), after taking cash and cash equivalents including margin into account, as at 31
Performance and
The performance and future development of the Company depend on the success of the Company’s investment strategy. A review of the Company’s performance, market background, investment activity and strategy during the year, together with the investment outlook are provided in the Chairman’s Statement and Portfolio Managers’ Report on pages 6 to 11.
Annual Continuation Vote
The Articles of
The Company has been notified of the following holdings of 3% and over of the Company’s ordinary share capital carrying unrestricted voting rights:
As at As at As at 29 February 2024 31 December 2023 31 December 2022 Fund Manager/Registered Holder Holding % Holding % Holding % Hargreaves Lansdown, 32,254,848 16.99 29,303,533 16.23 26,574,014 15.3 stockbrokers (EO) Interactive Investor (EO) 22,799,521 12.01 20,922,574 11.58 19,654,448 11.4 Invesco* 17,540,155 9.24 17,540,155 9.71 17,825,962 10.3 AJ Bell, stockbrokers (EO) 13,060,999 6.88 11,582,380 6.41 9,145,250 5.3 Redmayne Bentley, stockbrokers 9,766,654 5.15 9,152,417 5.07 8,166,730 4.7 Charles Stanley 9,666,630 5.09 9,597,611 5.31 10,136,841 5.9 HSDL, stockbrokers (EO) 6,411,333 3.38 6,237,521 3.45 5,966,781 3.5 EFG Harris Allday, under 3% under 3% 5,469,738 3.2 stockbrokers
EO: Execution only.
* Held across a number of Invesco Funds. Invesco is not considered a related party. For further information see Related Party Transactions and Transactions with Manager note 23 on page 70.
Board’s Duty to Promote the Success of the Company
The Directors have a fiduciary duty to act, in good faith, for the benefit of shareholders taken as a
whole. In the
In fulfilling these duties, and in accordance with the Company’s nature as an investment company with no employees and no customers in the traditional sense, the Board’s principal concern has been, and continues to be, the interests of the Company’s shareholders taken as a whole. Notwithstanding this, the Board has a responsible governance culture and also has due regard for broader matters so far as they apply. In particular, the Board engages with the
The Company communicates with its shareholders at least three times a year providing information about shareholder meetings, dividend payments and half-yearly and annual financial results. In addition, the annual general meeting of the Company provides shareholders with the opportunity to attend and meet with the Directors and the Manager. The Company’s AGM will be held on
Board Diversity
The Company’s policy on diversity is set out on page 40, under the section ‘Nomination and Remuneration Committee’. The Board considers diversity, including the balance of skills, knowledge, experience, gender and ethnicity amongst other factors when reviewing its composition and appointing new directors. The Board continues to recognise the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations.
In view of its relatively small size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment. In doing so, the Board will seek to meet the targets set out in the FCA’s Listing Rule 9.8.6R (9)(a), which are summarised below. In accordance with Listing Rule 9.8.6R (9), (10) and (11) the Board has provided the following information in relation to its diversity as at
Board Gender as at
Number of Number of Number in Percentage of Board Percentage of senior positions executive executive members the Board on the Board managementA managementA Men 2 40% 1 n/a n/a Women 3 60%B 1C,D n/a n/a
A the Company does not disclose the number of directors in executive management as this is not applicable for an investment trust.
B meets the target of 40% as set out in LR 9.8.6R (9)(a)(i).
C
the positions of Senior Independent Director and Chair of the
D meets the target of 1 as set out in LR 9.8.6R (9)(a)(ii).
Board Ethnic Background as at
Number of Number of Number in Percentage of Board Percentage of senior executive executive positions members the Board on the Board managementA managementA White British or other White (including minority-white 5 100% 2 n/a n/a groups) Minority ethnic 0B 0% 0 n/a n/a
A the Company does not disclose the number of directors in executive management as this is not applicable for an investment trust.
B is less than the target of 1 as set out in LR 9.8.6R (9)(a)(iii).
There have been no changes since the year end that have affected the Company’s ability to meet the targets set in LR 9.8.6R (9)(a).
Modern Slavery Act 2015
The Company is an investment vehicle and does not provide goods or services in the normal course of business, or have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015.
Environmental, Social and Governance (‘ESG’) Matters
In relation to the portfolio, the Company has delegated the management of the Company’s investments to the Manager, who has an ESG Philosophy and Approach which sets out a number of principles that are intended to be considered in the context of its responsibility to manage investments in the financial interests of shareholders. A greenhouse gas emissions statement is included in the Directors’ Report on page 35.
The Manager forms part of the Invesco Ltd group. Invesco Ltd ('Invesco') is committed to being a responsible investor and applies, and is a signatory to, the United Nations Principles for
The Manager is complying with the spirit of the Sustainable Finance Disclosure Regulation (‘SFDR’) which came into effect within the EU on
The Manager’s investment team incorporates ESG considerations in its investment process as part of the evaluation of new opportunities. The Portfolio Managers make their own conclusions about the ESG characteristics of each investment held and about the overall ESG characteristics of the portfolio, although third party ESG ratings may inform their view. Additionally, the Manager’s ESG team provides ESG monitoring.
Regarding stewardship, the Board considers that the Company has a responsibility as an investor towards ensuring that appropriate standards of corporate governance are maintained in the companies in which it invests. To achieve this, the Board does not seek to intervene in daily management decisions, but aims to support high standards of governance and, where necessary, will take the initiative to ensure those standards are met.
The Company’s stewardship functions have been delegated to the Manager. The Manager has adopted a clear and considered policy towards its responsibility as an investor on behalf of the Company. As part of this policy, the Manager takes steps to satisfy itself about the extent to which the companies in which it invests look after shareholders’ value and comply with local recommendations and practices, such as the
Insight into Invesco’s ESG Framework
The Henley based Invesco Fixed Income team, of which the portfolio managers are a part, incorporates ESG considerations in its investment process as part of the evaluation of new primary and secondary market opportunities, with identified ESG concerns feeding into the final investment decision and assessment of relative value.
Investment teams at Invesco are supported on many ESG engagement activities by a centralised team of ESG professionals. Invesco’s ESG approach is led globally by their Global Head of ESG and the Global ESG team. This team reports into the Head of Investments Engagement. This team is further supported by their global proxy function.
At a local level, The Co-Head of Investments, Invesco Fixed Income has ultimate oversight of, agrees with and sponsors Invesco’s ESG approach. The Invesco Fixed Income Europe ESG investor group is chaired by a member of the global ESG team and is made up of champions from each investment team. Each ESG champion is a representative of the individual investment teams that has responsibility for feeding into the overall ESG approach and areas of interest for further analysis. The role of this group is to help facilitate dialogue and share insights from across asset classes and regions. The group meets quarterly.
Training is an essential part of Invesco’s commitment to ESG integration, and keeping abreast of the rapidly evolving landscape for responsible investment. Their continuing personal development (‘CPD’) training programme includes ESG modules. This is augmented by other programmes such as global sector meetings and CIO insight meetings.
ESG overview
Although ESG integration forms part of the investment process, the Company is not managed to sustainable ESG objectives, constraints or outcomes.
The portfolio managers’ approach is centred on macroeconomic and corporate credit research and focuses on fundamental valuation to support the active management of portfolios. The Manager has always incorporated ESG analysis into its investment research because it believes that non-financial risks can have a material impact on credit risk and by identifying those risks, it can improve its credit risk assessment and produce better risk-adjusted returns in portfolios.
The core objective of the Manager’s ESG approach is to assess issuers’ performance across environmental, social and governance factors and to determine where those risks are potentially material or mispriced.
The fixed income universe is broad and varied. Geographical, structural and regulatory differences mean that data availability, ESG awareness and management engagement levels can vary greatly. As a result, while the investment team’s commitment to ESG risk assessment is constant, the path to arriving at an ESG-based assessment necessarily differs to account for the constraints and challenges of different circumstances.
Common Principles for
The Invesco team’s approach to ESG is based on a belief that incorporating material environmental, social and governance risks into a broader risk assessment, leads to better long-term risk-adjusted returns. In order to do this, the team considers materiality and momentum.
• Issuers may have a myriad of ESG considerations, but materiality means focussing on those particular ESG risk factors that have the potential to impact an issuer’s credit risk profile.
• Momentum means understanding the evolution of ESG risks. As with all risk, Invesco look to identify positive and negative momentum in ESG risks and assess the potential for those trends to affect creditworthiness. As a firm Invesco encourage positive momentum by engaging with companies. Invesco’s Global ESG team engages with the management of companies and provide views on matters such as corporate strategy, transparency, capital allocation and ESG concerns.
ESG analysis for corporate bonds
The Manager’s credit analysts are responsible for understanding and assessing ESG risks for the companies under their coverage alongside financial credit risk. Corporate credit research is organised around global industrial sectors, allowing the analysts to develop a comprehensive understanding of not only the ESG risks pertinent to each issuer under their coverage but also those risks prevalent in a sector.
This approach of incorporating ESG risk into the broader assessment is undertaken for all issuers of corporate bonds, for both developed or emerging market countries.
External ESG resources
Invesco has a range of third-party research and data available as an input to support the analysts in their ESG risk assessment.
Examples:
• MSCI ESG Scores, industry percentiles and weights
• CDP carbon and scoring data
• Sustainalytics Risk scores and category summary data
• Global Compact compliance or violation fields (MSCI and Sustainalytics)
• ISS Climate Solutions – Scope 1 to 3 emissions and science-based emission targets
• Controversies – MSCI & Sustainalytics data feeds
Invesco’s ESG resources
Invesco’s Global ESG team has resources in research, portfolio analytics and management engagement.
Furthermore, Invesco’s own proprietary developed ESG tool (ESGIntel) provides ESG insights, metrics, data points and momentum scores from over 50 data points and metrics. Sector differences are accommodated with each having its own tailor-made framework.
The tool provides a holistic view on how a company’s value chain is impacted in different ways by various ESG metrics, and ratings are produced both at the overall company and indicator levels to facilitate a focus on higher risk company-specific issues. In addition, momentum indicators highlight a company’s trajectory using five years of data history.
While disclosure levels vary greatly by the company due to sector, size and regional factors, these data dashboards can provide a comprehensive picture of each issuer’s performance.
The importance of fundamental ESG analysis
At the issuer level, data availability, disclosure rules and management engagement levels can vary across each global sector. Raw ESG data can sometimes present a partial or even misleading picture. When placed alongside the fact that issuers themselves have unique features in terms of business models, the weighting of ESG factors in each issuer assessment must be interpreted and understood in a broader context.
In our research process, the qualitative judgement of the credit analyst is therefore central to determining whether an ESG factor is evolving in a manner that may compromise an issuer’s financial indicators and ultimately, its creditworthiness.
ESG in credit selection
Once a credit analyst has undertaken their credit assessment, including that of the materiality and momentum of ESG risks, then credit research is presented to portfolio managers.
The portfolio managers need to assess the type and materiality of any ESG risk and set that against the potential investment return in the context of the Company’s objectives.
Other than the exclusions related to certain types of munitions, there are no pre-determined rules on how securities are selected in light of any ESG risks. Each investment case is likely to have its own unique set of risks. The investment team’s credit selection emphasises fund manager judgement and each case is considered on its own merits.
Engagement with issuers
Invesco engages directly with companies to better understand their positions and their future intentions and lobby for change where Invesco believe it is necessary. Although engagement as pure debt investors can be challenging, Invesco’s ownership of both equity and debt can often be used to increase our voice as a stakeholder. Engagement is carried out on a case by case basis by relevant analysts and strategically with co-ordination through Invesco’s Global ESG team.
Invesco’s Global ESG team is led by the Global Head of ESG. Reporting to the Global Head of ESG is the Director of
i. Internal assessment and coordination: the ESG team consults with the investment teams and reviews the ESG Engagement focus list and decides whether to: (a) gather feedback on a topic and provide that feedback to an issuer; (b) schedule a call with the issuer if it is deemed to be necessary; or (c) engage directly with the issuer and serve as a liaison. Invesco’s ESG team will arrange contact between the relevant investment teams and issuers when and if it is deemed necessary. Any ESG engagement meeting is added to a centralised calendar that investment teams can access.
ii. Research and follow up: the ESG research team conducts in-depth ESG research in preparation for these meetings and discusses with the relevant investment teams across Invesco to ensure that companies are questioned on the key ESG topics. The ESG team produces an Engagement Report for these meetings which is shared via the Bloomberg platform for all relevant investment teams to access. Invesco is also a member of several organisations that facilitate collective dialogue with companies and continues to assess other collective engagements that we would like to work more closely with in the future:
• Invesco is a signatory to Climate Action 100+ and is taking a leading investor role on one company and a participative role on at least six other companies.
• Invesco joined the Investor Tailings Initiative when it was first launched in 2019. Invesco signed letters that were sent to over 600 companies and actively participated in meetings with companies and governments to ensure the development of higher standards and to evolve the tools to assess companies.
• Invesco signed the Investor statement on Covid-19, to encourage the business community to take what steps they can to mitigate the social impacts caused by the pandemic. Some of these steps include providing paid leave, prioritising health and safety, maintaining employment and maintaining supplier relationships. Invesco has engaged with companies on these topics as part of its ongoing one-to-one ESG engagements.
ESG portfolio monitoring
Dedicated ESG-focused portfolio reviews are in place to complement the existing risk-return portfolio review process. Invesco’s Global ESG team leads each review meeting which is attended by fund managers and credit research analysts. Portfolios are reviewed on the basis of a wide range of ESG metrics on an absolute basis and also relative to benchmarks where appropriate.
ESG portfolio monitoring includes measurement, based on Sustainalytics ESG research data, of total portfolio ESG risk and identification of holdings with the highest and lowest ESG risk. As of the end of 2023, holdings with the highest ESG risk were concentrated in the energy sector. The holdings with the lowest ESG risk were spread across several sectors.
Invesco also carry out Carbon Footprint Analysis of the portfolio, in absolute terms and compared to the wider high yield market, using data from ISS Climate Solutions.
Whilst TCFD is currently not applicable to the Company, the Manager has produced a product level report on the Company in accordance with the Financial Conduct Authority’s (‘FCA’) rules and guidance regarding the disclosure of climate-related financial information consistent with TCFD Recommendations and Recommended Disclosures. These disclosures are intended to help meet the information needs of market participants, including institutional clients and consumers of financial products, in relation to the climate-related impact and risks of the Manager’s TCFD in-scope business. The product level report on the Company is available on the Company’s website at https://www.invesco.com/uk/en/investment-trusts/invesco-bond-income-plus-limited.html. Key elements of the product level report include a scenario analysis of how climate change is likely to impact the portfolio valuation under net zero 2050, delayed transition and hothouse scenarios, and a discussion of the most significant drivers of performance under those scenarios.
Invesco's
Both reports noted above are in the process of being updated for the period to
Investments in Order of Valuation
AT
Market Country of Value % of Issuer/issue Rating(1) Industry Incorporation £’000 Portfolio Lloyds Banking Financials UK Group 7.875% FRN Baa3/BB–/BBB 6,658 2.0 Perpetual (AT1) 8.5% Cnv FRN Baa3/BB–/BBB 3,178 1.0 Perpetual (AT1) 8.5% Cnv FRN 27 Baa3/BB–/BBB 1,411 0.4 March 2071 (AT1) 6.375% FRN Baa3/BB–/BBB 136 0.0 Perpetual (AT1) 11,383 3.4 Barclays Financials UK 9.25% Cnv FRN Ba1/BB–/BB 6,716 2.0 Perpetual (AT1) FRN 14 Nov 2032 Baa1/BBB–/BBB 1,672 0.5 8.875% Cnv FRN Ba1/BB–/BB 728 0.2 Perpetual (AT1) 3.25% Cnv 17 Jan Baa1/BBB+/BBB 724 0.2 2033 (SNR) FRN Perpetual Ba1/BB–/BB 282 0.1 (AT1) 4.375% FRN Ba1/BB–/BB 122 0.1 Perpetual (AT1) 10,244 3.1 Co-Operative Bank Financials UK 11.75% 22 May 2034 Ba3/NR/BB 3,904 1.1 9.5% Cnv FRN 24 Ba3/NR/BB 1,628 0.5 May 2028 (SNR) 6% FRN 06 Apr 2027 Ca/NR/NR 1,369 0.4 (SNR) 7.5% FRN 08 Jul Ca/NR/NR 982 0.3 2026 7,883 2.3 Virgin Money Financials UK 8.25% Cnv Ba1/NR/BB 3,681 1.1 Perpetual (AT1) 11% Cnv FRN Ba1/NR/BB 2,355 0.7 Perpetual (AT1) Cnv FRN 23 Aug Baa1/BBB–/BBB 1,308 0.4 2029 (SNR) 7,344 2.2 BNP Paribas Financials UK 7.375% FRN Ba1/BBB–/BBB 3,321 1.0 Perpetual (AT1) FRN Perpetual Ba1/BBB–/BBB 1,386 0.4 (AT1) 9.25% FRN Ba1/BBB–/BBB 1,205 0.4 Perpetual (AT1) 1.25% Cnv 13 Jul Baa1/A–/A 775 0.2 2031 (SNR) 6,687 2.0 Aviva Financials UK 6.875% Cnv FRN Baa2/NR/BBB 5,130 1.5 Perpetual 8.875% Preference NR/NR/NR 1,489 0.5 6,619 2.0 UK Treasury Bill Government Bonds UK 3.75% 22 Oct 2053 Aa3u/AA/AA 3,733 1.1 4% 22 Oct 2063 Aa3u/AA/AA 948 0.3 1.25% 31 Jul 2051 Aa3u/AA/AA 798 0.2 (SNR) 0.5% 22 Oct 2061 Aa3u/AA/AA 676 0.2 6,155 1.8 Teva Pharmaceutical Health Care Netherlands Finance 6.75% 01 Mar 2028 Ba2/BB–/BB 2,399 0.7 (SNR) 7.875% 15 Sep 2031 Ba2/BB–/BB 1,334 0.4 (SNR) 7.375% 15 Sep 2029 Ba2/BB–/BB 952 0.3 (SNR) 4.375% 09 May 2030 Ba2/BB–/BB 814 0.2 (SNR) 5.125% 09 May 2029 Ba2/BB–/BB 588 0.2 (SNR) 6,087 1.8 Ziggo Bond Finance Telecommunications Netherlands 6% 15 Jan 2027 B3/B–/B 3,842 1.2 (SNR) 3.375% 28 Feb 2030 B3/B–/B 1,280 0.4 (SNR) 4.875% 15 Jan 2030 B1/B+/B 459 0.1 (SNR) 5,581 1.7 Virgin Media O2 Telecommunications UK 4% 31 Jan 2029 Ba3/BB–/BB 2,480 0.7 (SNR) 4.25% 15 Jan 2030 Ba3/BB–/BB 1,660 0.5 (SNR) 4.875% 15 Jul 2028 B2/B/B 1,380 0.4 (SNR) 5,520 1.6 Albion Finance Consumer Services Luxembourg 8.75% 15 Apr 2027 B3/B/B 3,126 0.9 (SNR) 6.125% 15 Oct 2026 B1/BB–/BB 2,333 0.7 (SNR) 5,459 1.6 Vodafone Group Basic Materials UK 8% FRN Perpetual Ba1/BB+/BB 5,331 1.6 (SUB) Eléctricité De Utilities France France 6% Perpetual Ba2/B+/BB 2,520 0.7 5.875% Perpetual Ba2/B+/BB 1,637 0.5 7.5% FRN Perpetual Ba2/B+/BB 946 0.3 5,103 1.5 Codere New Topco Consumer Services Luxembourg 11% PIK 30 Sep Ca/D/D 3,463 1.0 2026 13% 30 Sep 2024 B3/NR/B 941 0.4 11% PIK 30 Sep Ca/D/D 155 0.0 2026 12.75% PIK 30 Nov C/D/D 55 0.0 2027 13.625% PIK 30 Nov NR/NR/NR 34 0.0 2027 Common Stock NR/NR/NR – 0.0 4,648 1.4 Clarios Basic Materials USA 8.5% 15 May 2027 B3/B–/B 4,415 1.3 (SNR) Telecom Italia Telecommunications Italy 7.875% 31 Jul 2028 B1/B+/B 2,552 0.7 (SNR) 7.721% 04 Jun 2038 B1/B+/B 1,614 0.5 4,166 1.2 Rothschilds Continuation Financials Guernsey Finance 9% FRN Perpetual NR/NR/NR 2,802 0.8 (SUB) FRN Perpetual NR/NR/NR 1,335 0.4 4,137 1.2 Deutsche Bank Financials Germany FRN Perpetual Ba2/BB/BB 3,403 1.0 (AT1) 6% FRN Perpetual Ba2/BB/BB 710 0.2 (AT1) 4,113 1.2 Sainsbury’s Bank Financials UK 10.5% FRN 12 Mar Baa2/NR/BBB 3,887 1.2 2033 Legal & General Financials UK 5.625% FRN Baa2/BBB/BBB 3,865 1.2 Perpetual Bellis Consumer Goods UK 4.5% 16 Feb 2026 B2/NR/B 2,187 0.6 (SNR) 4% 16 Feb 2027 Caa1/NR/CCC 1,661 0.5 (SNR) 3,848 1.1 BCP V Modular Consumer Services UK Services 6.125% 30 Nov 2028 B2/B/B 2,582 0.8 6.75% 30 Nov 2029 Caa1/CCC+/CCC 1,064 0.3 (SNR) 3,646 1.1 Ford Motor Credit Consumer Goods USA 6.86% 05 Jun 2026 Ba1/BBB–/BBB 3,635 1.1 ING Financials Netherlands 6.25% Cnv FRN 20 Baa2/BBB/BBB 3,522 1.1 May 2033 Parts Europe Consumer Goods France 6.5% 16 Jul 2025 B2/BB–/B 3,513 1.1 Petra Diamonds Basic Materials Bermuda 10.5% PIK 08 Mar B3/B/B 3,246 1.0 2026 Common Stock NR/NR/NR 142 0.0 3,388 1.0 RL Finance Financials UK 10.125% Cnv FRN Baa3/BBB/BBB 3,367 1.0 Perpetual Thames Water Utilities UK Finance 4% 19 Jun 2025 Baa1/BBB/BBB 1,907 0.6 (SNR) 4.625% 19 May 2026 B3/NR/CCC 1,000 0.3 (SNR) 8.25% 25 Apr 2040 Baa1/BBB/BBB 348 0.1 (SNR) 3,255 1.0 Maison Industrials UK 6% 31 Oct 2027 NR/B+/B 3,230 1.0 (SNR) Stonegate Pub Consumer Services UK Company 8.25% 31 Jul 2025 B3/NR/B 3,220 1.0 Frigoglass Finance Industrials Netherlands 11% 20 Apr 2028 NR/NR/NR 1,216 0.4 11% 20 Apr 2026 NR/NR/NR 1,990 0.6 3,206 1.0 Commerzbank Financials Germany 6.125% FRN Ba2/BB–/BB 2,174 0.6 Perpetual (AT1) FRN 06 Dec 2032 Baa3/BB+/BB 1,005 0.3 3,179 0.9 Telefonica Telecommunications Netherlands FRN Perpetual Ba2/BB/BB 2,154 0.6 6.75% FRN Ba2/BB/BB 833 0.3 Perpetual (SUB) 2,987 0.9 Pension Insurance Financials UK 7.375% FRN NR/NR/BBB 2,965 0.9 Perpetual Banco BVA Financials Spain 6% FRN Perpetual Ba2/NR/BB 2,928 0.9 (AT1) Allwyn Consumer Services UK Entertainment 7.875% 30 Apr 2029 NR/BB/BB 1,992 0.6 (SNR) 7.25% 30 Apr 2030 NR/BB/BB 825 0.2 2,817 0.8 IM Group Consumer Services France 8% 01 Mar 2028 B3/B/B 2,732 0.8 (SNR) Bank Of Ireland Financials Ireland 7.5% FRN Perpetual Ba1/BB–/BB 1,665 0.5 (AT1) 7.594% FRN 06 Dec Baa2/BB+/BBB 1,042 0.3 2032 2,707 0.8 CPUK Finance Financials Jersey 6.5% 28 Aug 2050 NR/B/B 1,634 0.5 (SNR) 4.5% 28 Aug 2027 NR/B/B 1,050 0.3 2,684 0.8 Gatwick Airport Financials UK Finance 4.375% 07 Apr 2026 Ba3/NR/BB 2,679 0.8 (SNR) BT Telecommunications UK 8.375% FRN Ba1/BB+/BB 2,625 0.8 Perpetual Volkswagen Consumer Goods Netherlands Financial Services 6.5% 18 Sep 2027 A3/BBB+/BBB 1,462 0.4 (SNR) 7.875% FRN Baa2/BBB–/BBB 585 0.2 Perpetual 4.375% FRN Baa2/BBB–/BBB 550 0.2 Perpetual 2,597 0.8 OSB Financials UK Cnv FRN 27 Jul Baa3/NR/BBB 1,469 0.5 2033 6% FRN Perpetual NR/NR/BB 1,125 0.3 (SUB) (AT1) 2,594 0.8 Intesa Financials Italy 6.375% Cnv FRN Ba3/BB–/BB 1,492 0.5 Perpetual (AT1) 5.148% 10 Jun 2030 Baa3/BB+/BB 1,092 0.3 2,584 0.8 Dana Financing Consumer Goods Luxembourg Luxembourg 8.5% 15 Jul 2031 B1/BB–/BB 2,550 0.8 (SNR) Morrisons 4.75% 04 Nov 2027 B2/B+/B Industrials UK 1,165 0.3 (SNR) 5.5% 04 Nov 2027 B2/B+/B 1,321 0.4 (SNR) 2,486 0.7 Inspired Consumer Services UK Entertainment 7.875% 01 Jun 2026 B2/NR/B 2,479 0.7 (SNR) Lottomatica Consumer Services Italy 7.13 % 01 Jun 2028 Ba3/BB–/BB 1,416 0.4 (SNR) FRN 15 Dec 2030 Ba3/BB–/BB 1,020 0.3 (SNR) 2,436 0.7 Marcolin Health Care Italy 6.125% 15 Nov 2026 B3/B–/B 2,426 0.7 (SNR) Saga Consumer Services UK 5.5% 15 Jul 2026 B2/B–/B 2,400 0.7 (SNR)BP Capital Financials UK 4.25% FRN Baa1/BBB/BBB 2,395 0.7 Perpetual Prestige Bidco Consumer Services Germany FRN 15 Jul 2027 B1/B+/B 2,391 0.7 (SNR) HSBC Financials UK FRN 13 Nov 2034 Baa1/BBB/BBB 1,912 0.6 (SUB) 5.25% 14 Mar 2044 Baa1/BBB/BBB 473 0.1 2,385 0.7 CaixaBank Financials Spain 8.25% Cnv FRN NR/BB/BB 2,385 0.7 Perpetual (AT1) Societe Generale Financials France 7.875% Cnv FRN Ba2/BB/BB 1,430 0.4 Perpetual (AT1) FRN Perpetual Ba2/BB/BB 920 0.3 (AT1) 2,350 0.7 888.com Consumer Services Gibraltar 7.558% 15 Jul 2027 B1/B/B 2,342 0.7 Cidron Aida Finco Health Care Luxembourg 6.25% 01 Apr 2028 B3/B–/B 2,194 0.7 (SNR) Beazley Financials Ireland 5.875% 04 Nov 2026 NR/NR/BBB 2,161 0.6 Benteler Consumer Services Austria International 9.375% 15 May 2028 Ba3/BB–/BB 1,549 0.5 10.5% 15 May 2028 Ba3/BB–/BB 526 0.1 2,075 0.6 Enel Utilities Italy 7.75% 14 Oct 2052 Baa1/BBB/BBB 1,836 0.5 (SNR) 6.625% FRN Baa3/BB+/BBB 215 0.1 Perpetual 2,051 0.6 Ineos Quattro Industrials UK 9.625% 15 Mar 29 Ba3/BB/BB 1,143 0.3 (SNR) 8.5% 15 Mar 29 Ba3/BB/BB 900 0.3 (SNR) 2,043 0.6 Fiber Bidco Industrials Italy FRN 25 Oct 2027 B2/B/B 1,322 0.4 (SNR) 11% 25 Oct 2027 B2/B/B 706 0.2 (SNR) 2,028 0.6 IHO Verwaltungs Consumer Goods Germany 6% 15 May 2027 Ba2/BB–/BB 2,000 0.6 (SNR) General Motors Financials USA Financial 2.35% 03 Sep 2025 Baa2/BBB/BBB 1,906 0.6 (SNR) Lancashire Financials Bermuda 5.625% 18 Sep 2041 Baa3/BB+/BB 1,903 0.6 (FRN) Tereos Finance Consumer Goods France 7.5% 30 Oct 2025 NR/BB–/BB 1,885 0.6 (SNR) NatWest Financials UK 8% FRN Perpetual Baa3/BB–/BBB 943 0.3 (AT1) Cnv FRN 06 Jun Baa1/BBB–/BBB 938 0.3 2033 1,881 0.6 Tullow Oil Oil and Gas UK 10.25% 15 May 2026 Caa1/B–/CCC 1,841 0.5 (SNR) True Potential Financials Jersey 6.5% 15 Feb 2027 B1/B+/B 1,801 0.5 (SNR) Zenith Consumer Services UK 6.5% 30 Jun 2027 B1/B+/B 1,800 0.5 (SNR) Bayer AG Health Care Germany 7% FRN Perpetual Ba1/BB+/BB 1,791 0.5 (SUB) Mobico Group Consumer Services UK FRN Perpetual Ba1/BB+/BB 1,748 0.5 Banco Sabadell Financials Spain 5.75% FRN NR/B+/B 1,149 0.3 Perpetual (AT1) 5% FRN Perpetual NR/B+/B 597 0.2 (AT1) 1,746 0.5 Ocado Consumer Goods UK 3.875% 08 Oct 2026 B3/NR/B 1,728 0.5 (SNR) Marb Bondco Consumer Services UK 3.95% 29 Jan 2031 NR/BB+/BB 1,711 0.5 (SNR) Stora Enso Industrials Finland 7.25% 15 Apr 2036 Baa3/NR/BBB 1,675 0.5 Preem Oil and Gas Sweden 12% 30 Jun 2027 B3/BB–/B 1,670 0.5 (SNR) Jerrold Finco Financials UK 5.25% 15 Jan 2027 NR/BB/BB 1,656 0.5 (SNR) AA Bond Co Consumer Services Jersey 7.375% 31 Jul 2050 NR/BBB–/BBB 1,272 0.4 (SNR) 8.45% 31 Jul 2050 NR/BBB–/BBB 360 0.1 (SNR) 1,632 0.5 Petroleos Oil and Gas Mexico Mexicanos 9.5% 15 Sep 2027 B1/BBB/B 784 0.2 (SNR) 6.95% 28 Jan 2060 B1/BBB/B 466 0.2 (SNR) 6.75% 21 Sep 2047 B1/BBB/B 365 0.1 (SNR) 1,615 0.5 Motion Finco Consumer Services Luxembourg 7.375% 15 Jun 2030 B2/B+/B 1,611 0.5 Sasol Financing Financials USA USA 8.75% 03 May 2029 Ba1/BB+/BB 1,593 0.5 (SNR) Sigma Holdco Consumer Goods Netherlands 7.875% 15 May 2026 Caa1/CCC+/CCC 1,551 0.5 (SNR) Equitable Life Financials USA 6.375% 02 Jun 2028 A1/A+/A 1,550 0.5 (SNR) Premier Consumer Services USA Entertainment 5.625% 01 Sep 2029 B3/CCC+/B 935 0.3 (SNR) 5.875% 01 Sep 2031 B3/CCC+/B 611 0.2 (SNR) 1,546 0.5 Boparan Finance Consumer Services UK 7.625% 30 Nov 2025 Caa1/B–/B 1,470 0.4 (SNR) Verisure Industrials Sweden 9.25% 15 Oct 2027 B1/B+/B 1,450 0.4 (SNR) EDP – Energias de Utilities Portugal Portugal 5.943% FRN 23 Apr Ba1/BB+/BB 1,438 0.4 2083 GTCR Financials Netherlands 8.5% 15 Jan 2031 Ba3/BB/BB 1,379 0.4 (SNR) Vattenfall Utilities Sweden 6.875% FRN Baa2/BB+/BB 1,348 0.4 Perpetual (SUB) Food Service Consumer Goods Spain Project 5.5% 21 Jan 2027 Ba3/NR/BB 1,347 0.4 (SNR) Banco BPM Financials Italy 9.5% FRN Perpetual NR/NR/B 1,341 0.4 (AT1) AXA Financials France 6.379% FRN A3/BBB+/BBB 848 0.3 Perpetual 5.453% FRN A3/A–/A 493 0.1 Perpetual 1,341 0.4 Italmatch Basic Materials Italy Chemicals 10% 06 Feb 2028 B3/B/B 1,339 0.4 Nationwide Financials UK FRN 07 Dec 2027 A3/BBB+/A 693 0.2 10.25% Perpetual NR/NR/NR 643 0.2 (CCDS) 1,336 0.4 Rolls Royce Industrials UK 5.75% 15 Oct 2027 Ba2/BB+/BB 1,319 0.4 (SNR) Ecclesiastical Financials UK Insurance Office 8.625% Preference NR/NR/NR 1,280 0.4 CIRSA Finance Financials Luxembourg 7.875% 31 Jul 2028 B2/B/B 1,271 0.4 (SNR) La Financière Consumer Services France ATALIAN 6.625% 15 May 2025 Caa2/CCC/CCC 1,088 0.3 (SNR) 5.125% Cnv 15 May Caa2/CCC/CCC 168 0.1 2025 (SNR) 1,256 0.4 Burger King France Consumer Goods France 7.75% 01 Nov 2027 NR/CCC/CCC 1,252 0.4 Alain Afflelou Consumer Services France FRN 19 May 2027 Caa1/CCC+/CCC 1,243 0.4 Loxam SAS Consumer Services France 5.75% 15 Jul 2027 NR/B/B 1,230 0.4 Castle UK (Miller Industrials UK Homes) FRN 15 May 2028 B1/B+/B 801 0.3 7% 15 May 2029 B1/B+/B 423 0.1 (SNR) 1,224 0.4 National Bank Of Financials Greece Greece 8.25% FRN 18 Jul Ba3/B/B 1,214 0.4 2029 Altice Telecommunications France 4.25% 15 Oct 2029 B2/B–/B 828 0.3 (SNR) 5.875% 01 Feb 2027 B2/B–/B 385 0.1 (SNR) 1,213 0.4 SSE Utilities UK 8.375% FRN 20 Nov Baa1/BBB+/BBB 1,171 0.3 2028 Centrica Utilities UK 7% 19 Sep 2033 Baa2/BBB/BBB 1,148 0.3 (SNR) Aegon Financials Netherlands 5.625% FRN Baa3/BB+/BB 1,129 0.3 Perpetual Travis Perkins Industrials UK 3.75% 17 Feb 2026 NR/NR/BBB 1,126 0.3 (SNR) John Lewis Consumer Services UK 4.25% 18 Dec 2034 NR/NR/NR 1,082 0.3 (SNR) Quilter Financials UK 8.625% FRN 18 Apr NR/NR/BBB 1,059 0.3 2033 Match Group Technology USA 3.625% 01 Oct 2031 Ba3/BB/BB 1,049 0.3 (SNR) TI Automotive Consumer Goods UK Finance 3.75% 15 Apr 2029 B3/BB/B 1,024 0.3 (SNR) CCO Holdings Telecommunications USA 5.125% 01 May 2027 B1/BB–/BB 953 0.3 (SNR) Alpha Services & Consumer Goods Greece Holdings 11.875% Cnv FRN B3/NR/B 906 0.3 Perpetual (AT1) Cornwall (Jersey) Consumer Services Jersey 0.75% Cnv 16 Apr NR/NR/NR 889 0.3 2026 (SNR) Koninklijke Telecommunications Netherlands 6% FRN Perpetual NR/BB+/BB 874 0.3 Heathrow Financials UK 4.125% 01 Sep 2029 B1/NR/B 861 0.3 (SNR) Jupiter Fund Financials UK Management 8.875% 27 Jul 2030 NR/NR/BBB 854 0.3 CGG Oil and Gas France 7.75% 01 Apr 2027 B3/CCC+/B 831 0.2 (SNR) Goodyear Tire & Consumer Goods USA Rubber 9.5% 31 May 2025 B2/B+/B 821 0.2 (SNR) B&M Consumer Services Luxembourg 4% 15 Nov 2028 Ba1/BB+/BB 805 0.2 (SNR) US Treasury Note Government Bonds USA 3.875% 15 Aug 2033 Aaa/AA+/AA 786 0.2 FAGE International Consumer Goods Luxembourg 5.625% 15 Aug 2026 Ba3/BB–/BB 779 0.2 (SNR) Motion Bondco Financials Ireland 4.5% 15 Nov 2027 Caa2/CCC+/CCC 748 0.2 (SNR) HP Consumer Services USA 5.5% 15 Jan 2033 Baa2/BBB/BBB 719 0.2 (SNR) TotalEnergies Oil and Gas France 3.25% FRN A3/A–/A 716 0.2 Perpetual (SUB) MPT Operating Health Care USA Partnership 2.5% 24 Mar 2026 Ba2/BB–/BB 414 0.1 (SNR) 3.375% 24 Apr 2030 Ba2/BB–/BB 300 0.1 (SNR) 714 0.2 Dell International Consumer Services USA 6.2% 15 Jul 2030 Baa2/BBB/BBB 712 0.2 (SNR) Bupa Finance Health Care UK 5% 08 Dec 2026 Baa1/NR/BBB 698 0.2 Zurich Finance Financials Ireland 5.125% FRN 23 Nov A2/A+/A 690 0.2 2052 Goldman Sachs Financials USA 3.625% FRN 29 Oct A2/BBB+/A 644 0.2 2029 (SNR) PGH Capital Financials UK 5.375% 06 Jul 2027 NR/NR/BBB 621 0.2 Phoenix Financials UK FRN Perpetual NR/NR/BBB 617 0.2 CNP Assurances Financials France 4.875% FRN Baa2/BBB+/BBB 615 0.2 Perpetual Cerved Consumer Services Italy 6% 15 Feb 2029 B3/B–/B 278 0.1 (SNR) FRN 15 Feb 2029 B3/B–/B 335 0.1 (SNR) 613 0.2 Spectrum Telecommunications USA Management 4.5% 15 Sep 2042 Ba1/BBB–/BBB 560 0.2 (SNR) Heimstaden Consumer Goods Sweden 1.625% 13 Oct 2031 NR/BBB–/BBB 545 0.2 (SNR) British Airways Consumer Services USA 8.375% 15 Nov 2028 NR/A–/BBB 545 0.2 DNO ASA Oil and Gas Norway 7.875% 09 Sep 2026 NR/NR/NR 519 0.2 (SNR) Rothesay Life Financials UK 8% 30 Oct 2025 NR/NR/BBB 514 0.2 Tendam Brands Consumer Services Spain FRN 31 Mar 2028 B2/B+/B 496 0.1 Peel Land & Property Financials UK Investments 8.375% Var 30 Apr NR/BBB/BBB 493 0.1 2040 Via Celere Desarro Consumer Goods Spain 5.25% 01 Apr 2026 NR/B+/B 490 0.1 (SNR) Odyssey Europe Consumer Services Luxembourg 9% PIK 31 Dec 2025 B3/B–/B 478 0.1 Morgan Stanley Financials USA FRN 18 Nov 2033 A1/A–/A 469 0.1 (SNR) Millicom International Telecommunications Luxembourg Cellular 5.125% 15 Jan 2028 Ba2/NR/BB 443 0.1 RAC Bond Co Consumer Goods UK FRN 04 Nov 2046 NR/B+/B 436 0.1 (SNR) Nyrstar Basic Materials Malta 0% 31 Jul 2026 NR/NR/NR 408 0.1 (SNR) Monitchem Basic Materials Luxembourg 8.75% 01 May 2028 B3/B/B 397 0.1 (SNR) Herens Basic Materials Luxembourg 4.75% 15 May 2028 B2/B–/B 381 0.1 (SNR) Kosmos Energy Oil and Gas USA 7.75% 01 May 2027 B3u/B/B 365 0.1 (SNR) VTR Finance Telecommunications Chile 5.125% 15 Jan 2028 Caa1/CCC/CCC 240 0.1 (SNR) 4.375% 15 Apr 2029 Caa1/CCC/CCC 74 0.0 (SNR) 314 0.1 Permanent TSB Financials Ireland 13.25% 26 Apr 2071 Ba3/NR/BB 285 0.1 (AT1) Abrdn Financials UK FRN Perpetual Baa2/BB+/BB 218 0.1 (AT1) Signa Consumer Goods Luxembourg 5.5% 23 Jul 2026 NR/D/D 208 0.1 (SNR) Unique Pub Finance Consumer Goods UK 7.395% 30 Mar 2024 NR/B/B 183 0.1 Total Play Telecommunications Mexico Telecomunicaciones 6.375% 20 Sep 2028 Caa2/NR/CCC 160 0.0 (SNR) Banco Santander Financials Spain 3.625% FRN Ba1/NR/BB 129 0.0 Perpetual (AT1) Total investments 335,533 100.0
(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
Cnv: Convertible
Var: Variable
CCDS: Core Capital Deferred Shares
AT1: Additional Tier 1 bond
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Company’s Annual Financial Report in accordance with applicable laws and regulations.
Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Accounting Standards as issued by the
International Accounting Standard 1 requires that financial statements present fairly for each financial year the Company’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs.
In preparing these financial statements, the Directors are required to:
– properly select and apply accounting policies and then apply them consistently;
– present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
– provide additional disclosures when compliance with specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
– make an assessment of the Company’s ability to continue as a 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 (as explained in detail on page 17) 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.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and which enable them to ensure that the accounts comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Corporate Governance Statement and a Directors’ Report that comply with that law and those regulations.
The Directors of the Company, who are listed on page 34, each confirm to the best of their knowledge that:
– the financial statements, which have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
– this Annual Financial Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces;
– this Annual Financial Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy; and
– there is no relevant audit information of which the Company’s auditor is unaware, and each Director has taken steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
Signed on behalf of the Board of Directors
Audit & Risk Committee Chair
3 April 2024
a.
The directors have delegated responsibility for the maintenance and integrity of the
b. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Statement of Comprehensive Income
Year ended Year ended 31 December 2023 31 December 2022 Revenue Capital Total Revenue Capital Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Profit/(loss) on investments held at fair 11 – 6,856 6,856 – (37,322) (37,322) value Profit/(loss) on derivative instruments – currency hedges and CDS – 3,197 3,197 – (13,752) (13,752) Exchange differences – 1,998 1,998 – (3,555) (3,555) Income 4 24,424 - 24,424 22,881 – 22,881 Investment management 5 (941) (941) (1,882) (924) (924) (1,848) fee Other expenses 6 (802) (3) (805) (762) (4) (766) Profit/(loss) before finance costs and 22,681 11,107 33,788 21,195 (55,557) (34,362) taxation Finance costs 7 (984) (984) (1,968) (115) (115) (230) Profit/(loss) before 21,697 10,123 31,820 21,080 (55,672) (34,592) taxation Tax on ordinary 8 – - – (30) – (30) activities Profit/(loss) after 21,697 10,123 31,820 21,050 (55,672) (34,622) taxation Return per ordinary 9 12.23p 5.71p 17.94p 12.47p (32.98)p (20.51)p share
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
Statement of Changes in Equity
Stated Capital Revenue Capital Reserve Reserve Total Notes £’000 £’000 £’000 £’000 At 31 December 2021 297,326 23,531 5,873 326,730 (Loss)/profit after taxation – (55,672) 21,050 (34,622) Dividends paid 10 – – (18,755) (18,755) Net proceeds from issue of new shares 16 7,736 – – 7,736 At 31 December 2022 305,062 (32,141) 8,168 281,089 Profit after taxation – 10,123 21,697 31,820 Dividends paid 10 (341) – (20,011) (20,352) Net proceeds from issue of new shares 16 12,072 – – 12,072 At 31 December 2023 316,793 (22,018) 9,854 304,629
Balance Sheet
At At 31 December 31 December 2023 2022 Notes £’000 £’000 Non-current assets Investments held at fair value through profit or 11 335,533 317,870 loss Current assets Other receivables 12 8,552 7,194 Derivative financial instruments – receivable 13 1,589 106,588 Cash and cash equivalents 8,138 9,082 18,279 122,864 Current liabilities Other payables 14 (916) (746) Derivative financial instruments – payable 13 (199) (105,148) Securities sold under agreements to repurchase 15 (48,068) (53,751) (49,183) (159,645) Net current liabilities (30,904) (36,781) Net assets 304,629 281,089 Capital and reserves Stated capital 16 316,793 305,062 Capital reserve 17 (22,018) (32,141) Revenue reserve 17 9,854 8,168 Shareholders’ funds 304,629 281,089 Net asset value per ordinary share 18 168.58p 162.20p
The financial statements were approved and authorised for issue by the Board of Directors on
Signed on behalf of the Board of Directors
Audit & Risk Committee Chair
The accompanying accounting policies and notes are an integral part of these financial statements.
Statement of Cash Flows
Year ended Year ended 31 December 31 December 2023 2022 £’000 £’000 Cash flow from operating activities Profit/(loss) before finance costs and taxation 33,788 (34,362) Adjustment for: Purchases of investments (126,310) (109,181) Sales of investments 115,465 105,523 (10,845) (3,658) (Decrease)/increase from securities sold under (5,683) 14,656 agreements to repurchase (Profit)/loss on investments held at fair value (6,856) 37,322 Net movement from derivative instruments – currency 50 (253) hedges Increase in receivables (1,355) (1,409) Increase/(decrease) in payables 67 (76) Increase in tax recoverable – (3) Exchange differences on cash and cash equivalents (937) 593 Net cash inflow from operating activities before 8,229 12,810 taxation Taxation paid – (30) Net cash inflow from operating activities 8,229 12,780 Cash flow from financing activities Finance cost paid (1,865) (49) Net proceeds from issue of new shares – note 16 12,199 7,531 Dividends paid – note 10 (20,352) (18,755) Cost of shares issued – note 16 (92) – Net cash outflow from financing activities (10,110) (11,273) Net (decrease)/increase in cash and cash equivalents (1,881) 1,507 Cash and cash equivalents at start of the year 9,082 8,168 Exchange differences 937 (593) Cash and cash equivalents at the end of the year 8,138 9,082 Reconciliation of cash and cash equivalents to the Balance Sheet is as follows: Cash held at custodian 6,038 1,672 Invesco Liquidity Funds plc – Sterling 2,100 7,410 Cash and cash equivalents 8,138 9,082 Cash flow from operating activities includes: Dividends received 283 176 Interest received 24,341 21,849
Reconciliation of net debt
At At 1 January Cash Non-cash 31 December 2023 flows movement 2023 £’000 £’000 £’000 £’000 Cash and cash equivalents 9,082 (1,881) 937 8,138 Securities sold under agreements to (53,751) 5,683 – (48,068) repurchase Total (44,669) 3,802 937 (39,930)
Notes to the Financial Statements
1. Principal Activity
The Company is a closed-end investment company incorporated in Jersey and operates under the Companies (Jersey) Law 1991. The principal activity of the Company is investment in a diversified portfolio of high-yielding fixed-interest securities as set out in the Company’s Investment Objective and Policy.
2. Principal Accounting Policies
The principal accounting policies describe the Company’s approach to recognising and measuring transactions during the year and the position of the Company at the year end.
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied during the current year and preceding year, unless otherwise stated. The financial statements have been prepared on a going concern basis as noted below.
(a) Basis of Preparation
(i) Accounting Standards Applied
The financial statements have been prepared on a historical cost basis, except for the measurement at fair value of investments and derivatives, and in accordance with the applicable International Financial Reporting Standards (IFRS) and interpretations issued by the International Financial Reporting Interpretations Committee as adopted by the
Where presentational guidance set out in the Statement of Recommended Practice (SORP) ‘Financial Statements of
(ii) Going Concern
As explained on page 17, the Company has an Annual Continuation Vote and the Directors believe shareholders will vote for the Company to continue. Accordingly, the Directors have determined that the financial statements should and have been prepared on a going concern basis, which does not include any adjustments that might arise from cessation of the Company. The Articles of
If a special resolution was held regarding a continuation vote a 75% majority of the shareholders need to vote for the Company not to continue.
Last year nearly 100% of the votes registered at the AGM were in favour of releasing the obligation to hold a continuation vote.
Based upon the current financial performance and financial position of the Company, along with the AGM vote outcome last year and ongoing dialogue with investors, the Directors do not have any concerns regarding the outcome of the forthcoming ordinary resolution and hence do not consider there to be a material uncertainty over going concern.
If a continuation vote was held and was unsuccessful, the basis of preparation would be switched at that date to a basis other than going concern and the NAV impacting adjustments would not be material as the majority of investments are Level 2, based on observable market prices.
(iii) Adoption of New and Revised Standards
There were no new nor revised standards and interpretations that became effective during the year having a significant impact on the amounts reported in these financial statements.
(iv) Critical Accounting Estimates and Judgements
The preparation of the financial statements may require the Directors to make estimations where uncertainty exists. It also requires the Directors to exercise judgement in the process of applying the accounting policies. The Directors, having taken into account the factors in note 2a(ii), judge it appropriate to continue to use the going concern basis to prepare the financial statements given the Annual Continuation Vote. In the prior year judgement was exercised over the valuation at initial transaction price of one security held at the balance sheet date and to thereby classify this security at Level 3. Further details are provided in note 20 on page 69.
(b) Foreign Currency
(i) Functional and Presentation Currency
The financial statements are presented in sterling, which is the Company’s functional and presentation currency and the currency in which the Company’s stated capital and expenses are denominated, as well as a certain proportion of its income, assets and liabilities.
(ii) Transactions and Balances
Transactions in foreign currency, whether of a revenue or capital nature, are translated to sterling at the rate of exchange ruling on the date of such transactions. Foreign currency assets and liabilities are translated to sterling at the rates of exchange ruling at the balance sheet date. All profits and losses, whether realised or unrealised, are recognised in the statement of comprehensive income and are taken to capital reserve or revenue reserve, depending on whether the gain or loss is capital or revenue in nature.
(c) Financial Instruments
(i) Recognition of Financial Assets and Financial Liabilities
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. These are offset if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.
(ii) Derecognition of Financial Assets
Financial assets are derecognised when the contractual rights to the cash flows from the asset expire, or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial asset that is created or retained by the Company is recognised as an asset.
(iii) Derecognition of Financial Liabilities
Financial liabilities are derecognised when the Company’s obligations are discharged, cancelled or expired.
(iv) Trade Date Accounting
Purchases and sales of financial assets are recognised on trade date, being the date on which the Company commits to purchase or sell the assets.
(v) Classification of Financial Assets and Financial Liabilities
Financial assets
Investments are classified as held at fair value through profit or loss as the investments are managed and their performance evaluated on a fair value basis in accordance with the Company’s documented investment strategy and this is also the basis on which information about investments is provided internally to the Board.
Financial assets held at fair value through profit or loss are initially recognised at fair value, which is taken to be their cost, with transaction costs expensed in the statement of comprehensive income, and are subsequently valued at fair value. Changes in fair value are recognised in the statement of comprehensive income.
For investments that are actively traded in organised financial markets, fair value is determined by reference to stock exchange quoted bid prices at the balance sheet date. For investments that are not actively traded or where active stock exchange quoted bid prices are not available, fair value is determined by reference to a variety of valuation techniques including broker quotes and price modelling.
Financial Liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method.
(d) Derivatives and Hedging
Derivative instruments are valued at fair value in the balance sheet. Hedge accounting has not been adopted.
Forward currency contracts entered into for hedging purposes are valued at the appropriate forward exchange rate ruling at the balance sheet date and any profits and losses are recognised in the statement of comprehensive income and taken to capital.
(e) Cash and Cash Equivalents
Cash and cash equivalents may comprise cash (including short term deposits which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value) as well as cash equivalents, including money market funds.
(f) Securities Sold Under Agreements to Repurchase (‘repo financing’)
The Company participates in repo financing arrangements in connection with its investment portfolio. Under these arrangements, the Company sells fixed interest securities but is contractually obliged to repurchase them at a fixed price on a fixed date. Securities which are the subject of repo financing arrangements are included in investments in the balance sheet at their fair value and the associated liability is recognised at amortised cost, being the capital amounts owing under the repo financing arrangements. The difference between sale and repurchase prices for such transactions is reflected in the statement of comprehensive income over the lives of the transactions, within finance costs which is allocated 50% to capital and 50% to revenue (2022: 50% capital; 50% revenue). This accounting has been adopted because the repurchase price results in a lender’s return for the transferee as the Company has retained substantially all the risks and rewards of ownership of the asset.
(g) Income Recognition
All income is recognised in the statement of comprehensive income. Interest income arising from fixed income securities is recognised using the effective interest method. Dividend income arises from equity investments held and is recognised on the date investments are marked ‘ex-dividend’. Deposit interest is taken into account on an accruals basis.
Special dividends are considered individually to ascertain the reason behind the payment. This will determine whether they are treated as income or capital in the income statement.
(h) Expenses and Finance Costs
All expenses are accounted for on an accruals basis and are recognised in the statement of comprehensive income. Investment management fees and finance costs are allocated 50% to capital and 50% to revenue (2022: 50% capital; 50% revenue) in accordance with the Board’s expected long-term split of returns, in the form of capital gains and income respectively, from the investment portfolio. Except for custodian dealing costs, all other expenses are charged through revenue.
(i) Taxation
Overseas interest and dividends are shown gross of withholding tax and the corresponding irrecoverable tax is shown as a charge in the statement of comprehensive income.
(j) Dividends payable to shareholders
Interim dividends are recognised in the period in which they are paid and are dealt with in the statement of changes in equity.
3. Segmental Reporting
No segmental reporting is provided as the Directors are of the opinion that the Company is engaged in a single segment of business of investing in debt and, to a significantly lesser extent, equity securities.
4. Income
This note shows the income generated from the portfolio (investment assets) of the Company and income received from any other source.
2023 2022 £’000 £’000 Income from investments UK investment income – interest 9,259 8,065 UK dividends 189 207 Overseas investment income – interest 14,700 14,554 Overseas dividends 94 13 24,242 22,839 Other income Deposit interest 112 23 Other income 70 19 182 42 Total income 24,424 22,881
5. Investment Management Fee
This note shows the fees paid to the Manager, which are calculated quarterly on the basis of the value of the assets being managed.
2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Investment management fee 941 941 1,882 924 924 1,848
At
The investment management fees and finance costs are allocated 50% to capital and 50% to revenue (2022: 50% to capital and 50% to revenue).
Details of the investment management agreement are provided in the Business Review on pages 16 and 17.
6. Other Expenses
The other expenses of the Company are presented below; those paid to the Directors and the auditor are separately identified.
2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Directors’ fees(i) 173 – 173 184 – 184 Auditors’ fees(ii): – for audit of the Company’s annual financial statements 54 – 54 53 – 53 Other expenses(iii) 575 3 578 525 4 529 802 3 805 762 4 766
(i) The maximum Directors’ fees authorised by the Articles of Association are £250,000 (2022: £185,000) per annum. The Directors’ Remuneration Report on page 44, provides further information on Directors’ fees.
(ii) Auditor’s fees include out of pocket expenses.
(iii) Other expenses include:
• custodian transaction charges of £2,700 (2022: £3,700). These are charged to capital.
•
amounts due to
• A fee of £133,000 was paid to the Manager for marketing services on behalf of the Company (2022: £45,000).
• No premium was paid during the year on credit default swaps (2022: £71,000).
7. Finance Costs
Finance costs arise on any borrowing facilities the Company has and comprise commitment fees on any unused facility as well as interest when the facility is used.
2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Interest due under repo financing 980 980 1,960 111 111 222 Overdraft interest 4 4 8 4 4 8 984 984 1,968 115 115 230
The Company has repo financing arrangements in place which were used during the year. For repos that are denominated in currencies where the interest rate is negative, the interest is receivable and has been netted against repo interest payable within finance costs, as they relate to borrowing costs.
8. Taxation
As a Jersey investment company no tax is payable on capital gains and, as the Company principally invests in assets which do not result in a revenue tax, the only overseas tax arises on assets domiciled in countries with which Jersey has no double-taxation treaty.
2023 2022 £’000 £’000 Overseas taxation – 30
The Company is subject to Jersey income tax at the rate of 0% (2022: 0%). The overseas tax charge in the prior year consisted of irrecoverable withholding tax suffered.
9. Return per Ordinary Share
Return per ordinary share is the amount of gain generated for the financial year divided by the weighted average number of ordinary shares in issue.
The basic revenue, capital and total return per ordinary share is based on each of the returns on ordinary activities after taxation and on 177,389,718 (2022: 168,797,526) ordinary shares, being the weighted average number of ordinary shares in issue throughout the year.
10. Dividends on Ordinary Shares
Dividends are usually paid from the income less expenses. Dividends are paid as an amount per ordinary share held.
The final dividend shown below is based on shares in issue at the record date or, if the record date has not been reached, on shares in issue on the date the balance sheet is signed. The third interim and final dividends are paid after the balance sheet date.
2023 2022 Pence £’000 Pence £’000 Dividends paid and recognised in the year: Fourth interim 2.875 5,008 2.750 4,636 First interim 2.875 5,087 2.750 4,636 Second interim 2.875 5,112 2.750 4,636 Third interim 2.875 5,145 2.875 4,847 11.500 20,352 11.125 18,755
Dividends paid in the year have been charged to revenue except for £341,000 (2022: nil) which was charged to stated capital. This amount is equivalent to the income accrued on the new shares issued in the year (see note 16).
Set out below are the dividends that have been declared in respect of the financial years ended 31 December:
2023 2022 Pence £’000 Pence £’000 Dividends payable in respect of the year: First interim 2.875 5,087 2.750 4,636 Second interim 2.875 5,112 2.750 4,636 Third interim 2.875 5,145 2.875 4,847 Fourth interim 2.875 5,212 2.875 5,008 11.500 20,556 11.250 19,127
The fourth interim dividend for 2023 was paid on
11. Investments Held at Fair Value Through Profit and Loss
The portfolio is principally made up of investments which are listed and traded on regulated stock exchanges. Profits and losses are either:
• realised, usually arising when investments are sold; or
• unrealised, being the difference from cost of those investments still held at the year end.
(a) Analysis of investment profits in the year
2023 2022 £’000 £’000 Opening book cost 349,196 343,054 Opening investment unrealised (loss)/gain (31,326) 8,480 Opening valuation 317,870 351,534 Movements in year: Purchases at cost 126,310 109,181 Sales - proceeds (115,503) (105,523) Profit/(loss) on investments in the year 6,856 (37,322) Closing valuation 335,533 317,870 Closing book cost 352,292 349,196 Closing investment unrealised loss (16,759) (31,326) Closing valuation 335,533 317,870
The Company received £115,503,000 (2022: £105,523,000) from investments sold in the year. The book cost of these investments when they were purchased was £123,927,000 (2022: £102,982,000) realising a loss of £8,424,000 (2022: profit of £2,541,000). These investments have been revalued over time and until they were sold any unrealised profits/losses were included in the fair value of the investments.
(b) Registration of investments
The investments of the Company are registered in the name of the Company or in the name of nominees and held to the order of the Company.
(c) Securities sold under agreements to repurchase
Included in the valuation above are securities under agreements to repurchase which had a market value at
12. Other Receivables
Other receivables are amounts which are due to the Company, such as income which has been earned (accrued) but not yet received and monies due from brokers for investments sold.
2023 2022 £’000 £’000 Amounts due from brokers 38 – Margin held at brokers 2,129 582 Proceeds due from issue of new shares 171 206 Income tax recoverable 3 3 Prepayments and accrued income 6,211 6,403 8,552 7,194
13. Derivative Financial Instruments
Derivative financial instruments are financial instruments that derive their value from the performance of another item, such as an asset or exchange rates. They are used to manage the risk associated with fluctuations in the value of certain assets and liabilities. The Company can use derivatives to manage its exposure to fluctuations in foreign exchange rates.
Derivative financial instruments comprise forward currency contracts.
2023 2022 £’000 £’000 Gross derivative financial instruments Forward currency contracts – receivable 95,843 106,588 Forward currency contracts – payable (94,453) (105,148) 1,390 1,440
The following table has been added to enhance the disclosures already made in the financial statements:
2023 2022 £’000 £’000 Net derivative financial instruments Forward currency contracts – receivable 1,589 2,344 Forward currency contracts – payable (199) (904) 1,390 1,440
For the year ended
This presentation had no impact on the net current liability or the net current asset position as previously reported. The presentation has no impact on any other primary financial statement.
The directors have considered IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" and have concluded that this presentation was qualitatively immaterial to users of the financial statements and in line with IAS 8 no restatement is required.
14. Other Payables
Other payables are amounts which must be paid by the Company, and include amounts owed to suppliers, such as the Manager and auditor, and any amounts due to brokers for the purchase of investments.
2023 2022 £’000 £’000 Amounts payable relating to issue of new shares 1 1 Accruals 915 745 916 746
15. Securities sold under agreements to repurchase
2023 2022 £’000 £’000 Securities sold under agreements to repurchase 48,068 53,751
During the year, the Company entered into repo financing arrangements whereby securities are sold under agreements to repurchase. Further details are shown in note 2(f) and note 19.3.
16.
The stated capital represents the total number of shares in issue. Stated capital can be used for distributions under Jersey Law.
2023 2022 Number £’000 Number £’000 Allotted ordinary shares of no par value: Brought forward 173,302,596 305,062 168,577,596 297,326 Net issue proceeds 7,400,000 12,072 4,725,000 7,736 Dividends paid from stated capital – (341) – – 180,702,596 316,793 173,302,596 305,062
At
At a general meeting of the Company every member has one vote on a show of hands and on a poll one vote for each share held. The notice of general meeting will specify deadlines for exercising voting rights either by proxy or in person in relation to resolutions to be passed at the meeting.
The Directors may restrict voting powers where shareholders fail to provide information with respect to interests in voting rights when so requested, may refuse to register any transfer of a share in favour of more than four persons jointly and can require certain US holders of shares to transfer their shares compulsorily.
Save for the foregoing, there are no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; and no agreements which the Company is party to that might affect its control following a successful takeover bid.
For the year to
Subsequent to the year end 10,101,727 ordinary shares were issued at an average price of 168.94p. The gross proceeds of these issuances were £17,066,000 and the net proceeds after issue costs were £16,980,000. No shares were bought back during the year or since the year end.
Because the criteria in paragraphs 16C and 16D of IAS 32 Financial Instruments: Presentation, have been met, the stated capital of the Company is classified as equity even though there is a continuation vote.
17. Reserves
This note explains the different reserves attributable to shareholders. The aggregate of the reserves and stated capital (see previous note) make up total shareholders’ funds.
The capital reserve includes unrealised investment holding profits and losses, being the difference between cost and market value at the balance sheet date, as well as realised profits and losses on disposal of investments. In addition, costs allocated to capital are recognised in the capital reserve. The revenue reserve shows the net revenue after payment of any dividend from the reserve. Both the capital and revenue reserves are distributable.
18. Net Asset Value per Ordinary Share
The Company’s total net assets (total assets less total liabilities) are often termed shareholders’ funds and are converted into net asset value per ordinary share by dividing by the number of shares in issue.
The net asset value per share and the net asset values attributable at the year end were as follows:
Net asset Net assets value per ordinary attributable share 2023 2022 2023 2022 Pence Pence £’000 £’000 Ordinary shares 168.58 162.20 304,629 281,089
Net asset value per ordinary share is based on net assets at the year end and on 180,702,596 (2022: 173,302,596) ordinary shares, being the number of ordinary shares in issue (excluding treasury) at the year end.
19. Risk Management: Financial Assets and Liabilities
Financial instruments comprise the Company’s investment portfolio and derivative financial instruments (for the latter see note 13) as well as any cash, borrowings (i.e. securities sold under agreements to repurchase otherwise known as ‘repo financing’), other receivables and other payables. The following note explains the risks that affect the Company’s financial instruments and looks at the Company’s exposure to these various risks .
Risk Management Policies and Procedures
The Business Review details the Company’s approach to investment management risks on page 14 and the accounting policies in note 2 explain the Company’s valuation basis for investments and currency.
As an investment company, the Company invests in loan stocks, corporate bonds, government stocks, preference shares and equities which are held for the long-term in order to achieve the Company’s Investment Objective in accordance with its Investment Policy. In pursuing these, the Company is exposed to a variety of risks that could result in either a reduction in the Company’s net assets or a reduction in the profits available for payment as dividends.
The Company’s principal financial instruments at risk comprise its investment portfolio. Other financial instruments at risk include cash and cash equivalents, borrowings (including repo financing), other receivables and other payables that arise directly from the Company’s operations.
The Company may enter into derivative transactions, including credit default swaps, for efficient portfolio management. Derivative instruments can be highly volatile and expose investors to a high risk of loss. Where used to hedge risk there is a risk that the return on a derivative does not exactly correlate to the returns on the underlying investment, obligation or market sector being hedged against. If there is an imperfect correlation, the Company may be exposed to greater loss than if the derivative had not been entered into. During the year the only derivatives entered into were forward currency contracts.
These risks and the Directors’ approach to managing them are set out below, and have not changed from those applied in the comparative year.
Risk management is an integral part of the investment management process. The Manager controls risk by ensuring that the Company’s portfolio is appropriately diversified and the portfolio managers actively monitor both the ratings and liquidity of the fixed-interest securities taking into account the Company’s financing requirements. In-depth and continual analysis of market and security fundamentals give the portfolio managers the best possible understanding of the risks associated with a particular security. The portfolio managers assess the exposure to market risk when making each investment decision, and monitor the overall level of market risk on the whole of the portfolio on an ongoing basis.
High-yield fixed-interest securities are subject to a variety of risks, including credit risk (note 19.3).
The day to day management of the investment activities, borrowings and hedging of the Company has been delegated to the Manager, and is the responsibility of the portfolio managers to whom the Board has given discretion to operate within set guidelines. Any proposed variation outside those guidelines is referred to the Board and the guidelines themselves are reviewed at every board meeting.
19.1 Market Risk
Market risk arises from changes in the fair value or future cash flows of a financial instrument. Market risk comprises three types of risk: currency risk (note 19.1.1), interest rate risk (note 19.1.2) and other price risk (note 19.1.3).
19.1.1 Currency Risk
The Company has assets, liabilities and income which are denominated in currencies other than sterling and movements in exchange rates will affect the sterling value of those items.
Management of the Currency Risk
The Board meets at least quarterly to assess risk and review investment performance. The portfolio managers monitor the Company’s exposure to foreign currencies on a daily basis and is reviewed by Directors at each Board meeting. The Company may use forward currency contracts to mitigate currency risk. Repo financing is matched to the currency of the underlying assets, which minimises currency risk on the movement of exchange rates affecting the underlying investments. Non-sterling investments that are not pledged under repo financing can be hedged using forward currency contracts. All borrowings and derivative contracts are limited to currencies and amounts commensurate with asset exposure to those currencies.
Income denominated in foreign currencies is converted to sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt.
Currency Exposure
The following table shows the fair values of the Company’s monetary items that have foreign currency exposure at 31 December. Where the Company’s investments (which are not monetary items) are priced in a foreign currency, they have been included separately in the analysis to show the overall level of exposure.
US Euro Dollar £’000 £’000 31 December 2023 Investments at fair value through profit or loss that are monetary items (fixed and floating interest) 99,776 66,032 Forward currency contracts (38,317) (52,111) Other receivables (due from brokers and dividends) 2,291 1,035 Cash and cash equivalents 2,882 2,360 Other payables (due to brokers and accruals) (284) – Securities sold under agreement to repurchase (48,068) – Foreign currency exposure on net monetary items 18,280 17,316 Total net foreign currency 18,280 17,316
US Euro Dollar £’000 £’000 31 December 2022 Investments at fair value through profit or loss that are monetary items (fixed and floating interest) 99,494 83,922 Forward currency contracts (38,338) (50,184) Other receivables (due from brokers and dividends) 2,240 1,337 Cash and cash equivalents 542 359 Other payables (due to brokers and accruals) (147) (16) Securities sold under agreement to repurchase (45,770) (2,789) Foreign currency exposure on net monetary items 18,021 32,629 Total net foreign currency 18,021 32,629
The above may not be representative of the exposure to risk during the year reported because the levels of monetary foreign currency exposure may change significantly throughout the year.
Currency Sensitivity
The effect on the Statement of Comprehensive Income and the net asset value that changes in exchange rates have on the Company’s financial assets and liabilities is based on the following currencies. These changes have been calculated by reference to the volatility of exchange rates during the period using the standard deviation of currency fluctuations against the mean.
2023 2022 £/Euro ±1.2% ±1.9% £/US Dollar ±2.2% ±6.2%
The following sensitivity analysis is based on the Company’s monetary foreign currency financial instruments held at the balance sheet date, taking account of any forward foreign exchange contracts that offset the effects of changes in currency exchange rates, and the income receivable in foreign currency in the year.
If sterling had strengthened by the changes in exchange rates shown above, this would have had the following effect:
USEuro Dollar £’000 £’000 2023 Effect on Statement of Comprehensive Income – profit/(loss) after taxation Revenue loss (87) (118) Capital loss (195) (359) Total loss after taxation for the year (282) (477) Effect on net asset value –0.1% –0.2%
USEuro Dollar £’000 £’000 2022 Effect on Statement of Comprehensive Income – profit/(loss) after taxation Revenue loss (117) (458) Capital loss (303) (1,941) Total loss after taxation for the year (420) (2,399) Effect on net asset value –0.1% –0.9%
If sterling had weakened by the same amounts, the effect would have been the converse.
In the opinion of the Directors, the above sensitivity analysis is not representative of the year as a whole, since the level of exposure changes frequently as part of the currency risk management process of the Company.
19.1.2 Interest Rate Risk
The Company is exposed to interest rate risk in a number of ways. Movements in interest rates may affect the fair value of fixed-interest rate securities, income receivable on cash deposits and floating rate securities, and interest payable on variable rate borrowings, including repo financing. Interest rate risk is related above all to long-term financial instruments.
Management of Interest Rate Risk
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account as part of the portfolio management and borrowings processes of the Manager. The Board reviews on a regular basis the investment portfolio and borrowings. This encompasses the valuation of fixed-interest and floating rate securities.
When the Company has cash balances, they are held in variable rate bank accounts yielding rates of interest dependant on the base rate of the Custodian, the
The Company has available repo financing arrangements it can use to finance investment activity, details of which are shown in note 7 and 15. The Company uses these at levels approved and monitored by the Board.
Interest Rate Exposure
The following table shows the Company’s exposure to interest rate risk at the balance sheet date arising from its monetary financial assets and liabilities.
Within More than one year one year Total £’000 £’000 £’000 2023 Exposure to floating interest rates: Investments held at fair value through profit or – 130,215 130,215 loss Cash and cash equivalents(i) 8,138 – 8,138 Margin held at brokers (aka collateral pledged on futures contracts) 2,129 – 2,129 10,267 130,215 140,482 Exposure to fixed interest rates: Investments held at fair value through profit or 1,124 201,283 202,407 loss Securities sold under agreements to repurchase (48,068) – (48,068) (46,944) 201,283 154,339 Net exposure to interest rates (36,677) 331,498 294,821
Within More than one year one year Total £’000 £’000 £’000 2022 Exposure to floating interest rates: Investments held at fair value through profit or – 108,008 108,008 loss Cash and cash equivalents(i) 9,082 – 9,082 Margin held at brokers (aka collateral pledged on futures contracts) 582 – 582 9,664 108,008 117,672 Exposure to fixed interest rates: Investments held at fair value through profit or 3,581 202,559 206,140 loss Securities sold under agreements to repurchase (53,751) – (53,751) (50,170) 202,559 152,389 Net exposure to interest rates (40,506) 310,567 270,061
(i)
Includes £2,100,000 (2022: £7,410,000) held in
The nominal interest rates on the investments at fair value through profit or loss are shown in the portfolio list on pages 25 to 32. The weighted average effective interest rate on these investments is 7.0% (2022: 6.6%). The weighted average effective interest rate on cash and cash equivalents is 4.08% (2022: 0.61%).
Interest Rate Sensitivity
The following table illustrates the sensitivity of the profit or loss after taxation for the year to a 3.25% (2022: 3.25%) increase in interest rates in regard to the Company’s financial assets and financial liabilities. As future changes cannot be estimated with any degree of certainty, the sensitivity analysis is based on the Company’s financial instruments held at the balance sheet date, with all other variables held constant.
2023 2022 £’000 £’000 Effect on Statement of Comprehensive Income – profit after taxation Revenue profit 334 314 Capital loss (41,080) (35,549) Total loss after taxation for the year (40,746) (35,235) Effect on NAV per ordinary share (22.5p) (20.3)p
If interest rates had decreased by 3.25% (2022: 3.25%), this would have had an equal and opposite effect.
The above exposure and sensitivity analysis are not representative of the year as a whole, since the level of exposure changes frequently as borrowings, which are predominantly from repo financing arrangements, can vary throughout the year.
19.1.3 Other Price Risk
Other price risk includes changes in market prices, other than those arising from currency risk or interest rate risk, which may affect the value of the investment portfolio, whether by factors specific to an individual investment or its issuer, or by factors affecting the wider market.
Management of Other Price Risk
It is the portfolio managers’ responsibility to manage the portfolio and borrowings in accordance with the investment objective and policy, and in accordance with the investment policy guidelines set by the Board. The Board manages the market price risks inherent in the investment portfolio by meeting regularly to monitor on a formal basis compliance with these. The Board also reviews investment performance. Because the Company’s portfolio is the result of the portfolio managers’ investment process, performance may not closely correlate with the markets in which the Company invests.
The Company’s exposure to other changes in market prices at 31 December on its investments is shown in the fair value hierarchy table on pages 69 and 70.
Concentration of Exposure to Other Price Risks
The Company’s investment portfolio is not concentrated in any single country of domicile, however, it is recognised that an investment’s country of domicile or listing does not necessarily equate to its exposure to the economic conditions in that country.
Other Price Risk Sensitivity
Excluding fixed interest securities and convertibles, at the year end the Company held other investments of £2,912,000 (2022: £3,721,000). The effect of a 10% increase or decrease in the fair values of these investments (including any exposure through derivatives) on the profit after taxation for the year is £291,000 (2022: £372,000). This level of change is considered to be reasonably possible based on the observation of market conditions during the financial year.
19.2 Liquidity Risk
This is the risk that the Company may encounter difficulty in meeting its obligations associated with financial liabilities i.e. when realising assets or raising/replacing repo financing to meet financial commitments. A lack of liquidity in the portfolio may make it difficult for the Company to realise assets at or near their purported value in the event of a forced sale.
Management of Liquidity Risk
Liquidity risk is not viewed by the Directors as a significant risk because the majority of the Company’s assets comprise readily realisable securities, although a lack of liquidity in non-investment grade securities may make it difficult to rebalance the Company’s investment portfolio as and when the portfolio managers believe it would be advantageous to do so. On a daily basis the portfolio managers ascertain the Company’s cash and borrowing requirements by reviewing future cash flows arising from purchases and sales of investments, interest and dividend receipts, expenses and dividend payments, and available financing (including repo financing).
Liquidity Risk Exposure
The contractual maturities of the financial liabilities at 31 December, based on the earliest date on which payment can be required, was as follows:
2023 2022 Less than More Less than More three than one three than one months year Total months year Total £’000 £’000 £’000 £’000 £’000 £’000 Other payables (note 14) Accruals 916 – 916 746 – 746 Derivative financial instruments – payable (note 13) 199 – 199 105,148 – 105,148 Securities sold under agreements to repurchase (note 15) 48,068 – 48,068 53,751 – 53,751 49,183 – 49,183 159,645 – 159,645
19.3 Credit Risk
Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligation under that transaction could result in a loss to the Company. The Company’s principal credit risk is the risk of default on the non-investment grade debt. The Company’s other main credit risk arises from the repo financing arrangements whereby, if a counterparty failed to sell the required assets to the Company on the repurchase date, the Company would be left with the claim against the defaulting counterparty for the stock and, if applicable, any margin held by the counterparty and not returned.
At the year end 70.4% (2022: 77.3%) of the Company’s portfolio consisted of non-investment grade securities. To the extent that the Company invests in non-investment grade securities, the Company may realise a higher current yield than the yield offered by investment grade securities. On the other hand, investments in such securities involve a greater volatility of price and a greater risk of default by the issuers of such securities, with consequent loss of interest payments and principal. Non-investment grade securities are likely to be subject to greater uncertainties from exposure to adverse conditions and will be speculative with respect to an issuer’s capacity to meet interest payments and repay principal in accordance with its obligations.
Investment grade and non-investment grade securities totalled 95.8% (2022: 94.9%) of the portfolio at the year end. Adverse changes in the financial position of an issuer of such high-yield fixed-interest securities or in general economic conditions may impair the ability of the issuer to make payments of principal and/or interest or may cause the liquidation or insolvency of an issuer.
The portfolio may be adversely affected if the Company’s custodian suffers insolvency or other financial difficulties. The appointment of a depositary has substantially lessened this risk. The Board reviews the custodian’s annual controls report and the Manager’s management of the relationship with the custodian.
Management of and Exposure to Credit Risk
Almost all of the Company’s assets are subject to credit risk. Where the portfolio managers make an investment in a bond, corporate or otherwise, the credit rating of the issuer is also considered when assessing the risk of defaults. Investments in bonds are across a variety of industrial sectors and geographical markets to avoid concentration of credit risk. Counterparties for derivative transactions are also a source of credit risk. Transactions involving derivatives are entered into only with banks whose credit ratings are taken into account to minimise default risk. The credit ratings of the derivatives counterparties range from Aa3 through to Baa1. In addition, the Company may use credit default swaps to offset the credit risk of the portfolio. At the year end, no credit default swaps were held by the Company (2022: none).
Details of the Company’s investments, including their credit ratings, are shown below. Credit risk for transactions involving derivatives and equity investments is minimised as the Company only uses approved counterparties.
2023 2022 % of Cumulative % of Cumulative Rating Portfolio Total % Portfolio Total % Investment Grade: AA+ 0.2 0.2 – – AA 1.8 2.0 – – A+ 0.7 2.7 0.2 0.2 A– 0.8 3.5 0.8 1.0 BBB+ 1.8 5.3 2.0 3.0 BBB 14.7 20.0 10.1 13.1 BBB– 5.4 25.4 4.5 17.6 Non-investment Grade: BB+ 8.1 33.5 6.2 23.8 BB 13.1 46.6 9.8 33.6 BB– 17.0 63.6 14.5 48.1 B+ 8.5 72.1 10.7 58.8 B 12.1 84.2 21.0 79.8 B– 6.7 90.9 5.6 85.4 CCC+ 2.1 93.0 5.5 90.9 CCC 1.7 94.7 2.8 93.7 CCC– – 94.7 0.6 94.3 CC – 94.7 0.6 94.9 D 1.1 95.8 – 94.9 NR (including equity) 4.2 100.0 5.1 100.0 100.0 100.0 Summary of Analysis Investment Grade 25.4 17.6 Non-investment Grade 70.4 77.3 NR (including equity) 4.2 5.1 Total 100.0 100.0
The Company manages the credit risk inherent in repo financing by only dealing with good quality counterparties whose credit-standing is reviewed periodically by the Manager. There is a maximum limit allowed with any one counterparty, and the repo entered into must have a maturity tenor of three months or less. The Company has exposure to credit risk on securities pledged under repo financing held, with 3 counterparties, as follows (2022: 3 counterparties):
2023 2022 Market Market value of Net value of Net Amounts securities credit Amounts securities credit borrowed pledged exposure borrowed pledged exposure under under to under under to repo repo counter repo repo counter financing financing party financing financing party Counterparty Rating Location £’000 £’000 £’000 £’000 £’000 £’000 Barclays A1/A+ UK – – – 38,298 49,169 10,871 BNP UK Aa3/A+ UK 28,891 32,773 3,882 7,644 9,112 1,468 Morgan A3/A+ UK 13,369 16,263 2,894 – – – Stanley HSBC A1/A+ UK 5,808 7,261 1,453 7,809 9,562 1,753 48,068 56,297 8,229 53,751 67,843 14,092 Net credit exposure as 2.7 5.0 % of net assets
Cash balances are held with approved deposit takers only and are limited to a maximum of 4% of the Company’s net asset value with any one deposit taker. Balances held with
There are no financial assets that are past due or impaired at the year end (2022: none).
Fair Values of Financial Assets and Financial Liabilities
Financial assets are either carried in the balance sheet at their fair value (investments and derivatives), or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, due to brokers, accruals and cash).
Financial liabilities are carried at amortised cost except for derivatives, which as stated above are carried at fair value.
20. Classification Under Fair Value Hierarchy
The valuation techniques used by the Company are explained in the accounting policies note 2(c). The table that follows sets out the fair value of the financial instruments. The three levels set out in IFRS 7 hierarchy follow:
Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset/liability.
There were no transfers in the year between any of the levels.
Normally investments would be valued using stock market active prices, with investments disclosed as Level 1 and this is the case for the quoted equity investments that the Company holds. However, the majority of the Company’s investments are non-equity investments. Evaluated prices from a third party pricing vendor are used to price these securities, together with a price comparison made to secondary and tertiary evaluated third party sources. Evaluated prices are in turn based on a variety of sources including broker quotes and benchmarks. As a result, the Company’s non-equity investments have been shown as Level 2 – recognising that the fair values of these investments are not as visible as quoted equity investments and their higher inherent pricing risk. However, this does not mean that the fair values shown in the portfolio valuation are not achievable at point of sale.
Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 2023 Financial assets designated at fair value through profit or loss: Quoted Investments: – Fixed interest securities(1) – 281,481 – 281,481 – Convertibles – 44,200 – 44,200 – Government – 6,941 – 6,941 – Preference 2,769 – – 2,769 – Equities 142 – – 142 Derivative financial instruments: – Currency hedges – 1,390 – 1,390 Total for financial assets 2,911 334,012 – 336,923
A reconciliation of the fair value of Level 3 is set out below.
2023 £’000 Opening fair value 1,165 Sales – proceeds (1,159) Sales – net realised gains 19 Unrealised loss (due to foreign exchange movement) (25) Closing fair value of Level 3 –
Frigoglass 13%
Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 2022 Financial assets designated at fair value through profit or loss: Quoted Investments: – Fixed interest securities(1) – 294,154 1,165 295,319 – Convertibles – 18,614 – 18,614 – Government – 216 – 216 – Preference 2,641 – – 2,641 – Equities 1,080 – – 1,080 Derivative financial instruments: – Forward currency contract – 1,440 – 1,440 Total for financial assets 3,721 314,424 1,165 319,310
A reconciliation of the fair value of Level 3 is set out below.
2022 £’000 Opening fair value – Purchases at cost 1,143 Unrealised gain (due to foreign exchange movement) 22 Closing fair value of Level 3 1,165
(1) Fixed interest securities include both fixed and floating rate securities.
21. Capital Management
The Company’s capital, or equity, is represented by its net assets which are managed to achieve the Company’s investment objective set out on page 12.
The main risks to the Company’s investments are shown in the Business Review under the ‘Principal Risks and Uncertainties’ section on pages 15 and 16. These also explain that the Company is able to gear and that gearing will amplify the effect on equity of changes in the value of the portfolio.
The Board can also manage the capital structure directly since it has taken the powers, which it is seeking to renew, to issue and buy-back shares and it also determines dividend payments.
The Board regularly monitors the level of borrowing used by the Company and has imposed limits within which borrowings should be managed.
Total equity at
22. Contingencies, Guarantees and Financial Commitments
Liabilities the Company is committed to honour but which are dependent on a future circumstance or event occurring would be disclosed in this note if any existed.
There were no contingencies, guarantees or other financial commitments of the Company as at
23. Related Party Transactions and Transactions with Manager
A related party is a company or individual who has direct or indirect control or who has significant influence over the Company.
Under International Financial Reporting Standards as adopted by the EU (‘IFRS’), the Company has identified the Directors and their dependents as related parties. Directors fees paid have been disclosed in the Directors’ Remuneration Report on pages 44 and 45 with additional disclosure in note 6. Full details of Directors’ interests are set out in the Directors’ Remuneration Report on page 45. No other related parties have been identified.
24. Post Balance Sheet Events
Any significant events that occurred after the end of the reporting period but before the signing of the balance sheet will be shown here.
There was a successful placing and Winterflood Retail Access Platform ('WRAP') retail offer, announced on
The Company has issued a total of 7,926,727 new ordinary shares of no par value in the capital of the Company at a price of
5,179,465 New Shares were issued pursuant to the Placing and 2,747,262 New Shares were issued pursuant to the WRAP Retail Offer.
This annual financial report announcement is not the Company’s statutory accounts.
The statutory accounts for the period ended
The audited annual financial report will be posted to shareholders shortly.
Copies may be obtained during normal business hours from the Company’s Registered Office,
A copy of the annual 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
.
Company Secretary
Telephone: 01534 700000
LEI: 549300JLX6ELWUZXCX14