WEISS KOREA OPPORTUNITY FUND LTD. WEISS KOREA OPPORTUNITY FUND LTD.
LEI 213800GXKGJVWN3BF511
(Classified Regulated Information, under DTR 6 Annex 1 section 1.2)
HALF-YEARLY REPORT HALF-YEARLY FINANCIAL REPORT AND UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2022
Financial Highlights
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As at close of business on 9 September 2022, the latest published NAV per Share was £1.8793 and the Share Price was £1.9050.
*Portfolio Discount
The portfolio discount represents the discount of WKOF’s actual NAV to the value of what the NAV would be if WKOF held the respective common shares of issuers rather than preference shares on a one-to-one basis.
Company Summary
The Company
Weiss Korea Opportunity Fund Ltd. (“WKOF” or the “Company”) was incorporated with limited liability in Guernsey as a closed-ended investment company on 12 April 2013. The Company’s Shares were admitted to trading on the Alternative Investment Market (“AIM”) of the London Stock Exchange (the “LSE”) on 14 May 2013.
The Company is managed by Weiss Asset Management LP (the “Investment Manager”), a Boston-based investment management company registered with the Securities and Exchange Commission in the United States of America.
Investment Objective and Dividend Policy
Weiss Korea Opportunity Fund’s (“WKOF” or the “Company”) investment objective is to provide Shareholders with an attractive return on their investment, predominantly through long-term capital appreciation. The Company is geographically focused on South Korean (“Korean”) companies. Specifically, the Company invests primarily in listed preference shares issued by companies incorporated in South Korea (“Korea”), which in many cases trade at a discount to the corresponding common shares of the same companies. Since the Company’s Admission to the Alternative Investment Market (“AIM”), Weiss Asset Management LP (“WAM” or the “Investment Manager”) has assembled a portfolio of Korean preference shares that it believes are undervalued and could appreciate based on the criteria that it selects. The Company may, in accordance with its investment policy, also invest some portion of its assets in other securities, including exchange-traded funds, futures contracts, options, swaps and derivatives related to Korean equities, and cash and cash equivalents. The Company does not have any concentration limits.
The Company intends to return to Shareholders all dividends received, net of withholding tax, on an annual basis.
Investment Policy
The Company is geographically focused on South Korean companies. Some of the considerations that affect the Investment Manager’s choice of securities to buy and sell may include the discount at which a preference share is trading relative to its respective common share, dividend yield and its liquidity, among other factors. Not all of these factors will necessarily be satisfied for particular investments.
Preference shares are selected by the Investment Manager at its sole discretion, subject to the overall control of the Board of Directors of the Company (the “Board”).
From time to time, the Company purchases certain credit default swaps on the sovereign debt of South Korea and put options on iShares MSCI South Korea ETF (“EWY”) as general market and portfolio hedges, but generally did not hedge its exposure to interest rates or foreign currencies during the period ended 30 June 2022 (2021: Nil). Please see additional information about the nature of these hedges in the Investment Manager’s Report within.
Investment Process
The Investment Manager monitors the discounts and yields on the universe of Korean preference shares as well as events or catalysts that could affect preference share discounts leading to material price changes.
Multiple criteria are used to rank and calculate the returns for each preference share, including but not limited to:
· The discount that the preference share is trading at relative to its common share
· Expected dividend yield
· Future catalysts or events
· Management quality
· Fundamentals of the company
· Market impact from entering and exiting our position
We expect to remain close to fully invested as long as the opportunity set remains attractive.
Why South Korea?
The future of the South Korean economy looks promising. The global success of companies like Samsung Electronics, LG Electronics and SK Hynix stimulates other areas of the South Korean, economy both through the demand for intermediary goods and the demand for services by the workers at these companies. In addition, South Korea has emerged as one of the world’s most innovative countries as it:
• Ranked 1st in the Bloomberg Innovation Index for eight of the last nine years1
• Filed the highest number of patent applications relative to GDP in 20202
• Has an exceptionally high credit rating on its sovereign debt. South Korea was rated higher than Japan and the U.K. by Moody’s, S&P, and Fitch.3
• Ranked 7th largest exporter in the world in 20214
• Ranked 10th largest economy by GDP in the world in 20215
• Ranked in the top 3% in the World Bank’s Ease of Doing Business Report in 20206
• Ranked in the top 10% in each of reading, mathematics and science PISA test scores in 20187
South Korean companies are thus a key part of the value chain in some of the world’s most exciting industries, such as electric vehicles, 5G technology and smartphones. The country also boasts a high GDP per capita, one of the lowest government debt/GDP ratios of any country, large foreign exchange reserves, and low levels of unemployment.
Although its population is ageing, the general education level of South Korea’s work force is increasing. South Korean students are consistently among the top performing students in the Programme for International Student Assessment tests, including the subtest on critical thinking. This provides a pool of talent that can be tapped for future growth.
| Index Name | P/E Ratio | P/B Ratio |
| Nifty Index (India) | 17.8 | 2.9 |
| S&P 500 (US) | 16.6 | 3.8 |
| Nikkei 225 (Japan) | 14.7 | 1.6 |
| TAIEX (Taiwan) | 10.2 | 1.9 |
| FTSE 100 (UK) | 9.9 | 1.6 |
| Hang Seng Index (HK) | 11.3 | 0.9 |
| Shanghai Composite (China) | 11.7 | 1.5 |
| KOSPI 200 (S. Korea) | 8.6 | 0.9 |
The South Korean stock market appears fundamentally cheap relative to other equity markets. As of 30 June 2022, the KOSPI 200 trades at a 35% lower price to earnings ratio and a 56% lower price to book ratio compared to the average of the major indices shown in the table above. This cheap valuation can be largely explained by the historically poor corporate governance displayed by the major South Korean conglomerates. However, events over the last several years indicate a trend of awareness and improvements in corporate governance. There were a record-high 27 publicly traded South Korean companies subject to activist demands in 2021, which represented a 170% increase year-over-year compared to 2020. In the first quarter of 2022 alone, 33 publicly traded Korean companies were subjected to activist demands, representing a year-over-year increase of 150%.8 The Investment Manager report sets forth some examples of improvements in corporate governance that has taken place during the most recent 12 months. The underlying thesis of our strategy is that improved corporate governance will attract more investors to South Korea and the companies in which we invest which will, over time, increase the value of the common shares and narrow the discount of the preference shares held in WKOF’s portfolio, thus increasing the value of WKOF’s holdings.
Korean preference shares
Many of the largest companies in the Korean market issue preference shares in addition to their common shares. These preference shares are equity shares that receive the same dividend per share as the voting common shares plus an additional percentage of the preference shares’ par value per share. In return for this higher dividend, preference shares are non-voting in normal circumstances, although they do have voting rights in certain situations. Many of these preference shares trade at less than half the price of the corresponding common shares despite receiving a slightly higher dividend amount as the common shares and, therefore, provide preference shareholders with relatively higher yields than the corresponding common shares.
The majority of Korean preference shares were issued in the mid-1990s, when the Korean government pressured chaebols (family-owned Korean conglomerates) to raise equity and reduce debt within their capital structures. By issuing non-voting shares, the founders of the Korean companies were able to raise equity capital without diluting their voting control. The additional payment as a percentage of par value which preference shares paid out to investors, albeit nominal today, was sufficiently large relative to the dividends in the 1990s to attract investors. Today, there are 124 Korean preference shares outstanding with an aggregate market capitalisation of approximately £38 billion.
Although preference shares typically do not have voting rights, an economic or financial model that values equity on the discounted value of future cash flows would imply that the preference shares of these companies should be trading at roughly the same price as the corresponding common shares. Further, preference shares are not associated with over-priced speculative companies; rather, many of the leading companies in the Korean economy have preference shares outstanding today.
Continued corporate governance improvements, increased dividend payouts and investor activism such as that experienced over the past several years could continue to serve as catalysts for preference share discounts narrowing. The Company invests in a portfolio of discounted Korean preference shares, including Korean market heavyweights such as Hyundai Motor Co, LG Chem Ltd., LG Electronics Inc and AmorePacific Corp.
Top 10 Holdings
1. HYUNDAI MOTOR COMPANY, 2ND PFD.
14.0% OF WKOF NAV* DISCOUNT TO COMMON SHARE: -51%
Hyundai Motor Company is Korea’s leading car manufacturer, producing and selling more than 3.8 million units globally in over 200 countries in 2021. Hyundai was ranked a top 5 global automotive maker by market share in 2021. Hyundai plans on increasing its presence in the electric vehicle market, while targeting to sell over 4.3 million units in 2022.
2. LG CHEM LTD., PFD.
12.3% OF WKOF NAVDISCOUNT TO COMMON SHARE: -53%
Korea’s largest chemical company by market capitalisation, LG Chem manufacturers and sells petrochemical products and advanced materials, including plastics and EV batteries. Its EV battery business and subsidiary, LG Energy Solution is the second- largest EV battery maker in the world. In 2021, LG Chem generated over $37bn in revenue globally.
3. AMOREPACIFIC CORP., PFD
7.1% OF WKOF NAV DISCOUNT TO COMMON SHARE: -61%
Amorepacific Corp develops beauty and cosmetic products while operating over 30 brands, including Etude and Laneige. Amorepacific’s portfolio of products ranges from perfume to dental care, including a premium tea brand.
4. HANWHA CORPORATION 3RD PFD.
7.1% OF WKOF NAVDISCOUNT TO COMMON SHARE: -44%
Hanwha Corporation specialises in producing and trading chemicals, aerospace & defense products, and energy products. It also deals in the construction and financial services industry. As a Fortune Global 500 company, Hanwha is also the holding company of Hanwha group which owns a majority stake in Korea’s second largest life insurance company by assets and Hanwha Solutions, a leading domestic manufacturer of solar cell panels. Hanwha Corporation’s network includes 469 offices worldwide.
5. CJ CHEILJEDANG CORP, PFD.
6.6% OF WKOF NAVDISCOUNT TO COMMON SHARE: -57%
CJ CheilJedang is a leading food company in Korea, focused on processing food ingredients into groceries such as refined sugar, flour, and processed meats. The company also operates a number of food brands that specialise in home meal replacements and snacks, including names like Bibigo and Petitzel. CJ CheilJedang also operates in the bio industry, and produces plant-based protein and amino acids.
* WKOF also invests in Hyundai Motor Company, Pfd and 3rd Pfd., bringing WKOF's total exposure to Hyundai Motor Company to 17% of WKOF's NAV.
6. LG ELECTRONICS INC., PFD.
6.5% OF WKOF NAVDISCOUNT TO COMMON SHARE: -52%
LG Electronics is a household brand in home appliances, with various product lines including washing machines, televisions, refrigerators, and smart phones. According to market research firm Omdia, the company ranked second globally in terms of TV market share, capturing 18.5% of global TV sales. LG Electronics has 128 sites focused on manufacturing, R&D, and distribution of their products.
7. MIRAE ASSET DAEWOO CO., LTD., 2ND PFD.
5.9% OF WKOF NAVDISCOUNT TO COMMON SHARE: -43%
Mirae Asset Daewoo is a South Korean financial services firm offering securities trading, equity underwriting, investment banking services, and wealth/asset management. One of the top 5 securities brokerages in Korea, Mirae Asset conducts business globally, including the United States, Canada, United Kingdom, and China.
8. SK CHEMICALS CO., LTD., NEW PREF
4.8% OF WKOF NAVDISCOUNT TO COMMON SHARE: -47%
SK Chemicals focuses on the production of environmentally friendly materials and life science products. Green chemicals include bio-based material used in the production of polyurethane, as well as amorphous resin for containers and home appliances. Its life science segment spans treatments for the common cold to asthma treatments. SK Chemicals also owns majority stake in Korea’s largest vaccine maker by market capitalisation.
9. DOOSAN FUEL CELL CO., LTD., 1P
4.4% OF WKOF NAV DISCOUNT TO COMMON SHARE: -67%
One of the largest fuel cell manufacturers by market capitalisation, Doosan Fuel Cell produces and sell stationary fuel cell products globally. The company is focused on sustainable electricity and heat generation. Its products are targeted towards residential, commercial, and industrial use.9
10. SOLUS ADVANCED MATERIALS, CO., LTD., 1ST PFD.
3.7% OF WKOF NAVDISCOUNT TO COMMON SHARE: -75%
Solus Advanced Materials is a major Korean manufacturer of copper foil, which has significant applications in communication equipment and circuit boards. Solus Advanced Materials’ business lines also include the specialised production of battery copper foil and OLED materials. In 2022, Solus began supplying battery copper foil to Tesla, a leading electric vehicle manufacturer.
Chair’s Review
For the period ended 30 June 2022
On behalf of the Directors, I am pleased to provide the 2022 Half-Yearly Report on the Company. During the period from 31 December 2021 to 30 June 2022 (the “Period”), the Company’s net asset value fell by -21.4% including reinvested dividends10. The Company underperformed the reference MSCI Korea 25/50 Net Total Return Index (the “Korea Index”), which fell by -18.2% in Pounds Sterling (“GBP”). Since the admission of the Company to AIM in May 2013, the net asset value has increased by 123.7% including reinvested dividends10 compared to the Korea Index returns of 51.0%.11, an annualised outperformance of the index of 8.0%. A report from the Investment Manager is included in this report.
The Company’s underperformance against the Korea Index in 2022 was due to the poor performance of the common shares that the Company owns the preference shares of, relative to those in the Index. Like many major Asian markets, the Korean equity market did poorly in the first half of 2022 due to challenging macro-economic conditions leading to weakening demands for Korean exports, increased import costs and an increase in foreign net selling of Korean securities.
The Directors declared an interim dividend of 6.3732 pence per Share, ex-dividend date 19 May 2022, to distribute the income received by the Company in respect of the year ended 31 December 2021. This dividend was paid to all Shareholders on 10 June 2022. The growth in dividends per Share since the launch of the Company is in line with the thesis that WAM has been promoting over the past several years; that Korean companies pay out low dividends but this is improving which should attract more global investors to the Korean stock market.
The Company’s Portfolio Discount of preference shares to the equivalent common shares remains very wide at around 52% which has now been the case for over 12 months. These wide and volatile discounts, similar to the levels at the inception of WKOF, provide greater opportunities for the Investment Manager to “trade the discount”, selling when discounts are relatively narrow and buying when they widen. Over the past nine years, and more actively employed starting in 2018, the Investment Manager believes this strategy allows us to invest in securities with favourable expected risk-adjusted return profiles.
Based on the fact that the assets currently held by the Company consist mainly of securities that are readily realisable, whilst the Directors acknowledge that the liquidity of these assets needs to be managed, the Directors believe that the Company has adequate financial resources to meet its liabilities as they fall due for at least twelve months from the date of this report, and that it is appropriate for the Financial Statements to be prepared on a going concern basis.
The Board is authorised to repurchase up to 40 per cent of the Company's outstanding Ordinary Shares in issue as at 30 June 202212. Since Admission almost nine years ago, and as at the date of this document, the Company has repurchased, at a discount to NAV, 13,190,250 Ordinary Shares of the original 105,000,000 Ordinary Shares issued at Admission (12.6%). The Board also has in place standing instructions with the Company’s broker, Singer Capital Markets Limited (“Broker” or “Singer”), for the repurchase of the Company’s Shares during closed periods when the Board is not permitted to give individual instructions; such closed periods typically occur around the preparation of the Annual and Half Yearly Financial Reports. The Board intends to continue to aggressively repurchase Shares if the Company’s Shares are trading at a significant discount to net asset value. We will continue to keep Shareholders informed of any share repurchases through public announcements.
The Board and the Investment Manager believe that the opportunity offered by Korean preferred shares is as attractive as it has been since launch. We would hope that the next ten years provide the same opportunities for the Company to outperform the Korean Index.
Other Initiatives
The Board has recently implemented several new strategies including refreshing the look and content of the Annual Report and this Half-Yearly Financial Report which we hope Shareholders find more informative and “user friendly”. I also mentioned in the Annual Report for 2021 that the Board is considering a move to the Main Board of the London Stock Exchange. Unfortunately, it has not been possible to proceed with the initiative at this time. We hope to achieve this in the future.
As the Company approaches its tenth anniversary, following corporate governance best practices, the Directors will perform an orderly handover of the custodianship of your assets to new directors. In our last letter, we previewed that a replacement director for Rob King would be appointed, following the appointment of Gill Morris. The board would like to thank Rob for his expertise, help and guidance to the Company since its launch. We believe that it is in the best interest of the Company and Shareholders to appoint directors with skills and experience which enhance the overall value of the Board to the Company. We are therefore delighted to welcome Krishna Shanmuganathan and Wendy Dorey to the Board. I believe that they will provide great insight, good governance and that together with Gill, will be a hardworking, collaborative and progressive team. In order to make the transition of the new board as seamless as possible, one of these new directors will be appointed Chair, as my ten years’ service approaches in 2023. Any changes to the Board will be notified to the market.
As always, I would like to thank new and existing Shareholders for their support over the last six months. If there are any questions for the Board, please do not hesitate to contact me through the Company’s broker, Singers.
If any of the new shareholders wish to speak with the Board then please contact Singers and we will be happy to answer any questions you may have.
Norman Crighton
Chair
9 September 2022
Investment Manager’s Report
For the period ended 30 June 2022
Introduction
In the first half of 2022, WKOF’s Net Asset Value (“NAV”) in pounds Sterling (“GBP”) declined 21.4%, including reinvested dividends,13 compared to the reference MSCI South Korea 25/50 Net Total Return Index (the “Korea Index”),14 which decreased 18.2% in GBP. From its inception until 30 June 2022, WKOF outperformed the Korea Index: WKOF’s NAV, including reinvested dividends, increased 123.7%, compared to a return of 51.0% for the Korea Index over the same period.
| YTD 2022 | 3 Years | 5 Years | Since Inception | |
| WKOF | -21.4% | 24.1% | 14.6% | 123.7% |
| MSCI South Korea 25/50 Net Total Return Index | -18.2% | 6.4% | 1.5% | 51.0% |
| WKOF Excess Performance | -3.2% | 17.7% | 13.1% | 72.8% |
Source: Bloomberg as of 30 June 2022. Inception Date: 14 May 2013. WKOF returns are based on NAV per share.
WKOF Performance Attribution
WKOF’s returns are driven by four primary factors:
· the performance of the common shares of the same issuers whose preference shares WKOF owns,
· dividend yields,
· the narrowing or widening of the discounts of the preference shares it holds relative to their corresponding common shares and
· currency fluctuation/fees/other expenses.
The underperformance of WKOF against the Korea Index in the first half of 2022 was largely attributed to the underperformance of the common shares of the same companies of which WKOF owns preference shares against the benchmark.
| Return Source | YTD to 6/30/22 |
| MSCI South Korea Index | -19.6% |
| WKOF Common Shares vs. MSCI Index | -1.6% |
| Excess Dividend Yield of Preferred Shares Owned | -1.1% |
| Discount Narrowing of Preferred Shares Owned | -0.4% |
| Impact of Currency / Fees / Others | 1.3% |
Source: Bloomberg and Weiss Asset Management, LP (data as of 30 June 2022)
Review of the WKOF Portfolio
We continue to believe that South Korean equities and the portfolio holdings of WKOF offer significant valuation discounts relative to other countries’ equity markets as represented by price-to-earnings ratios (‘P/E ratios’) and price-to-book ratios (‘P/B ratios’) below.
| Index Name | P/E Ratio | P/B Ratio | Dividend Yield |
| Nifty Index (India) | 17.8 | 2.9 | 1.4% |
| S&P 500 (US) | 16.6 | 3.8 | 1.7% |
| Nikkei 225 (Japan) | 14.7 | 1.6 | 2.1% |
| TAIEX (Taiwan) | 10.2 | 1.9 | 4.0% |
| FTSE 100 (UK) | 9.9 | 1.6 | 4.2% |
| Hang Seng Index (HK) | 11.3 | 0.9 | 3.1% |
| Shanghai Composite (China) | 11.7 | 1.5 | 2.3% |
| KOSPI 200 (S. Korea) | 8.6 | 0.9 | 2.1% |
| WKOF Portfolio Holdings | 4.7 | 0.4 | 3.5% |
Source: Bloomberg L.P. Weiss Asset Management, LP. Data retrieved as of 30 June 2022
WKOF’s portfolio holdings currently trade at a 63% lower P/E ratio and 79% lower P/B ratio compared to the average ratios of the selected indices above. While the KOSPI 200 already yields low price multiples, the valuation discounts of WKOF’s portfolio holdings relative to these indices are the result of those holdings being preference shares trading at large discounts to the corresponding common shares. This is further amplified by owning the preference shares of certain “holding companies” that the Investment Manager believes trade at substantial discounts to their subsidiaries. WKOF’s current portfolio discount is approximately 52%, which is similar to its discount at inception in 2013.
As discussed in previous correspondence, the Investment Manager evaluates its investment decisions across multiple criteria, including the discount between each preference share and its corresponding common share, the expected dividend yield, and the fundamentals of a company. In assessing the fundamentals of a company, the Investment Manager is focused on understanding whether other discounts exist between the market price of the company and the implied price derived from certain analyses conducted on the company, as well as whether WKOF is able to take advantage of such discounts.
Over the course of the first half of 2022, WKOF has continued to maintain a double-digit percentage holding of its portfolio in the preference shares of LG Chem Ltd. (“LG Chem”). As of 30 June 2022, LG Chem’s preference shares traded at a discount of 53% to its common shares. The Investment Manager also believes the current price of LG Chem’s preference shares is exposed to an additional discount that exists between the valuations of the common shares of LG Chem and its net asset value on a look-through basis.
LG Chem is an example of a holding company (“holdco”) in the South Korean market. Holdcos, which are generally controlled by “chaebols” (large family-owned conglomerates), have controlling stakes in the major subsidiaries of their respective conglomerates. Many of these subsidiaries are publicly traded, which allows us to assess whether the holdcos are trading at a discount with a reasonable degree of certainty. When we conduct this sum-of-the-parts analysis on LG Chem, we observe that the current market value of its common shares implies a much lower value than the look-through value assessed based on the economic value of LG Chem’s ownership of its subsidiaries. For example, LG Chem owns 81.8% of LG Energy Solution (“LG ES”)15, the largest EV Battery maker in Korea and the second largest battery maker in the world.16 It also operates a valuable battery materials business that supplies to LG ES. Given our estimates of LG Chem’s discount to net asset value (including its LG ES stake) of approximately 60%, and LG Chem preference share discount of 53% (both as of 30 June 2022), and the value of other subsidiaries as reported LG Chem’s balance sheet, the final look-through discount of LG Chem’s preference shares is estimated to be approximately 81%. We believe any future sales of LG ES shares by LG Chem could lead to value accretion to common shareholders of LG Chem, and even more so to the preference shareholders.
Another example of this concept is SK Chemicals Co. (“SK Chem”). SK Chem owns a controlling stake of 68.34%17 of another listed company in South Korea, SK Bioscience Co. Ltd. (“SK Bioscience”), which is trading at a market capitalisation of 4.9bn GBP as of 30 June 2022. In contrast, SK Chem traded at a market capitalisation of approximately 1.0bn GBP the same day. In other words, SK Chem traded at a 70% discount to the market value of its stake in SK Bioscience, which amounts to 3.3bn GBP. In addition, factoring in the 47% discount at which SK Chem’s preference shares trade relative to its common shares as of the end of June, the final look-through discount including the reported valuations of other subsidiaries as reported on the balance sheet of SK Chem is estimated to be over 80% (i.e. WKOF is paying less than 20p for each GBP of assets).
Gaining an understanding of the economic and non-economic motives of the chaebols which own many of the issuers of South Korean preference shares is a critical part of our fundamental analysis. Additionally, we look to seek out investments which could benefit from corporate governance changes, especially those that have low expectations implied by valuations. We continue to maintain the view that, in general, corporate governance has been improving within the South Korean market.
In the first half of 2022, we have witnessed some notable events in corporate governance that the Investment Manager believes demonstrates the growing trend of Korean companies more closely aligning their interests with their minority shareholders. In March 2022, SK Inc., the holding company for companies such as SK Hynix and SK Inc., announced a revised shareholder return policy, which includes an annual share buyback program until 2025 and a possibility of the cancellation of its treasury shares.18 Additionally, SK Inc. opted to increase the level of stock-based compensation for its senior executives and began using its stock price as one of its management team’s key performance indicators.
In the second quarter of 2022, LG Corp, which investors have also historically criticised for its lack of shareholder friendly policies, also indicated improvements in corporate governance as its board of directors approved a 500 billion KRW (317 million GBP) share buyback program until 2024.19 As this environment continues to improve, we hope to see improvements in the valuations of common shares of the holdcos as well as narrowing discounts of their preference shares relative to their common shares.
Review of the South Korean Macro Environment
Challenging global macroeconomic conditions have led to weaker South Korean market performance over the last two quarters. According to figures released by Bank of Korea (“BoK”), South Korea experienced a 3.1% drop in exports between the first and second quarter of 2022. Data published for June 2022 indicate a 5.4% year-over-year increase in exports, led by demand for semiconductors and petrochemicals; however, this figure also represents the slowest monthly growth in exports since November 2020. 20 The decrease in export activity comes as a result of lower global demand while the economies of South Korea’s largest export partners continue to be impacted by the economic toll stemming from the Russia-Ukraine war, uncertainty in the Chinese economy, and recovery from COVID-19. In contrast to the single digit increase in exports, South Korea experienced a year-over-year increase of 19% in imports at the end of Q2 2022 as energy and commodity prices increased, resulting in a growing trade deficit that had begun to take effect in early 2022. 21
Despite the slowdown in exports between the first and second quarter, the South Korean economy continued to grow between April and June 2022, outpacing inflation for a 0.7% increase in real GDP. An increase in household spending was the main contributor to this growth, spurred by the loosening of COVID-19 restrictions. This increase in consumption, however, contributed further to inflationary pressure experienced by both consumers and producers with South Korea’s consumer price index (“CPI”) up 6.0% year-over-year and producer price index (“PPI”) up 9.9% over the same period.22
With the growth in CPI reaching its fastest pace since the Asian Financial Crisis of 1997, the South Korean government implemented a number of initiatives to control this rising inflation. Elected in March 2022, new BoK governor Rhee Chang-yong has taken a stance to focus on combating inflation. BoK delivered four rate hikes throughout the first half of the year, raising the country’s policy rate from 1.00% at the beginning of 2022 to 2.50% as of the date of this report.23 In addition, South Korea’s newly elected president Yoon Suk-yeol has attempted to enact his own set of economic policies to combat inflation and shift the government to a more pro-business and market-friendly stance. After assuming office in May, President Yoon’s conservative government expanded its list of tariff-free import items to include more than 25 major imported products and floated the idea of a corporate-friendly tax reform to encourage private sector investments.24 The new administration’s attempts to usher in more shareholder-friendly practices in South Korea while fostering a deregulated business environment for private-led growth, have received mixed levels of responses. For instance, the four largest conglomerates in South Korea have pledged capital investments of more than 860 trillion KRW (550 billion GBP) in the next five years following the entrance of the new administration.25 Nevertheless, President Yoon’s approval ratings have deteriorated from 52% when he was sworn in to 28% as of the last week of July.26 It is likely too early to predict whether the new administration will successfully achieve its stated goals to stimulate the economy while improving corporate governance.
Hedging
WKOF pursues its investment strategy with a portfolio that is generally long-only. However, as further described in WKOF's Annual Report and Audited Financial Statements for the year ended 31 December 2017 and in subsequent Annual Reports, the Board approved a hedging strategy intended to reduce exposure to extreme events that would be catastrophic to its Shareholders’ investments in WKOF, because of political tensions in Northeast Asia. WKOF has limited its use of hedging instruments to purchases of credit default swaps (“CDS”) and put options on the MSCI Korea 25/50 Index, securities that we believe would generate high returns if WKOF experienced geopolitical disaster without introducing material new risks into the portfolio. These catastrophe hedges are not expected to make money in most states of the world. We expect that, as with any insurance policy, WKOF’s hedges will lose money most of the time. The tables below provide details about the hedges as of 30 June 2022. Note that outside of the general market and portfolio hedges described herein, WKOF has generally not hedged interest rates or currencies.
| Credit Default Swaps on South Korean Sovereign Debt | Notional Value (GBP) | Total Cost to Expiration (GBP) | Annual Cost (GBP) |
Price Paid as % of Notional Value (per annum) | Expiration Date | Duration (Years) |
| 3-year CDS | 82m | 601,974 | 182,384 | 0.23% | 2025 | 3.0 |
| Total Cost | 731,377 | 193,611 |
Concluding Remarks
While the South Korea equity market exhibited poor performance in the first half of 2022 caused by macro uncertainty and poor economic conditions, the Investment Manager believes the investment thesis for WKOF remains intact. Discounts in the portfolio remain at historically high levels. As previously discussed, on a look-through basis, the Investment Manager believes holdings of the fund offer significant valuation discounts to South Korean common shares which, in turn, offer significant discounts to global equities. While it may require patience, we believe long-term investors will be rewarded as other investors discover this value opportunity, and there could be additional upside if South Korean corporate governance continues what we believe are improving trends to narrow the substantial discounts that are currently available.
Thank you for your trust, and we look forward to providing you with updates in the future.
Weiss Asset Management LP
9 September 2022
Condensed Statement of Financial Position
| As at | As at | |||||||
| 30 June | 31 December | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| Notes | £ | £ | ||||||
| Assets | ||||||||
| Financial assets at fair value through profit or loss | 8 | 121,851,545 | 159,614,094 | |||||
| Derivative financial assets | 9 | - | 221,639 | |||||
| Other receivables | 308,980 | 3,881,815 | ||||||
| Cash and cash equivalents | 4,177,520 | 3,091,245 | ||||||
| Margin account | 2,408,971 | 1,381,413 | ||||||
| Due from broker | 12,452 | 696 | ||||||
| Total assets | 128,759,468 | 168,190,902 | ||||||
| Liabilities | ||||||||
| Derivative financial liabilities | 9 | 1,438,881 | 984,227 | |||||
| Due to broker | - | 263,091 | ||||||
| Other payables | 261,413 | 402,439 | ||||||
| Total liabilities | 1,700,294 | 1,649,757 | ||||||
| Net assets | 127,059,174 | 166,541,145 | ||||||
| Represented by: | ||||||||
| Shareholders' equity and reserves | ||||||||
| Share capital | 10 | 33,986,846 | 33,986,846 | |||||
| Other reserves | 93,072,328 | 132,554,299 | ||||||
| Total shareholders' equity | 127,059,174 | 166,541,145 | ||||||
| Net assets per share | 7 | 1.8333 | 2.4029 | |||||
The Notes form an integral part of these Condensed Financial Statements.
The Condensed Financial Statements were approved and authorised for issue by the Board of Directors on 9 September 2022.
Norman Crighton Gill Morris
Chair Director
Condensed Statement of Comprehensive Income
| For the period ended | For the period ended | For the period ended | For the period ended | |||||||
| 30 June 2022 | 30 June 2022 | 30 June 2022 | 30 June 2021 | |||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||
| Income | Capital | Total | ||||||||
| Notes | £ | £ | £ | £ | ||||||
| Income | ||||||||||
|
Net changes in fair value of financial assets at fair value through profit or loss | - | (34,996,104) | (34,996,104) | 32,880,404 | ||||||
|
Net changes in fair value of derivative financial instruments through profit or loss | - | 959,892 | 959,892 | 82,819 | ||||||
| Net foreign currency (losses)/gains | (309,417) | 797,241 | 487,824 | (311,025) | ||||||
| Dividend income | 445,389 | - | 445,389 | 619,918 | ||||||
| Bank interest | - | - | - | (90) | ||||||
| Total income | 135,972 | (33,238,971) | (33,102,999) | 33,272,026 | ||||||
| Expenses | ||||||||||
| Operating expenses | (323,645) | (1,539,845) | (1,863,490) | (3,068,708) | ||||||
| Total operating expenses | (323,645) | (1,539,845) | (1,863,490) | (3,068,708) | ||||||
| (Loss)/Profit for the period before dividend withholding tax | (187,673) | (34,778,816) | (34,966,489) | 30,203,318 | ||||||
| Dividend withholding tax | 3 | (98,403) | - | (98,403) | (136,305) | |||||
| (Loss)/Profit for the period after dividend withholding tax | (286,076) | (34,778,816) | (35,064,892) | 30,067,013 | ||||||
| (Loss)/Profit and total comprehensive (loss)/income for the period | (286,076) | (34,778,816) | (35,064,892) | 30,067,013 | ||||||
| Basic and diluted (loss)/earnings per Share | ||||||||||
| Continuation Pool | 6 | (0.0041) | (0.5018) | (0.5059) | 0.3792 | |||||
| Realisation Pool* | 6 | - | - | - | 0.0894 | |||||
All items derive from continuing activities.
*No Realisation shares were in issue for the period ended 30 June 2022.
The Notes form an integral part of these Condensed Financial Statements.
Condensed Statement of Changes in Equity
| Share | Other | |||||
| capital | reserves | Total | ||||
| For the period ended 30 June 2022 (Unaudited) | Notes | £ | £ | £ | ||
| Balance at 1 January 2022 | 33,986,846 | 132,554,299 | 166,541,145 | |||
| Total comprehensive income for the period | - | (35,064,892) | (35,064,892) | |||
| Transactions with Shareholders, recorded directly in equity | ||||||
| Distributions paid | 4 | - | (4,417,079) | (4,417,079) | ||
| Balance at 30 June 2022 | 33,986,846 | 93,072,328 | 127,059,174 | |||
| For the period ended 30 June 2021 (Unaudited) | ||||||
| Continuation Pool | Realisation Pool | |||||
| Share | Other | Share | Other | |||
| capital | reserves | capital | reserves | Total | ||
| Notes | £ | £ | £ | £ | £ | |
| Balance at 1 January 2021 | 68,124,035 | 135,000,918 | - | - | 203,124,953 | |
| Total comprehensive income for the period | - | 29,572,100 | - | 494,913 | 30,067,013 | |
| Transactions with Shareholders, recorded directly in equity | ||||||
| Redesignation of Realisation Shares | 10 | (32,417,757) | - | 32,417,757 | - | - |
| Distributions paid | 4 | - | (4,238,125) | - | - | (4,238,125) |
| Redemption of Realisation Shares | 10 | - | - | (25,000,000) | - | (25,000,000) |
| Repurchase of Ordinary Shares | 10 | (1,719,432) | - | - | - | (1,719,432) |
| Balance at 30 June 2021 | 33,986,846 | 160,334,893 | 7,417,757 | 494,913 | 202,234,409 | |
The Notes form an integral part of these Condensed Financial Statements.
Condensed Statement of Cash Flows
| For the period ended | For the period ended | |||
| 30 June 2022 | 30 June 2021 | |||
| (Unaudited) | (Unaudited) | |||
| Notes | £ | £ | ||
| Cash flows from operating activities | ||||
| Profit for the period | (35,064,892) | 30,067,013 | ||
| Adjustments for: | ||||
| Net change in fair value of financial assets held at fair value through profit or loss | 34,996,104 | (32,880,404) | ||
| Exchange gains on cash and cash equivalents | (487,824) | (311,025) | ||
| Net change in fair value of derivative financial instruments held at fair value through profit or loss | (959,892) | (82,819) | ||
| Increase in receivables | (18,869) | (14,171) | ||
| Decrease in other payables | (141,026) | (102,038) | ||
| Dividend income | (346,988) | (619,918) | ||
| Dividend received | 3,938,692 | 4,248,379 | ||
| Net cash generated from operating activities | 1,915,305 | 305,017 | ||
| Cash flows from investing activities | ||||
| Purchase of financial assets at fair value through profit or loss | (5,198,292) | (76,849,505) | ||
| Opening of derivative financial instruments | 9 | 1,799,402 | (358,461) | |
| Proceeds from the sale of financial assets at fair value through profit or loss | 7,689,890 | 108,036,164 | ||
| Closure of derivative financial instruments | (163,217) | - | ||
| (Increase)/decrease in margin account | 9 | (1,027,558) | 388,301 | |
| Net cash generated from investing activities | 3,100,225 | 31,216,499 | ||
| Cash flows from financing activities | ||||
| Purchase of own Shares for cancellation | - | (1,719,433) | ||
| Repurchase of Realisation Shares | - | (25,000,000) | ||
| Distributions paid | 4 | (4,417,079) | (4,238,125) | |
| Net cash used in financing activities | (4,417,079) | (30,957,558) | ||
| Net increase in cash and cash equivalents | 598,451 | 563,958 | ||
| Exchange gains on cash and cash equivalents | 487,824 | 311,025 | ||
| Cash and cash equivalents at the beginning of the period | 3,091,245 | 5,972,867 | ||
| Cash and cash equivalents at the end of the period | 4,177,520 | 6,847,850 |
The Notes form an integral part of these Condensed Financial Statements.
Notes to the Unaudited Condensed Financial Statements
For the period ended 30 June 2022
1. General information
The Company was incorporated with limited liability in Guernsey, as a closed-ended investment company on 12 April 2013. The Company’s Shares were admitted to trading on AIM of the LSE on 14 May 2013.
The Investment Manager of the Company is Weiss Asset Management LP.
At the AGM held on 27 July 2016, the Board approved the adoption of the new Articles of Incorporation in accordance with Section 42(1) of the Companies (Guernsey) Law, 2008 (the “Law”).
2. Significant accounting policies
a) Statement of compliance
The Condensed Financial Statements of the Company for the period ended 30 June 2022 have been prepared in accordance with IFRS adopted by the European Union and the AIM Rules of the London Stock Exchange. They give a true and fair view and are in compliance with the Law.
b) Basis of preparation
The Condensed Financial Statements are prepared in Pounds Sterling (£), which is the Company’s functional and presentational currency. They are prepared on a historical cost basis modified to include financial assets at fair value through profit or loss.
The Condensed Financial Statements, covering the period from 1 January to 30 June 2022, are not audited.
The accounting policies adopted are consistent with those used in the Annual Report and Audited Financial Statements for the year ended 31 December 2021.
The Condensed Financial Statements do not include all the information and disclosures required in the Annual Report and Audited Financial Statements and should be read in conjunction with the Annual Report and Audited Financial Statements for the year ended 31 December 2021. The Auditor’s Report contained within the Annual Report and Audited Financial Statements provided an unmodified opinion.
The preparation of the Condensed Financial Statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, and liabilities at the date of these Condensed Financial Statements. If in the future such estimates and assumptions which are based on management’s best judgement at the date of the Condensed Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change.
c) Going concern
The Company has continued in existence following the third Realisation Opportunity and will continue to operate as a going concern unless a determination to wind up the Company is made. Given this, the Directors will propose further realisation opportunities for Shareholders who have not previously elected to realise all of their Ordinary Shares. Such opportunities will be made using a similar mechanism to previously announced Realisation Opportunities. The next Realisation Opportunity will take place during May 2023. The Board and the Investment Manager believe the investment policy continues to be valid.
Based on the fact that the assets currently held by the Company consist mainly of securities that are readily realisable, whilst the Directors acknowledge that the liquidity of these assets needs to be managed, the Directors believe that the Company has adequate financial resources to meet its liabilities as they fall due for at least twelve months from the date of this report, and that it is appropriate for the Financial Statements to be prepared on a going concern basis.
3. Taxation
The Company has been granted Exempt Status under the terms of The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 to income tax in Guernsey. Its liability is an annual fee of £1,200 (2021: £1,200). The amounts disclosed as taxation in the Condensed Statement of Comprehensive Income relate solely to withholding tax levied in South Korea on distributions from South Korean companies at an offshore rate of 22 %.
4. Dividends to Shareholders
Dividends, if any, will be paid annually each year. An annual dividend of 6.3732 pence per Share (£4,417,069) was approved on 12 May 2022 and paid on 10 June 2022 in respect of the year ended 31 December 2021. An annual dividend of 5.2311 pence per Share (£4,238,125) was approved on 4 May 2021 and paid on 4 June 2021 in respect of the year ended 31 December 2020.
5. Significant accounting judgements, estimates and assumptions
The preparation of the Condensed Financial Statements in conformity with IFRS requires management to make judgements, estimates, and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expense, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The significant judgements, estimates, and assumptions made by management when applying the Company’s accounting policies, as well as the key sources of estimation uncertainty, were the same for these Condensed Financial Statements as those that applied to the Annual Report and Audited Financial Statements for the year ended 31 December 2021.
6. Basic and diluted earnings per Share
The total basic and diluted loss per Ordinary Share of £0.5059 (30 June 2021: profit per Share of £0.3792 for the continuation pool and profit per Share of £0.0894 for the realisation pool) for the Company has been calculated based on the total loss after tax for the year of £35,064,892 (for the period ended 30 June 2021: £30,067,013 profit) and the weighted average number of Ordinary Shares in issue during the period of 69,307,078 (for the period ended 30 June 2021: 77,981,628 continuation pool and 5,537,079 realisation pool).
Income and capital earnings and losses for the period 30 June 2022 have both been calculated on the weighted average number of Ordinary Shares in issue during the year of 69,307,078.
7. Net Asset Value per Ordinary Share
The NAV of each Share of £1.8333 (as at 31 December 2021: £2.4029) is determined by dividing the net assets of the Company attributed to the Ordinary Shares of £127,059,174 (as at 31 December 2021: £166,541,145) by the number of Ordinary Shares in issue at 30 June 2022 of 69,307,078 (as at 31 December 2021: 69,307,078 Ordinary Shares in issue).
8. Financial assets at fair value through profit or loss
| As at | As at | |||||
| 30 June | 31 December | |||||
| 2022 | 2021 | |||||
| (Unaudited) | (Audited) | |||||
| £ | £ | |||||
| Cost of investments at beginning of the year | 149,112,223 | 137,878,681 | ||||
| Purchases of investments in the year | 4,935,202 | 101,777,858 | ||||
| Disposal of investments in the year | (7,701,647) | (137,572,478) | ||||
| Net realised gains on investments in the year | 686,757 | 47,028,162 | ||||
| Cost of investments held at end of the year | 147,032,535 | 149,112,223 | ||||
| Unrealised (loss)/gain on investments | (25,180,990) | 10,501,871 | ||||
| Financial assets at fair value through profit or loss | 121,851,545 | 159,614,094 | ||||
9. Derivative financial instruments at fair value through profit or loss
| As at | As at | ||||||||
| 30 June | 31 December | ||||||||
| 2022 | 2021 | ||||||||
| (Unaudited) | (Audited) | ||||||||
| £ | £ | ||||||||
| Cost of derivatives at beginning of the period/year | (724,897) | (1,745,063) | |||||||
| Opening of derivatives in the period/year | (1,799,402) | (724,897) | |||||||
| Closure of derivatives in the period/year | 163,217 | 1,084,182 | |||||||
| Realised gain on closure of derivatives in the period/year | 525,523 | 660,881 | |||||||
| Net cost of derivatives held at end of the period/year | (1,835,559) | (724,897) | |||||||
| Unrealised gain on derivative financial instruments at fair value through profit or loss | 396,678 | (37,691) | |||||||
| Net fair value on derivative financial instruments at fair value through profit or loss | (1,438,881) | (762,588) | |||||||
The following are the composition of the Company’s derivative financial instruments at period/year end:
| As at | As at | ||||||||
| 30 June | 31 December | ||||||||
| 2022 | 2021 | ||||||||
| Assets | Liabilities | Assets | Liabilities | ||||||
| (Unaudited) | (Unaudited) | (Audited) | (Audited) | ||||||
| Derivatives held for trading: | £ | £ | £ | £ | |||||
| Options | - | - | 221,639 | - | |||||
| Credit default swaps | - | (1,438,881) | - | (984,227) | |||||
| Total | - | (1,438,881) | 221,639 | (984,227) |
10. Share capital
The share capital of the Company consists of an unlimited number of Ordinary Shares of no par value.
| As at | As at | |||||
| 30 June | 31 December | |||||
| 2022 | 2021 | |||||
| (Unaudited) | (Audited) | |||||
| Authorised | ||||||
| Unlimited Ordinary Shares at no par value | - | - | ||||
| Issued at no par value | ||||||
| 69,307,078 (2021: 69,307,078 unlimited Ordinary Shares at no par value) | - | - | ||||
| Reconciliation of number of Shares | ||||||
| As at | As at | |||||
| 30 June | 31 December | |||||
| 2022 | 2021 | |||||
| Shares | Shares | |||||
| Ordinary Shares at the beginning of the year | 69,307,078 | 81,617,828 | ||||
| Purchase of own Shares for cancellation | - | (600,000) | ||||
| Purchase of Realisation Shares | - | (11,710,750) | ||||
| Total Ordinary Shares in issue at the end of the period/year | 69,307,078 | 69,307,078 | ||||
| As at | As at | |||||
| 30 June | 31 December | |||||
| 2022 | 2021 | |||||
| Shares | Shares | |||||
| Treasury Shares at the beginning of the year | 11,437,662 | - | ||||
| Redesignation of Realisation Shares | 273,085 | 11,437,662 | ||||
| Total Shares at the end of the period/year | 11,710,747 | 11,437,662 | ||||
| Share capital account | ||||||
| As at | As at | |||||
| 30 June | 31 December | |||||
| 2022 | 2021 | |||||
| £ | £ | |||||
| Share capital at the beginning of the year | 33,986,846 | 68,124,035 | ||||
| Purchase of own Shares for cancellation | - | (1,719,433) | ||||
| Purchase of Realisation Shares | - | (32,417,756) | ||||
| Total Share capital at the end of the period/year | 33,986,846 | 33,986,846 | ||||
Ordinary Shares
The Company has a single class of Ordinary Shares, which were issued by means of an initial public offering on 14 May 2013, at 100 pence per Share.
The rights attached to the Ordinary Shares are as follows:
a) The holders of Ordinary Shares shall confer the right to all dividends in accordance with the Articles of Incorporation of the Company.
b) The capital and surplus assets of the Company remaining after payment of all creditors shall, on winding-up or on a return (other than by way of purchase or redemption of own Ordinary Shares) be divided amongst the Shareholders on the basis of the capital attributable to the Ordinary Shares at the date of winding up or other return of capital.
c) Shareholders present in person or by proxy or (being a corporation) present by a duly authorised representative at a general meeting have on a show of hands, one vote and, on a poll, one vote for every Share.
d) On 15 March 2021, being 44 days before the Subsequent Realisation Date, the Company published a circular pursuant to the Realisation Opportunity, entitling the Shareholders to serve a written notice during the election period (a “Realisation Election”) requesting that all or a part of their Ordinary Shares be re-designated to Realisation Shares, subject to the aggregate NAV of the continuing Ordinary Shares on the last business day before the Reorganisation Date being not less than £50 million. As Shareholders elected to participate in the Realisation Opportunity, the Company’s portfolio was divided into two pools: the Continuation Pool; and the Realisation Pool.
e) On 14 May 2021, 11,710,750 Ordinary Shares, which represented 14.5% of the Company’s issued Ordinary Share capital were redesignated as Realisation Shares.
On 23 June 2021, the Company announced that it had made good progress with the sale of assets in the Realisation Pool and would commence with the first compulsory redemption of 8,979,885 Realisation shares representing approximately 76.7%. of Realisation Shares in issue. The First Redemption was effected pro-rata to holdings of Realisation Shares on the register at the close of business on 22 June 2021. The First Redemption price was 278.4 pence per Realisation Share, equivalent to the unaudited Net Asset Value per Realisation Share as at 31 May 2021.
The Company made good progress with the sale of the remaining assets in the Realisation Pool and on 7 September 2021 announced a second compulsory redemption of 2,457,780 Realisation shares representing approximately 90% of Realisation Shares. The Second Redemption was effected in the same manner as the First Redemption at a price of 275.55 pence per Realisation Share, equivalent to the Net Asset Value per Realisation Share as at 31 August 2021, and with a record date of 6 September 2021.
On the 21 December 2021 the Company announced the final compulsory redemption of the final 273,085 Realisation Shares. The Final Redemption price was 266.39 pence per Realisation Share, equivalent to the unaudited Net Asset Value per Realisation Share as at 17 December 2021.
All Realisation Shares that were redeemed have been re-designated as Ordinary Shares and held in Treasury.
Share buyback and cancellation
During the period ended 30 June 2022, the Company purchased Nil shares (31 December 2021: 600,000) of its own Shares at a consideration of £Nil (31 December 2021: £1,719,433) under its general buyback authority originally granted to the Company in 2014.
The Company has 69,307,078 Ordinary Shares in issue as at 30 June 2022 (as at 31 December 2021: 69,307,078).
At the AGM held on 21 July 2022, Shareholders approved the authority of the Company to buy back up to 40% of the issued Ordinary Shares to facilitate the Company’s discount management. Any Ordinary Shares bought back may be cancelled or held in treasury.
11. Related-party transactions and material agreements
Related-party transactions
a) Directors’ remuneration and expenses
The Directors of the Company are remunerated for their services at such a rate as the Directors determine provided that the aggregate amount of such fees does not exceed £150,000 per annum.
The annual Directors’ fees comprise £35,000 payable to Mr Crighton as the Chair, £32,500 to Mrs Morris as Chair of the Audit Committee and £30,000 to Mr King. On 1 June 2022, the Board announced the appointment of Mr Shanmuganathan to the Board. The annual Directors’ fees payable to Mr Shanmuganathan and Mrs Dorey will be £30,000.
During the period ended 30 June 2022, Directors’ fees of £51,250 (period ended 30 June 2021: £40,750) were charged to the Company and £Nil remained payable at the end of the period (as at 31 December 2021: £Nil).
b) Shares held by related parties
The Directors who held office at 30 June 2022 and up to the date of this Report held the following number of
Ordinary Shares beneficially:
| As at 30 June 2022 (Unaudited) | As at 31 December 2021 (Audited) | |||||||
| Ordinary | % of issued | Ordinary | % of issued | |||||
| Shares | share capital | Shares | share capital | |||||
| Norman Crighton | 20,000 | 0.03% | 20,000 | 0.03% | ||||
| Robert King | 15,000 | 0.02% | 15,000 | 0.02% | ||||
| Gillian Morris | 3,934 | 0.01% | 3,934 | 0.01% | ||||
| Krishna Shanmuganathan | - | - | N/A | N/A | ||||
Wendy Dorey (appointed 9 September 2022) purchased 2,552 shares on 24 August 2022.
The Investment Manager is principally owned by Dr Andrew Weiss and certain members of the Investment Manager’s senior management team.
As at 30 June 2022, Dr Andrew Weiss and his immediate family members held an interest in 5,316,888 Ordinary Shares (as at 31 December 2021: 6,486,888) representing 7.67% (as at 31 December 2021: 9.36 %) of the Ordinary issued share capital of the Company.
As at 30 June 2022, employees and partners of the Investment Manager other than Dr Andrew Weiss, their respective immediate family members or entities controlled by them or their immediate family members held an interest in 3,594,333 Ordinary Shares (as at 31 December 2021: 2,844,333) representing 5.19% (as at 31 December 2021: 4.10 %) of the Ordinary issued share capital of the Company.
c) Investment management fee
The Company’s Investment Manager is Weiss Asset Management LP. In consideration for its services provided by the Investment Manager under the Investment Management Agreement (IMA) dated 8 May 2013, the Investment Manager is entitled to an annual management fee of 1.5 % of the Company’s NAV accrued daily and payable within 14 days after each month end. The Investment Manager is also entitled to reimbursement of certain expenses incurred by it in connection with its duties.
The IMA will continue in force until terminated by the Investment Manager or the Company, giving to the other party thereto not less than 12 months’ notice in writing.
For the period ended 30 June 2022, investment management fees and charges of £ 1,101,447 (for the period ended 30 June 2021: £1,599,511) were charged to the Company and £168,934 (as at 31 December 2021: £214,941) remained payable at the period/year end.
12. Financial risk management
IFRS 13 ‘Fair Value Measurement’ requires the Company to establish a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy under IFRS 13 ‘Fair Value Measurement’ are set as follows:
· Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities;
· Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices); and
· Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety.
If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes ‘observable’ requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The following table presents the Company’s financial assets and liabilities by level within the valuation hierarchy as of 30 June 2022:
| Total | |||||
| As at | |||||
| 30 June | |||||
| Level 1 | Level 2 | Level 3 | 2022 | ||
| (Unaudited) | |||||
| £ | £ | £ | £ | ||
| Financial assets/(liabilities) at fair value through | |||||
| profit or loss: | |||||
| Korean preference shares | 121,851,545 | - | - | 121,851,545 | |
| Financial derivative liabilities | - | (1,438,881) | - | (1,438,881) | |
| Total net assets | 121,851,545 | (1,438,881) | - | 120,412,664 | |
| Total | |||||
| As at | |||||
| 31 December | |||||
| Level 1 | Level 2 | Level 3 | 2021 | ||
| (Audited) | |||||
| £ | £ | £ | £ | ||
| Financial assets/(liabilities) at fair value through | |||||
| profit or loss: | |||||
| Korean preference shares | 159,614,094 | - | - | 159,614,094 | |
| Financial derivative assets | 221,639 | - | - | 221,639 | |
| Financial derivative liabilities | - | (984,227) | - | (984,227) | |
| Total net assets | 159,835,733 | (984,227) | - | 158,851,506 | |
The Company recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the transfers have occurred. During the period ended 30 June 2022, there were no transfers from Level 2 to Level 1 (for the year ended 31 December 2021: £Nil).
Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include Korean preference shares, exchange traded funds, and exchange traded options.
The Company holds investments in derivative financial instruments which are classified as Level 2 within the fair value hierarchy. These consist of credit default swaps with a fair value of (£1,438,818) (as at 31 December 2021: (£984,227)). As at 30 June 2022, the Company held no Level 1 derivative financial instruments (31 Dec 2021: £221,639).
13. NAV reconciliation
The Company announces its NAV to the LSE after each daily and month-end valuation point. The following is a reconciliation of the NAV per Share attributable to participating Shareholders as presented in these Condensed Financial Statements, using IFRS to the NAV per Share reported to the LSE:
| As at 30 June 2022 | As at 31 December 2021 | ||||
| NAV per | NAV per | ||||
| Participating | Participating | ||||
| NAV | Share | NAV | Share | ||
| £ | £ | £ | £ | ||
| Net Asset Value reported to the LSE | 126,979,752 | 1.8321 | 162,661,741 | 2.3470 | |
| Adjustment to accruals and cash | (24,419) | (0.0004) | - | - | |
| Adjustment for dividend income | 103,841 | 0.0015 | 3,879,404 | 0.0560 | |
| Net Assets Attributable to Shareholders per Financial Statements | 127,059,174 | 1.8333 | 166,541,145 | 2.4030 | |
The published NAV per Share of £1.8321 (as at 31 December 2021: £2.3470) is different from the accounting NAV per Share of £1.8333 (as at 31 December 2021: 2.4030) due to the adjustments noted above.
14. Subsequent events
These Condensed Financial Statements were approved for issuance by the Board on 9 September 2022. Subsequent events have been evaluated until this date.
Wendy Dorey was appointed to the Board effective 9 September 2022.
No further subsequent events have occurred.
Statement of Principal and Emerging Risks and Uncertainties
For the period ended 30 June 2022
The Company’s risk exposure and the effectiveness of its risk management and internal control systems are reviewed by the Audit Committee at its meetings and annually by the Board. The Board believes that the Company has adequate and effective systems in place to identify, mitigate, and manage the risks to which it is exposed.
Emerging Risks
In order to recognise any new risks that may impact the Company and to ensure that appropriate controls are in place to manage those risks, the Audit Committee undertakes a regular review of the Company’s Risk Matrix. COVID-19
The Board monitored the development of the pandemic and considered the impact it has had to date and assessing the impact it may have in the future. Despite the impact on the Company’s share performance and subsequent recovery and easing of restrictions in relation to the pandemic, there remains continued uncertainty such that predicting any future impact with any certainty remains challenging. The Board will continue to assess the position.
Geopolitical risks
Risks to global growth have been heightened as a result of the conflict in the Ukraine. The level of tension between North and South Korea fluctuates. There is a heightened risk of malicious cyber activity. There is a continuing risk of further COVID outbreaks in Korea, Guernsey, and the U.S.
Principal Risks and Uncertainties
In respect to the Company’s system of internal controls and reviewing its effectiveness, the Directors:
• are satisfied that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency, or liquidity; and
• have reviewed the effectiveness of the risk management and internal control systems, including material financial, operational, and compliance controls (including those relating to the financial reporting process) and no significant failings or weaknesses were identified.
The principal risks and uncertainties which have been identified and the steps which are taken by the Board to mitigate them are as follows:
Investment Risks
The Company is exposed to the risk that its portfolio fails to perform in line with its investment objective and policy if markets move adversely or if the Investment Manager fails to comply with the investment policy. The Board reviews reports from the Investment Manager at the quarterly Board Meetings, with a focus on the performance of the portfolio in line with its investment policy. The Administrator is responsible for ensuring that all transactions are in accordance with the investment restrictions.
Operational Risks
The Company is exposed to the risk arising from any failures of systems and controls in the operations of the Investment Manager, Administrator, and the Custodian. The Board and its Committees regularly review reports from the Investment Manager and the Administrator on their internal controls. The Administrator will report to the Investment Manager any valuation issues which will be brought to the Board for final approval as required.
Accounting, Legal and Regulatory Risks
The Company is exposed to the risk that it may fail to maintain accurate accounting records, fail to comply with requirements of its Admission Document, and fail to meet listing obligations. The accounting records prepared by the Administrator are reviewed by the Investment Manager. The Administrator, Broker, and Investment Manager provide regular updates to the Board on compliance with the Admission Document and changes in regulation.
Discount Management
The Company is exposed to Shareholder dissatisfaction through inability to manage the Share price discount to NAV. The Board and its Broker monitor the Share price discount (or premium) continuously and have engaged in Share buybacks from time to time to help minimise any such discount. The Board believes that it has access to sufficiently liquid assets to help manage the Share price discount.
Liquidity of Investments
The Korean preference shares typically purchased by the Company generally have smaller market capitalisations and lower levels of liquidity than their common share counterparts. These factors, among others, may result in more volatile price changes in the Company’s assets as compared to the South Korean stock market or other more liquid asset classes. This volatility could cause the NAV to go up or down dramatically.
In order to realise its investments, the Company will likely need to sell its holdings in the secondary market, which could prove difficult if adequate liquidity does not exist at the time, and could result in the values received by the Company being significantly less than their holding values. The liquidity of the market for preference shares may vary materially over time. There can be no guarantee that a liquid market for the Company’s assets will exist or that the Company’s assets can be sold at prices similar to the published NAV. Illiquidity could also make it difficult or costly for the Company to purchase securities, and this could result in the Company holding more cash than anticipated. Furthermore, it is possible that South Korea could impose currency-exchange or capital controls on foreign investors, making it difficult or impossible for the Company to repatriate funds. The Investment Manager considers the liquidity of secondary trading in assessing and managing the liquidity of the Company’s investments. The Board reviews the Company’s resources and obligations on a regular basis with a view to ensuring that sufficiently liquid assets are held for the expected day to day operations of the Company. However, if the Company were required to liquidate a substantial portion of its assets at a single time, it is likely that the market impact of the necessary sale transactions would impact the value of the portfolio materially.
Fraud Risk
The Company is exposed to fraud risk. The Audit Committee continues to monitor the fraud, bribery, and corruption policies of the Company. The Board receives an annual confirmation from all service providers that there have been no instances of fraud or bribery.
Financial Risks
The financial risks, including market, credit, and liquidity risks, faced by the Company are set out in the annual report of the Company. These risks and the controls in place to reduce the risks are reviewed at the quarterly Board Meetings.
Going Concern
The Company has continued in existence following the third Realisation Opportunity and will continue to operate as a going concern unless a resolution to wind up the company is made. Every two years after the Realisation Date, the Directors will propose further realisation opportunities for Shareholders who have not previously elected to realise all of their Ordinary Shares using a similar mechanism used in the previously announced Realisation Opportunity. The next Realisation Opportunity will take place during May 2023.
Based on the fact that the assets currently held by the Company consist mainly of securities that are readily realisable, whilst the Directors acknowledge that the liquidity of these assets needs to be managed, the Directors believe that the Company has adequate financial resources to meet its liabilities as they fall due for at least twelve months from the date of this report, and that it is appropriate for the financial statements to be prepared on a going concern basis.
Directors’ Responsibility Statement
For the period ended 30 June 2022
The Directors are responsible for preparing the Unaudited Half-Yearly Financial Report (the “Condensed Financial Statements”), which have not been audited by an independent auditor, and confirm that to the best of their knowledge:
· these Condensed Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and in accordance with International Accounting Standard 34 “Interim Financial Reporting” issued by the European Union and the AIM Rules of the London Stock Exchange (“LSE”);
· these Condensed Financial Statements include a fair review of important events that have occurred during the period and their impact on the Condensed Financial Statements, together with a description of the principal risks and uncertainties of the Company for the remaining six months of the financial period as detailed in the Investment Manager’s Report; and
· these Condensed Financial Statements include a fair review of related party transactions that have taken place during the six-month period which have had a material effect on the financial position or performance of the Company, together with disclosure of any changes in related-party transactions in the last Annual Report and Audited Financial Statements which have had a material effect on the financial position of the Company in the current period.
The Directors confirm that the Condensed Financial Statements comply with the above requirements.
On behalf of the Board,
Norman Crighton Gill Morris
Chair Director
9 September 2022
Board of Directors
The Company has five Directors and will revert to four Directors from 1 October 2022. All Directors are considered independent of the Investment Manager.
Norman Crighton (aged 56)
Mr. Crighton is Chairman of the Company. Norman Crighton is an experienced public company director having served on the boards of eight closed-end funds and one operating company over the past ten years. Presently Norman is also Non-Executive Chair of RM Infrastructure Income plc, AVI Japan Opportunity Trust plc and Harmony Energy Income Trust plc.
Norman has extensive fund experience having previously been Head of Closed-End Funds at Jefferies International and Investment Manager at Metage Capital Ltd. leveraging his 31 years of experience in investment trusts. His career in investment banking covered research, sales, market making and proprietary trading, servicing major international institutional clients over 15 years. His work in many countries included restructuring closed-end funds and well as several IPOs. During his time as a fund manager, Norman managed portfolios of closed-end funds on a hedged and unhedged basis covering developed and emerging markets.
Following on from his long-term promotion of best corporate governance practice, Norman has more recently been focusing on expanding his work into Environmental and Social issues. His work in the investment trust industry is backed up with a master’s degree from the University of Exeter in Finance and Investment and a BA(Hons) in Applied Economics. Norman is British and resident in the United Kingdom.
Robert Paul King- retires 30 September 2022 (aged 59)
Rob is an independent non-executive director for a number of open and closed-ended investment funds including one Specialist Fund Sector fund, Tufton Oceanic Assets Limited (Chairman); one AIM listed fund, Weiss Korea Opportunities Fund Limited; and one International Stock Exchange listed fund, Golden Prospect Precious Metals Limited (which also has a trading listing on the LSE). Before becoming an independent non-executive director in 2011, he was a director of Cannon Asset Management Limited and their associated companies. Prior to this he was a director of Northern Trust International Fund Administration Services (Guernsey) Limited (formerly Guernsey International Fund Managers Limited) where he had worked from 1990 to 2007. He has been in the offshore finance industry since 1986 specialising in administration and structuring of offshore open and closed ended investment funds. Rob is British and resident in Guernsey.
Gillian Yvonne Morris (aged 59)
Gill is Chairman of the Audit Committee. Gill is also a non-executive director and Chair of the Audit Committee at The International Stock Exchange, and a panel member of the States of Guernsey Financial Scrutiny Panel and the Guernsey Tax Tribunal. She also runs her own consultancy and coaching business. Gill qualified as a Chartered Accountant with the Institute of Chartered Accountants of England & Wales in 1988 and a Chartered Tax Advisor with the Chartered Institute of Taxation in 1994. Gill started her career in 1985 as a tax advisor at Touche Ross & Co. in London. She worked with Touche Ross & Co. and KPMG in Australia before returning to Guernsey with KPMG. Gill moved into the industry in 1994, joining Specsavers Optical Group as their tax manager and during her time with the Group was promoted to Director of Tax and Treasury and ultimately served as Director of Risk and Government Affairs until 2020. Gill has also assumed other government roles in Guernsey since 2012, including as a member of the Public Accounts Committee and a Non-States member of the Scrutiny Management Committee. Gill is British and resident in Guernsey. Gill was appointed to the Board in 2021.
Krishna Shanmuganathan- appointed 1 June 2022 (aged 48)
Krishna Shanmuganathan is an independent non-executive director of the Company. He is also an independent non-executive director of abrdn Asia Focus plc since June 2020 and founded Scylax Partners in 2016, a provider of specialist advisory services. Prior to Scylax, Krishna was a managing partner at Hakluyt & Company (Asia), a risk advisory company, having established and led the Asia Pacific offices of the firm based in Singapore. Krishna has also held research and analyst roles at Fidelity International and Cambridge Associates after a successful and varied career in the Foreign & Commonwealth Office. He holds a number of other non-executive appointments, including being on the advisory board of Serendipity Capital, chairman of the trustees of St Jude India ChildCare Centres UK and a trustee of Solefield School Educational Trust. Krishna has Masters degrees from University of Cambridge and University of London, is British and resident in the United Kingdom. Krishna was appointed to the board in 2022.
Wendy Dorey- appointed 9 September 2022 (aged 49)
Mrs Dorey is an experienced professional in the financial services industry, with key competencies in business strategy, financial regulation, risk management and investment marketing and distribution. She is currently a Director of Dorey Financial Modelling, an investment consulting firm, a Commissioner for the Guernsey Financial Services Commission, and a Non-Executive Director for Schroders (CI) Limited.
Mrs Dorey has over 20 years’ industry experience working for asset managers, pension consultants and retail banks in the UK, Guernsey and France. She has worked for a number of leading asset managers : BNY Mellon, M&G Asset Management, Friends Ivory & Sime and Robert Fleming/Save & Prosper. She has also consulted to the Defined Contribution Consulting arm of the Punter Southall Group, and obtained retail banking experience at Lloyds bank and Le Credit Lyonnais. She is a Fellow of the Institute of Directors and qualified as a Chartered Director in 2020. She is also currently Chair of the Guernsey Branch of the Institute of Directors.
Investment Manager
Weiss Asset Management is an investment management firm headquartered in Boston, MA registered with the U.S. Securities and Exchange Commission as an investment adviser. In addition to WKOF, WAM manages multiple investment vehicles, including private hedge funds, an institutional separate account and other opportunity funds.
The firm was founded by Dr Andrew Weiss, an academic economist, who launched his first fund in 1991.
WAM employs deep fundamental and statistical analysis to find undervalued securities globally, and seeks to maximise risk-adjusted returns for its investor base that includes charitable foundations, pension plans, endowments, hospitals, government entities and private investors.
WAM has been investing in the Korean market for over 20 years. Over this time, the firm has built out a dedicated night desk of 6 employees focused on trading its Asian strategies, as well as strong relationships with a number of Korean brokers.
The firm has 80+ employees and assets under management of approximately £2.5 billion.
Andrew Weiss
Founder and Chief Executive Officer
Andrew is the Founder and Chief Executive Officer of WAM. Andrew received his Ph.D. in Economics from Stanford University, was elected a fellow of the Econometric Society in 1989 and is currently Professor Emeritus of Economics at Boston University.
Andrew’s academic research interests have included markets with imperfect information, macroeconomics, development economics, and labour economics. He ranks in the top 1% of published economists by citations, and his co-authored paper “Credit Rationing in Markets with Imperfect Information” with Joseph Stiglitz was prominently featured in the Nobel Prize committee statement for Stiglitz’s 2001 Nobel Prize Award.
Andrew began his career as Assistant Professor at Columbia University and as a Research Economist in the Mathematics Center at Bell Laboratories. He has lectured at numerous major universities and international organisations and is the author of numerous articles published in professional journals.
Andrew began managing the predecessor to WAM’s existing domestic hedge fund in 1991 and founded WAM in 2003. Andrew and WAM’s strategies have been featured in articles in Forbes, Time, and Outstanding Investor Digest, as well as newspaper articles in the U.S. and Europe.
Additionally, Andrew is a member of the Advisory Board of the University of California Center for Effective Global Action, the Advisory Board for the Center for Development Economics at Williams College and the Council on Foreign Relations. Andrew and his wife Bonnie are the founders of Child Relief International, a foundation dedicated to fighting poverty in less developed countries. Andrew is also a board member of the WAM Foundation, a non-profit focused on maximising the alleviation of suffering worldwide.
Jack Hsiao
Managing Director
Jack joined WAM in February 2008; he is a Managing Director and a member of the Investment Committee. Prior to that, Jack interned at WAM from 2006-2008 while performing his undergraduate studies. Jack works from Boston and oversees all strategies in Asia including investments across preference shares, holding companies, bonds, distressed, value equities and other instruments. After graduating Valedictorian from his high school, Jack received his Bachelor degree in Economics from Harvard.
Ethan Lim
Portfolio Manager
Ethan joined WAM in June 2015; he is a Portfolio Manager at the firm and is primarily responsible for managing the firm’s investments in Korea, while overseeing the Asia team and other strategies during Asia hours. Prior to joining Weiss, Ethan interned at Goldman Sachs’s Seoul office. Ethan graduated from Seoul National University, where he received a BS in Mechanical and Aerospace Engineering and a BA in Economics, and completed his Master’s degree in Financial Engineering at Columbia University.
How to invest in Weiss Korea Opportunity Fund
You can invest in the Fund through the following:
Via the nominated broker
The nominated broker is Singer Capital Markets.
The Board encourages all of its shareholders to exercise their rights and notes that many specialist platforms provide shareholders with the ability to receive company documentation, to vote their shares and to attend general meetings, at no cost.
Please refer to your investment platform for more details, or visit the Association of Investment Companies’ (“AIC”) website at www.theaic.co.uk/aic/shareholder-voting-consumer-platforms for information on which platforms support these services and how to utilise them.
Through a professional adviser
Professional advisers are usually able to access the products of all the companies in the market and can help you find an investment that suits your individual circumstances. An adviser will let you know the fee for their service before you go ahead.
You can find an adviser at unbiased.co.uk You may also buy investment trusts through stockbrokers, wealth managers and banks. To familiarise yourself with the Financial Conduct Authority (“FCA”) adviser charging and commission rules, visit fca.org.uk.
Corporate Information
| Directors (Non-Executive) Norman Crighton (Chairman) Robert Paul King (retires 30 September 2022) Gillian Yvonne Morris Krishna Shanmuganathan (appointed 1 June 2022) Wendy Dorey (appointed 9 September 2022) | Company Secretary, Administrator and Designated Manager Northern Trust International Fund Administration Services (Guernsey) Limited PO Box 255 Trafalgar Court Les Banques St. Peter Port Guernsey GY1 3QL |
| Registered Office PO Box 255 Trafalgar Court Les Banques St. Peter Port Guernsey GY1 3QL | Financial Adviser, Nominated Adviser and Broker Singer Capital Markets 1 Bartholomew Lane London EC2N 2AX | |
| Investment Manager Weiss Asset Management LP 222 Berkeley Street, 16th Floor Boston, MA 02116 USA | Guernsey Legal Adviser to the Company Mourant Ozannes (Guernsey) LLP Royal Chambers St. Julian’s Avenue St. Peter Port Guernsey GY1 4HP | |
| English Legal Adviser to the Company Stephenson Harwood LLP 1 Finsbury Circus London EC2M 7SH | Registrar Link Market Services (Guernsey) Limited Mont Crevelt House Bulwer Avenue St. Sampson Guernsey GY2 4LH | |
| Custodian and Principal Bankers Northern Trust (Guernsey) Limited PO Box 71 Trafalgar Court Les Banques St. Peter Port Guernsey GY1 3DA | Independent Auditor KPMG Channel Islands Limited Glategny Court Glategny Esplanade St. Peter Port Guernsey GY1 1WR |
Endnotes
[1] Bloomberg L.P. (2022). Bloomberg Innovation Scores as of 12/31 since 2013. Retrieved from Bloomberg terminal.
2 WIPO IP Facts and Figures 2021. (n.d.). World Intellectual Property Organization.
3 The Sovereign Credit Rating of Korea. (n.d.). Bank of Korea.
4 Leading export countries worldwide in 2021. (n.d.). Statista.
5 GDP. (n.d.). World Bank.
6 Doing Business 2020. (2020). World Bank.
7 PISA 2018 Insights and Interpretations. (n.d.). Organisation for Economic Co-operation and Development.
8 Activist Targets. (n.d.). Activist Insight.
9 Technology and Products. (2022). Doosan Fuel Cell.
10 This return includes all dividends paid to the Company’s Shareholders and assumes that these dividends were reinvested in the Company’s Shares at the next date for which the Company reports a NAV, at the NAV for that date.
11 MSCI total return indices are calculated as if any dividends paid by constituents are reinvested at their respective closing prices on the ex-date of the distribution.
12 On 30 July 2022 the Company had 9,307,078 shares outstanding
13 For WKOF, this return includes all dividends paid to WKOF’s Shareholders and assumes that these dividends were reinvested in WKOF’s Shares at the next date for which WKOF reports a NAV, at the NAV for that date. MSCI total return indices are calculated as if any dividends paid by constituents are reinvested at their respective closing prices on the ex date of the distribution. iShares MSCI Korea UCITS ETF also assumes reinvestment of dividends.
14 MSCI Korea 25/50 Net Total Return Index denominated in GBP. MSCI total return indices are calculated as if any dividends paid by constituents are reinvested at their respective closing prices on the ex-date of the distribution.
15 LG Energy Solution Raises $10.8 bln in S.Korea's Biggest IPO. (2022). Reuters.
[1]6 CATL Retains Top Position As World’s Biggest EV Battery Maker. (2022). Bloomberg.
[1]7 Subsidiaries Companies. (2022). SK Chemicals.
[1]8 US Hedge Fund Urges SK to Focus On Share Buybacks. (2022). The Korea Economic Daily.
[1]9 LG to Buy Back $398 Mn Of Its Own Shares. (2022). The Korea Economic Daily.
20 Bloomberg L.P. (2022). World Economic Statistics: South Korea. Retrieved from Bloomberg terminal.
21 Bloomberg L.P. (2022). World Economic Statistics: South Korea. Retrieved from Bloomberg terminal.
22 Bloomberg L.P. (2022). World Economic Statistics: South Korea. Retrieved from Bloomberg terminal.
23 South Korea Raises Rates, Warns Inflation Fight Not Over. (2022). Reuters.
24 S. Korea to lift import tariffs on more key foodstuffs amid high inflation. (2022). The Korea Times.
25 S. Korea’s top 5 conglomerates pledge capex nearly matching half of GDP through 2026. (2022). Pulse News.
26Approval rating of South Korea's President Yoon Suk-yeol from April to August 2022. (2022). Statista.
