WEISS KOREA OPPORTUNITY FUND LTD.
LEI 213800GXKGJVWN3BF511
(Classified Regulated Information, under DTR 6 Annex 1 section 1.1)
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Weiss Korea Opportunity Fund Ltd. (the "Company" or "WKOF") has today, released
its Annual Financial Report for the year ended 31 December 2023. The Report will
shortly be available for inspection via the Company's website
www.weisskoreaopportunityfund.com. (https://www.weisskoreaopportunityfund.com/cgi
-bin/investors/documents.pl?AGREE=1)
Financial Highlights
As at 31 December 2023 As at 31 December 2022
£ £
Total Net Assets 116,849,704 127,080,493
Net Asset Value ("NAV") Per 1.69 1.83
Share
Mid-Market Share Price 1.68 1.81
As at
31 December 2023 Since inception
NAV Return -5.5% 112.2%
Benchmark Return 14.8% 73.2%
As at 31 December 2023 As at
31 December 2022
Portfolio Discount* 49.7% 68.0%
Share Price Discount -0.4% -1.6%
Fund Dividend Yield 3.2% 3.5%
Average Trailing 12-Month P/E 4.8x 4.0x
Ratio of Preference Shares
Held
P/B Ratio of Preference Shares 0.3 0.3
Held
Annualised Total Expense Ratio 2.1% 2.0%
* 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.
As at close of business on 30 April 2024, the latest published NAV per Share was
£1.80 and the Share Price was £1.73.
Chair's Review
For the year ended 31 December 2023
Investment Performance
Against a backdrop of weakening economic data in China and a `theme-driven stock
frenzy' in the Korean market, WKOF's NAV in pounds Sterling ("GBP") declined by
5.5%, including reinvested dividends during the period from 1 January 2023 to 31
December 2023. In comparison, the reference MSCI South Korea 25/50 Net Total
Return Index (the "Korea Index") appreciated by 14.8%. Since the admission of
WKOF to the AIM in May 2013, NAV has increased by 112.2%, including reinvested
dividends, compared to the Korea Index returns of 73.2%, a cumulative
outperformance of 39% since inception.
Dividend
During the year, the Directors declared an interim dividend yield of 5.3517
pence per share on 2 May 2023, equating to a 3.2% net dividend yield over the
past 12 months, to distribute the income received by WKOF in respect of the year
ended 31 December 2022. This dividend was paid to all Shareholders on 9 June
2023.
The Company's policy is to pay a single dividend, which incorporates all
dividends received (net of withholding tax), on an annual basis. As discussed in
the Investment Manager's report below, there are changes afoot in Korean
corporate governance. One of the initiatives aims to address Korean companies'
unique approach to the declaration of dividends, whereby a dividend is declared
but its quantum is not announced at the same time. The proposal is that both the
time and amount of the dividend ought to be declared together. Some of the
companies in which we are invested have already proactively implemented this,
such as Hyundai Motors. The impact of this change is that the dividends
receivable in 2023 (that is those declared) are significantly lower than in
previous years. This is because those companies that have moved to the new
process have declared their dividends post year-end. At the time of writing,
most of these companies have declared and (in most cases) already paid out their
dividends. The board therefore intends to take into account all dividends
received up to 30 April 2024 when declaring the Company's own dividend.
As things currently stand, the Board expects to adopt a similar approach for
future periods but will keep the dividend policy and process under review
Share Buybacks
The Board is authorised to repurchase up to 40% of WKOF's outstanding Ordinary
Shares in issue as of 31 December 2023. To date, WKOF has repurchased 12.6% of
Ordinary Shares issued at admission and continues to have the intention to
repurchase shares if they trade at a significant discount to NAV in the future.
The share price traded in line with the NAV over the period. We will also keep
shareholders informed of any share repurchases through public announcements.
Realisation Opportunity
WKOF offers shareholders the regular opportunity to elect to realise all, or a
part, of their shareholding in WKOF (the "Realisation Opportunity") once every
two years, on the anniversary of WKOF's admission date. As we said in our Half
-Yearly Financial Report, we were pleased to see that only 41,496 shares were
tendered (0.06% of WKOF's shares) as this displayed positive shareholder
support. The next Realisation Opportunity will take place in 2025, and we hope
that shareholders will continue to show their support for WKOF and the long-term
opportunity it offers.
Board Composition
This is my first Annual Report as Chairman, and I wish to extend, again, our
thanks to Norman Crighton, who successfully steered WKOF from its IPO until last
year. Your current board has a diverse range of skills and experiences, brings
fresh perspectives, and are well qualified to act in the best interests of
shareholders to enable the continued success of WKOF. Although not a requirement
of the AIM listing rules, your Board is nonetheless compliant with the diversity
and inclusion targets as set out in Chapter 15 of the FCA's Listing Rules, as
well as the AIC Code of Corporate Governance and remains committed to corporate
governance best practices as recommended in the Hampton-Alexander and Davies
reviews.
Your Investment Manager
Following a pause during COVID, I am pleased to report that your Investment
Manager has been increasingly engaging with South Korean companies on governance
matters, very much in support of the government's `Corporate Value-Up
initiative'. During the reporting period, your Investment Manager held a number
of meetings with portfolio companies in the portfolio and expects to continue
doing so in the future.
Value for Money
Your Board continues to keep all costs under review and we are very mindful that
the ongoing charges for the year were approximately 2.1%. We strive to keep the
cost of investing as low as possible for shareholders, with the investment
management fee of 1.5% making up the bulk of the costs. The Realisation
Opportunity added approximately £124,000 of expense for the year, but the Board
believes that this periodic redemption facility is very much in the best
interest of all shareholders. The Board scrutinised all other overheads during
the year, cutting back where no obvious value was being generated, to ensure
that shareholders receive value for money.
Responsible Investing
As an AIM quoted investment company, WKOF is not subject to the FCA Listing Rule
requirement to comply with TCFD (Task Force on Climate-related Financial
Disclosures). Your Investment Manager, as a US asset manager, is also not
subject to the TCFD requirements. However, your Board is a keen supporter of the
ambitions of TCFD, as it will improve disclosure around climate related issues.
As a result, WKOF's reporting on Responsible Investing will evolve in line with
regulatory requirements and remain an area of focus for the Board in the coming
years.
Outlook
2023's relative and absolute performance was disappointing for WKOF, but there
are reasons to be optimistic about the future performance, not least given the
recent uplift in performance following the end of the reporting period (and as
detailed in the Investment Manager's Report). While investors will most likely
remain sceptical of material change occurring in South Korea , at least in the
short-term, the government appears to have introduced incentives to enact real
change. Domestic retail ownership of stocks has greatly increased, and Korea has
the recent success of corporate governance changes in Japan as a playbook for
similar announcements and activities. We believe WKOF offers an attractive way
for patient, value-oriented investors to gain exposure to the economic benefits
of what we hope is an increasingly modernised and shareholder friendly
investment environment in South Korea .
I look forward to communicating with you about WKOF's activities in the future.
If any Shareholders wish to speak with the Board, please contact Singers, and we
will be happy to answer any questions you may have.
Krishna Shanmuganathan
Chair
2 May 2024
Investment Manager's Report
For the year ended 31 December 2023
WKOF Performance Attribution
At the end of December 2023, WKOF held a portfolio of 32 South Korean preference
shares. As a reminder, the economic rights of South Korean preference shares are
generally the same or slightly better than the corresponding common shares, yet
the preference shares often trade at substantial discounts to the common shares.
WKOF's returns, on a currency-neutral basis, are driven by five primary factors:
· The performance of the South Korean equity market generally as indicated by
the Korea Index;
· The discounts of the preference shares WKOF holds narrowing or widening
relative to their corresponding common shares;
· The performance of the common shares (which correspond to the preference
shares held by WKOF)
· relative to the performance of the South Korean equity market;
· Excess dividend yields of the preference shares held by WKOF; and
· Fees, expenses and other factors.
In order to compare WKOF's relative return to the South Korea Index, we report
the attribution of these aforementioned factors to WKOF's performance. The
following table provides this performance attribution for the year ended 31
December 2023 and for the period since the inception of WKOF in May 2013 to 31
December 2023.
Performance Attribution Table
Return Component 2023 Since Inception
The Korea Index 14.8% 73.2%
Discount Narrowing (Widening) of Preferred Shares Owned 1.8% 66.2%
WKOF Common Shares vs. The Korea Index -20.4% -29.3%
Excess Dividend Yield of Preferred Shares Owned 1.7% 16.7%
Fees, Expenses and Others -3.4% -14.6%
NAV Performance -5.5% 112.2%
WKOF's investment thesis at inception was based on the likelihood that WKOF's
NAV would perform well, largely due to (i) decreases in the large discounts of
the preference shares held by WKOF relative to their corresponding common shares
and (ii) the related excess dividend yields caused by these large discounts.
This has, indeed, generally been the case as these two factors have collectively
been the main contributors to WKOF's outperformance relative to the South Korea
Index since inception. At present, we continue to remain confident in both of
these theses.
In September 2013, shortly after inception, the preference shares held by WKOF
traded at a 55.5% discount to their corresponding common shares and the dividend
yield was 1.7%. As at 31 December 2023, the discount and dividend yield were
49.7% and 3.2%, respectively. We are focused on returns since inception because
we believe that due to high levels of idiosyncratic volatility, any data that is
gathered over a one-year period is unlikely to be a reliable guide for future
performance.
As displayed above in the attribution table, WKOF under-performed the South
Korea Index during 2023 due to negative attribution via common share selection
return. We believe it is primarily a result of thematic- driven investors
favouring growth-oriented common shares which typically have higher valuation
metrics. While it has been a frustrating two years for WKOF on an absolute basis
and relative to various South Korean equity indices, there is optimism that
investors could begin rewarding certain low price-to-book equities due to
investor optimism of corporate governance reform as discussed in greater detail
below. While investor sentiment could change, it is encouraging to see a
possible tailwind for low price-to-book securities like those held by WKOF.
Review of the South Korean Macro Environment
There is increasing concern that North Korea could carry out some form of
destabilising provocation against South Korea in 2024, and, as a result, WKOF
has increased its exposure to Korean sovereign bond credit default swap
protection. While it seems highly unlikely that an attack would occur that could
trigger a large-scale military conflict, we consider that there is an increased
likelihood of some form of action intended to sow political division in Korea
and increase national security distractions in China and the US. In recent
months, political and military tension in the Korean Peninsula have continued to
escalate, as North Korea has exhibited signs of increased aggression. In
January, North Korea fired artillery shells towards the border islands of South
Korea , tested more ballistic missiles and followed such provocations with a
declaration that "South Korea [is] its principal enemy". In February 2024, North
Korea's parliament announced it had abolished laws that allow for economic
cooperation with South Korea , further signalling an ongoing deterioration of the
relationship between the Koreas. This announcement followed the discovery that
North Korea demolished The Monument to the Three Charts, a 30-meter monument
that had stood as a symbol of unification between the Koreas since 2001. With
upcoming legislative elections and presidential elections in South Korea and in
the United States , respectively, North Korea is expected to intensify their
provocations throughout the year.
South Korea's economy, the fourth largest in Asia , expanded 1.4% in 2023. While
this year's growth was the country's lowest since 2020, the growth during the
fourth quarter suggests that the domestic economy remains on the road to
recovery. In 2023, South Korea's annual exports declined by 7.4% while annual
imports decreased by 12.1%. The decline in exports has partially been attributed
to decreased demand from China , to which exports fell by 2.9% year over year.
After stagnating for sixteen months, chip exports began to rise in November 2023
with exports jumping by 21.8% on a year on year basis during December.
South Korea's 3.5% policy interest rate or bank base rate, which has been
unchanged since January 2023, remains at its 15-year high. Following the Bank of
Korea's ("BOK") November 2023 meeting, it raised its inflation target from 2.4%
to 2.6% and, once again decided to leave its policy interest rate unchanged
following its most recent meeting in January. In the 2023 Half-Yearly Report, we
discussed the Bank of Korea's concern about levels of household debt, which
stood at 103% of GDP as of 30 June 2023. At 30 September 2023, South Korea's
household debt hit a new record, despite the restrictive interest rate policy
described above, so will most likely remain an area of focus for the BOK.
Governor Rhee has previously suggested that, should household debt levels
continue to rise, the BOK might consider subsequent rate hikes.
Valuation of Major Indices
Index Name P/E Ratio P/B Ratio Dividend Yield
Nifty Index (India) 24.4 3.1 1.3%
S&P 500 (US) 23.4 4.5 1.5%
Nikkei 225 (Japan) 20.4 1.9 1.9%
FTSE 100 (UK) 10.7 1.7 3.9%
Shanghai Composite (China) 11.3 1.3 2.8%
Hang Seng Index (HK) 9.2 1.0 4.1%
TAIEX (Taiwan) 18.2 2.1 3.4%
KOSPI 200 (Korea) 11.6 1.0 1.6%
WKOF Portfolio Holdings 4.2 0.4 2.7%
South Korean equities and the portfolio holdings of WKOF continue to offer
apparent valuation discounts relative to other countries' equity markets as
represented by the price-to-earnings ratios ("P/E ratios") and price-to-book
ratios ("P/B ratios") listed in this report.
As previously discussed, WKOF's portfolio discount as at 31 December 2023 was
50%. This is calculated as the weighted average discount of the preference
shares owned by WKOF relative to the prices of such preference shares'
corresponding common shares. In addition, the KOSPI 200 has depressed valuation
multiples as shown above relative to the average of other major indices.
Portfolio Discussion and Korean Corporate Governance
Investors who read our reports have become accustomed to the valuation table
above which displays South Korean equities trading at highly discounted
valuations relative to other developed markets, as well as certain emerging
markets. These discounts have persisted for an extended period of time and
investors may rightfully wonder what might cause a change. While South Korea has
been a challenging region for investors to put their capital, there are signs
that material change may be on the horizon. Due to the existing low valuations
of South Korean companies, as well as comparatively low levels of foreign stock
ownership of such companies, improvements in international perceptions of Korea
could have a material impact on Korean equity valuations. In particular,
securities which trade at steep valuation discounts due to concerns over the
issuers' corporate governance could benefit from market-wide improvements in
corporate governance.
International concerns about South Korean corporate governance practices
typically focus on the following issues:
· Laws and regulations, which contain fewer minority protections relative to
developed markets, allow controlling shareholders of publicly traded companies
to favour their own interests over those of minority shareholders;
· A lack of truly independent directors on the boards of many publicly traded
companies due to directors only being required to maintain a standard of being
"loyal" to the company, not shareholders (source: Article 382-3 of the
Commercial Act);
· Wealthy families are often controlling shareholders of publicly traded
companies and may have an incentive to depress the valuations of the publicly
traded stocks they control to avoid high inheritance taxes (which can be as high
as 60%) when they transfer wealth to the next generation of the family;
· Stocks bought back by companies are often held in treasury without
cancellation which is dilutive to earnings per share; this practice also
maintains a defensive currency that issuers can readily use to dilute minority
shareholders in the future;
· Payout ratios to shareholders, even by profitable companies with large cash
positions, are often materially lower than in other countries; and
· Minority shareholders may be at risk of a controlling shareholder forcing
them to swap their shares of the company they own with another less attractive
company the controlling shareholder owns or be diluted through an unattractive
new stock offering.
As mentioned in our prior reports, there are reasons for optimism that the above
corporate governance regime may be ending.
The recently announced government-sponsored `Corporate Value-up Programme' could
be the start of more pronounced long-term changes in corporate governance in
South Korea . Japan has enacted similar corporate governance reforms over the
past decade which, having had limited early success, seem to be now yielding
results. For example, when the Tokyo Stock Exchange "named and shamed" companies
whose publicly traded equities were trading below book value, approximately 40%
of affected companies subsequently submitted plans for improvement and share
buybacks hit a record high. Despite GDP in Japan contracting in both the third
and fourth quarters last year, company profits in the fourth quarter increased
by 46% year-on-year (Source: Grant's Interest Rate Observer, February 2024).
While details will not be available until June 2024, the general goals of the
Korean governance programme appear to be:
· Encouraging companies to improve corporate governance standards through
incentives and tax benefits;
· Creating an index of companies, the "Korea Premium Index," composed of best
practicing companies similar to Japan's JPX Prime 150 Index and exchange traded
funds;
· Encouraging pension funds and domestic institutional investors to track the
new index; and
· Requiring listed companies to disclose plans to enhance corporate value
through the revised Corporate Governance Disclosures and key valuation metrics.
If improvements are made in corporate governance, we are hopeful it will have a
positive impact on WKOF's future performance. As shown in the table on the
right, WKOF's Top 10 Holdings are primarily comprised of companies with low
price-to-book ratios.
Issuer Name Portfolio Weight Common Share
Price-to-Book Ratio
Hyundai Motor 16% 0.45
Company, 2nd Prf.
LG Electronics Inc., 10% 0.85
Prf.
LG Chem Ltd., Prf. 8% 1.10
Hanwha Corporation 7% 0.18
3rd Prf.
Amorepacific Corp., 7% 1.73
Prf.
CJ CheilJedang Corp, 6% 0.67
Prf.
Mirae Asset 5% 0.34
Securities Co., Ltd.,
2nd Prf.
Samsung Kodex 200 ETF 4% N/A
Hyundai Motor 4% 0.45
Company, 3rd Prf.
CJ Corporation, 1st 3% 0.47
Prf.
Top 10 Holdings 70%
Domestic retail investors now represent a large shareholder base for South
Korean stocks. The number of retail investors has grown from 6 to 14 million
since 2020 - an increase of 135%, which represents approximately 33% of the
voting public in South Korea . (Source: Goldman Sachs, "Korea Value in Action", 7
February 2024). With legislative and presidential elections occurring this year
and in 2027, respectively, there is arguably a political incentive to enact
reforms that benefit retail and minority shareholders. Three more recent
examples of such reforms are:
· A draft plan was released to improve the dividend pay-out process of South
Korean companies. In South Korea , dividend amounts are disclosed after the ex
-date of dividends, which effectively precludes shareholders from knowing the
per-share dividend before becoming eligible to receive those dividends. By
contrast, the international market standard is to announce dividend amounts
prior to the dividend record date for additional clarity on dividend payouts.
All else being equal, the new practice is likely to provide greater insight into
indicative dividend payouts prior to South Korean issuers' dividend record
dates, thereby allowing investors to capture attractive yield opportunities with
more information about upcoming dividend payouts;
· A 30 year old rule requiring foreign investors to register with authorities
in order to trade local shares was abolished, and a requirement to report
transaction details of firms trading shares through an omnibus account was
relaxed from two days after settlement to once a month;
· South Korean companies with market capitalisations greater than KRW 10
trillion (roughly 7-8 billion GBP market capitalisations) and foreign ownership
greater than 5% will be required to provide disclosures in English starting in
2024.
There have already been slow but meaningful improvements to corporate governance
in South Korea (albeit from low standards) and pressure continues to mount to
improve standards:
· While South Korea still ranks eighth for corporate governance in its region
according to the Asian Corporate Governance Association, it also had the largest
absolute change in corporate governance score after Japan (Japan was +5.3 vs
South Korea +4.2) since 2000 of any country in its region;
· Over 45 companies received proactive shareholder proposals from
institutional shareholders in 2022 versus less than five instances just five
years ago (Source: Insignia; Goldman Sachs, "Korea Value in Action", 7
February 2024);
· It was the third largest market for activism in 2023 with 77 activist
campaigns - up from 10 campaigns in 2020. (Source: Grant's Interest Rate
Observer, February 2024); and
· Payout ratios of companies listed on the KOSPI increased to 44% in 2023 from
32% the year prior (Source: FactSet, Korea Exchange, Goldman Sachs Investment
Research).
If corporate governance in South Korea is improving and potentially
accelerating, why has the large weighted-average discount of South Korean
preference shares held by WKOF persisted or even widened?
A leading cause is our deliberate portfolio rebalancing as the Company has
rotated from preference shares where discounts have tightened towards ones with
wider discounts. For example, the Company's largest portfolio position at one
point was Samsung Electronics, which had a discount wider than 40% over the life
of the fund. As of the end of February 2024, the discount stands at 21% and has
never reverted higher than 25% since 2018. Samsung Electronics provides an
example of positive corporate governance reform having a material impact on the
preference shares tightening and investors benefiting. However, with limited
upside due to a narrower discount level, we believe other preference shares with
wider discounts offer better prospective risk-adjusted returns over the longer
-term.
Similarly, we reduced our exposure to LG Chem during 2023. It stood as the
largest position in the portfolio (approximately 15% of NAV) in 2022 and now
accounts for just under 8% of NAV. The discount of its preference shares
tightened throughout 2023, finishing the year at 38%, demonstrating reduced
scope for upside potential. It was therefore, replaced as the largest position
by Hyundai Motors' preference shares during the year. Not only were these
preference shares trading at a wider-than- average 48% discount at mid-year,
they also offered an attractive 10% dividend yield. A similar rationale has led
us to increase the Company's position in LG Electronics preference shares, which
were trading at a 57% discount at mid-year.
We have observed that discounts in the most liquid preference shares appear to
be tightening. This is not to say that corporate governance has improved
universally for all South Korean companies or that past trends in preference
share discounts will always repeat themselves in larger discount securities.
However, when discounts widen for reasons that are hard to explain with sound
economic principles, we will patiently capture attractive investment
opportunities as they present themselves. We are aware that a major goal of WKOF
is to enable long- term investors to benefit from the large discounts of South
Korean preference shares relative to their underlying common shares and will
continue to manage the portfolio to that end.
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 certain Korean equity ETFs and indices -
securities that we believe would generate high returns if South Korea
experienced geopolitical disaster - which do not introduce material new risks
into the portfolio. These catastrophe hedges are not expected to make money in
most states of the world. We expect that WKOF's hedges will lose money most of
the time but are tradeable prior to expiration. The table below provides details
about the hedges as of 31 December 2023. Note that outside of the general market
and portfolio hedges described herein, WKOF has generally not hedged interest
rates or currencies.
CDS Notional Cost Paid as a % of Expiration Date
Amount (GBP) Notional Value per Annum
(Spread)
78,443,677 0.195% 6/20/2025
Concluding Remarks
To echo the Half-Yearly Report, we wish to again express our thanks to our long
-term shareholders for their patience. We continue to remain disciplined and
focused on attempting to capitalise on a rare economic anomaly in the form of
Korean preference shares trading at steep discounts to the corresponding common
shares despite largely equivalent economic rights. Discounts are similar to when
WKOF was originally listed and valuations are at heavy discounts to global
equities. This is in spite of slow but steady corporate governance reforms and
the recent announcements of potentially more material changes ahead. We remain
optimistic about WKOF's future risk-adjusted returns and continue to be one of
its largest shareholders.
Weiss Asset Management LP
2 May 2024
Statement of Financial Position
As at 31 December 2023
As at As at
31 December 31 December
2023 2022
£ £
Assets
Financial assets at fair 112,427,879 120,764,446
value through profit or
loss
Other receivables 1,627,052 4,598,722
Margin account 1,396,037 1,327,313
Cash and cash equivalents 3,364,287 2,890,620
Total assets 118,815,255 129,581,101
Liabilities
Derivative financial 903,381 1,145,453
liabilities
Due to broker 271,189 -
Other payables 790,981 1,355,155
Total liabilities 1,965,551 2,500,608
Net assets 116,849,704 127,080,493
Represented by:
Shareholders' equity and
reserves
Share capital 33,912,856 33,986,846
Other reserves 82,936,848 93,093,647
Total Shareholders' equity 116,849,704 127,080,493
Net Assets Value per 1.6870 1.8336
Ordinary Share
The Financial Statements were approved and authorised for issue by the Board of
Directors on 2 May 2024.
Krishna ShanmuganathanGill Morris
ChairDirector
Statement of Comprehensive Income
For the year ended 31 December 2023
For the year ended For the year ended
31 December 2023 31 December 2022
£ £
Income
Net losses on financial
assets
at fair value through (4,498,384) (37,206,667)
profit or loss
Net gains on derivative
financial
instruments through 242,072 1,253,397
profit or loss
Net foreign currency (559,160) 632,948
(losses)/gains
Dividend income 2,490,245 5,088,748
Bank interest income 12,747 4,488
Total loss (2,312,480) (30,227,086)
Expenses (3,586,733) (3,696,545)
Operating expenses
Total operating expenses (3,586,733) (3,696,545)
Loss for the year before (5,899,213) (33,923,631)
dividend withholding tax
Dividend withholding tax (548,479) (1,119,942)
Loss for the year after (6,447,692) (35,043,573)
dividend withholding tax
Loss and total (6,447,692) (35,043,573)
comprehensive loss for
the year
Basic and diluted loss (0.0931) (0.5056)
per Share
All items derive from
continuing activities.
Following review of the AIC SORP and its impact on the Statement of
Comprehensive Income the Board have decided not to follow the recommended income
and capital split. This is due to the fact that the Company's dividend policy is
not influenced by its expense policy.
Statement of Changes in Equity
For the year ended 31 December 2023
For the year ended 31 Share Other reserves Total
December 2023
capital £ £
£
Balance as at 1 January 2023 33,986,846 93,093,647 127,080,493
Total comprehensive loss for - (6,447,692) (6,447,692)
the year
Transactions with
Shareholders, recorded
directly in equity
Purchase of Realisation (73,990) - (73,990)
Shares
Distributions paid - (3,709,107) (3,709,107)
Balance as at 31 December 33,912,856 82,936,848 116,849,704
2023
For the year ended 31 Share Other Total
December 2022
capital reserves £
£ £
Balance as at 1 January 2022 33,986,846 132,554,299 166,541,145
Total comprehensive loss for - (35,043,573) (35,043,573)
the year
Transactions with
Shareholders, recorded
directly in equity
Distributions paid - (4,417,079) (4,417,079)
Balance as at 31 December 33,986,846 93,093,647 127,080,493
2022
Statement of Cash Flows
For the year ended 31 December 2023
For the year For the year
ended 31 December ended 31 December
2023 2022
£ £
Cash flows from
operating activities
Loss and total (6,447,692) (35,043,573)
comprehensive loss for
the
year
Adjustments for:
Interest income (12,747) (4,488)
Net gain or loss on 4,498,384 37,206,667
financial assets at
fair
value through profit
or loss
Exchange losses on (81,949) (523,108)
cash and cash
equivalents
Net gain or loss on (242,072) (1,253,397)
derivative financial
instruments at fair
value through profit
or
loss
Increase in (1,731) (3,314)
receivables excluding
dividends
Increase/(decrease) in 89,974 (57,744)
other payables
excluding withholding
tax
Dividend income net of (1,941,766) (3,968,807)
withholding taxes
Dividend received net 4,261,019 4,265,673
of withholding taxes
Bank interest received 12,747 4,488
Purchase of financial (18,040,415) (10,431,005)
assets at fair value
through profit or loss
Proceeds from the sale 22,149,787 11,811,591
of financial assets
at fair value through
profit or loss
Net cash generated 4,243,539 2,002,983
from operating
activities
Cash flows from
investing activities
Opening of derivative - 1,799,480
financial instruments
Closure of derivative - (163,217)
financial instruments
(Increase)/decrease in (68,724) 54,100
margin account
Net cash generated (68,724) 1,690,363
from investing
activities
Cash flows from
financing activities
Purchase of (73,990) -
Realisation Shares
Distributions paid (3,709,107) (4,417,079)
Net cash used in (3,783,097) (4,417,079)
financing activities
Net 391,718 (723,733)
increase/(decrease) in
cash and cash
equivalents
Exchange gains on cash 81,949 523,108
and cash equivalents
Cash and cash 2,890,620 3,091,245
equivalents at the
beginning
of the year
Cash and cash 3,364,287 2,890,620
equivalents at the end
of the
year
For further information, please contact:
Singer Capital Markets Limited +44 20 7496 3000
James Maxwell/ James Fischer -
Nominated Adviser
James Waterlow - Sales
NorthernTrustInternationalFund +44 1481 745001
Administration Services (Guernsey)
Limited
Company secretary
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