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WKOF Weiss Korea Opportunity Fund Ltd.

176.50
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Weiss Korea Opportunity Fund Ltd. LSE:WKOF London Ordinary Share GG00B933LL68 ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 176.50 173.00 180.00 180.00 176.50 176.50 978 08:00:24
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Trust,ex Ed,religious,charty -30.23M -35.04M -0.5056 -3.49 122.33M

Weiss Korea Opp Replacement : Annual Financial Report

27/04/2017 4:56pm

UK Regulatory


 
TIDMWKOF 
 
This announcement replaces the announcement released at 7 a.m. on 27 April 2017 
with the only changes being the correction of name of the Chairman of the Audit 
Committee in the Audit Committee Report and the correction of dates disclosed 
in the Chairman's Review and note 20, subsequent events. 
 
 
WEISS KOREA OPPORTUNITY FUND LTD. 
 
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS 
 
FOR THE YEARED 31 DECEMBER 2016 
 
The Company has today, released its Annual Report and Audited Financial 
Statements for the year ended 
31 December 2016. The Report will shortly be available from the Company's 
website www.weisskoreaopportunityfund.com. 
 
For further information, please contact: 
 
N+1 Singer                             +44 20 7496 3000 
James Maxwell - Nominated Adviser 
James Waterlow - Sales 
 
Northern Trust International Fund      +44 1481 745323 
Administration Services (Guernsey) 
Limited 
Samuel Walden 
 
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 AIM Market 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 Korean companies, 
specifically investing primarily in listed preferred shares issued by companies 
incorporated in Korea, which in many cases have traded and continue to 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 
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 and other types of options, 
swaps and derivatives related to Korean equities, as well as cash and cash 
equivalents. 
 
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. Specifically, 
the Company invests primarily in listed preferred shares issued by companies 
incorporated in South Korea, which in many cases are currently trading at a 
discount to the corresponding common shares of the same companies. The 
Investment Manager has assembled a portfolio of Korean preferred shares that it 
believes are undervalued and could appreciate based on criteria it selects. 
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 shares, its dividend yield, its 
liquidity and its common shares weighting (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 will not generally make decisions based on corporate 
fundamentals or its view of the commercial prospects of the issuer. Preferred 
shares are selected by the Investment Manager at its sole discretion, subject 
to the overall control of the Board. 
 
The Company invests primarily in Korean preferred shares, but it may invest 
some portion of its assets in other securities, including exchange-traded 
funds, futures contracts and other types of options, swaps and derivatives 
related to Korean equities, as well as cash and cash equivalents. The Company 
does not have any concentration limits. 
 
The Company has not hedged its exposure to foreign currency during the year 
ended 31 December 2016 (2015: Nil). 
 
Share Buy-backs 
 
At the Annual General Meeting ("the AGM") on 27 July 2016, Shareholders granted 
the Company a general buy-back authority of up to 40% of the Company's issued 
share capital. In addition, on 12 February 2016, the Company appointed N+1 
Singer Advisory LLP to manage an irrevocable programme during the close period 
leading up to the publication of the Company's full year results (the "Close 
Period Buy-Back Programme") to buy back ordinary shares within certain pre-set 
parameters. Any shares purchased in the Close Period Buy- Back Programme will 
count towards the Company's general buy-back authority of 40% of the Company's 
issued share capital, as approved at the Company's AGM. 
 
On 5 August 2016, the Company re-appointed N+1 Singer Advisory LLP to manage 
the Close Period Buy- Back Programme to buy back ordinary shares within certain 
pre-set parameters during the close period leading up to the publication of the 
year-end results. Any shares purchased in the Close Period Buy-Back Programme 
will count towards the Company's share buy-back authority of 40% of the 
Company's issued share capital, as approved at the Company's AGM. 
 
For additional information on share buy-backs refer to Note 15. 
 
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, 
which is announced by a Regulatory News Service and is available through the 
Company's website www.weisskoreaopportunityfund.com. 
 
Company financial highlights and performance summary for the year ended 31 
December 2016 
 
                                                        As at               As at 
 
                                             31 December 2016    31 December 2015 
 
                                                            GBP                   GBP 
 
Total Net Assets                                  146,374,699         131,142,778 
 
NAV per share                                          1.5027              1.3449 
 
Basic and diluted earnings                             0.1800              0.1561 
per share 
 
Mid-Market Share price                                   1.42                1.28 
 
Discount to NAV                                        (5.5%)              (4.8%) 
 
As at close of business on 25 April 2017, the latest published NAV per share 
had increased to GBP1.5442 (as at 18 April 2017) and the share price stood at GBP 
1.485. 
 
Total expense ratio 
 
The annualised total expense ratio for the year ended 31 December 2016 was 
1.80% (31 December 2015: 1.81%). 
 
Chairman's Review 
 
We are pleased to provide the 2016 Annual Financial Report on the Company. 
During the period from 31 December 2015 to 31 December 2016 (the "Period"), the 
Company's NAV increased by 11.61%,[1] underperforming the reference MSCI Korea 
25/50 Capped Index, which returned 28.48% in pounds sterling.[2] Since the 
admission of the Company to AIM in May 2013 the NAV has increased by 42.25% 
compared to Index returns of 23.18%. A report from the Investment Manager 
follows. 
 
In accordance with the commitment in the Company's Admission Document, the 
Company has announced that it is offering Shareholders the opportunity to elect 
to realise all or a part of their shareholding in the Company (the "Realisation 
Opportunity").[3] A circular with full details of the Realisation Opportunity 
was published on 20 March 2017. 
 
If any Shareholders elect for realisation, then the Company will be 
reorganized, with the Company's current portfolio divided into two pools: a 
Continuation Pool and a Realisation Pool. As the Company detailed in its 
circular for the Realisation Opportunity, the mechanism for returning cash to 
the shareholders that elect for realisation will be decided by the Board, in 
consultation with its advisors, once the results of the realisation elections 
are available. We note that the cash distributed to realising shareholders will 
likely be different than the net asset value of the Company on the date of such 
reorganisation. Also, while the Realisation Pool will be managed in accordance 
with an orderly realisation with the aim of making progressive returns of cash 
to holders of Realisation Shares, if the Realisation Pool is of significant 
size, it is likely that a full cash distribution may take some considerable 
time. 
 
All of the Directors and personnel associated with the Investment Manager (who 
collectively own approximately 10% of the Company's issued share capital as at 
7 April 2017) intend to continue their investment in the Company and do not 
intend to participate in the Realisation Opportunity in respect of all or any 
part of their respective shareholdings. Indeed, Andrew Weiss, the CEO and CIO 
of the Investment Manager, recently increased his shareholding in the Company. 
 
The Directors also declared a final dividend to distribute the income received 
by the Company in respect of the year ended 31 December 2016. This dividend 
will be payable to all Shareholders regardless of any election they make 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 27 July 2016 (on which date the Company had 97,409,750 shares). 
Since Admission, and as at the date of this document, the Company has 
repurchased 7,590,250 Ordinary Shares of the original 105,000,000 Ordinary 
Shares issued at Admission at a weighted average discount to the Company's net 
asset value per Ordinary Share of 5.69%. In 2016 the Company traded very 
infrequently at a significant discount and therefore the Directors only 
repurchased 100,000 shares in the period at a discount of 6.9%. 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, typically 
around the preparation of the Annual and Half-Yearly Financial Reports. The 
Board intends to continue to aggressively repurchase shares of the Company if 
the Company's discount is greater than 5 per cent. of the Company's net asset 
value.  We believe that the share repurchase program is an excellent discount 
control mechanism and that it is mutually beneficial for continuing and exiting 
shareholders.  We will continue to keep Shareholders informed of any share 
repurchases through public announcements. 
 
The Annual General Meeting will be held on 19 July 2017, and a notice 
circulated in advance. If you are unable to attend in person, the Board is 
always happy to answer questions or to meet with Shareholders directly if 
required. Additionally, 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. The discount that Korean 
preference shares trade to the comparable ordinary shares has indeed narrowed 
significantly since 2013. However, the weighted average discount of preferred 
shares held in the portfolio still currently stands at 38.4%[4] and the 
Directors believe that many of the steps needed to be taken in Korea to narrow 
discounts further have already been put in place. I would also like to thank 
Weiss Asset Management LP, as well as the other service providers, all of whom 
have contributed greatly to the Company. 
 
Sincerely, 
 
Norman Crighton 
 
Chairman 
 
26 April 2017 
 
[1] This return includes all dividends paid to the Company's Shareholders, but 
does not assume such dividends are reinvested. 
 
[2] 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. 
 
[3] Additionally, unless it has already been determined that the Company will 
be wound-up, the Company will offer shareholders subsequent opportunities to 
realise all or part of their shareholding every two years after the Realisation 
Opportunity, on or prior to the anniversary of Admission (14 May). 
 
[4] As at 31 December 2016. 
 
Investment Manager's Report 
 
For the year ended 31 December 2016 
 
WKOF is a long-only fund that invests in Korean preference shares, which 
generally trade at a discount to their corresponding ordinary shares. The 
Company's net asset value was up in 2016, but underperformed the MSCI South 
Korea Index, returning 11.61% compared to 28.48% for the MSCI South Korea 
Index. Two factors contributed roughly equally to the Company's short-term 
underperformance in 2016: widening of discounts of preference shares to their 
corresponding ordinary shares, and the outperformance of companies that have 
not issued preference shares. 
 
Short time frames often contain more noise than long time frames, and it is 
generally easier to make predictions about the long-run. As investors, we seek 
to invest in value and maintain a long-term orientation irrespective of 
short-term volatility. We believe this is the most prudent way to compound 
capital. As of 31 December 2016, the net asset value of the Company ("WKOF") is 
up 42% from inception.[1] Over this period, the Company outperformed the MSCI 
South Korea Index[2] by 19.07%. 
 
Commentary 
 
There are several reasons for our optimism about the future prospects of WKOF: 
 
1)     The "Double Discount" - Korean preference shares trade at a discount to 
their corresponding ordinary shares which, in turn, trade at a discount to 
comparable markets. WKOF's weighted average discount of 38.4% is significantly 
wider than the median discount of 2.6% for other non-voting share classes 
around the world.[3] 
 
2)     Soft Catalysts for the Double Discount to Narrow - Korean companies are 
beginning to return more capital. Samsung and Hyundai, WKOF's two largest 
holdings, have made extraordinary commitments to increase dividend payout 
ratios. The National Pension Service is working hard to improve corporate 
governance for the benefit of Korean retirees. If this general trend continues, 
it will be good for both ordinary and preference shares. 
 
3)     Hard to Replicate Portfolio - WKOF enables access to a portfolio of 
discounted Korean preferred shares, within a structure with effective 
discount-control mechanisms. The Company owns a portfolio with discounts as 
wide as 65%. These securities represent a smaller percent of net asset value 
but offer extraordinary upside. The portfolio took nearly one year to construct 
and the unique characteristics are not duplicable by most market participants. 
 
These reasons have motivated senior management to increase their holdings in 
the Company. Since the inception of WKOF, Andrew Weiss has owned over 6% of the 
outstanding shares of the Company. Over the course of December 2016 and January 
2017, he bought 550,000 shares in WKOF bringing his holdings to over 7 million 
shares (7.2% of outstanding shares). An entity controlled by Paul Sherman also 
bought additional shares of WKOF in December 2015. Total ownership by employees 
and affiliates of the Investment Manager is around 10% of shares outstanding. 
None of the members of the Weiss Asset Management team have sold any shares 
since inception. 
 
Valuation of Korean Preferred Shares 
 
While the discounts of Korean preferred shares to their respective ordinary 
shares have narrowed significantly from inception, they are still far greater 
than the discounts for equivalent shares in other countries. Germany, Sweden, 
Russia, Italy and Brazil all have non-voting shares. Across all those countries 
the median discount for non-voting shares with at least GBP10 million annualized 
trading volume was 2.6%. In contrast, the median discount for Korean preference 
shares with at least GBP10 million annualized volume was 39.6%[4] as of 
31 December 2016. The weighted average discount for the preference shares in 
the WKOF portfolio was 38.4% as of 31 December 2016. 
 
In addition to the preferred shares' discounts relative to their corresponding 
ordinary shares, on almost all metrics Korean ordinary shares continue to be 
cheaper than their global peers on an absolute basis. As of 
31 December 2016, the KOSPI 200 Index traded at an 11.6x price-to-earnings 
multiple, which is lower than other South East Asian stock indices, as shown 
below. 
 
Figure 1. Comparison of Equity Index Fundamentals in Asia[5] 
 
Index Name                        Dividend Payout    P/E Ratio    P/B Ratio 
                                  Ratio 
 
TAIEX (Taiwan)                    62.2%              14.6x        1.61x 
 
Shanghai Composite (China)        32.1%              15.3x        1.72x 
 
Nikkei 225 (Japan)                37.4%              21.7x        1.83x 
 
Nifty (India)                     29.0%              19.4x        2.62x 
 
KOSPI 200 (South Korea)           19.8%              11.6x        0.94x 
 
Many Korean companies have accumulated large cash balances. The 
price-to-earnings ratios above are not adjusted for the low returns on those 
cash holdings: if cash was subtracted from the price and interest received on 
the cash subtracted from earnings price-to-earnings would be significantly 
lower. Similarly, the reported return on equity in Korea at 8.46% for the KOSPI 
200 (as of year-end) is artificially depressed by the large cash holdings of 
Korean companies. These numbers look even better for the preference shares that 
are trading at discounts to their ordinary shares. 
 
Soft Catalysts 
 
We believe that an important catalyst for Korean share prices is the improving 
efficiency of capital allocation. Companies that distribute cash in the form of 
dividends and share buybacks do not tend to trade at single digit 
price-to-earnings multiples in perpetuity. If firms retain earnings and invest 
them in high return projects, that will also be positive for long-term 
investors since the value of shareholder equity will grow. 
 
In particular, we believe the prospects for Korean preference shares have been 
improved by recent actions by Samsung Electronics Co. Ltd. ("Samsung"), which 
has set a positive example. Samsung has announced that   50% of 2016 free cash 
flow will be distributed as either dividends or on buybacks of preference and 
ordinary shares. From 2015 to 2016, Samsung increased its per share dividend by 
36%. According to its guidance, Samsung will be investing ?9.3 trillion 
(approximately GBP6.2 billion) on share repurchases in the next year. Based on 
Samsung's past behavior, we anticipate that at current discounts the ratio of 
repurchases of preference shares to ordinary as a fraction of outstanding 
preference and ordinary shares respectively will be approximately 1.7 to 1. At 
current prices, we are forecasting that Samsung will repurchase just under 5% 
of its preference shares, which amounts to 33 days of volume.[6] This is in 
addition to the October 2015 to October 2016 period, in which Samsung 
repurchased over 10% of its preference shares. Disproportionate repurchases of 
preference shares are accretive to all shareholders; at about a 20% discount, 
Samsung Electronics can repurchase 1.25 preference shares for the price of each 
ordinary share. Based on its initial repurchase ratios in early 2016, if 
discounts on the preference shares were to expand, we believe Samsung would be 
more aggressive in buying back preference shares. These actions by Samsung 
indicate that it is focused on increasing shareholder value, and acting in the 
interest of all shareholders. 
 
Samsung also increased its dividend from ?21,050 in 2015 to ?28,550 per share. 
Across the universe of Korean preference shares with at least GBP10 million of 
annualised volume, companies that pay higher dividends tend to trade at lower 
discounts, as shown below. The subset of these preference shares with a common 
share dividend yield less than 1% had an average discount of 46%, compared to a 
35% average discount for those shares with a common share dividend yield 
greater than 2%.[7] 
 
What is most important about the Samsung payout policy is not what it means for 
Samsung-that is likely to already be reflected in its share price-but the 
possible effect on other companies. Korea has perhaps the lowest payout ratio 
of any advanced country. As by far the largest firm in Korea, Samsung serves as 
a model for other firms. 
 
If other firms were to follow the Samsung payout policy, we would expect large 
increases in the prices of Korean preference shares. A corporate culture and 
mindset that cares about increasing shareholder value benefits all 
shareholders, but preference shares are likely to benefit disproportionately 
from increased dividends and constructing buybacks in ways that are accretive 
to the value of the firm. 
 
While it's not clear whether they were influenced by Samsung's announcements, 
the management of Hyundai Motor Company has also given guidance on increased 
capital return. In January 2017, they announced that they will return 30-50% of 
free cash flow to shareholders. 
 
Another force pushing for higher dividend payouts is the Korean National 
Pension Fund, which has been urging Korean companies to increase dividend 
payouts. Recent events may also induce it to resist political pressures if they 
are not conducive to maximising shareholder value. In January 2017, Moon 
Hyung-pyo was charged with illegally pressing the National Pension Fund to back 
the merger of Cheil Industries and Samsung C&T. At the time of the merger, Mr. 
Moon was South Korea's health and welfare minister. At the time of his 
indictment Moon was the chairman of the National Pension Fund. These actions to 
hold the pension fund accountable to shareholders rather than captive to 
political pressures are a strong positive sign. The potential influence of the 
National Pension Fund continues to grow as it increases its purchases of 
equities. (The National Pension Fund has already exerted its influence on 
increasing dividend payouts.) We are optimistic that the indictment of Mr. Moon 
will induce the Company to be a strong advocate for interests of shareholders 
over the interest of insiders. 
 
Comments on the Distribution of Discounts in the Portfolio 
 
The largest discounts in WKOF's portfolio tend to be in the least liquid 
preference shares. The widest discount of any preference shares in the 
portfolio at 31 December 2016 was 65%. To avoid having an inordinately large 
market impact, the Company slowly accumulated shares in the preference shares 
with the widest discounts. 
 
Most investors are probably aware that if a preferred share discount narrows 
from 50% to 40%, the value of the preferred share increases by 20% (assuming 
all else equal), although it is easy to overlook the magnitude of the 
difference between discount and gain from narrowing of discount when discounts 
are large. What may be less apparent is that if the weighted-average discount 
of a portfolio of preferred shares narrows from 50% to 40%, the increase in 
value of the preferred shares depends on the distribution of discounts within 
the portfolio. In particular, the more spread out the discounts are from the 
average, the greater the increase in value. 
 
While we often describe our portfolio in terms of its weighted-average 
discount, this one metric does not tell the whole story. Indeed, the most 
discounted shares in the portfolio have an effect on potential future returns 
that is outsized compared to their effect on the weighted average discount. 
 
To take a simple example, let's compare the return from a hypothetical 
portfolio (Portfolio A) with a single stock trading at a 40% discount with the 
return from an equally weighted portfolio of two stocks one at 20% discount and 
the other at a 60% discount (Portfolio B). Both portfolios have an initial 
weighted average discount of 40% (see figure 2). Now suppose all discounts on 
preferred shares in the two portfolios move halfway to the value of the 
ordinary shares: the single stock trades at a 20% discount, the more expensive 
stock in the two stock portfolio trades at a 10% discount and the less 
expensive stock trades at a 30% discount. The excess return (over the return on 
the ordinary shares) of the single stock portfolio (Portfolio A) would be 33%. 
The excess return for the two-stock portfolio (Portfolio B) stocks would be 
44%. In this example, as detailed in figure 4 below, although the weighted 
average discount of Portfolio B narrows by only about 18% (less than the 20% 
narrowing of Portfolio A), the excess return of Portfolio B is about 11% 
greater than that of Portfolio A. 
 
Figure 2. Illustrative Example of the Effect of Discount Dispersion on 
Potential Returns[8] 
 
                 Before:                                     After: 
 
Portfolio A                                   Portfolio A 
 
Security         Value   Discount             Security       Value[9] Discount 
 
Preferred Share  100     40%                  Preferred       133.3   20% 
1                                             Share 1 
 
                 Total   Weighted                            Total    Weighted Avg. 
                 Value:  Avg...                              Value:   Discount: 
                         Discount: 
 
                 100     40%                                 133.3    20% 
 
Portfolio B                                   Portfolio B 
 
Security         Value   Discount             Security       Value    Discount 
 
Preferred Share  50      60%                  Preferred      87.5     30% 
2                                             Share 2 
 
Preferred Share  50      20%                  Preferred      56.3     10% 
3                                             Share 3 
 
                 Total   Weighted                            Total    Weighted Avg. 
                 Value:  Avg.                                Value:   Discount: 
                         Discount: 
 
                 100     40%                                 143.8    22.2% 
 
WKOF Buyback Program 
 
As the Investment Manager and as shareholders of the Company, we are pleased 
that the WKOF board has been aggressive in its repurchase of the Company's 
shares when the WKOF discount has been in the 5-7% range. We believe that the 
Company's own shares are our best investment when they are trading at 
significant discounts. Since its inception, the Company has bought back 
7,590,250 shares, or about GBP9.27 million worth of shares, at an average 
discount of 5.69%.[10] We pride ourselves on the Company's corporate 
governance, and the unusually large share buyback program (shareholders have 
authorized the Board to repurchase up to 40% of WKOF's shares per annum). The 
buyback program has been accretive to the Company's continuing shareholders, 
and it provides a near continuous exit mechanism to shareholders who need 
liquidity. If the Board continues to exercise its buyback authority, the 
Company is unlikely to trade at a large discount to its net asset value, but 
could trade at a significant premium. 
 
Comments on Political and Economic Conditions 
 
Under current economic conditions, Korean preference shares are undervalued; 
however, the election of Donald Trump creates considerable uncertainty about 
global economic conditions. South Korea is heavily dependent on international 
trade. According the World Bank data for 2015, South Korea's exports of goods 
and services were around 45% of GDP; by comparison China's exports were 22% of 
GDP, Japan's were 18% and the United States' exports were less than 13%. 
Consequently, Korea is thus especially vulnerable to a global increase in 
protectionism. President Trump has been consistent in his support of 
protectionism. If the U.S. were to impose tariffs or border adjustments that 
were declared to be in violation of the WTO rules, Trump might pull the U.S. 
out of the WTO.[11] This would have serious adverse consequences on global 
trade. On the other hand, if U.S. protectionism took the form of tariffs 
against China and China were to retaliate with tariffs against U.S. goods and 
services, that might create opportunities for Korea to increase its exports to 
both the U.S. and China. 
 
The Korean economy is also vulnerable to the political uncertainty surrounding 
the impeachment trial of President Park Geun-hye. Even if she gets the four out 
of nine votes needed to avoid impeachment by the Constitutional Court, her term 
expires no later than December 20, 2017 and she cannot run for re-election. 
While the trial proceeds, the Prime Minister Hwang Kyo-ahn will act as interim 
president. The Korean political parties and the public seem united in their 
opposition to President Park; however, there is no clear frontrunner in the 
race to succeed her. 
 
There is no particular reason to expect a new administration to make radical 
changes in economic policy. Corporate tax rates in Korea have been fairly 
stable at 24%. Corporate tax revenues as a percentage of GDP are higher than in 
most other countries. The budget is in rough balance, the national debt is low, 
and Korea runs a trade surplus. Korea has bilateral trade agreements with 
almost all the participants in the Trans-Pacific Partnership so the U.S. 
withdrawal from the TPP will have little adverse consequences for Korea. To the 
extent that the TPP would have improved protections for U.S. intellectual 
property rights, the U.S. withdrawal from TPP may make it easier for Korean 
companies to circumvent U.S. patent and copyright law. The main macro-economic 
risks for Korea seem most likely to the effects on the global economy of 
protectionist trade policies coming out of the U.S., and responses by China to 
those policies. If trade wars were to trigger a global recession this could be 
devastating to the profits of Korean firms. However, if selective tariffs 
against imports of Chinese products by the U.S. and corresponding tariffs 
against imports of U.S. products by China did not trigger a global recession, 
Korean firms could benefit from the opportunities to gain market share vis a 
vis Chinese and American firms. 
 
Korea is also vulnerable to military conflicts between the U.S. and China. As 
early as May 2017 the U.S. will be deploying a Terminal High Altitude Area 
Defense system "THAAD" in South Korea. THAAD radar covers much of China and 
parts of Eastern Siberia. Both Russia and China have voiced strong opposition 
to its deployment: Chinese foreign minister Wang Yi has said the deployment of 
THAAD "has undermined the foundations of trust between the two countries." The 
retaliation has thus far been minor - confined to discouraging Chinese tourists 
from going to South Korea and some incidental discrimination against Korean pop 
cultural exports. 
 
More importantly, Rex Tillerson, the new U.S. Secretary of State, has said that 
China's access to the artificial islands that it is developing in the South 
China Sea "is not going to be allowed." Since it is hard to see how the U.S. 
can stop access without triggering a military confrontation with China, the 
incentive for China to stop deployment of THAAD has greatly increased. This may 
cause China to increase its economic pressure on South Korea to stop THAAD. 
 
Korea's main export market is China. If Korea were denied access to the Chinese 
market as a means of thwarting THAAD this would have serious adverse 
consequence for the Korean economy. If instead Korea were to side with China, 
the U.S. might retaliate with tariffs against imports from Korea. The most 
recent available data had monthly Korean exports to China of around $10 billion 
and exports to the U.S. of around $51/2 billion out of total exports of around 
$45 billion. Korea may have to choose between exports to China or U.S. Of 
course, if there is a war between China and the U.S. we will have more serious 
problems to worry about than the value of Korean preference shares. 
 
The greatest long run threat to Korea comes from North Korea. The development 
of long range missiles that are capable of carrying nuclear warheads is 
especially problematic. It is difficult to envision why North Korea would want 
to be able to attack the U.S. mainland with nuclear weapons except as a means 
of deterring the U.S. from intervening on behalf of South Korea in a military 
conflict with North Korea. The change in leadership of North Korea and the 
U.S., and the leadership vacuum in South Korea, as well as the growth in the 
nuclear capabilities of North Korea make it exceptionally difficult to forecast 
geo-political events in North-east Asia. But the risk of war on the Korean 
peninsula seems greater than at any time in recent years. 
 
Summary 
 
 "Unexpected" events occur much more frequently than people estimate. 2016 was 
no exception, with "Brexit" and the election of Donald Trump. Indeed, we 
believe that the greatest risk to the preservation of capital from an 
investment in WKOF is geo-political. Given the erratic nature of the leadership 
in the U.S., and the potential for a break-up of the E.U. it is beyond the 
scope of this report to give an adequate treatment of how we would suggest 
hedging these risks. 
 
In a complex world, it is important to remain disciplined and adhere to 
principles. As value investors, we believe that WKOF remains attractive over 
the long-run. We cannot predict when Korean preferred share discounts will 
narrow, but we expect to be handsomely rewarded and will sleep well in the 
meantime because of the portfolio's low look through leverage and 
price-to-earnings ratio. Thank you for your continued support. 
 
Weiss Asset Management LP 
 
26 April 2017 
 
[1] 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. WKOF's performance figures include such distributions, but 
the distributions are not assumed to be reinvested in WKOF when calculating 
WKOF's performance. 
 
[2] MSCI Korea 25/50 Net Total Return Index, denominated in British pounds 
sterling. 
 
[3] As of 31 December 2016. Median discount is of the basket of German, 
Russian, Swedish, Italian, and Brazilian non-voting shares shown in figure 1 
and described in the footnote for figure 1. The median is for informational 
purposes only. One cannot invest in the median discount. 
 
[4] Median discounts computed using Bloomberg data for the basket of non-voting 
shares shown in figure 1 and described in the footnote for figure 1. The median 
is displayed for informational purposes only. One cannot invest in the median 
discount. 
 
[5] Bloomberg, as of 31 December 2016. Dividend payout ratios are the trailing 
12-month weighted averages using the weighting method of each respective index 
as of 31 December 2016. 
 
[6] Using 90-day average volume from the 4th quarter of 2016 and the end-2016 
Samsung preferred share price. 
 
[7] Recall that at these levels, differences in discounts are considerably 
smaller than the corresponding difference in valuation of the preferred share. 
 
[8] This example is provided as an illustration of the arithmetical properties 
of discount dispersion and weighted average discounts, and should not be 
interpreted as a forecast of future changes in Korean preferred share discounts 
generally or of the discounts of securities in the Company's portfolio. In 
particular, the assumption in the example that preferred share discounts all 
decrease by half is entirely arbitrary. 
 
[9] The value shown after the preferred share discounts are halved assumes that 
there has not been any change in the value of the ordinary shares. 
 
[10] These discounts are approximations since the net asset value is only 
announced weekly, and the trades may have occurred during hours in which the 
Korean market was closed. Since shares are repurchased at a discount the share 
buybacks are accretive to the NAV. However, because the discounts were small 
and the number of shares repurchased was only around 8% of outstanding shares 
the effect on the returns for WKOF was minor. 
 
[11] For instance, legal experts have disagreed about whether the border 
adjustment tariffs would be a violation of WTO rules. Trump came out against 
Border Adjustments as being too complicated and then several days later came 
out in support of them; he may reverse positions again. But charging taxes on 
imports and exempting exports from computation of corporate profits tax could 
trigger sanctions under WTO. Trump's most typical reaction to opposition seems 
to be to attack, so U.S. withdrawal from multilateral trade agreements, 
including the WTO, is more likely than at any time in U.S. history. 
 
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 50) 
 
Mr Crighton is Chairman of the Company. He is also a non-executive director of 
Global Fixed Income Realisation Limited and RM Secured Direct Lending plc. 
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 more than 25 years' experience in closed-ended funds having 
worked 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. Mr Crighton was appointed 
to the Board in 2013. 
 
Stephen Charles Coe (aged 51) 
 
Stephen is currently Chairman of European Real Estate Investment Trust Limited 
and TOC Property Backed Lending Trust plc.  He is also director (and Chairman 
of the Audit Committee) of Raven Russia Limited, Leaf Clean Energy Company, 
Weiss Korean Opportunities Fund Limited and Trinity Capital PLC. 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 Administrastion Services Limited.  He 
became self employed in August 2006 providing services to financial services 
clients. 
 
Robert Paul King (aged 53) 
 
Mr King is a non-executive director for a number of open and closed-ended 
investment funds including Chenavari Capital Solutions Limited and Threadneedle 
UK Select Trust Limited. He was a director of Cannon Asset Management Limited 
and their associated companies, from 2007 to 2011. 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 offshore 
open and closed-ended investment funds. Robert is British and resident in 
Guernsey. Mr King was appointed to the Board in 2013. 
 
Report of the Directors 
 
The Directors of the Company present their Annual Report and Audited Financial 
Statements for the year ended 31 December 2016. 
 
Principal Activity 
 
The Company was incorporated with limited liability in Guernsey on 12 April 
2013 as a company limited by shares and as an authorised closed-ended 
investment company. The Company's Shares were admitted to trading on the AIM 
Market of the LSE on 14 May 2013. As an existing closed-ended fund, the Company 
is deemed to be granted an authorised declaration in accordance with Section 8 
of the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended 
and Rule 6.02 of the Authorised Closed-ended Investment Schemes Rules 2008 on 
the same date as the Company obtained consent under the Control of Borrowing 
(Bailiwick of Guernsey) Ordinance 1959 to 1989. 
 
Investment Objective and Investment Policy 
 
The investment objective and investment policy of the Company is to provide 
Shareholders with an attractive return on their investment, predominantly 
though long-term capital appreciation, by investing primarily in listed Korean 
preferred shares. The full investment objective and investment policy is 
detailed in the Summary Information of the Annual Report. 
 
Going Concern 
 
In accordance with the Company's Articles of Association and Prospectus, the 
Company shall offer 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 
Admission, being 
15 May 2017 (the "Realisation Date"). See Note 17 for further details. 
 
On 20 March 2017, the Company announced that pursuant to the Realisation 
Opportunity, Shareholders who are on the register as at the record date may 
elect, during the election period, to redesignate all or part (provided that 
such part be rounded up to the nearest whole ordinary share) of their ordinary 
shares as Realisation Shares. 
 
Subject to the aggregate NAV of the continuing ordinary shares at the close of 
business on the last Business Day before the Realisation Date being not less 
than GBP50 million, the ordinary shares held by the Shareholders who have elected 
for Realisation will be redesignated as Realisation Shares and the Portfolio 
will be 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). If one or more Realisation Elections are duly made and the NAV of the 
continuing ordinary shares at the close of business on the last Business Day 
before the Reorganisation Date is less than GBP50 million, the Directors may 
propose an ordinary resolution for the winding up of the Company and may pursue 
a liquidation of the Company instead of splitting the Portfolio into the 
Continuation Pool and the Realisation Pool. 
 
Currently, the Board does not know the number of shareholders (or related 
shares), who will take up the Realisation Opportunity. Based on the uncertainty 
of the offer and the fact that the assets of 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 in the foreseeable future and for at least twelve months from the date 
of this report, and that it is appropriate for the Financial Statements to be 
prepared on a going concern basis, given that the Board believes the Company 
will continue in existence post the Realisation Opportunity. 
 
Viability Statement 
 
In accordance with provision C.2.2 of the UK Corporate Governance Code (the "UK 
Code"), published by the Financial Reporting Council in September 2014, the 
Board has assessed the prospects of the Company over the three year period to 
26 April 2020 (the "viability period"). On 20 March 2017, the Company announced 
to offer all Shareholders the right to elect, during the election period, to 
realise some or all of the value of their ordinary shares, less applicable 
costs and expenses, on or prior to the Realisation Date. Currently, the Board 
does not know the number of shareholders (or related shares), who will take up 
the Realisation Opportunity. The Board, however, believes that the Company will 
continue in existence post Realisation Opportunity and consider that three 
years is an appropriate period of assessment of the viability of the Company 
for the purpose of giving assurance to Shareholders. 
 
The Board and the Investment Manager believe that the investment opportunity 
provided by the Company remains compelling, but the viability of the Company is 
clearly contingent on the investment opportunity remaining in place, a matter 
which the Board monitors on an on-going basis. As the South Korean preference 
shares held by the Company trade at a discount compared with ordinary shares 
for the same companies, the Company remains attractive to long term investors 
over the viability period. 
 
The Board's assessment of the Company over the viability period has been made 
with reference to the Company's current financial position and prospects, the 
Company's strategy and risk appetite having considered the Company's principal 
risks and uncertainties detailed below. The Board has also considered the 
Company's likely cash flows and the liquidity of its portfolio. 
 
It is noted that the Company currently has no gearing, though borrowing is 
permitted under its constitution. In the event that the Company did consider 
taking on debt, the Board would carefully assess the Company's ability to meet 
the debt obligations as they become due. 
 
It is possible to imagine a number of scenarios, such as war or political 
events, which could severely impact the liquidity of the Company's investments. 
The Board maintains cash balances (outside of South Korea) sufficient to meet 
the Company's running costs for at least two years. 
 
Also the Board has assumed that the regulatory and fiscal regimes under which 
the Company operates will continue in broadly the same form during the 
viability period. The Board speaks with its broker and legal advisers on a 
regular basis to understand issues impacting on the Company's regulatory and 
fiscal structure. 
 
The Board considers the principal risks affecting the viability of the Company 
are as follows: 
 
Notice period of Investment Manager 
 
The Board has assumed that the Investment Manager will remain in place during 
the viability period; however, the Board acknowledges the risk of the 
Investment Manager serving a twelve month notice period under the Management 
Agreement. To mitigate this risk, the Board meets and communicates regularly 
with the Investment Manager to review its performance and the relationship with 
the Investment Manager. 
 
Failure of the Custodian to carry out its obligations to the Company 
 
The Company's assets are held in accounts maintained by the Company's 
Custodian. Failure by the Custodian to carry out its obligations to the Company 
in accordance with the terms of the Custodian agreement could have an impact on 
the viability of the Company. To mitigate this risk, the Board regularly 
receives reports from the Custodian, and through the Management and Engagement 
Committee they monitor the relationship with the Custodian. 
 
Loss of license or listing 
 
The Board has assumed that the Company will retain its regulatory status and 
listing throughout the viability period. The Company Secretary, Administrator 
and Broker report to the Board at least quarterly on regulatory matters and 
confirm compliance with listing and other regulatory requirements. 
 
Based on the Company's processes for monitoring operating costs, share price 
discount, the Investment Manager's compliance with the investment objective, 
asset allocation, the portfolio risk profile, liquidity risk and the robust 
assessment of the principal risks and uncertainties facing the Company, the 
Board has concluded that there is a reasonable expectation that the Company 
will be able to continue in operation, post Realisation Opportunity and meet 
its liabilities as they fall due over the viability period to 2020. 
 
International Tax Reporting 
 
For purposes of the US Foreign Accounts Tax Compliance Act, the Company 
registered with the US Internal Revenue Service ("IRS") as a Guernsey reporting 
Foreign Financial Institution ("FFI") in November 2014, received a Global 
Intermediary Identification Number (2A7KNV.99999.SL.831), and can be found on 
the IRS FFI list. 
 
The Common Reporting Standard ("CRS") is a global standard for the automatic 
exchange of financial account information developed by the Organisation for 
Economic Co-operation and Development ("OECD"), which has been adopted by 
Guernsey and which came into effect on 1 January 2016. The CRS replaced the 
intergovernmental agreement between the UK and Guernsey to improve 
international tax compliance that had previously applied in respect of 2014 and 
2015. 
 
The Board will take necessary actions to ensure that the Company is compliant 
with Guernsey regulations and guidance in this regard. 
 
Results and Dividends 
 
The results for the year ended 31 December 2016 are set out in the Statement of 
Comprehensive Income. An annual dividend of 2.2416 pence per share (GBP2,183,536) 
was approved on 2 June 2016 and paid on 
28 June 2016, in respect of the year ended 31 December 2015. An annual dividend 
of 1.8580 pence per share (GBP1,868,474) was approved on 4 June 2015 and paid on 
26 June 2015, in respect of the year ended 31 December 2014. 
 
The Board intendeds to declare an interim dividend on 4 May 2017 with a record 
date on 12 May 2017 for the year ended 31 December 2016, based on dividends 
from investments in Korean preferred shares. 
 
Shareholder Information 
 
Further Shareholder information can be found in the Summary Information. 
 
Investment Management 
 
The Investment Manager of the Company is Weiss Asset Management LP, a Delaware 
limited partnership formed on 10 June 2003, (the "Investment Manager"). The key 
terms of the Investment Management Agreement and specifically the fee charged 
by the Investment Manager are set out in Note 16 of the Financial Statements. 
The Board believes that the investment management fee is competitive with other 
investment companies with similar investment mandates. 
 
The Board reviews, on an on-going basis, the performance of the Investment 
Manager and considers whether the investment strategy utilised is likely to 
achieve the Company's investment objective. 
 
Having considered the portfolio performance and investment strategy, the Board 
has unanimously agreed that the interests of the Shareholders as a whole are 
best served by the continuing appointment of the Investment Manager on the 
terms agreed. 
 
Directors 
 
The details of the Directors of the Company during the year and at the date of 
this Report are set out in the Directors section. 
 
Directors' Interests 
 
The Directors who held office at 31 December 2016 and up to the date of this 
Report held the following numbers of ordinary shares beneficially: 
 
                                As at 31 December 2016   As at 31 December 2015 
 
                                Ordinary   % of issued   Ordinary   % of issued 
 
                                  Shares         share     Shares         share 
                                               capital                  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% 
 
There have been no changes in the interests of the above Directors during the 
year. 
 
Substantial Interests 
 
Disclosure and Transparency Rules ("DTRs") are now comprised in the Financial 
Conduct Authority handbook. Section 5, the only section of the DTRs which 
applies to AIM listed companies, requires substantial Shareholders to make 
relevant holding notifications to the Company. The Company must then 
disseminate this information to the wider market. Details of major Shareholders 
in the Company can be found in Note 10. 
 
Corporate Governance 
 
The Company is a Guernsey registered company, and is not premium listed; the 
Company is not required to comply with the UK Corporate Governance Code (the 
"UK Code"), however, the Board is committed to high standards of corporate 
governance and has implemented a framework for corporate governance which it 
considers to be appropriate for an investment company in order to comply with 
the main principles of the UK Code. By complying with the UK Code, the Company 
is deemed to comply with the Code of Corporate Governance (the "GFSC Code") 
issued by the Guernsey Financial Services Commission. 
 
The UK Code is publicly available on the Financial Reporting Council's (the 
"FRC") website. The FRC issued a revised UK Code in April 2016, for reporting 
periods beginning on or after 1 May 2016. The Board has adopted the revised 
code. 
 
The Board has considered the principles and recommendations of the UK Code, and 
considers that reporting against the UK Code will provide better information to 
Shareholders. To ensure on-going compliance with these principles the Board 
receives a report from the Company Secretary, at each quarterly meeting, 
identifying how the Company is in compliance and identifying any changes that 
might be necessary. 
 
The Board, having reviewed the UK Code, considers that it has maintained 
procedures during the year ended 31 December 2016 and up to the date of this 
report to ensure that it complies with the UK Code except as explained 
elsewhere in the Report. 
 
Role of the Board 
 
The Board is the Company's governing body and has overall responsibility for 
maximising the Company's success by directing and supervising the affairs of 
the business and meeting the appropriate interests of Shareholders and relevant 
stakeholders, while enhancing the value of the Company and also ensuring 
protection of investors. A summary of the Board's responsibilities is as 
follows: 
 
  * statutory obligations and public disclosure; 
  * strategic matters and financial reporting; 
  * risk assessment and management including reporting compliance, governance, 
    monitoring and control; and 
  * other matters having a material effect on the Company. 
 
The Board's responsibilities for the Annual Report are set out in the Statement 
of Directors' Responsibilities. 
 
The Board has engaged external companies to undertake the investment 
management, administrative and custodial activities of the Company. Documented 
contractual arrangements are in place with these companies which define the 
areas where the Board has delegated responsibility to them. 
 
The Board needs to ensure that the Annual Report and Financial Statements, 
taken as a whole, are fair, balanced and understandable and provide the 
information necessary for Shareholders to assess the Company's performance, 
business model and strategy. 
 
In seeking to achieve this, the Directors have set out the Company's investment 
objective and policy and have explained how the Board and its delegated 
committees operate and how the Directors review the risk environment within 
which the Company operates and set appropriate risk controls. Furthermore, 
throughout the Annual Report and Financial Statements, the Board has sought to 
provide further information to enable Shareholders to better understand the 
Company's business and financial performance. 
 
Composition and Independence of the Board 
 
The Board currently comprises three non-executive Directors, all of whom are 
considered independent of the Investment Manager. The Directors of the Company 
are listed in the Directors section. 
 
The Chairman is Mr Crighton. A biography for Mr Crighton and all other 
Directors appears in the Directors section. In considering the independence of 
the Chairman, the Board has taken note of the provisions of the UK Code 
relating to independence, and has determined that Mr Crighton is an Independent 
Director. 
 
The Board believes it has a good balance of skills and experience to ensure it 
operates effectively. The Chairman is responsible for leadership of the Board 
and ensuring its effectiveness. 
 
As the Chairman is an Independent Director, no appointment of a Senior 
Independent Director has been made. The Company has no employees and therefore 
there is no requirement for a Chief Executive, or whistleblowing policy. 
 
The Company holds a minimum of four Board Meetings per year to discuss general 
management, structure, finance, corporate governance, marketing, risk 
management, compliance, asset allocation and gearing, contracts and 
performance. The Quarterly Board Meetings are the principal source of regular 
information for the Board enabling it to determine policy and to monitor 
performance, compliance and controls. These meetings are supplemented by 
communication and discussions throughout the year. 
 
A representative of the Investment Manager, Administrator and Company Secretary 
may attend each Board Meeting either in person or by telephone thus enabling 
the Board to fully discuss and review the Company's operations and performance. 
Each Director has direct access to the Investment Manager and Company Secretary 
and may at the expense of the Company seek independent professional advice on 
any matter. 
 
Attendance at the Board and other Committee Meetings during the year was as 
follows: 
 
                                      Number of       Norman      Robert     Stephen 
 
                                       Meetings     Crighton        King         Coe 
                                           held 
 
Board Meetings                                6            6           6           6 
 
Audit Committee                               4            4           4           4 
Meetings 
 
Management Engagement Committee               1            1           1           1 
Meetings 
 
Board Diversity 
 
The Board considers the composition of the Board on an on-going basis. 
 
Re-election 
 
The Articles of Incorporation provide that one-third of the Directors retire by 
a voluntary rotation basis at each AGM. However, in order to meet the highest 
standards of corporate governance, the Directors have agreed to stand for 
election annually. 
 
The Directors may at any time appoint any person to be a Director either to 
fill a casual vacancy or as an addition to the existing Directors. Any Director 
so appointed shall hold office only until, and shall be eligible for 
re-election at, the next AGM following their appointment but shall not be taken 
into account in determining the Directors or the number of Directors who are to 
retire by a voluntary rotation basis, at that meeting, if it is an AGM. 
 
Board Performance 
 
The Board undertake an evaluation of their own performance and that of 
individual Directors on an annual basis. In order to review their 
effectiveness, the Board carry out a process of formal self-appraisal. The 
Board consider how they function as a whole and also review the individual 
performance of its members. This process is conducted by the respective 
Chairman reviewing each members' performance, contribution and commitment to 
the Company by reviewing a questionnaire each Board member has completed. This 
last took place in the board meeting held on 5 December 2016. 
 
The Board considers it has a breadth of experience relevant to the Company, and 
the Directors believe that any changes to the Board's composition can be 
managed without undue disruption. 
 
During the Board Meeting held on 5 December 2016, the Board agreed that 
Directors' fees, along with all fees associated with the Company would be 
reviewed post Realisation Opportunity in May 2017. 
 
Committees of the Board 
 
The Board has established Audit and Management and Engagement Committees. All 
Terms of Reference for Committees are available from the Company Secretary upon 
request or on the Company's website, www.weisskoreaopportunityfund.com. 
 
Audit Committee 
 
The Company has established an Audit Committee, with formally delegated duties 
and responsibilities within written terms of reference. The Audit Committee is 
chaired by Mr Coe. The Audit Committee's other members are Mr Crighton and Mr 
King. The Audit Committee meets formally at least twice a year. 
 
Appointment to the Audit Committee is for a period up to three years which may 
be extended for two further three year periods. 
 
The table in this report sets out the number of Audit Committee Meetings held 
during the year ended 31 December 2016 and the number of such meetings attended 
by each Audit Committee member. 
 
A report of the Audit Committee detailing responsibilities and activities is 
presented in the Audit Committee Report. 
 
Management and Engagement Committee 
 
The Company has established a Management and Engagement Committee, with 
formally delegated duties and responsibilities within written terms of 
reference. The Management and Engagement Committee is chaired by Mr King. The 
Management and Engagement Committee's other members are Mr Crighton and Mr Coe. 
The Management and Engagement Committee meets formally once a year. 
 
The principal duties of the Management and Engagement Committee are to review 
the performance of and contractual arrangements with the Investment Manager and 
all other service providers to the Company (other than the External Auditor). 
 
During the year, the Management and Engagement Committee has reviewed the 
services provided by the Investment Manager as well as the other service 
providers and have recommended to the Board that their continuing appointments 
are in the best interests of the Shareholders. During the last meeting, held on 
5 December 2016, the Management and Engagement Committee confirmed that all 
service providers' fees would be reviewed post Realisation Opportunity in May 
2017. 
 
Nomination Committee 
 
The Board does not have a separate Nomination Committee. The Board as a whole 
fulfils the function of a Nomination Committee. Any proposal for a new Director 
will be discussed and approved by the Board. The Board will determine whether 
in future an external search consultancy or open advertising is used in the 
appointments of non-executive Directors. 
 
Remuneration Committee 
 
In view of its non-executive and independent nature, the Board considers that 
it is not appropriate for there to be a Remuneration Committee as anticipated 
by the UK Code because this function is carried out as part of the regular 
Board business. A Remuneration Report prepared by the Board is contained in the 
Annual Report. Directors' remuneration is considered on an annual basis. 
 
Environmental Policy 
 
Due to the Company's listing on AIM, the Company is required to disclose its 
Environmental Policy, but this is not applicable due to the nature of its 
operations. 
 
Internal Controls 
 
The Board is ultimately responsible for establishing and maintaining the 
Company's system of internal controls and for maintaining and reviewing its 
effectiveness. The Company's risk matrix continues to be the basis of the 
Company's risk management process in establishing the Company's system of 
internal financial and reporting controls. The risk matrix is prepared and 
maintained by the Board which initially identifies the risks facing the Company 
and then collectively assesses the likelihood of each risk, the impact of those 
risks and the strength of the controls operating over each risk. The Company's 
system of internal controls is designed to manage rather than to eliminate the 
risk of failure to achieve the Company's objectives and by their nature can 
only provide reasonable and not absolute assurance against misstatement and 
loss. These controls aim to ensure that: assets of the Company are safeguarded; 
proper accounting records are maintained; and the financial information for 
publication is reliable. 
 
The UK Code requires Directors to conduct at least annually a review of the 
Company's system of internal controls, covering all controls, including 
financial, operational, compliance and risk management. The Board has evaluated 
the Company's systems of internal controls. In particular, it has prepared a 
process for identifying and evaluating the significant risks affecting the 
Company and the policies by which these risks are managed and resulted in a low 
to medium risk assessment. 
 
The Board has delegated the management of the Company's investment portfolio 
and the administration, registrar and corporate secretarial functions including 
the independent calculation of the Company's NAV and the production of the 
Annual Report and Financial Statements, which are independently audited. Whilst 
the Board delegates these functions, it remains responsible for the functions 
it delegates and for the systems of internal control. Formal contractual 
agreements have been put in place between the Company and providers of these 
services. On an on-going basis, Board reports are provided at each quarterly 
Board Meeting from the Investment Manager, Administrator, Registrar, Company 
Secretary and a representative from the Investment Manager is asked to attend 
these meetings. 
 
In common with most investment companies, the Company does not have an internal 
audit function. All of the Company's management functions are delegated to the 
Investment Manager, Administrator, Registrar and Company Secretary which have 
their own internal audit and risk assessment functions. 
 
The Company's risk exposure and the effectiveness of its risk management and 
internal control systems are reviewed by the Audit Committee at its meetings 
and annually by the Board. The Board believes that the Company has adequate and 
effective systems in place to identify, mitigate and manage the risks to which 
it is exposed. 
 
Principal Risks and Uncertainties 
 
In respect to the Company's system of internal controls and reviewing its 
effectiveness, the Directors: 
 
  * are satisfied that they have carried out a robust assessment of the 
    principal risks facing the Company, including those that would threaten its 
    business model, future performance, solvency or liquidity; and 
  * have reviewed the effectiveness of the risk management and internal control 
    systems including material financial, operational and compliance controls 
    (including those relating to the financial reporting process) and no 
    significant failings or weaknesses were identified. 
 
The principal risks and uncertainties which have been identified and the steps 
which are taken by the Board to mitigate them are as follows: 
 
Investment Risks 
 
The Company is exposed to the risk that its portfolio fails to perform in line 
with its investment objective and policy if markets move adversely or if the 
Investment Manager fails to comply with the investment policy. The Board 
reviews reports from the Investment Manager at the quarterly Board Meetings, 
with a focus on the performance of the portfolio in line with its investment 
policy. The Administrator is responsible for ensuring that all transactions are 
in accordance with the investment restrictions. 
 
Operational Risks 
 
The Company is exposed to the risk arising from any failures of systems and 
controls in the operations of the Investment Manager, Administrator and the 
Custodian. The Board and its Committees regularly review reports from the 
Investment Manager and the Administrator on their internal controls. The 
Administrator will report to the Investment Manager any valuation issues which 
will be brought to the Board for final approval as required. 
 
Accounting, Legal and Regulatory Risks 
 
The Company is exposed to the risk that it may fail to maintain accurate 
accounting records, fail to comply with requirements of its Admission Document 
and fail to meet listing obligations. The accounting records prepared by the 
Administrator are reviewed by the Investment Manager. The Administrator, Broker 
and Investment Manager provide regular updates to the Board on compliance with 
the Admission Document and changes in regulation. 
 
Discount Management 
 
The Company is exposed to Shareholder dissatisfaction through inability to 
manage the share price discount to NAV. The Board and its Broker monitor share 
price discount (and premium) continuously and has engaged in share buy-backs 
from time to time to help minimise any such discount.  The Board believes that 
it has access to sufficiently liquid assets to help manage share price 
discount. The Company's discount management programme is described within Note 
17. 
 
Liquidity of Investments 
 
The Korean preferred shares typically purchased by the Company generally have 
smaller market capitalisations and lower levels of liquidity than their common 
share counterparts. These factors, among others, may result in more volatile 
price changes in the Company's assets as compared to the Korean stock market or 
other more liquid asset classes. This volatility could cause the NAV to go up 
or down dramatically. 
 
In order to realise its investments, the Company will likely need to sell its 
holdings in the secondary market, which could prove difficult if adequate 
liquidity does not exist at the time, and could result in the values received 
by the Company being significantly less than their holding values. The 
liquidity of the market for preferred shares may vary materially over time. 
There can be no guarantee that a liquid market for the Company's assets will 
exist or that the Company's assets can be sold at prices similar to the 
published NAV. Illiquidity could also make it difficult or costly for the 
Company to purchase securities, and this could result in the Company holding 
more cash than anticipated. Furthermore, it is possible that South Korea could 
impose currency-exchange or capital controls on foreign investors, making it 
difficult or impossible for the Company to repatriate funds. The Investment 
Manager considers the liquidity of secondary trading in assessing and managing 
the liquidity of the Company's investments. The Board reviews the Company's 
resources and obligations on a regular basis with a view to ensuring that 
sufficient liquid assets are held for the expected day to day operations of the 
Company. However, if the Company were required to liquidate a substantial 
portion of its assets at a single time, it is likely that the market impact of 
the necessary sale transactions would impact the value of the portfolio 
materially. 
 
Fraud Risk 
 
The Company is exposed to fraud risk. The Audit Committee continues to monitor 
the fraud, bribery and corruption policies of the Company. The Board receives 
an annual confirmation from all service providers that there have been no 
instances of fraud or bribery. 
 
Financial Risks 
 
The financial risks, including market, credit and liquidity risk faced by the 
Company, are set out in Note 17 of the Financial Statements. These risks and 
the controls in place to reduce the risks, are reviewed at the quarterly Board 
Meetings. 
 
Shareholder Engagement 
 
The Directors welcome Shareholders' views and places great importance on 
communication with its Shareholders. Shareholders wishing to meet with the 
Chairman and other Board members should contact the Company's Administrator. 
 
The Investment Manager and Broker maintain a regular dialogue with 
institutional Shareholders, the feedback from which is reported to the Board. 
 
The Company's AGM provides a forum for Shareholders to meet and discuss issues 
of the Company and provides Shareholders with the opportunity to vote on the 
resolutions as specified in the Notice of AGM. The Notice of AGM and the 
results are released to the London Stock Exchange in the form of an 
announcement. 
 
In addition, the Company maintains a website which contains comprehensive 
information, including links to regulatory announcements, share price 
information, financial reports, investment objective and investor contacts. 
 
Auditor 
 
The Auditor, KPMG Channel Islands Limited, has indicated their willingness to 
continue in office. Accordingly, a resolution for their reappointment will be 
proposed at the forthcoming AGM. 
 
Directors' Responsibilities 
 
The Directors are responsible for preparing the Annual Report and Financial 
Statements, in accordance with applicable law and regulations. 
 
Company law requires the Directors to prepare Financial Statements for each 
financial year. Under that law they have elected to prepare the Financial 
Statements in accordance with International Financial Reporting Standards 
("IFRS") as adopted by the European Union and applicable law. 
 
The Directors are responsible for preparing the Annual Report and Financial 
Statements, in accordance with applicable law and regulations. 
 
Company law requires the Directors to prepare Financial Statements for each 
financial year. Under that law they have elected to prepare the Financial 
Statements in accordance with International Financial Reporting Standards 
("IFRS") as adopted by the European Union and applicable law. 
 
The Financial Statements are required by law to give a true and fair view of 
the state of affairs of the Company and of the profit or loss of the Company 
for that period. 
 
In preparing these Financial Statements, the Directors are required to: 
 
  * select suitable accounting policies and then apply them consistently; 
  * make judgements and estimates that are reasonable and prudent; 
  * state whether applicable accounting standards have been followed, subject 
    to any material departures disclosed and explained in the Financial 
    Statements; and 
  * prepare the Financial Statements on a going concern basis unless it is 
    inappropriate to assume that the Company will continue in business. 
 
The Directors are responsible for keeping proper accounting records which 
disclose with reasonable accuracy at any time the financial position of the 
Company and to enable them to ensure that the Financial Statements have been 
properly prepared in accordance with the Companies (Guernsey) Law, 2008. They 
have general responsibility for taking such steps as are reasonably open to 
them to safeguard the assets of the Company and to prevent and detect fraud and 
other irregularities. 
 
The Directors confirm that they have complied with the above requirements in 
preparing the Annual Report and Financial Statements and that to the best of 
their knowledge and belief: 
 
  * the Annual Report and Financial Statements, taken as a whole, are fair, 
    balanced and understandable and provide the information necessary for the 
    Shareholders to assess the Company's performance, business model and 
    strategy; and 
  * the Financial Statements have been prepared in accordance with IFRS as 
    adopted by the European Union, give a true and fair view of the assets, 
    liabilities, financial position and profit of the Company. 
 
The Directors are responsible for the maintenance and integrity of the 
corporate and financial information included on the Company's website and for 
the preparation and dissemination of Financial Statements. 
 
Legislation in Guernsey governing the preparation and dissemination of 
Financial Statements may differ from legislation in other jurisdictions. 
 
Disclosure of information to the Auditor 
 
So far as they are each aware, there is no relevant audit information of which 
the Company's Auditor is unaware, and each Director has taken all the steps 
that they ought to have taken as a Director to make themselves aware of any 
relevant audit information and to establish that the Company's Auditor is aware 
of that information. 
 
The Directors recognise their responsibilities stated above. 
 
Signed on behalf of the Board by: 
 
Norman Crighton 
 
Chairman 
 
Stephen Coe 
 
Director 
 
26 April 2017 
 
Directors' Remuneration Report 
 
Introduction 
 
An ordinary resolution for the approval of the Directors' Remuneration Report 
will be put to the Shareholders at the AGM to be held on 19 July 2017. 
 
Remuneration Policy 
 
All Directors are non-executive and a Remuneration Committee has not been 
established. The Board as a whole considers matters relating to the Directors' 
remuneration. No advice or services were provided by any external person in 
respect of its consideration of the Directors' remuneration. 
 
The Company's policy is that the fees payable to the Directors should reflect 
the time spent by the Directors on the Company's affairs and the 
responsibilities borne by the Directors and be sufficient to attract, retain 
and motivate directors of a quality required to run the Company successfully. 
The Chairman of the Board is paid a higher fee in recognition of his additional 
responsibilities, as is the Chairman of the Audit Committee. The policy is to 
review fee rates periodically, although such a review will not necessarily 
result in any changes to the rates, and account is taken of fees paid to 
Directors of comparable companies. 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 GBP200,000 per annum. 
 
There are no long term incentive schemes provided by the Company and no 
performance fees are paid to Directors. 
 
None of the Directors have a service contract with the Company, but each of the 
Directors is appointed by a letter of appointment which sets out the main terms 
of their appointment. Directors hold office until they retire by rotation or 
cease to be a Director in accordance with the Articles of Incorporation, by 
operation of law, or until they resign. 
 
During the Board Meeting held on 5 December 2016, the Board agreed that 
Directors' fees, along with all fees associated with the Company would be 
reviewed post Realisation Opportunity in May 2017. 
 
Remuneration 
 
Directors are remunerated in the form of fees, payable quarterly in arrears, to 
the Director personally. No Directors have been paid additional remuneration 
outside their normal Directors' fees and expenses. 
 
The annual Directors' fees comprise GBP26,000 payable to Mr Crighton, the 
Chairman, GBP22,000 to Mr Coe as Chairman of the Audit Committee and GBP20,000 to 
Mr King. 
 
For the year ended 31 December 2016, Directors' fees were: 
 
                                For the year ended       For the year ended 
 
                                      31 December 2016         31 December 2015 
 
                                                     GBP                        GBP 
 
Norman Crighton                                 26,000                   26,000 
 
Stephen Coe                                     22,000                   22,000 
 
Robert King                                     20,000                   20,000 
 
Signed on behalf of the Board by: 
 
Norman Crighton 
 
Chairman 
 
26 April 2017 
 
Stephen Coe 
 
Director 
 
26 April 2017 
 
Audit Committee Report 
 
Dear Shareholders, 
 
We present the Audit Committee's Report for 2016, setting out the 
responsibilities of the Audit Committee and its key activities in 2016. 
 
The Audit Committee has reviewed the Company's financial reporting, significant 
areas of judgement and estimation within the Company's Financial Statements, 
the independence and effectiveness of the External Auditor and the internal 
control and risk management systems of the Company's service providers. The 
Audit Committee considered whether the Annual Report and Financial Statements 
are fair, balanced and understandable and whether they provided the necessary 
information for Shareholders to assess the Company's performance, business 
model and strategy before recommending them to the Board for approval. In order 
to assist the Audit Committee in discharging these responsibilities, regular 
reports are received from the Investment Manager, Administrator and External 
Auditor. Following its review of the independence and effectiveness of the 
Company's External Auditor, the Audit Committee has recommended to the Board 
that KPMG Channel Islands Limited be reappointed as Auditor, which the Board 
has submitted for approval to the Company's Shareholders. 
 
A member of the Audit Committee will continue to be available at each AGM to 
respond to any Shareholder questions on the activities of the Audit Committee. 
 
Responsibilities 
 
The Audit Committee reviews and recommends the approval of the Financial 
Statements of the Company to the Board and is the forum through which the 
External Auditor reports to the Board of Directors. The External Auditor and 
the Audit Committee will meet together without representatives of either the 
Administrator or Investment Manager being present if either considers this to 
be necessary. 
 
The role of the Audit Committee includes: 
 
  * monitoring the integrity of the published Financial Statements of the 
    Company; 
  * review and report to the Board on the significant issues and judgements and 
    estimates made in the preparation of the Company's published Financial 
    Statements; 
  * monitor and review the quality and effectiveness of the External Auditor 
    and their independence; 
  * consider and make recommendations to the Board on the appointment, 
    reappointment, replacement and remuneration to the Company's External 
    Auditor; 
  * review the Company's procedures for prevention, detection and reporting of 
    fraud, bribery and corruption; and 
  * monitor and review the internal control and risk management systems of the 
    service providers. 
 
The Audit Committee's full terms of reference can be obtained by contacting the 
Company's Secretary or on the Company's website, 
www.weisskoreaopportunityfund.com. 
 
Key Activities of the Audit Committee 
 
The following sections discuss the assessments made by the Audit Committee 
during the year: 
 
Financial Reporting 
 
The Audit Committee's review of the Annual Report and Audited Financial 
Statements focused on the following significant area: 
 
Valuation of investments 
 
The Company's investments had a fair value of GBP141,956,597 as at 31 December 
2016 and represent the majority of the net assets of the Company. The 
investments are all listed and traded and the valuation is by reference to the 
fair value measurement required by IFRS. The Audit Committee considered the 
fair value of the investments held by the Company as at 31 December 2016 to be 
reasonable from a review of information provided by the Investment Manager and 
Administrator. All prices have been confirmed by the Administrator, to 
independent pricing sources as at 31 December 2016. 
 
The Investment Manager and Administrator confirmed to the Audit Committee that 
they were not aware of any material misstatements including matters relating to 
the Financial Statements' presentation, nor were they aware of any fraud or 
bribery relating to the Company's activities. Furthermore, the External Auditor 
reported to the Audit Committee that no material misstatements were found in 
the course of their work. 
 
Following a review of the presentations and reports from the Administrator and 
consulting where necessary with the External Auditor, the Audit Committee is 
satisfied that the Financial Statements appropriately address the critical 
judgements and key estimates made in the preparation of the Financial 
Statements (both in respect to the amounts reported and the disclosures). The 
Audit Committee is also satisfied that the significant assumptions used for 
determining the value of assets and liabilities have been appropriately 
scrutinised, challenged and are sufficiently robust. 
 
Risk Management 
 
The Audit Committee continued to consider the process for managing the risk of 
the Company and its service providers. Risk management procedures for the 
Company, as detailed in the Company's risk assessment matrix, were reviewed and 
approved by the Audit Committee and a full review will take place post 
Realisation Opportunity in May 2017. 
 
Fraud, Bribery and Corruption 
 
The Audit Committee continues to monitor the fraud, bribery and corruption 
policies of the Company. The Board receives a confirmation from all service 
providers that there have been no instances of fraud or bribery. 
 
The External Auditor 
 
Independence, objectivity and fees 
 
The independence and objectivity of the External Auditor is reviewed by the 
Audit Committee which also reviews the terms under which the External Auditor 
is appointed to perform non-audit services. The Audit Committee has established 
pre-approval policies and procedures for the engagement of the Auditor to 
provide audit and assurance services. 
 
These are that the External Auditor may not provide a service which: 
 
  * places them in a position to audit their own work; 
  * creates a mutuality of interest; 
  * results in the External Auditor developing close relationships with service 
    providers of the Company; 
  * results in the External Auditor functioning as a manager or employee of the 
    Company; and 
  * puts the External Auditor in the role of advocate of the Company. 
 
As a general rule, the Company does not utilise the External Auditor for 
internal audit purposes, secondments or valuation advice. Services such as tax 
compliance, tax structuring, private letter rulings, accounting advice, 
quarterly reviews and disclosure advice are normally permitted but will be 
pre-approved by the Audit Committee. 
 
The following table summarises the remuneration payable to KPMG Channel Islands 
Limited and to other KPMG member firms for audit and non-audit services. 
 
                                   For the year ended                 For the year 
                                                                         ended 
 
                                         31 December 2016         31 December 2015 
 
KPMG Channel Islands Limited                            GBP                        GBP 
 
Annual audit                                       24,500                   24,000 
 
Tax fees (UK Reporting Fund                         3,750                    3,750 
Status) 
 
                                                   28,250                   27,750 
 
The Audit Committee does not consider KPMG Channel Islands Limited's 
independence to be under threat. In making this assessment, the Audit Committee 
has concluded that the non-audit fees do not relate to prohibited services 
identified by the Audit Committee. In approving the non-audit services the 
Audit Committee considered the safeguards put in place by KPMG Channel Islands 
Limited to reduce the threats to independence and objectivity to an acceptable 
level. 
 
KPMG Channel Islands Limited has been the External Auditor from the date of the 
initial listing on the London Stock Exchange. The recent revisions to the UK 
Corporate Governance Code introduced a recommendation that the external audit 
be put out to tender every ten years. The Audit Committee has noted this and 
will develop a plan for tendering at the appropriate time. 
 
The Audit Committee has examined the scope and results of the audit, its cost 
effectiveness and the independence and objectivity of the External Auditor, 
with particular regard to non-audit fees, and considers KPMG Channel Islands 
Limited, as External Auditor, to be independent of the Company. 
 
Performance and effectiveness 
 
During the year, when considering the effectiveness of the External Auditor, 
the Audit Committee has taken into account the following factors: 
 
  * The audit plan presented to them before the audit; 
  * The post audit report including variations from the original plan; 
  * Changes in audit personnel; 
  * The External Auditor's report on independence; and 
  * Feedback from both the Investment Manager and Administrator. 
 
Further to the above, at the conclusion of the 2016 audit fieldwork, the Audit 
Committee performed specific evaluation of the performance of the External 
Auditor through discussion with the Administrator, Investment Manager and the 
Auditor, themselves. 
 
There were no significant adverse findings from this evaluation. 
 
Reappointment of External Auditor 
 
Consequent to this review process, the Audit Committee has recommended to the 
Board that a resolution be put to the 2017 AGM for the reappointment of KPMG 
Channel Islands Limited as External Auditor. The Board has accepted this 
recommendation. 
 
Internal control and risk management systems 
 
After consultation with the Investment Manager, Administrator and External 
Auditor, the Audit Committee has considered the impact of the risk of the 
override of controls by its service providers, the Investment Manager and 
Administrator. 
 
The Audit Committee reviews externally prepared assessments of the control 
environment in place at the Administrator, with the Administrator providing a 
Service Organisation Controls Report on a bi-annual basis. The Audit Committee 
noted that the Management and Engagement Committee received a self-assessment 
from the Investment Manager and no issues were identified in this. 
Additionally, representatives of the portfolio managers meet with the Board of 
Directors annually to discuss and review the controls in place at the 
Investment Manager. No significant failings or weaknesses were identified in 
these reviews. 
 
The Audit Committee has also reviewed the need for an internal audit function. 
The Audit Committee has decided that the systems and procedures employed by the 
Investment Manager and the Administrator's internal audit function provide 
sufficient assurance that a sound system of internal control, which safeguards 
the Company's assets, is maintained. An internal audit function specific to the 
Company is therefore considered unnecessary. 
 
In finalising the Financial Statements for recommendation to the Board for 
approval, the Audit Committee is satisfied that, taken as a whole, the Annual 
Report and Financial Statements are fair, balanced and understandable. 
 
For any questions on the activities of the Audit Committee not addressed in the 
foregoing, a member of the Audit Committee remains available to attend each AGM 
to respond to such questions. 
 
The Audit Committee Report was approved by the Board on 26 April 2017 and 
signed on behalf of the Audit Committee by: 
 
Stephen Coe 
 
Chairman, Audit Committee 
 
26 April 2017 
 
Independent Auditor's Report 
 
To the Members of Weiss Korea Opportunity Fund Ltd. 
 
Opinions and conclusions arising from our audit 
 
Opinion on financial statements 
 
We have audited the financial statements of Weiss Korea Opportunity Fund Ltd. 
(the "Company") for the year ended 31 December 2016 which comprise the 
statement of financial position, the statement of comprehensive income, the 
statement of changes in equity, the statement of cash flows and the related 
notes. The financial reporting framework that has been applied in their 
preparation is applicable law and International Financial Reporting Standards 
as adopted by the European Union ('EU').  In our opinion, the financial 
statements: 
 
  * give a true and fair view of the state of the Company's affairs as at 31 
    December 2016 and of its total comprehensive income for the year ended 31 
    December 2016; 
 
  * have been properly prepared in accordance with International Financial 
    Reporting Standards as adopted by the EU; and 
 
  * comply with the Companies (Guernsey) Law, 2008. 
 
Emphasis of matter - going concern 
 
In forming our opinion on the financial statements, which is not modified, we 
have considered the adequacy of the disclosure made in Note 2c to the financial 
statements concerning the Company's ability to continue as a going concern. 
 
In accordance with the Company's Articles of Association and Prospectus, the 
Company shall offer all shareholders the right to elect to realise some or all 
of the value of their Ordinary Shares. Subject to the aggregate net asset value 
of the continuing Ordinary Shares falling below the viable threshold disclosed 
in note 2c to the financial statements, the Directors may propose an ordinary 
resolution for the winding up of the Company and may pursue the liquidation of 
the Company. 
 
This condition indicates the existence of a material uncertainty that may cast 
doubt about the Company's ability to continue as a going concern. The financial 
statements do not include the adjustments that would result if the Company was 
unable to continue as a going concern. 
 
Our assessment of risks of material misstatement 
 
The risks of material misstatement detailed in this section of this report are 
those risks that we have deemed, in our professional judgement, to have had the 
greatest effect on: the overall audit strategy; the allocation of resources in 
our audit; and directing the efforts of the engagement team. Our audit 
procedures relating to these risks were designed in the context of our audit of 
the financial statements as a whole. Our opinion on the financial statements is 
not modified with respect to any of these risks, and we do not express an 
opinion on these individual risks. 
 
In arriving at our audit opinion above on the financial statements, the risks 
of material misstatement that had the greatest effect on our audit were as 
follows: 
 
1.             Valuation of investments (GBP141,956,597 or 97% of NAV) 
 
Refer to the Report of the Audit Committee, Note 2e (accounting policies) and 
Note 11 and 18 (financial instrument disclosures). 
 
  * The risk - The Company invests primarily in listed preferred shares issued 
    by companies incorporated and listed in South Korea, which in certain cases 
    may trade at a discount to the corresponding common shares of the same 
    companies. As highlighted in the Report of the Audit Committee, the 
    valuation of the Company's investments, given they represent the majority 
    of the Company's net assets as at 31 December 2016, is a significant area 
    of our audit. Fair value of investments traded in active markets are based 
    on the bid price at the close of business of the relevant stock exchange on 
    the reporting date. As disclosed in Note 18 to the financial statements, 
    100% of the Company's investments are traded in an active market. 
 
  * Our response - Our procedures with respect to the Company's valuation of 
    investments included, but were not limited to, evaluating the design, 
    implementation and operating effectiveness of controls at the administrator 
    in relation to valuation of investments, and using our own financial 
    instruments valuation specialist to perform a comparison of the latest 
    available bid prices from an independent third party pricing provider to 
    the bid prices utilised by the Company. In addition our own financial 
    instruments valuation specialist assessed the quality of the available bid 
    prices used as at 31 December 2016 for evidence of stale prices and 
    reviewed volumes traded on preference shares held by the Company to assess 
    their liquidity. 
 
We also considered the Company's valuation policies adopted and fair value 
disclosures in Note 2e, 11 and 18 for compliance with International Financial 
Reporting Standards as adopted by the EU. 
 
2.             Going concern 
 
Refer to the Report of the Directors and Note 2c accounting policies. 
 
·      The risk - In accordance with the Company's Articles of Association and 
Prospectus, the Company shall offer all shareholders the right to elect to 
realise some or all of the value of their Ordinary Shares, less applicable 
costs and expenses, on or prior to the realisation date, being 15 May 2017. 
Subject to the aggregate net asset value of the continuing Ordinary Shares at 
the close of business on the last business date before the realisation date 
being not less than GBP50 million, the Ordinary Shares held by the shareholders 
who have elected for realisation will be re-designated as realisation shares 
and the Portfolio of Investments will be split into two separate and distinct 
pools namely the Continuation Pool and the Realisation Pool. If one or more 
Realisation Elections are duly made and the net asset value of the continuing 
ordinary shares at the close of business on the last Business Day before the 
Realisation Date is less than GBP50 million, the Directors may propose an 
ordinary resolution for the winding up of the Company and may pursue a 
liquidation of the Company instead of splitting the Portfolio of Investments 
into the Continuation Pool and the Realisation Pool. The outcome of the 
realisation offer is uncertain; this indicates the existence of a material 
uncertainty that may cast doubt about the Company's ability to continue as a 
going concern as described in note 2c to the financial statements. 
 
  * Our response - Our procedures with respect to going concern included, but 
    were not limited to, holding discussions with the administrator, the 
    Investment Manager and the Audit Committee with regards to the status of 
    the realisation offer process and their assessment of the impact of such an 
    event, if any, on the going concern basis of preparation for the financial 
    statements. We also discussed with the Investment Manager the outcome of 
    feedback, if any, from significant shareholders as to the likelihood of 
    their voting intentions and outlook for the Company. In addition, we 
    compared management's assessment of the Company's ability to continue as a 
    going concern against our other audit findings. 
 
We also considered the Company's going concern disclosure in Note 2c to the 
financial statements for compliance with International Financial Reporting 
Standards as adopted by the EU and other appropriate technical guidance. 
 
Our application of materiality and an overview of the scope of our audit 
 
Materiality is a term used to describe the acceptable level of precision in 
financial statements. Auditing standards describe a misstatement or an omission 
as "material" if it could reasonably be expected to influence the economic 
decisions of users taken on the basis of the financial statements. The auditor 
has to apply judgement in identifying whether a misstatement or omission is 
material and to do so the auditor identifies a monetary amount as "materiality 
for the financial statements as a whole". 
 
The materiality for the financial statements as a whole was set at GBP4,391,000. 
This has been calculated using a benchmark of the Company's net asset value (of 
which it represents approximately 3%) which we believe is the most appropriate 
benchmark as net asset value is considered as the prime driver of returns to 
the members and to be one of the principal considerations for members of the 
Company in assessing the financial performance of the Company. 
 
We agreed with the Audit Committee to report to it all corrected and 
uncorrected misstatements we identified through our audit with a value in 
excess of GBP219,000, in addition to other audit misstatements below that 
threshold that we believe warranted reporting on qualitative grounds. 
 
Our audit of the Company was undertaken to the materiality level specified 
above, which has informed our identification of significant risks of material 
misstatement and the associated audit procedures performed in those areas as 
detailed above.  The audit was performed at the offices of the administrator. 
 
Whilst the audit process is designed to provide reasonable assurance of 
identifying material misstatements or omissions it is not guaranteed to do so. 
Rather we plan the audit to determine the extent of testing needed to reduce to 
an appropriately low level the probability that the aggregate of uncorrected 
and undetected misstatements does not exceed materiality for the financial 
statements as a whole. This testing requires us to conduct significant depth of 
work on a broad range of assets, liabilities, income and expense as well as 
devoting significant time of the most experienced members of the audit team, in 
particular the Responsible Individual, to subjective areas of the accounting 
and reporting process. 
 
An audit involves obtaining evidence about the amounts and disclosures in the 
financial statements sufficient to give reasonable assurance that the financial 
statements are free from material misstatement, whether caused by fraud or 
error. This includes an assessment of: whether the accounting policies are 
appropriate to the Company's circumstances and have been consistently applied 
and adequately disclosed; the reasonableness of significant accounting 
estimates made by the Board of Directors; and the overall presentation of the 
financial statements. In addition, we read all the financial and non-financial 
information in the Annual Report to identify material inconsistencies with the 
audited financial statements and to identify any information that is apparently 
materially incorrect based on, or materially inconsistent with, the knowledge 
acquired by us in the course of performing the audit. If we become aware of any 
apparent material misstatements or inconsistencies we consider the implications 
for our report. 
 
Disclosures of principal risks 
 
Based on the knowledge we acquired during our audit, we have nothing material 
to add or draw attention to in relation to: 
 
  * the directors' Viability Statement, concerning the principal risks, their 
    management, and, based on that, the directors' assessment and expectations 
    of the Company's continuing in operation over the 3  years to 26 April 
    2020; or 
 
  * the disclosures in Note 2c of the financial statements concerning the use 
    of the going concern basis of accounting. 
 
Matters on which we are required to report by exception 
 
Under International Standards on Auditing ("ISAs") (UK and Ireland) we are 
required to report to you if, based on the knowledge we acquired during our 
audit, we have identified other information in the Annual Report that contains 
a material inconsistency with either that knowledge or the financial 
statements, a material misstatement of fact, or that is otherwise misleading. 
 
In particular, we are required to report to you if: 
 
  * we have identified material inconsistencies between the knowledge we 
    acquired during our audit and the directors' statement that they consider 
    that the Annual Report and financial statements taken as a whole is fair, 
    balanced and understandable and provides the information necessary for 
    members to assess the Company's performance, business model and strategy; 
    or 
 
  * the Audit Committee Report does not appropriately address matters 
    communicated by us to the Audit Committee. 
 
Under the Companies (Guernsey) Law, 2008, we are required to report to you if, 
in our opinion: 
 
  * the Company has not kept proper accounting records; or 
 
  * the financial statements are not in agreement with the accounting records; 
    or 
 
  * we have not received all the information and explanations, which to the 
    best of our knowledge and belief are necessary for the purpose of our 
    audit. 
 
We have nothing to report in respect of the above responsibilities. 
 
Scope of report and responsibilities 
 
The purpose of this report and restrictions on its use by persons other than 
the Company's members as a body 
 
This report is made solely to the Company's members, as a body, in accordance 
with section 262 of the Companies (Guernsey) Law, 2008 and, in respect of any 
further matters on which we have agreed to report, on terms we have agreed with 
the Company. Our audit work has been undertaken so that we might state to the 
Company's members those matters we are required to state to them in an 
auditor's report and for no other purpose. To the fullest extent permitted by 
law, we do not accept or assume responsibility to anyone other than the Company 
and the Company's members, as a body, for our audit work, for this report, or 
for the opinions we have formed. 
 
Respective responsibilities of directors and auditor 
 
As explained more fully in the Directors' Responsibilities Statement, the 
directors are responsible for the preparation of the financial statements and 
for being satisfied that they give a true and fair view. Our responsibility is 
to audit, and express an opinion on, the financial statements in accordance 
with applicable law and ISAs (UK and Ireland). Those standards require us to 
comply with the UK Ethical Standards for Auditors. 
 
KPMG Channel Islands Limited 
 
Chartered Accountants 
 
Glategny Court, 
 
Glategny Esplanade, 
 
St. Peter Port, 
 
Guernsey 
 
GY1 1WR 
 
26 April 2017 
 
Statement of Financial Position 
 
                                                              As at          As at 
 
                                                        31 December    31 December 
 
                                                               2016           2015 
 
                                                Notes             GBP              GBP 
 
Assets 
 
Financial assets at fair value through profit   11,18   141,956,597    122,775,669 
or loss 
 
Other receivables                                13       3,536,330      2,358,893 
 
Cash and cash equivalents                        12       2,240,481      6,360,135 
 
Due from broker                                 2(o)              -        481,717 
 
Total assets                                            147,733,408    131,976,414 
 
Liabilities 
 
Current liabilities 
 
Due to broker                                   2(o)        151,910              - 
 
Other payables                                   14       1,206,799        833,636 
 
Total liabilities                                         1,358,709        833,636 
 
Net assets                                              146,374,699    131,142,778 
 
Represented by: 
 
Shareholders' equity and 
reserves 
 
Share capital                                    15      93,626,149     93,746,629 
 
Other reserves                                  2(r)     52,748,550     37,396,149 
 
Total shareholders' equity                              146,374,699    131,142,778 
 
Net assets per                                    6          1.5027         1.3449 
share 
 
The notes form an integral part of these Financial Statements. 
 
The Financial Statements were approved and signed by the Board of Directors on 
26 April 2017. 
 
Norman Crighton 
 
Chairman 
 
Stephen Coe 
 
Director 
 
Statement of Comprehensive Income 
 
                                                     For the year       For the year 
                                                            ended              ended 
 
                                                 31 December 2016        31 December 
                                                                                2015 
 
                                         Notes                  GBP                  GBP 
 
Income 
 
Net changes in fair value of               7           17,282,902         16,197,400 
financial assets at fair value 
through profit or loss 
 
Income                                     8            3,943,448          2,586,621 
 
Total income                                           21,226,350         18,784,021 
 
Expenses 
 
Operating expenses                         9          (2,822,857)        (2,466,120) 
 
Total operating expenses                              (2,822,857)        (2,466,120) 
 
Profit for the year before tax                         18,403,493         16,317,901 
 
Withholding tax                           (2q)          (867,556)          (569,098) 
 
Profit for the year                                    17,535,937         15,748,803 
after tax 
 
Profit and comprehensive income for the                17,535,937         15,748,803 
year 
 
Basic and diluted earnings per share       5               0.1800             0.1561 
 
All items derive from continuing activities. 
 
The notes form an integral part of these Financial Statements. 
 
Statement of Changes in Equity 
 
For the year ended 31 December 2016 
 
                                                            Share       Other 
 
                                                          capital    reserves       Total 
 
                                                Notes           GBP           GBP           GBP 
 
Balance at 1 January 2016                              93,746,629  37,396,149 131,142,778 
 
Profit for the year                                             -  17,535,937  17,535,937 
 
   Transactions with Shareholders, recorded 
              directly in equity 
 
Repurchase of ordinary shares and cancelled on   15     (120,480)           -   (120,480) 
purchase 
 
Distributions paid                                3             - (2,183,536) (2,183,536) 
 
Balance at 31 December 2016                            93,626,149  52,748,550 146,374,699 
 
Balance at 1 January 2015                             102,900,000  23,515,820 126,415,820 
 
Total comprehensive income for the year                         -  15,748,803  15,748,803 
 
   Transactions with Shareholders, recorded 
              directly in equity 
 
Repurchase of ordinary shares and cancelled on   15   (9,153,371)           - (9,153,371) 
purchase 
 
Distributions paid                                3             - (1,868,474) (1,868,474) 
 
Balance at 31 December 2015                            93,746,629  37,396,149 131,142,778 
 
The notes form an integral part of these Financial Statements. 
 
Statement of Cash Flows 
 
For the year ended 31 December 2016                  For the year       For the year 
                                                            ended              ended 
 
                                                      31 December        31 December 
                                                             2016               2015 
 
                                           Notes                GBP                  GBP 
 
Cash flows from operating activities 
 
Profit for the year                                    17,535,937         15,748,803 
 
Adjustments for: 
 
Net change in fair value of financial        7       (17,282,902)       (16,197,400) 
assets held at fair value profit or loss 
 
Effect of foreign exchange rate                         1,400,058             41,626 
fluctuations 
 
Increase in debtors                          13       (1,177,437)          (123,455) 
 
Increase in creditors                        14           373,163             68,228 
 
Net cash generated from/(used in)                         848,819          (462,198) 
operating activities 
 
Cash flows from investing activities 
 
Purchase of financial assets at fair value   11      (61,621,560)       (24,778,741) 
through profit or loss 
 
Proceeds from the sale of financial assets   11        58,957,103         36,214,129 
at fair value through profit or loss 
 
Net cash (used in)/generated from                     (2,664,457)         11,435,388 
investing activities 
 
Cash flows from financing activities 
 
Repurchase of ordinary shares and            15         (120,480)        (9,153,371) 
cancelled on purchase 
 
Distributions paid                           3        (2,183,536)        (1,868,474) 
 
Net cash used in financing activities                 (2,304,016)       (11,021,845) 
 
Net decrease in cash and cash equivalents             (4,119,654)           (48,655) 
 
Cash and cash equivalents at the beginning              6,360,135          6,408,790 
of the year 
 
Cash and cash equivalents at the end of                 2,240,481          6,360,135 
the year 
 
The notes form an integral part of these Financial Statements. 
 
Notes to the 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 the AIM Market of the LSE on 14 May 2013. 
 
The Company's investment objective and policy is set out in the Summary 
Information. 
 
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 Annual Report and Audited Financial Statements of the Company for the year 
ended 31 December 2016 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 Law. 
 
b)     Basis of preparation 
 
The Financial Statements are prepared in pounds sterling (GBP), 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. 
 
c)     Going concern 
 
In accordance with the Company's Articles of Association and Prospectus, the 
Company shall offer 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 
Admission, being 
15 May 2017 (the "Realisation Date"). See Note 17 for further details. 
 
On 20 March 2017, the Company announced that pursuant to the Realisation 
Opportunity, Shareholders who are on the register as at the record date may 
elect, during the election period, to redesignate all or part (provided that 
such part be rounded up to the nearest whole ordinary share) of their ordinary 
shares as Realisation Shares. 
 
Subject to the aggregate NAV of the continuing ordinary shares at the close of 
business on the last Business Day before the Realisation Date being not less 
than GBP50 million, the ordinary shares held by the Shareholders who have elected 
for Realisation will be redesignated as Realisation Shares and the Portfolio 
will be 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). If one or more Realisation Elections are duly made and the NAV of the 
continuing ordinary shares at the close of business on the last Business Day 
before the Reorganisation Date is less than GBP50 million, the Directors may 
propose an ordinary resolution for the winding up of the Company and may pursue 
a liquidation of the Company instead of splitting the Portfolio into the 
Continuation Pool and the Realisation Pool. 
 
Currently, the Board does not know the number of shareholders (or related 
shares), who will take up the Realisation Opportunity. Based on the uncertainty 
of the offer and the fact that the assets of 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 in the foreseeable future and for at least twelve months from the date 
of this report, and that it is appropriate for the Financial Statements to be 
prepared on a going concern basis, given that the Board believes the Company 
will continue in existence post the Realisation Opportunity. 
 
d)     Standards, amendments and interpretations not yet effective 
 
At the date of approval of these Financial Statements, the following standards 
and interpretations have not been applied in these Financial Statements, but 
were in issue and not yet effective. 
 
IFRS 9 'Financial Instruments' is effective for annual reporting periods 
beginning on or after 1 January 2018, with early adoption permitted and amends 
IAS 39 'Financial Instruments - Recognition and measurement.' IFRS 9 specifies 
how an entity should classify and measure financial assets, including some 
hybrid contracts. They require all financial assets to be classified on the 
basis of the entity's business model for managing the financial assets and the 
contractual cash flow characteristics of the financial asset; this 
classification includes financial assets initially measured at fair value plus, 
in the case of a financial asset not at fair value through profit or loss, 
particular transaction costs; subsequently measured at amortised costs or fair 
value. These requirements improve and simplify the approach for classification 
and measurement of financial assets compared with the requirements of IAS 39. 
They apply a consistent approach to classifying financial assets and replace 
the numerous categories of financial assets in IAS 39, each of which had its 
own classification criteria. 
 
They also result in one impairment method, replacing the numerous impairment 
methods in IAS 39 that arise from the different classification. 
 
IFRS 15 'Revenue from Contracts with Customers' is effective for annual periods 
beginning on or after 
1 January 2018, with early adoption permitted. IFRS 15 establishes a 
comprehensive framework for determining whether, how much and when revenue is 
recognised. It replaces existing revenue recognition guidance, including IAS 18 
'Revenue'. 
 
The Company currently recognises dividend income under IAS 18 'Revenue'. The 
Company does not anticipate any impact on its recognition of dividend income 
under IFRS 15 'Revenue from Contracts with Customers' as the standard only 
outlines the treatment of revenue from customer contracts. Dividend income will 
continue to be recognised under IAS 18 'Revenue,' when the Company's right to 
receive payments is established. 
 
The Board anticipates that the adoption of these standards and interpretations 
in a future period will not have a material impact on the Financial Statements 
of the Company, other than IFRS 9. The Company is currently evaluating the 
potential effect of this standard. 
 
e)     Financial instruments 
 
i)     Classification 
 
Financial assets are classified into the following categories: financial assets 
at fair value through profit or loss and loans and receivables. 
 
The classification depends on the nature and purpose of the financial assets 
and is determined at the time of initial recognition. 
 
Financial liabilities are classified as either financial liabilities at fair 
value through profit or loss or other financial liabilities. 
 
ii)     Recognition 
 
Financial assets at fair value through profit or loss ("investments") 
 
Financial assets and derivatives are recognised in the Company's Statement of 
Financial Position when the Company becomes a party to the contractual 
provisions of the instrument. 
 
Purchases and sales of investments are recognised on the trade date (the date 
on which the Company commits to purchase or sell the investment). Investments 
purchased are initially recorded at fair value, being the consideration given 
and excluding transaction or other dealing costs associated with the 
investment. 
 
Subsequent to initial recognition, investments are measured at fair value. 
Gains and losses arising from changes in the fair value of investments and 
gains and losses on investments that are sold are recognised through profit or 
loss in the Statement of Comprehensive Income within net changes in fair value 
of financial assets at fair value through profit or loss. 
 
Other financial instruments 
 
For other financial instruments, including other receivables and other 
payables, the carrying amounts as shown in the Statement of Financial Position 
approximate to fair values due to the short term nature of these financial 
instruments. 
 
iii) Fair Value Measurement 
 
Fair value is the price that would be received to sell an asset or paid to 
transfer a liability in an orderly transaction between market participants at 
the measurement date. Investments traded in active markets are valued at the 
latest available bid prices ruling at midnight, Greenwich Mean Time ("GMT"), on 
the reporting date. The Directors are of the opinion that the bid-market prices 
are the best estimate on fair value. Gains and losses arising from changes in 
the fair value of financial assets/(liabilities) are shown as net gains or 
losses on financial assets through profit or loss in Note 11 and are recognised 
in the Statement of Comprehensive Income in the period in which they arise. 
 
iv) Derecognition of financial instruments 
 
A financial asset is derecognised when: (a) the rights to receive cash flows 
from the asset have expired, (b) the Company retains the right to receive cash 
flows from the asset, but has assumed an obligation to pay them in full without 
material delay to a third party under a "pass through arrangement"; or (c) the 
Company has transferred substantially all the risks and rewards of the asset, 
or has neither transferred nor retained substantially all the risks and rewards 
of the asset, but has transferred control of the asset. 
 
On de-recognition of a financial asset, the difference between the carrying 
amount of the asset using the average cost method and the consideration 
received (including any new asset obtained, less any new liability assumed) is 
recognised in profit or loss. 
 
A financial liability is derecognised when the obligation under the liability 
is discharged, cancelled or expired. 
 
f)     Net changes in fair value of financial assets at fair value through 
profit or loss 
 
Net changes in fair value of financial assets at fair value through profit or 
loss includes all realised and unrealised fair value changes and foreign 
exchange differences, but excludes dividend income. 
 
g)    Income 
 
Dividend income from equity investments is recognised through profit or loss in 
the Statement of Comprehensive Income when the relevant investment is quoted 
ex-dividend. 
 
h)    Expenses 
 
All expenses are accounted for on an accruals basis. Expenses incurred on the 
acquisition of financial assets at fair value through profit or loss and 
management fees are charged to the Statement of Comprehensive Income. 
 
i)     Cash and cash equivalents 
 
Cash comprises cash in hand and demand deposits. Cash equivalents, which can 
include bank overdrafts, are short term, highly liquid investments that are 
readily convertible to known amounts of cash and which are subject to 
insignificant changes in value. Cash, deposits with banks and bank overdrafts 
are stated at their principal amount. 
 
j)     Share capital 
 
Ordinary shares are classified as equity. Incremental costs directly 
attributable to the issue of ordinary shares are shown in equity as a 
deduction, net of tax, from the proceeds and disclosed in the Statement of 
Changes in Equity. 
 
k)    Foreign currency translations 
 
Functional and presentation currency 
 
The Financial Statements of the Company are presented in the currency of the 
primary economic environment in which the Company operates (its 'functional 
currency'). The Directors have considered the currency in which the original 
capital was raised, distributions will be made and ultimately the currency in 
which capital would be returned in a liquidation. 
 
On the Statement of Financial Position date, the Directors believe that pounds 
sterling best represents the functional currency of the Company. For the 
purpose of the Financial Statements, the results and financial position of the 
Company are expressed in pounds sterling, which is the presentational currency 
of the Company. Monetary assets and liabilities, denominated in foreign 
currencies, are re-translated into pounds sterling at the exchange rate at the 
reporting date. Non-monetary assets denominated in foreign currencies that are 
measured at fair value are retranslated in pounds sterling at the exchange rate 
at the date on which the fair value was determined. Realised and unrealised 
gains or losses on currency translation are recognised in the Statement of 
Comprehensive Income. Foreign currency differences relating to investments at 
fair value through profit or loss are included within net changes in fair value 
of financial assets at fair value through profit or loss. 
 
l)     Treasury shares 
 
Where the Company purchases its own share capital, the consideration paid, 
which includes any directly attributable costs, the nominal value of the shares 
are deducted through share capital and the difference between the total 
consideration and the total nominal value of all shares purchased is recognised 
through other reserves, which is a distributable reserve. 
 
When such Shares are subsequently sold or reissued, any consideration received, 
net of any directly attributable incremental transaction costs and the related 
income tax effects, is recognised as an increase in equity and the resulting 
surplus or deficit on the transaction is transferred to/from the other reserve. 
 
Where the Company cancels treasury shares, no further adjustment is required to 
the share capital account at the time of cancellation. Shares held in treasury 
are excluded from calculations when determining NAV per share and earnings per 
share. 
 
m)   Operating segments 
 
The Board has considered the requirements of IFRS 8 'Operating Segments', and 
is of the view that the Company is engaged in a single segment of business, 
being an investment strategy tied to listed preferred shares issued by 
companies incorporated in South Korea. The Board, as a whole, has been 
determined as constituting the chief operating decision maker of the Company. 
 
The key measure of performance used by the Board to assess the Company's 
performance and to allocate resources is the total return on the Company's NAV, 
as calculated under IFRS, and therefore no reconciliation is required between 
the measure of profit or loss used by the Board and that contained in these 
Audited Financial Statements. 
 
The Board of Directors is charged with setting the Company's investment 
strategy in accordance with the investment policy. They have delegated the day 
to day implementation of this strategy to its Investment Manager but retain 
responsibility to ensure that adequate resources of the Company are directed in 
accordance with their decisions. The investment decisions of the Investment 
Manager are reviewed on a regular basis to ensure compliance with the policies 
and legal responsibilities of the Board. The Investment Manager has been given 
full authority to act on behalf of the Company, including the authority to 
purchase and sell securities and other investments on behalf of the Company and 
to carry out other actions as appropriate to give effect thereto. 
 
Whilst the Investment Manager may make the investment decisions on a day to day 
basis regarding the allocation of funds to different investments, any changes 
to the investment strategy or major allocation decisions have to be approved by 
the Board, even though they may be proposed by the Investment Manager. 
 
The Board therefore retains full responsibility as to the major decisions made 
on an on-going basis. The Investment Manager will always act under the terms of 
the Admission Document which cannot be significantly changed without the 
approval of the Board of Directors and where necessary, Shareholders. 
 
n)    Other receivables 
 
Other receivables are amounts due in the ordinary course of business. Other 
receivables are recognised initially at fair value and subsequently measured at 
amortised cost using the effective interest method, less provision for 
impairment. 
 
o)     Other payables 
 
Other payables are obligations to pay for services that have been acquired in 
the ordinary course of business. Other payables are recognised initially at 
fair value and subsequently measured at amortised cost using the effective 
interest method. 
 
p)     Due from and due to brokers 
 
Amounts due from and due to brokers represent receivables for securities sold 
and payables purchased that have been contracted for but not yet settled or 
delivered on the Statement of Financial Position date respectively. 
 
q)     Dividend distribution 
 
Dividend distribution to the Company's Shareholders is recognised as a 
liability in the Company's Financial Statements and disclosed in the Statement 
of Changes in Equity in the period in which the dividends are proposed and 
approved by the Board. 
 
r)     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 GBP1,200 (2015: GBP1,200). 
 
The amounts disclosed as taxation in the Statement of Comprehensive Income 
relates solely to withholding tax levied in South Korea on distribution from 
Korean companies at an offshore rate of 22%. 
 
s)     Other reserves 
 
Total comprehensive income for the year is transferred to Other Reserves. 
 
t)    Dividends to Shareholders 
 
Dividends, if any, will be paid annually in June each year. An annual dividend 
of 2.2416 pence per share (GBP2,183,536) was approved on 2 June 2016 and paid on 
28 June 2016, in respect of the year ended 31 December 2015. 
 
An annual dividend of 1.8580 pence per share (GBP1,868,474) was approved on 4 
June 2015 and paid on 26 June 2015, in respect of the year ended 31 December 
2014. 
 
u)   Significant accounting judgements, estimates and assumptions 
 
The preparation of the 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 estimates and underlying assumptions are reviewed on an on-going basis. 
Revisions to accounting estimates are recognised in the period in which the 
estimate is revised if the revision affects only that period, or in the period 
of revision and future periods if the revision affects both current and future 
periods. 
 
Judgements 
 
In the process of applying the Company's accounting policies, management has 
made the following judgements, which have the most significant effect on the 
amounts recognised in the Annual Financial Statements: 
 
Functional currency 
 
As disclosed in Note 2(j), the Company's functional currency is the pound 
sterling. Pound sterling is the currency in which the original capital was 
raised, distributions will be made and ultimately the currency in which capital 
would be returned in a liquidation. 
 
v)   Basic and diluted earnings per share 
 
The basic and diluted earnings per share for the Company has been calculated 
based on the total comprehensive income for the year of GBP14,779,671 (for the 
year ended 31 December 2015: GBP15,748,803) and the weighted average number of 
ordinary shares in issue during the year of 97,414,942 (for the year ended 
31 December 2015: 100,886,598). 
 
w)  Net asset value per ordinary share 
 
The net asset value of each Share of GBP1.5027 (as at 31 December 2015: GBP1.3449) 
is determined by dividing the net assets of the Company attributed to the 
ordinary shares of GBP146,374,699 (as at 31 December 2015: GBP131,142,778) by the 
number of ordinary shares in issue at 31 December 2016 of 97,409,750 (as at 
31 December 2015: 97,509,750 ordinary shares in issue). 
 
x)   Net changes in fair value on financial assets at fair value through profit 
or loss 
 
                                                     For the year       For the year 
                                                            ended              ended 
 
                                                      31 December        31 December 
                                                             2016               2015 
 
                                                                GBP                  GBP 
 
Realised gain on investments                           15,045,539          4,927,720 
 
Realised gain/(loss) on foreign                         1,488,424            (1,686) 
currency 
 
Movement in unrealised gain on                            837,305         11,228,054 
investments 
 
Movement in unrealised exchange gain on                  (88,366)             43,312 
foreign currency 
 
Net changes in fair value on financial assets          17,282,902         16,197,400 
at fair value through profit or loss 
 
y)   Other income 
 
                                                   For the year       For the year 
                                                          ended              ended 
 
                                               31 December 2016        31 December 
                                                                              2015 
 
                                                              GBP                  GBP 
 
Dividend income                                       3,943,448          2,586,621 
 
z)   Operating expenses 
 
                                                  For the year       For the year 
                                                         ended              ended 
 
                                                   31 December        31 December 
                                                          2016               2015 
 
                                                             GBP                  GBP 
 
Investment Management fee (Note 16c)                 2,060,184          1,894,277 
 
Custodian                                               79,913             54,885 
fees 
 
Audit fees                                              21,954             24,308 
 
Administration and Secretarial fees                     93,634             95,405 
 
Directors' fees (Note                                   68,000             68,000 
16a) 
 
Auditors remuneration for non-audit                      3,750              3,750 
services* 
 
Professional fees                                       40,614             37,609 
 
Transaction costs                                      342,547            162,896 
 
Financial Adviser, Nominated Adviser and                30,300             30,000 
Broker fee 
 
Sundry expenses                                         81,962             94,990 
 
                                                     2,822,858          2,466,120 
 
* Fees of GBP3,750 (31 December 2015: GBP3,750) were paid to the Auditor, KPMG 
Channel Islands Limited, in respect of tax services provided in the year to 31 
December 2016. 
 
aa) Operating segments 
 
Information on realised gains and losses derived from sales of investments are 
disclosed in Note 7 of the Financial Statements. The Company is domiciled in 
Guernsey. Substantially all of the Company's income is from its investment in 
listed preferred shares issued by companies incorporated in South Korea. 
 
The Company has no assets classified as non-current assets. The Company is 
likely to have a high degree of portfolio concentration as Korean preferred 
shares are concentrated with a small number of issuers. 
 
The Company also has a diversified Shareholder base. As at 31 December, 
registered Shareholders that have notified the market of their holding in the 
Company via an announcement to the LSE, were as follows: 
 
                                                           As at 31 December 2016 
 
                                                                      % of issued 
 
Shareholders                                               Shares           share 
                                                                          capital 
 
City of London Investment Management Company           13,753,909          14.12% 
 
Aberdeen Emerging Capital Limited                      12,498,100          12.83% 
 
Ruffer LLP                                             11,500,000          11.81% 
 
Banque Degroof Luxembourg                              10,125,000          10.39% 
 
Lepercq de Neuflize Asset                               9,546,077           9.80% 
Management 
 
Mount Capital                                           8,000,000           8.21% 
 
Merrill Lynch Pierce Fenner                             7,000,000           7.19% 
 
Andrew M. Weiss                                         6,510,888           6.68% 
 
                                                           As at 31 December 2015 
 
                                                                      % of issued 
 
Shareholders                                               Shares           share 
                                                                          capital 
 
Aberdeen Emerging Capital Limited                      12,452,000          12.77% 
 
Ruffer LLP                                             11,500,000          11.79% 
 
Banque Degroof Luxembourg                              10,125,000          10.38% 
 
Lepercq de Neuflize Asset                               8,764,065           8.99% 
Management 
 
Mount Capital                                           8,000,000           8.20% 
 
City of London Investment Management Company            7,160,740           7.34% 
 
Andrew M. Weiss                                         6,427,550           6.59% 
 
11. Financial assets at fair value through profit or loss 
 
                                                             As at           As at 
 
                                                       31 December     31 December 
 
                                                              2016            2015 
 
                                                                 GBP               GBP 
 
Cost of investments at beginning of                     96,544,822     103,534,207 
the year 
 
Purchases of investments in the year                    61,773,470      24,778,741 
 
Disposal of investments in the year                   (58,475,386)    (36,695,846) 
 
Realised gain on disposal of                            15,045,539       4,927,720 
investments in the year 
 
Cost of investments held at end of the                 114,888,445      96,544,822 
year 
 
Unrealised gain on investments                          27,068,152      26,230,847 
 
Financial assets at fair value through                 141,956,597     122,775,669 
profit or loss 
 
Financial assets are valued at the bid-market prices ruling as at the close of 
business at the Statement of Financial Position date, net of any accrued 
interest which is included in the Statement of Financial Position as an income 
related item. The Directors are of the opinion that the bid-market prices are 
the best estimate of fair value in accordance with the requirements of IFRS 13 
'Fair Value Measurement.' Movements in fair value are included in the Statement 
of Comprehensive Income. 
 
12. Cash and cash equivalents 
 
                                                           As at          As at 
 
                                                     31 December    31 December 
 
                                                            2016           2015 
 
                                                               GBP              GBP 
 
Cash at bank                                           2,240,481      6,360,135 
 
Cash at bank earns interest at floating rates based on daily bank deposit 
rates. 
 
13. Other receivables 
 
                                                           As at          As at 
 
                                                     31 December    31 December 
 
                                                            2016           2015 
 
                                                               GBP              GBP 
 
Dividends                                              3,533,674      2,356,303 
receivable 
 
Prepaid expenses                                           2,656          2,590 
 
                                                       3,536,330      2,358,893 
 
The Directors consider that the carrying amount of receivables approximate 
their fair value. 
 
14. Other payables 
 
                                                           As at          As at 
 
                                                     31 December    31 December 
 
                                                            2016           2015 
 
                                                               GBP              GBP 
 
Investment management fees payable                       337,375        162,303 
(Note 16c) 
 
Withholding tax                                          777,408        518,387 
payable 
 
Administration fee payable                                19,400         24,079 
 
Custody fee payable                                        7,160          5,320 
 
Directors' fees payable (Note 16a)                             -         17,000 
 
Audit fees payable                                        10,150         15,156 
 
Other payables                                            55,306         91,391 
 
                                                       1,206,799        833,636 
 
The Directors consider that the carrying amount of payables approximate their 
fair value. 
 
15. Share capital 
 
The share capital of the Company consists of an unlimited number of ordinary 
shares of no par value. 
 
                                                           As at           As at 
 
                                                     31 December     31 December 
 
                                                            2016            2015 
 
Authorised 
 
Unlimited Ordinary Shares at no par                            -               - 
value 
 
Issued at no par 
value 
 
97,409,750 (2015: 97,509,750) unlimited ordinary               -               - 
shares at no par value 
 
Reconciliation of number of Shares 
 
                                                           As at           As at 
 
                                                     31 December     31 December 
 
                                                            2016            2015 
 
                                                          No. of          No. of 
                                                          Shares          Shares 
 
Ordinary shares at the beginning of                   97,509,750     105,000,000 
the year 
 
Purchase of own shares for                             (100,000)     (7,490,250) 
cancellation 
 
Total Ordinary Shares in issue at the                 97,409,750      97,509,750 
end of the year 
 
Share capital 
account 
 
                                                           As at           As at 
 
                                                     31 December     31 December 
 
                                                            2016            2015 
 
                                                           Share           Share 
                                                         Capital         Capital 
 
                                                               GBP               GBP 
 
Share capital at the beginning of the                 93,746,629     102,900,000 
year 
 
Purchase of own shares for                             (120,480)     (9,153,371) 
cancellation 
 
Total share capital at the end of the                 93,626,149      93,746,629 
year 
 
The share capital of the Company consists of an unlimited number of ordinary 
shares of no par value. 
 
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)     the Shareholders present in person or by proxy or (being a corporation) 
present by a duly authorised representative at a general meeting has, on a show 
of hands, one vote and, on a poll, one vote for every Share. 
 
d)    On 20 March 2017, being 56 days before the fourth anniversary of 
admission to AIM, 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 
the ordinary shares held by them be redesignated 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 GBP50 million. A Realisation 
Notice, once validly given is irrevocable unless the Board agrees otherwise. If 
any Shareholders elect to participate in the Realisation Opportunity, the 
Company's current portfolio will be divided into two pools: the Continuation 
Pool; and the Realisation Pool. If one or more Realisation Elections are duly 
made and the aggregate NAV of the continuing ordinary shares on the last 
business day before the Realisation Date is less than GBP50 million, the 
Directors may propose an ordinary resolution for winding up of the Company and 
may pursue a liquidation of the Company instead of splitting the Portfolio into 
the Continuation Pool and the Realisation Pool. 
 
Share buy-back and cancellation 
 
During the year ended 31 December 2016, the Company purchased 100,000 of its 
own shares (31 December 2015: 7,490,250) at a consideration of GBP120,480 (31 
December 2015: GBP9,153,371) under the share buy-back authority originally 
granted to the Company in 2014. These shares have been subsequently cancelled. 
 
Following the share buy-back, the Company has 97,409,750 ordinary shares in 
issue as of 31 December 2016 (as at 31 December 2015: 97,509,750). 
 
At the AGM held on 27 July 2016, Shareholders granted the Company a general 
buy-back authority of up to  40% of the Company's issued share capital, as at 
27 July 2016. In addition, on 12 February 2016, the Company appointed N+1 
Singer Advisory LLP to manage an irrevocable programme during the close period 
leading up to the publication of the Company's full year results (the "Close 
Period Buy-Back Programme") to buy back ordinary shares within certain pre-set 
parameters. Any shares purchased in the Close Period Buy- Back Programme will 
count towards the Company's general buy-back authority of 40% of the Company's 
issued share capital, as approved at the Company's AGM. 
 
On 5 August 2016, the Company re-appointed N+1 Singer Advisory LLP to manage 
the Closed Period Buy- Back Programme to buy back ordinary shares within 
certain pre-set parameters during the close period leading up to the 
publication of the year-end results. The Closed Period Buy-Back Programme 
commenced on 24 March 2017 and will run until the end of the closed period, 
when the Company's financial statements for the year ended 31 December 2016 
were published on 27 April 2017, Any shares purchased in the Closed Period 
Buy-Back Programme will count towards the Company's share buy-back authority of 
40% of the Company's issued share capital, as approved at the Company's AGM. 
 
Realisation Opportunity 
 
On 20 March 2017, the Company announced that pursuant to the Realisation 
Opportunity, Shareholders who are on the register as at the record date may 
elect, during the election period, to re-designate all or part (provided that 
such part be rounded up to the nearest whole ordinary share) of their ordinary 
shares as Realisation Shares, subject to the aggregate NAV of the continuing 
ordinary shares as at the close of business on the last business day before the 
Realisation Date being not less than GBP50 million. See Note 17 for further 
details. 
 
16. Related party transactions and material agreements 
 
Related party transactions 
 
a)     Directors' remuneration and expenses 
 
During the year ended 31 December 2016, directors' fees of GBP68,000 (31 December 
2015: GBP68,000) were charged to the Company and GBPNil remained payable at the 
year-end (as at 31 December 2015: GBP17,000). For additional information refer to 
the Directors' Remuneration Report. 
 
b)     Shares held by related parties 
 
The Directors' Interests are set out in the Report of the Directors. 
 
The Investment Manager is principally owned by Dr. Andrew Weiss and certain 
members of the Investment Manager's senior management team. 
 
As at 31 December 2016, Dr. Andrew Weiss and his immediate family members held 
an interest in 6,510,888 ordinary shares (as at 31 December 2015: 6,427,550 
ordinary shares) representing 6.68 per cent. (as at 31 December 2015: 6.59 per 
cent.) of the issued share capital of the Company. 
 
As at 31 December 2016, employees of the Investment Manager, their respective 
immediate family members or entities controlled by them or their immediate 
family members held an interest in 2,718,333 ordinary shares (as at 31 December 
2015: 2,718,733) representing 2.79 per cent. (as at 31 December 2015: 2.79 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 management fee is subject to a minimum 
annual amount of GBP1 (one) million per annum for the first 48 months following 
Admission. 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, such notice not to expire prior to the 
fourth anniversary of admission other than in limited circumstances. During the 
Management and Engagement Committee meeting, held on 5 December 2016, the 
Directors agreed that the Investment Management Agreement would be reviewed, 
following the Realisation Opportunity in May 2017. 
 
For the year ended 31 December 2016, investment management fees and charges of 
GBP2,060,184 (for the year ended 31 December 2015: GBP1,894,277) were charged to 
the Company and GBP337,375 (as at 31 December 2015: GBP162,303) remained payable at 
the year-end. 
 
17. Financial risk management 
 
The Company's objective in managing risk is the creation and protection of 
Shareholder value. Risk is inherent in the Company's activities, but it is 
managed through an on-going process of identification, measurement and 
monitoring. 
 
The Company's financial instruments include investments designated at fair 
value through profit or loss and cash and cash equivalents. 
 
The main risks arising from the Company's financial instruments are market 
risk, foreign currency risk, interest rate risk, credit risk and liquidity 
risk. The techniques and instruments utilised for the purposes of efficient 
portfolio management are those which are reasonably believed by the Board to be 
economically appropriate to the efficient management of the Company. 
 
Market risk 
 
Market risk is the risk that the fair value or future cash flows of a financial 
instrument will fluctuate because of changes in market prices. The Company's 
activities expose it primarily to the market risks of changes in market prices, 
interest rates and foreign currency exchange rates. The Company's investments 
are heavily concentrated in South Korean securities. 
 
Market price risk 
 
The Company's NAV is sensitive to movement in market prices. As at 31 December 
2016, if market prices had been 5% higher, or 5% lower, with all other 
variables held constant then the increase/decrease in NAV would have been GBP 
7,097,830 (as at 31 December 2015: GBP6,138,783). Actual trading results may 
differ from the above sensitivity analysis and those differences may be 
material. 
 
Were there to be a major change in the political or economic environment in 
South Korea, the movement in market prices may be significantly and materially 
higher than the above. Refer to the Investment Manager's Report for a 
discussion of potential political and economic changes. 
 
Foreign currency risk 
 
Foreign currency risk is the risk that the value of a financial instrument will 
fluctuate due to changes in foreign exchange rates. 
 
The Company does not hedge its exposure to foreign currency (predominantly 
Korean won (KWR) and NAV per share will fluctuate with movements in foreign 
exchange rates. 
 
As at 31 December 2016, the Company held the following assets and liabilities 
in foreign currencies: 
 
                                                 As at                   As at 
 
                                           31 December             31 December 
 
                                                  2016                    2015 
 
Amounts in Sterling                    KRW         USD         KRW         USD 
 
Assets 
 
Monetary assets                  4,961,622     345,923   6,235,621   2,736,979 
 
Non-monetary assets            141,956,597           - 122,775,669           - 
 
                               146,918,219     345,923 129,011,290   2,736,979 
 
Liabilities 
 
Monetary liabilities             1,358,709           -     518,387           - 
 
                                 1,358,709           -     518,387           - 
 
Amounts in the above table are based on the carrying value of monetary assets 
and liabilities. 
 
The table below summarises the sensitivity of the Company's monetary and 
non-monetary assets and liabilities to changes in foreign exchange movements at 
31 December 2016. 
 
                                Reasonable       As at  Reasonable       As at 
 
                                  possible 31 December    possible 31 December 
 
                                  shift in        2016    shift in        2015 
                                      rate                    rate 
 
                                      2016           GBP        2015           GBP 
 
Currency 
 
KRW 
 
- Monetary assets                   +/- 5%     248,081      +/- 5%     311,781 
 
- Non-monetary assets               +/- 5%   7,097,830      +/- 5%   6,138,783 
 
- Monetary liabilities              +/- 5%      67,935      +/- 5%      25,919 
 
US Dollars 
 
- Monetary assets                   +/- 5%      17,296      +/- 5%     136,849 
 
- Non-monetary assets               +/- 5%           -      +/- 5%           - 
 
Interest rate risk 
 
The Company holds limited amounts on interest bearing deposits of GBP2,240,481 as 
at 31 December 2016 (as at 31 December 2015: GBP6,360,135) and does not invest in 
interest bearing securities and instruments. Accordingly interest rate risk is 
considered very low. 
 
The tables below summarise the Company's exposure to interest rate risk as of 
31 December 2016: 
 
                                                                          Total 
 
                                                                          As at 
 
                                  Floating       Fixed Non-Interest 31 December 
 
                                      rate        rate      bearing        2016 
 
                                         GBP           GBP            GBP           GBP 
 
Financial Assets 
 
Investments designated at 
fair value 
 
through profit or loss                  -           -   141,956,597 141,956,597 
 
Cash and cash equivalents        2,240,481          -            -    2,240,481 
 
Due from broker                         -           -            -           - 
 
Other receivables                       -           -     3,533,674   3,533,674 
 
                                 2,240,481          -   145,490,271 147,730,752 
 
                                                                          Total 
 
                                                                          As at 
 
                                  Floating       Fixed Non-Interest 31 December 
 
                                      rate        rate      bearing        2016 
 
                                         GBP           GBP            GBP           GBP 
 
Financial Liabilities 
 
Due to broker                           -           -       151,910     151,910 
 
Other payables                          -           -       429,391     429,391 
 
                                        -           -       581,301     581,301 
 
The tables below summarise the Company's exposure to interest rate risk as of 
31 December 2015: 
 
                                                                          Total 
 
                                                                          As at 
 
                                  Floating       Fixed Non-Interest 31 December 
 
                                      rate        rate      bearing        2015 
 
                                         GBP           GBP            GBP           GBP 
 
Financial Assets 
 
Investments designated at 
fair value 
 
through profit or loss                   -          -   122,775,669 122,775,669 
 
Cash and cash equivalents        6,360,135          -             -   6,360,135 
 
Due from broker                          -          -       481,717     481,717 
 
Other receivables                        -          -     2,356,303   2,356,303 
 
                                 6,360,135          -   125,613,689 131,973,824 
 
                                                                          Total 
 
                                                                          As at 
 
                                  Floating       Fixed Non-Interest 31 December 
 
                                      rate        rate      bearing        2015 
 
                                         GBP           GBP            GBP           GBP 
 
Financial Liabilities 
 
Other payables                          -           -       315,249     315,249 
 
                                        -           -       315,249     315,249 
 
Credit risk 
 
Credit risk is the risk that an issuer or counterparty will be unable or 
unwilling to meet a commitment that it has entered into with the Company. 
Credit risk is limited to the carrying value of financial assets at 
31 December 2016 as follows: 
 
                                                              As at       As at 
 
                                                        31 December 31 December 
 
                                                               2016        2015 
 
                                                                  GBP           GBP 
 
Cash and cash equivalents                                 2,240,481   6,360,135 
 
Other receivables                                         3,533,674   2,358,893 
 
Due from broker                                                  -      481,717 
 
                                                          5,774,155   9,200,745 
 
The Company is exposed to material credit risk in respect of cash and cash 
equivalents. The credit risk from cash and cash equivalents is mitigated as the 
majority of cash is placed with Northern Trust (Guernsey) Limited ("NTGL"). 
NTGL is a wholly owned subsidiary of The Northern Trust Corporation ("TNTC"). 
TNTC is publicly traded and a constituent of the S&P 500. As at 31 December 
2016, TNTC has a credit rating of A+ (as at 31 December 2015: A+) from Standard 
& Poor's and A2 (as at 31 December 2015: A2) from Moody's. 
 
Liquidity risk 
 
Liquidity risk is the risk that the Company may not be able to generate 
sufficient cash resources to settle its obligations in full as they fall due or 
can only do so on terms that are materially disadvantageous. 
 
The Company's investments are relatively liquid and the Company holds 
sufficient cash balances (or liquid investments) to meet its obligations as 
they fall due. The Board reviews its resources and obligations on a regular 
basis to ensure sufficient liquid assets are held. 
 
As at 31 December 2016, the Company had no significant financial liabilities 
other than payables arising directly from investing activity. 
 
                                                                         Total 
 
                                                                         As at 
 
                               Less than 1                         31 December 
 
                                     month  1-3 months 3-12 months        2016 
 
                                         GBP           GBP           GBP           GBP 
 
Due to broker                      151,910           -           -     151,910 
 
Other payables                     419,241           -     787,558   1,206,799 
 
                                   571,151           -     787,558   1,358,709 
 
                                                                         Total 
 
                                                                         As at 
 
                               Less than 1                         31 December 
 
                                     month  1-3 months 3-12 months        2015 
 
                                         GBP           GBP           GBP           GBP 
 
Other payables                     256,939      43,154      15,156     315,249 
 
                                   256,939      43,154      15,156     315,249 
 
Capital risk management 
 
The fair value of the Company's financial assets and liabilities approximate to 
their carrying amounts at the reporting date. 
 
The Company's objective when managing capital is to maintain an optimal capital 
structure, in order to reduce the cost of capital. The Company may borrow, 
however, as at 31 December 2016 there were no borrowings (as at 31 December 
2015: GBPNil). 
 
The gearing ratio below is calculated as total liabilities divided by total 
equity. 
 
                                                            As at       As at 
 
                                                      31 December 31 December 
 
                                                             2016        2015 
 
                                                                GBP           GBP 
 
Total assets                                          147,733,408 131,976,414 
 
Less: total liabilities                               (1,358,709)   (833,636) 
 
Net Asset Value                                       146,374,699 131,142,778 
 
Gearing Ratio                                               0.93%       0.64% 
 
The Board considers the above gearing ratio to be adequate, since total 
borrowings refer only to amounts due to the broker and other payables. 
 
Share buy-backs 
 
The Directors have general Shareholder authority to purchase in the market up 
to 40 per cent. of the ordinary shares in issue from time to time following 
Admission. The Directors intend to seek annual renewal of this authority from 
Shareholders at each general meeting of the Company. 
 
Pursuant to this authority, and subject to Guernsey law and discretion of the 
Directors, the Company may repurchase ordinary shares in the market on an 
on-going basis at a discount to NAV with a view to increasing the NAV per 
ordinary share and assisting in controlling the discount to NAV per ordinary 
share in relation to the price at which such ordinary shares may be trading. 
 
Purchases by the Company will be made only at prices below the estimated 
prevailing NAV per ordinary share based on the last Published NAV but taking 
account of movements in investments, stock markets and currencies, in 
consultation with the Investment Manager and at prices where the Directors 
believe such purchases will result in an increase in the NAV per Ordinary Share 
of the remaining Ordinary Shares. 
 
The Directors will consider repurchasing ordinary shares when the price per 
ordinary share plus the pro forma cost to the Company per share repurchased is 
less than 95 per cent. of the NAV per ordinary share. The pro forma cost per 
share should include any brokerage commission payable and costs of realising 
portfolio securities to fund the purchase. The Directors may, at their 
discretion, also consider repurchasing ordinary shares at a smaller discount to 
NAV per ordinary share, provided that such purchase would be accretive to NAV 
per ordinary share for any continuing Shareholders. 
 
Realisation Opportunity 
 
On 20 March 2017, the Company announced that pursuant to the Realisation 
Opportunity, shareholders who are on the register as at the record date, may 
elect, during the election period, to re-designate all, or part, (provided that 
such part be rounded up to the nearest whole ordinary share) of their ordinary 
shares as Realisation Shares, subject to the aggregate NAV of the continuing 
ordinary shares at the close of business on the last Business Day before the 
Realisation Date being not less than GBP50 million. The ordinary shares held by 
the Shareholders who have elected for Realisation will be redesignated as 
Realisation Shares and the Portfolio will be 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). 
 
With effect from the Realisation Date, the assets in the Realisation Pool will 
be managed in accordance with an orderly realisation programme with the aim of 
making progressive returns of cash, as soon as practicable, to those 
Shareholders who have elected to receive Realisation Shares. Ordinary shares 
held by Shareholders who do not submit a valid and complete election in 
accordance with the Articles during the Election Period will remain ordinary 
shares. 
 
Unless it has already been determined that the Company will be wound-up, every 
two years after the Realisation Date, the Directors will propose further 
realisation opportunities for Shareholders who have not previously elected to 
realise their ordinary shares using a similar mechanism to that described 
above. 
 
If the weighted average discount on the Portfolio is less than 25 per cent. 
over any 90 day period, then the Directors shall propose an ordinary resolution 
for the winding up of the Company. If one or more Realisation Elections are 
duly made and the NAV of the continuing ordinary shares at the close of 
business on the last Business Day before the Reorganisation Date is less than GBP 
50 million, the Directors may propose an ordinary resolution for the winding up 
of the Company and may pursue a liquidation of the Company instead of splitting 
the Portfolio into the Continuation Pool and the Realisation Pool. 
 
18. 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 31 December 2016: 
 
                                                                         Total 
 
                                                                         As at 
 
                                                                   31 December 
 
                                   Level 1     Level 2     Level 3        2016 
 
                                         GBP           GBP           GBP           GBP 
 
Financial assets at fair 
value through 
 
profit or loss: 
 
    Korean preferred shares    136,175,733           -           - 136,175,733 
 
    Korean exchange traded       5,780,864           -           -   5,780,864 
funds 
 
Total assets                   141,956,597           -           - 141,956,597 
 
                                                                         Total 
 
                                                                         As at 
 
                                                                   31 December 
 
                                   Level 1     Level 2     Level 3        2015 
 
                                         GBP           GBP           GBP           GBP 
 
Financial assets at fair 
value through 
 
profit or loss: 
 
    Korean preferred shares    122,775,669           -           - 122,775,669 
 
Total assets                   122,775,669           -           - 122,775,669 
 
The Company recognises transfers between levels of the fair value hierarchy as 
of the end of the reporting year during which the transfer has occurred. There 
were no transfers between levels during the year-end 31 December 2016 (for the 
year ended 31 December 2015: GBPNil). 
 
Investments whose values are based on quoted market prices in active markets, 
and are therefore classified within Level 1, include Korean preference shares 
and Exchange Traded Funds. 
 
The Company held no Level 2 or 3 investments as at or during the year ended 31 
December 2016 (as at 31 December 2015: GBPNil). 
 
19. NAV reconciliation 
 
The Company announces its NAV, based on bid value, to the LSE after each weekly 
and month end valuation point. The following is a reconciliation of the NAV per 
share attributable to redeemable participating preference Shareholders as 
presented in these Financial Statements, using IFRS to the NAV per share 
reported to the LSE: 
 
                                   As at 31 December 2016    As at 31 December 2015 
 
                                                  NAV per                   NAV per 
 
                                            Participating             Participating 
 
                                        NAV         Share         NAV         Share 
 
                                          GBP             GBP           GBP             GBP 
 
Net Asset Value reported to     143,618,433        1.4744 129,304,862        1.3261 
the LSE 
 
Adjustment for dividend           2,756,265        0.0283   1,837,916        0.0188 
income 
 
Net Assets Attributable to      146,374,699        1.5027 131,142,778        1.3449 
Shareholders per Financial 
Statements 
 
The published NAV per Share of GBP1.4744 (as at 31 December 2015: GBP1.3261) is 
different from the accounting NAV per Share of GBP1.5027 (as at 31 December 2015: 
GBP1.3449) due to the adjustments noted above. 
 
20. Subsequent events 
 
These Financial Statements were approved for issuance by the Board on 26 April 
2017. Subsequent events have been evaluated until this date. 
 
On 5 January 2017, Dr. Andrew Weiss purchased 500,000 ordinary shares at a 
price of 144.75 pence per share. This increased his holding in the company to 
7,010,888 ordinary shares, representing 7.20% per cent. of the Company's total 
issued share capital. 
 
As at the date of this Report, the Company has 97,409,750 ordinary shares in 
issue. 
 
No further subsequent events have occurred. 
 
 
 
END 
 

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