Weiss Korea Opportunity Fund - Annual Report and Audited Financial Statements for the year ended 31 December 2023

PR Newswire

LONDON, United Kingdom, May 02

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.

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 Share	1.69	1.83
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 Ratio of Preference Shares Held	4.8x	4.0x
P/B Ratio of Preference Shares Held	0.3	0.3
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 Company, 2nd Prf.	16%	0.45
LG Electronics Inc., Prf.	10%	0.85
LG Chem Ltd., Prf.	8%	1.10
Hanwha Corporation 3rd Prf.	7%	0.18
Amorepacific Corp., Prf.	7%	1.73
CJ CheilJedang Corp, Prf.	6%	0.67
Mirae Asset Securities Co., Ltd., 2nd Prf.	5%	0.34
Samsung Kodex 200 ETF	4%	N/A
Hyundai Motor Company, 3rd Prf.	4%	0.45
CJ Corporation, 1st Prf.	3%	0.47
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 Amount (GBP)	Cost Paid as a % of Notional Value per Annum (Spread)	Expiration Date
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 31 December	As at 31 December
	2023	2022
	£	£
Assets
Financial assets at fair value through profit or loss	112,427,879	120,764,446
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 liabilities	903,381	1,145,453
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 Ordinary Share	1.6870	1.8336

The Financial Statements were approved and authorised for issue by the Board of Directors on 2 May 2024.

Krishna Shanmuganathan Gill Morris

Chair Director

Statement of Comprehensive Income
For the year ended 31 December 2023

	For the year ended 31 December 2023	For the year ended 31 December 2022
	£	£
Income
Net losses on financial assets
at fair value through profit or loss	(4,498,384)	(37,206,667)
Net gains on derivative financial
instruments through profit or loss	242,072	1,253,397
Net foreign currency (losses)/gains	(559,160)	632,948
Dividend income	2,490,245	5,088,748
Bank interest income	12,747	4,488
Total loss	(2,312,480)	(30,227,086)
Expenses Operating expenses	(3,586,733)	(3,696,545)
Total operating expenses	(3,586,733)	(3,696,545)
Loss for the year before dividend withholding tax	(5,899,213)	(33,923,631)
Dividend withholding tax	(548,479)	(1,119,942)
Loss for the year after dividend withholding tax	(6,447,692)	(35,043,573)
Loss and total comprehensive loss for the year	(6,447,692)	(35,043,573)
Basic and diluted loss per Share	(0.0931)	(0.5056)
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 December 2023	Share capital £		Other reserves £	Total £
Balance as at 1 January 2023	33,986,846		93,093,647	127,080,493
Total comprehensive loss for the year	-		(6,447,692)	(6,447,692)
Transactions with Shareholders, recorded directly in equity
Purchase of Realisation Shares		(73,990)	-	(73,990)
Distributions paid		-	(3,709,107)	(3,709,107)
Balance as at 31 December 2023		33,912,856	82,936,848	116,849,704


For the year ended 31 December 2022		Share capital £	Other reserves £	Total £

Balance as at 1 January 2022		33,986,846	132,554,299	166,541,145
Total comprehensive loss for the year		-	(35,043,573)	(35,043,573)
Transactions with Shareholders, recorded directly in equity
Distributions paid		-	(4,417,079)	(4,417,079)
Balance as at 31 December 2022		33,986,846	93,093,647	127,080,493

Statement of Cash Flows
For the year ended 31 December 2023

	For the year ended 31 December 2023	For the year ended 31 December 2022

	£	£
Cash flows from operating activities
Loss and total comprehensive loss for the year	(6,447,692)	(35,043,573)

Adjustments for:
Interest income	(12,747)	(4,488)
Net gain or loss on financial assets at fair value through profit or loss	4,498,384	37,206,667
Exchange losses on cash and cash equivalents	(81,949)	(523,108)
Net gain or loss on derivative financial instruments at fair value through profit or loss	(242,072)	(1,253,397)
Increase in receivables excluding dividends	(1,731)	(3,314)
Increase/(decrease) in other payables excluding withholding tax	89,974	(57,744)
Dividend income net of withholding taxes	(1,941,766)	(3,968,807)
Dividend received net of withholding taxes	4,261,019	4,265,673
Bank interest received	12,747	4,488
Purchase of financial assets at fair value through profit or loss	(18,040,415)	(10,431,005)
Proceeds from the sale of financial assets at fair value through profit or loss	22,149,787	11,811,591
Net cash generated from operating activities	4,243,539	2,002,983

Cash flows from investing activities
Opening of derivative financial instruments	-	1,799,480
Closure of derivative financial instruments	-	(163,217)
(Increase)/decrease in margin account	(68,724)	54,100
Net cash generated from investing activities	(68,724)	1,690,363

Cash flows from financing activities
Purchase of Realisation Shares	(73,990)	-
Distributions paid	(3,709,107)	(4,417,079)
Net cash used in financing activities	(3,783,097)	(4,417,079)

Net increase/(decrease) in cash and cash equivalents	391,718	(723,733)
Exchange gains on cash and cash equivalents	81,949	523,108
Cash and cash equivalents at the beginning of the year	2,890,620	3,091,245
Cash and cash equivalents at the end of the year	3,364,287	2,890,620