Half-year Report

WEISS KOREA OPPORTUNITY FUND LTD.
LEI 213800GXKGJVWN3BF511
(Classified Regulated Information, under DTR 6 Annex 1 section 1.2)

HALF-YEARLY FINANCIAL REPORT
FOR THE PERIOD ENDED 30 JUNE 2019

Weiss Korea Opportunity Fund Ltd. (the “Company”) has today, released its Half-Yearly Financial Report for the period ended 30 June 2019. The Report will shortly be available for inspection via the Company's website www.weisskoreaopportunityfund.com.

For further information, please contact:

N+1 Singer James Maxwell – Nominated Adviser James Waterlow – Sales	[phone]
Northern Trust International Fund Administration Services (Guernsey) Limited Samuel Walden	[phone]

Summary Information

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
The Company's investment objective is to provide Shareholders with an attractive return on their investment, predominantly through long-term capital appreciation. The Company is geographically focussed on South Korean companies. Specifically, the Company invests primarily in listed preferred shares issued by companies incorporated in South Korea, which in many cases trade at a discount to the corresponding common shares of the same companies. Since the Company's Admission to AIM, the Investment Manager has assembled a portfolio of South Korean preferred 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 preferred share is trading relative to its respective common share, its dividend yield, its liquidity, and the weighting of its common share (if any) in the MSCI Korea 25/50 Net Total Return Index (the “Korea Index”), among other factors. Not all of these factors will necessarily be satisfied for particular investments. The Investment Manager does not generally make decisions based on corporate fundamentals or its view of the commercial prospects of an issuer. Preferred 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”).

The Company purchased certain credit default swaps on the sovereign debt of South Korea and put options on iShares MSCI South Korea 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 2019 (2018: Nil). Please see additional information about the nature of these hedges in the Investment Manager’s Report.

Realisation Opportunity
In accordance with the Company’s Articles of Association and its Admission Document, the Company offers all Shareholders the right to elect to realise some or all of the value of their Ordinary Shares (the “Realisation Opportunity”), less applicable costs and expenses, on or prior to the fourth anniversary of Company’s admission to AIM and, unless it has already been determined that the Company be wound-up, every two years thereafter, the most recent being 15 May 2019 (the “Realisation Date”).

On 20 March 2019, the Company announced that pursuant to the Realisation Opportunity, Shareholders who were on the register as at the record date could elect, during the Election Period, to redesignate all or part of their Ordinary Shares as Realisation Shares. The Election Period commenced on 15 April 2019 and closed on 8 May 2019. Elections were received from shareholders totalling of 2,747,153 Ordinary Shares, representing 3.3 per cent of the Company’s issued share capital.

Following the Realisation Date, the Ordinary Shares held by the Shareholders who elected for Realisation were redesignated as Realisation Shares and the Portfolio was split into two separate and distinct Pools, namely the Continuation Pool (comprising the assets attributable to the continuing Ordinary Shares) and the Realisation Pool (comprising the assets attributable to the Realisation Shares).

Shareholder Information
Northern Trust International Fund Administration Services (Guernsey) Limited (the “Administrator”) is responsible for calculating the Net Asset Value (“NAV”) per Share of the Company. The unaudited NAV per Ordinary Share is calculated on a weekly basis and at the month end by the Administrator, and is announced by a Regulatory News Service and is available through the Company’s websitewww.weisskoreaopportunityfund.com.

Company financial highlights and performance summary for the period ended 30 June 2019

					As at		As at
					30 June 2019		31 December 2018
					£		£
Total Net Assets					129,777,368		126,489,595
NAV per share					1.5901		1.4993
Basic and diluted earnings/(loss) per share					0.1281		(0.3780)
Mid-Market Share price					1.59		1.47
Premium/(discount) to NAV					-		(2.0%)

As at close of business on 6 September 2019, the latest published NAV per Share had decreased to £1.4368 (as at 3 September 2019) and the Share price stood at £1.45.

Total expense ratio
The annualised total expense ratio for the period ended 30 June 2019 was 1.82% (31 December 2018: 1.89%). The annualised total expense ratio includes charges paid to the Investment Manager and other expenses divided by the average NAV for the period.

Chairman’s Review

We are pleased to provide the 2019 Half Yearly Financial Report on the Company. During the period from 31 December 2018 to 30 June 2019 (the “Period”), the Company’s net asset value increased by 10.82%,[1] outperforming the reference MSCI Korea 25/50 Net Total Return Index (the “Korea Index”), which decreased 1.38% in pounds sterling.[2] Since the admission of the Company to AIM in May 2013, the net asset value has increased by 80.21% including reinvested dividends, or 78.55% without dividend reinvestment,[2] compared to the Korea Index returns of 42.00%.[3]

A report from the Investment Manager follows.

As described in the circular to Shareholders published on 20 March 2019, the Company made available its second Realisation Opportunity enabling Shareholders to elect to realise all, or a part, of their shareholding. Realisation opportunities are now scheduled to occur every two years on or about the anniversary of the Company’s listing. We are pleased to offer this feature to our investors, and proud to note that it has been copied elsewhere in the market as a model of good corporate governance.

On 8 May 2019, the Election Period for the Realisation Opportunity closed; valid elections were received from Shareholders totalling 2,747,153 Ordinary Shares, representing approximately 3.3 per cent. of the Company’s issued share capital. On 15 May 2019, these electing Ordinary Shares were redesignated as Realisation Shares, and on 18 June 2019 a full cash redemption was paid out to holders of Realisation Shares, and the shares were cancelled.

None of the Directors and personnel associated with the Investment Manager participated in the Realisation Opportunity in respect of all, or any part of, their respective shareholdings. Indeed, certain personnel associated with the Investment Manager acquired additional shares during the Period.

Due to the rather small number of shares electing for Realisation, the Company was able to effect the Realisation relatively quickly. Shareholders should not necessarily expect a similar timetable in future Realisation Opportunities. If in a future Realisation Opportunity, the Realisation Pool is of significant size, it is likely that a full cash distribution would take considerable time.

The Directors declared a dividend of 4.1195 pence Sterling per share, Ex-Dividend Date 9 May 2019, Record Date 10 May 2019, to distribute the income received by the Company in respect of the year ended 31 December 2018.[4] This dividend was paid to all Shareholders on 31 May 2019 regardless of any election made under the Realisation Opportunity.

In addition to the Realisation Opportunity, the Company has an active share repurchase program as part of its discount management strategy. The Board is authorised to repurchase up to 40% of the Company's outstanding Ordinary Shares in issue as at 25 July 2019 (on which date the Company had 81,617,828 Ordinary Shares in issue). As the Company traded at a narrow discount or premium to net asset value during the first half of 2019, there were no share repurchases during the Period.

Since Admission almost six years ago, and as at the date of this document, the Company has repurchased, at a discount to NAV, 12,590,250 Ordinary Shares of the original 105,000,000 Ordinary Shares issued at Admission. The Board also has in place standing instructions with the Company’s broker, N+1 Singer Advisory LLP, 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 discount is greater than 5% of the Company’s net asset value. We will continue to keep Shareholders informed of any share repurchases through public announcements.

As discussed in previous communications, the Company has purchased certain derivatives as general market hedges. Please see additional information about the nature of these hedges in the Investment Manager’s Report within.

If you would like to speak with the Investment Manager or learn about potential opportunities to meet with them, please contact the Company’s broker, N+1 Singer. I would like to thank Shareholders for their support and look forward to the continued success of the Company in the future.

Norman Crighton
Chairman
9 September 2019

[1] This return includes the annual cash dividend paid to the Company’s Shareholders but does not assume such dividends are reinvested.
[2] This return includes all dividends paid to the Company’s Shareholders and assumes that these dividends were reinvested in WKOF shares at the next date for which the Company reports a NAV, at the NAV for that date.
[3] 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.
[4] The Ex-Date for this dividend was 9 May 2019, and Payment Date was 31 May 2019.

Investment Manager’s Report

For the period ended 30 June 2019
In the first half of 2019, NAV of WKOF was up 10.82 per cent, outperforming the reference MSCI Korea 25/50 Net Total Return Index, which was down 1.38 per cent in pounds sterling. From its inception in May 2013, WKOF has significantly outperformed the Korean market. The total return to an investor in WKOF since inception was 80.21 per cent including reinvested dividends,[5] or 78.55 per cent without dividend reinvestment, compared to returns of 42.00 per cent for the Korea Index over the same period.

In the past, we have repeatedly noted that we do not expect our investment thesis in Korean preference shares to play out overnight, and that investors should expect periods of poor performance.  Nevertheless, the strong performance in the first half of 2019 was welcome after a very disappointing 2018 for both the South Korean market in general and Korean Preference Shares in particular.

The outperformance during the Period was due to several factors. The largest contributor was that the Company generally had more favourable weightings to positive and negative performing names than the Index. In other words, a portfolio holding the respective ordinary shares of the companies whose preference shares WKOF owns would have performed well relative to the Index. The other major contributor to the Fund’s outperformance was a moderate narrowing of preferred share discounts.

While we continue to believe that preferred shares discounts will narrow over the long term, we would not expect to see such strong stock performance due to company selection as we saw in the first half of the year. Our focus on preference shares means that we generally have little exposure to companies unless they have issued preference shares.[6] Within this subset of the Korean market, when constructing the portfolio weightings, major considerations include preference share discount and liquidity, as well as dividend yield. We do not believe any of these are strongly indicative of ordinary share performance.

Update on Portfolio Allocation

As described in the 2018 year-end report, we plan to rebalance the Company’s portfolio, over time, toward larger discount Korean preference shares. In the first half of 2019 we began this rotation primarily through the gradual selling of the Company’s holdings of Samsung Electronics (“Samsung”) preference shares. The Company reduced exposure to Samsung from approximately 25% on 31 March 2019 to 21% at 30 June 2019. The Company intends to continue using liquidity provided from portfolio sales (mainly ETF holdings and Samsung) to continue purchasing wider discount, less liquid, names as market volumes allow. As we rebalance toward preference shares trading at wider discounts, absent a general narrowing of discounts, we would generally anticipate that the portfolio’s weighted average discount will widen.

Update on Dividends

Following the 2018/2019 annual general meeting and dividend announcement season, we are pleased to observe that dividend yield for the KOSPI 200 reached 2% for the first time since 2005. Korean listed companies paid approximately 30.5 trillion KRW (approximately 20.8 billion GBP) of dividends in FY 2018, a roughly 15% increase from previous year and the highest amount in history. According to the Korea Corporate Governance Service, the number of shareholder proposals in annual general meetings for a higher dividend payout has been increasing in each of the last two years, with 31 such proposals in 2016, 66 in 2017, and 92 in 2018. The renewed focus on dividends is generally a positive catalyst for the portfolio. Not only are Korean preferred share discounts generally inversely correlated with common share dividend yields, increased shareholder payouts generally have a positive effect on the common share stock price as well.

Update on South Korean Corporate Governance

NPS Activity

The first half of 2019 was an eventful period for corporate governance updates in Korea. We are pleased to see increased corporate engagement from the National Pension Service (“NPS”) in multiple areas, as well as additional forays by activist investors. We observed the following noteworthy activity during the period:

LG Electronics Inc (“LGE”) nearly doubled its dividend payout, declaring an annual dividend per share of 750 KRW (approximately 0.5 GBP), an 87% increase over 2017. LGE is one of the companies NPS has been asking to increase its dividend payout ratio, and the market generally believes the increase was in part due to pressure from the pension fund. While the total yield for the company’s common shares is still low at 1%, the dividend increase had a disproportional effect on preferred share yields (now at 2.7%) since LGE preferred shares are trading at a 60% discount to common shares.

NPS also pressured Namyang Dairy Products Co Ltd (“Namyang”), to install a dividend committee, after pushing the company to increase its dividend payout ratio. The proposed dividend committee would operate independently of Namyang’s Board and would advise the Board on dividend policies.  Although Namyang declined both proposals, it demonstrates that NPS is acting on the tenets set out in the Stewardship Code.

In the proxy battle between Hyundai Motor Co (“Hyundai”) and Elliott Associates (“Elliott”), at the Hyundai annual general meeting NPS voted in favor of all of Hyundai’s proposals and against Elliott’s proposal for a large one-off special dividend. This decision was not unexpected, as both major proxy advisory firms ISS and Glass Lewis, also recommended voting against Elliott.

Activist Activity

A group of activist investors led by Dalton Investments and supported by Brandes Investment Partners, Korea Corporate Governance Improvement Fund (“KCGI”), Ruane, Cunniff & Goldfarb, and Value Partners submitted letters to the NPS and Korean government to propose ways to reduce the “Korean discount” on listed stocks. Some of their proposals included:

• Focus on dividend payout ratios that match global standards;
• Exercise shareholder rights;
• Focus on capital allocation;
• Reduce tax rates on dividends;
• Various other corporate governance initiatives.

The above-mentioned activist group also submitted proposals to Hyundai Home Shopping Network Co, asking for increased dividends or buyback/cancellations.  

KCGI launched a proxy battle against Hanjin KAL Corp (“Hanjin”) to ask Hanjin to divest from its unprofitable hotel business and pay off its debt to reduce its debt burden. KCGI is the second largest holder of Hanjin (10.81%).

The increased number of activist investor public engagements with Korean companies reinforces our view that corporate governance in Korea continues to improve over time. We reiterate our belief that long run improved corporate governance will not only lead to the narrowing of the discount of securities in the portfolio, but also add value to the common shares underlying the portfolio’s preferred shares. At the same time, we don’t expect drastic changes to corporate governance overnight, and we anticipate short term setbacks, as seen in cases where NPS and proxy advisors vote against large cash payouts for Korean companies.

Korean Air Lines

The recently ousted former chairman of Korean Air Lines Co Ltd (“KAL”) Cho Yang-Ho died in early April due to illness, only days after his removal from the board of KAL (the NPS and institutional shareholders had voted against his re-election). Cho and the controlling family had been considered one of the worst chaebol groups in Korea. There was a history of illicit activities and abuse of power. Cho himself had been on trial over charges of embezzlement and breach of trust.

The news of his death was followed by significant rallies for both the common and preferred shares of KAL and KAL related entities, with the market speculating about possible succession plans and corporate governance improvements. In our opinion, the two important takeaways from this event are:

1.     Succession events in Korean chaebols have the potential to be positive catalysts. In both the cases of Samsung and KAL, the transfer of ownership stakes from founders to their heirs led to increases in the common stock price and narrowing of preferred share discounts. This effect may be more pronounced with companies that have had historically poor corporate governance. The changing of ownership can lead to various positive outcomes, such as concessions given to minority shareholders or a split and sale of the company if there is a succession battle.

2.     We previously targeted 0% discount as the most bullish outcome for our Korean preferred share portfolio. However, after the demise of the former chairman of KAL, we saw preferred shares of Hanjin KAL, a 1.6 billion USD market cap company, trade from a 36% discount pre-news to an 80% premium post-news! Unless presented with a compelling reason, we would generally not hold preferred shares trading at a premium; however, when modelling potential scenarios, we should not reject the potential for premiums higher than 0%.

Hedging Update

WKOF pursues its investment strategy with a portfolio that is generally long only. However, as described more fully in the 2018 year-end report, because of political tensions in Northeast Asia, the Board approved a hedging strategy in September 2017. The purpose of the hedging strategy is to reduce exposure to extreme events that would be catastrophic to WKOF. Importantly, the Company has limited its use of hedging instruments to purchases of credit default swaps and put options: securities that we believe would generate high returns in an economic disaster, without introducing new risks into the portfolio or exacerbating existing risks. These catastrophe hedges are not intended to make money. We expect that the Company’s hedges will lose money most of the time—as with any insurance policy.

Following year-end, the Company sold all the previously held EWY put options in January and purchased new put options in March. The table below provides updated details about the hedges as of 28 June 2019.  Note that outside of the general market and portfolio hedges described herein, WKOF has generally not hedged its exposure to interest rates or currencies.

(Please note the use of U.S. dollar in the tables below)

Number of Option Contracts Held on EWY	Strike Price	Total Cost to Expiration (USD)	Purchase Date	Expiration Date
4,000	$52	$416,163	March 2019	October 2019
Total		$416,163

Credit Default Swaps on South Korean Sovereign Debt	Notional Value	Total Cost to Expiration (USD)	Annual Cost (USD)	Price Paid as % of Notional Value (per Annum)	Expiration Date	Duration (Years)
5 yr CDS	$20m	$457,151	$91,430	45 bps	2023	5.0
2 yr CDS	$80m	$382,619	$191,309	24 bps	2020	2.0
Total		$839,770	$282,739

Please see the Notes to the Financial Statements for more detailed information. Specifically, Note 9 for the net change in fair value of derivative financial instruments and the composition of options and credit default swaps held as of 30 June 2019.

Concluding thoughts

The Manager continues to believe that an analytically focused and disciplined investment approach in Korea will generate attractive long-term returns for investors. It is puzzling to us that large inefficiencies and dislocations in the Korean preference shares space remain in a yield compression environment. These dislocations persist in the face of positive catalysts, growing dividends, and cannot be explained away by typical financial factors. Regardless, we are happy to stay under the radar and traverse in less crowded opportunities. At a weighted average discount of 43% to common shares, we believe that the Korean preference shares in the WKOF portfolio remain a compelling opportunity.

Weiss Asset Management LP
9 September 2019

[5] This return includes all dividends paid to the Company’s Shareholders and assumes that these dividends were reinvested in WKOF shares at the next date for which the Company reports a NAV, at the NAV for that date.

[6] The common exception to this general statement is that the Fund often has a small exposure to the broader South Korean market through index securities held as a cash substitute.

Directors

The Company has three non-executive Directors, all of whom are considered independent of the Investment Manager and details are set out below.

Norman Crighton (aged 53)
Mr Crighton is Chairman of the Company. He is also a non-executive chairman of RM Secured Direct Lending plc and AVI Japan Opportunity Trust. Norman was, until May 2011, an investment manager at Metage Capital Limited where he was responsible for the management of a portfolio of closed-ended funds and has almost three decades of experience in closed-ended funds having led teams at Olliff and Partners, LCF Edmond de Rothschild, Merrill Lynch, Jefferies International Limited and latterly Metage Capital Limited. His experience covers analysis and research as well as sales and corporate finance. Norman is British and resident in the United Kingdom. Norman was appointed to the Board in 2013.

Stephen Charles Coe (aged 53)
Stephen is Chairman of the Audit Committee. He is also a director (and Chairman of the Audit Committee) of Leaf Clean Energy Company and Merian Chrysalis Investment Company. He has been involved with offshore investment funds and managers since 1990 with significant exposure to property, debt, emerging markets, and private equity investments.

He qualified as a Chartered Accountant with Price Waterhouse Bristol in 1990 and remained in audit practice, specialising in financial services, until 1997. From 1997 to 2003 he was a director of the Bachmann Group of fiduciary companies and Managing Director of Bachmann Fund Administration Limited, a specialist third party fund administration company. From 2003 to 2006 Stephen was a director with Investec in Guernsey and Managing Director of Investec Trust (Guernsey) Limited and Investec Administration Services Limited. He became self-employed in August 2006 providing services to financial services clients. Stephen is British and resident in Guernsey. Stephen was appointed to the Board in 2013.

Robert Paul King (aged 56)
Rob is a non-executive director for a number of open and closed-ended investment funds including Tufton Oceanic Assets Limited (chairman), Chenavari Capital Solutions Limited (chairman), and CIP Merchant Capital Limited. 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. Rob was appointed to the Board in 2013.

Directors’ Responsibility Statement

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 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                                                                 Stephen Coe
Chairman                                                                               Director

9 September 2019

Condensed Statement of Financial Position

						As at		As at
						30 June		31 December
						2019		2018
						(Unaudited)		(Audited)
					Notes	£		£
Assets
Current assets
Financial assets at fair value through profit or loss					8	123,759,126		120,312,836
Derivative financial assets					9	148,037		1,706,418
Other receivables						343,645		2,636,504
Cash and cash equivalents						4,990,595		1,304,537
Margin account						1,888,258		2,252,688
Due from broker						4,731		-
Total assets						131,134,392		128,212,983
Liabilities
Current liabilities
Derivative financial liabilities					9	1,018,215		1,209,227
Due to broker						36,177		-
Other payables						302,632		514,161
Total liabilities						1,357,024		1,723,388
Net assets						129,777,368		126,489,595
Represented by:
Shareholders' equity and reserves
Share capital					10	68,124,035		72,080,642
Other reserves						61,653,333		54,408,953
Total shareholders' equity						129,777,368		126,489,595
Net assets per share					7	1.5901		1.4993

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 2019.

Norman Crighton                                Stephen Coe
Chairman                                               Director

Condensed Statement of Comprehensive Income

				For the period ended	For the period ended
				30 June 2019	30 June 2018
				(Unaudited)	(Unaudited)
			Notes	£	£
Income
Net changes in fair value of financial assets   at fair value through profit or loss through profit or loss				11,651,316	(16,778,589)
Net changes in fair value of derivative financial   instruments through profit or loss				206,014	(225,514)
Net foreign currency losses				(137,822)	(9,616)
Other income				711,676	786,498
Total income/(loss)				12,431,184	(16,227,221)
Expenses
Operating expenses				(1,554,650)	(1,785,536)
Total operating expenses				(1,554,650)	(1,785,536)
Profit/(loss) for the period before tax				10,876,534	(18,012,757)
Withholding tax			3	(156,739)	(176,623)
Profit/(loss) for the period after tax				10,719,795	(18,189,380)
Profit/(loss) and total comprehensive income for the period				10,719,795	(18,189,380)
Basic and diluted earnings/(loss) per Share			6	0.1281	(0.2156)

All items derive from continuing activities.

The notes form an integral part of these Condensed Financial Statements.

Condensed Statement of Changes in Equity

For the period ended 30 June 2019 (Unaudited)
				Share	Other
				capital	reserves	Total
			Notes	£	£	£
Balance at 1 January 2019				72,080,642	54,408,953	126,489,595
Total comprehensive income for the period				-	10,719,795	10,719,795
Transactions with Shareholders, recorded directly in equity
Redemption of Realisation Shares			10	(3,956,607)	-	(3,956,607)
Distributions paid			4	-	(3,475,415)	(3,475,415)
Balance at 30 June 2019				68,124,035	61,653,333	129,777,368
For the period ended 30 June 2018 (Unaudited)
Balance at 1 January 2018				72,080,642	89,183,638	161,264,280
Total comprehensive loss for the period				-	(18,189,380)	(18,189,380)
Transactions with Shareholders, recorded directly in equity
Distributions paid			4	-	(2,881,486)	(2,881,486)
Balance at 30 June 2018				72,080,642	68,112,772	140,193,414

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 2019		30 June 2018
		(Unaudited)		(Unaudited)
	Notes	£		£
Cash flows from operating activities
Profit/(loss) for the period		10,719,795		(18,189,380)
Adjustments for:
Net change in fair value of financial assets held at fair value through profit or loss		(11,651,318)		16,778,589
Net change in fair value of derivative financial instruments held at fair value through profit or loss		(206,014)		225,514
Net change in NAV of Realisation Shares		(41,089)		-
Decrease in debtors		2,292,859		2,522,762
Decrease in creditors		(211,529)		(184,830)
Net cash generated from operating activities		902,704		1,152,655
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss	8	(2,085,317)		(22,628,701)
Open of derivative financial instruments	9	(310,732)		(967,526)
Proceeds from the sale of financial assets at fair value through profit or loss	8	10,321,790		23,528,114
Closure of derivative financial instruments	9	1,884,115		122,665
Decrease in margin account		364,430		880,614
Net cash generated from investing activities		10,174,286		935,166
Cash flows from financing activities
Redemption of Realisation Shares	10	(3,915,517)		-
Distributions paid	4	(3,475,415)		-
Net cash used in financing activities		(7,390,932)		-
Net increase in cash and cash equivalents		3,686,058		2,087,821
Cash and cash equivalents at the beginning of the period		1,304,537		3,429,302
Cash and cash equivalents at the end of the period		4,990,595		5,517,123

The notes form an integral part of these Condensed Financial Statements.

Notes to the Unaudited Condensed Financial Statements

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 2019 have been prepared in accordance with IFRS issued 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 Companies (Guernsey) Law, 2008.

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 2019, 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 2018. As disclosed in those Annual Financial Statements, IFRS 16, ‘Leases’ was applicable for financial reporting periods starting 1 January 2019. As such, this standard has been adopted by the Company, but has no effect on the Company. There were no other new standards, interpretations or amendments to standards issued and effective for the Period that materially impacted the Company.

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 2018. 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
Given that the Company has continued in existence following the second Realisation Opportunity and will continue to operate as a going concern unless a determination 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 2021.

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 Condensed 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 (2018: £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 4.1195 pence per Share (£3,475,415) was approved on 1 May 2019 and paid on 31 May 2019 in respect of the year ended 31 December 2018.

An annual dividend of 3.4155 pence per Share (£2,881,486) was approved on 8 June 2018 and paid on 13 July 2018 in respect of the year ended 31 December 2018.

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 2018.

6.   Basic and diluted (loss)/earnings per Share
The basic and diluted earnings/(loss) per Share for the Company has been calculated based on the total comprehensive gain for the period of £10,719,795 (period ended 30 June 2018: £18,189,380 loss) and the weighted average number of Ordinary Shares in issue during the period of 83,666,809 (period ended 30 June 2018: 84,364,981).

7.   Net asset value per Ordinary Share
The net asset value of each Share of £1.5901 (as at 31 December 2018: £1.4993) is determined by dividing the net assets of the Company attributed to the Ordinary Shares of £129,777,368 (as at 31 December 2018: £126,489,595) by the number of Ordinary Shares in issue at 30 June 2019 of 81,617,828 (as at 31 December 2018: 84,364,981 Ordinary Shares in issue).

8.   Net changes in fair value on financial assets at fair value through profit or loss

				As at		As at
				30 June		31 December
				2019		2018
				£		£
Cost of investments at beginning of the period/year				110,153,284		106,460,720
Purchases of investments in the period/year				2,121,494		20,717,121
Disposal of investments in the period/year				(10,326,520)		(21,930,228)
Realised gain on disposal of investments in the period/year				3,978,936		4,905,671
Cost of investments held at end of the period/year				105,927,194		110,153,284
Unrealised gain on investments				17,831,932		10,159,552
Financial assets at fair value through profit or loss				123,759,126		120,312,836

9.   Derivative financial instruments at fair value through profit or loss

					As at		As at
					30 June		31 December
					2019		2018
					£		£
Cost of derivatives at beginning of the period/year					(552,309)		(605,324)
Open of derivatives in the period/year					310,732		967,526
Closure of derivatives in the period/year					(1,884,115)		(122,665)
Realised gain/(loss) on closure of derivatives in the period/year					979,334		(791,846)
Net cost of derivatives held at end of the period/year					(1,146,358)		(552,309)
Net changes in fair value on derivative financial instruments at fair value through profit or loss					276,180		1,049,500
Net fair value on derivative financial instruments at fair value through profit or loss					(870,178)		497,191

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
				2019	2018
Authorised
Unlimited Ordinary Shares at no par value				-	-
Issued at no par value
81,617,828 (2018: 84,364,981) unlimited Ordinary Shares at no par value				-	-
Reconciliation of number of Shares
				As at	As at
				30 June	31 December
				2019	2018
				No. of Shares	No. of Shares
Ordinary Shares at the beginning of the period/year				84,364,981	84,364,981
Purchase of Realisation Shares				(2,747,153)	-
Total Ordinary Shares in issue at the end of the period/year				81,617,828	84,364,981

				As at	As at
				30 June	31 December
				2019	2018
				£	£
Share capital at the beginning of the period/year				72,080,642	72,080,642
Purchase of Realisation Shares				(3,956,607)	-
Total Share capital at the end of the period/year				68,124,035	72,080,642

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 20 March 2019, being 46 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 15 May 2019, 2,747,153 Ordinary Shares, which represented 3.3 per cent of the Company’s issued Ordinary Share capital were redesignated as Realisation Shares. On the 7 June 2019 the Board approved the compulsory redemption of the Realisation Shares in issue. The redemption price was 142.53 pence per Realisation Share, being the net assets of the Realisation Pool of £3,915,557, divided by the number of outstanding Realisation Shares in issue, being 2,747,153 Realisation Shares. The redemption proceeds were paid by cheque to the Realisation Shareholders on 18 June 2019, after which the Realisation Shares were cancelled and were no longer in issue.

Share buyback and cancellation
During the period ended 30 June 2019 and throughout 2018, the Company did not purchase any of its own Ordinary Shares under the Share buyback authority originally granted to the Company in 2014.

At the AGM held on 25 July 2019, 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 £30,000 payable to Mr Crighton as the Chairman, £27,500 to Mr Coe as Chairman of the Audit Committee and £24,000 to Mr King.

During the period ended 30 June 2019, Directors’ fees of £40,750 (period ended 30 June 2018: £40,750) were charged to the Company and £Nil remained payable at the end of the period (as at 31 December 2018: £Nil).

b)   Shares held by related parties
The Directors who held office at 30 June 2019 and up to the date of this Report held the following number of Ordinary Shares beneficially:

		As at 30 June 2019			As at 31 December 2018
		Ordinary		% of issued	Ordinary		% of issued
		Shares		share capital	Shares		share capital
Norman Crighton		20,000		0.02%	20,000		0.02%
Stephen Coe		10,000		0.01%	10,000		0.01%
Robert King		15,000		0.02%	15,000		0.02%

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 2019, Dr. Andrew Weiss and his immediate family members held an interest in 6,486,888 Ordinary Shares (as at 31 December 2018: 6,486,888 Ordinary Shares) representing 7.95 per cent. (as at 31 December 2018: 7.69 per cent.) of the issued share capital of the Company.

As at 30 June 2019, employees of the Investment Manager, their respective immediate family members, or entities controlled by them or their immediate family members held an interest in 2,844,333 Ordinary Shares (as at 31 December 2018: 2,718,733) representing 3.48 per cent. (as at 31 December 2018: 3.22 per cent.) of the issued share capital of the Company. 

Material agreements

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 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 Investment Management Agreement 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 2019, investment management fees and charges of £935,306 (period ended 30 June 2018: £1,111,182) were charged to the Company and £148,334 (as at 31 December 2018: £316,144) remained payable at the Period end.

12. Fair value measurement
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 2019:

					Total
					As at
					30 June
		Level 1	Level 2	Level 3	2019
		£	£	£	£
Financial assets/(liabilities) at fair value through
profit or loss:
Korean preferred shares		123,759,126	-	-	123,759,126
Financial derivative assets		148,037	-	-	148,037
Financial derivative liabilities		-	(1,018,215)	-	(1,018,215)
Total net assets		123,907,163	(1,018,215)	-	122,888,948
					Total
					As at
					31 December
		Level 1	Level 2	Level 3	2018
		£	£	£	£
Financial assets/(liabilities) at fair value through
profit or loss:
Korean preferred shares		120,312,836	-	-	120,312,836
Financial derivative assets		1,706,418	-	-	1,706,418
Financial derivative liabilities		-	(1,209,227)	-	(1,209,227)
Total net assets		122,019,254	(1,209,227)	-	120,810,027

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 2019, financial assets of £Nil were transferred from Level 2 to Level 1 (for the year ended 31 December 2018: £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 (£1,018,215) (as at 31 December 2018: (£1,209,227)).

As at 30 June 2019, Level 2 financial derivative assets of £Nil were held (as at 31 December 2018: £Nil).

13. NAV reconciliation
The Company announces its NAV to the LSE after each weekly and month end valuation point. The following is a reconciliation of the NAV per Ordinary Share attributable to participating Shareholders as presented in these Condensed Financial Statements, using IFRS to the NAV per Ordinary Share reported to the LSE:

		As at 30 June 2019		As at 31 December 2018
			NAV per		NAV per
			Participating		Participating
		NAV	Share	NAV	Share
		£	£	£	£
Net Asset Value reported to the LSE		129,430,635	1.5858	123,860,752	1.4682
Adjustment to accruals and cash		14,271	0.0002	(3,847)	(0.0001)
Adjustment for dividend income		332,462	0.0041	2,632,690	0.0280
Net Assets Attributable to Shareholders per Financial Statements		129,777,368	1.5901	126,489,595	1.4993

The published NAV per Ordinary Share of £1.5858 (as at 31 December 2018: £1.4682) is different from the accounting NAV per Share of £1.5901 (as at 31 December 2018: £1.4993) due to the adjustments noted above.

14. Subsequent events
These Condensed Financial Statements were approved for issuance by the Board on 9 September 2019. Subsequent events have been evaluated until this date.

As at the date of this Report, the Company has 81,617,828 Ordinary Shares in issue.

No further subsequent events have occurred.