LEI 213800GXKGJVWN3BF511
(Classified Regulated Information, under DTR 6 Annex 1 section 1.1)
HALF-YEARLY FINANCIAL REPORT AND UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
Company Performance
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As at |
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As at |
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£ |
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£ |
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Total Net Assets |
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112,585,886 |
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96,960,467 |
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NAV per share |
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1.63 |
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1.40 |
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Mid-Market Share price |
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1.52 |
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1.36 |
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Since Managed Wind-Down |
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WKOF Inception to Managed Wind-Down |
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NAV Return |
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20.3% |
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79.2% |
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Benchmark Return |
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27.3% |
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41.4% |
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As at |
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A s at |
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Portfolio Discount* |
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22.7% |
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46.0% |
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Share Price Discount |
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(6.8%) |
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(3.2%) |
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Fund Dividend Yield |
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2.7% |
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3.8% |
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Average Trailing 12-Month P/E Ratio of Preference Shares Held |
9.2x |
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6.0x |
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P/B Ratio of Preference Shares Held |
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0.3 |
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0.3 |
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Annualised Total Expense Ratio |
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2.5% |
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2.0% |
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*Since Managed Wind-Down
Performance since the start of Managed Wind-down on
*Portfolio Discount
The portfolio discount represents the discount of WKOF’s actual NAV to the value of what the NAV would be if WKOF held the respective common shares of issuers rather than preference shares on a one-to-one basis.
As at close of business on
Chair’s Report
For the period ended
Company Performance
During the period, the Company announced its intention to enter into Managed Wind-down, which was approved by Shareholders on
Dividend
The Directors declared an interim dividend of
Compulsory Redemption
On
Future Redemptions
As separately announced today, the Company is pleased to confirm that it intends to return £35 million to Shareholders by way of a second compulsory redemption of shares. The second redemption is expected to be executed following the close of business on
Subject to market conditions and other factors, we currently anticipate the liquidation of the Company and a final compulsory redemption to occur in the months following completion of the second compulsory redemption. We are mindful of managing the impact of costs on a diminishing portfolio of assets and will seek to liquidate the Company in a cost-effective manner. Shareholders will be closely informed of developments. It is also noted that the Company will be required to de-list before liquidation can take place.
I look forward to communicating with you about WKOF’s further progress over the coming months. If any Shareholders wish to speak with the Board, please contact Singers, and we will be happy to answer any questions you may have.
Chair
Investment Manager’s Report
For the period ended
Managed Wind-down of the Fund
As discussed in last year’s Annual Report, we notified WKOF’s Board of Directors in
- Several large and more liquid preference shares had their discounts narrowed to the point where they were no longer attractive investments for the fund. Consequently, the pool of more liquid preference shares available for investment decreased.
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South Korea's continued efforts to open its financial markets to foreign investors meant that the Company's holdings could now be replicated in more cost-effective ways than through the Company itself. - It was felt that given the above and the performance over the last two years that more shareholders would be likely to consider taking up the realisation opportunity which was due to take place this year. If this had happened, the overhead cost per share to investors would increase, potentially to an uneconomic and unacceptable level.
The Board subsequently commenced a strategic review to consider the future of the Company and to explore the strategic options available, including a change of investment mandate and/or a potential combination of the Company’s assets with another suitable investment company or fund. The shortlisted proposals were thoroughly assessed and meetings were held with interested parties. However, due to the complexities associated with the shortlisted proposals that came to light in the detailed discussions, combined with differing views of Shareholders, the Board reached the decision that a Managed Wind-down was the fairest proposal and would be in the best interests of the Company and its Shareholders as a whole.
Shareholders approved the Managed Wind-down at an Extraordinary General Meeting on
WKOF Performance Attribution
Prior to the Managed Wind-down, WKOF’s returns (on a currency-neutral basis) were driven by five primary factors:
- The performance of the Korean equity market generally as indicated by the Korea Index;
- The discounts of the preference shares WKOF holds narrowing or widening relative to their corresponding common shares;
- The performance of the common shares (which correspond to the preference shares held by WKOF) relative to the performance of the Korean equity market;
- Excess dividend yields of the preference shares held by WKOF; and
- Fees, expenses and other factors.
In order to compare WKOF’s relative return to the Korea Index, we report the attribution of these aforementioned factors to Company’s performance from inception until the date of the Managed Wind-down (
Performance Attribution Table
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Return Component |
Inception to Managed Wind-down |
Since Managed Wind-down |
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The Korea Index |
57.9% |
27.3% |
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Discount Narrowing (Widening) Of Preferred Shared Owned |
72.4% |
N/A |
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WKOF common Shares vs. The Korea Index |
-24.6% |
N/A |
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Excess Dividend Yield of Preferred Shares Owned |
14.5% |
N/A |
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Fees, Expenses and Others |
-40.8% |
N/A |
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NAV Performance |
79.2% |
20.3% |
Since the Managed Wind-down, WKOF increased its holdings of cash and cash equivalents and decreased its holdings of Korean preference shares. Given the recent market rally in Korea’s equity markets, WKOF’s NAV performance has lagged The Korea Index.
WKOF Inception to Managed Wind-down performance is calculated from
Performance since the start of Managed Wind-down on
Hedging
Prior to the Managed Wind-down performance, WKOF pursued its investment strategy with a portfolio that was generally long-only. However, as further described in earlier Annual reports, the Board approved a hedging strategy intended to reduce exposure to extreme events that, earlier, would have been catastrophic to its Shareholders' Investments in WKOF because of political tensions in
WKOF limited its use of hedging instruments to the purchase of credit default swaps (“CDS”) and put options on the MSCI Korea 25/50 Index. As noted in the 2024 Annual Report, we expected WKOF’s exposure to CDS to gradually decrease during the Managed Wind-down process. As of
Concluding Remarks
Thank you to our long-term shareholders. We are proud of WKOF’s performance during the 12 years the Company has been listed on AIM, during which we have continually sought to do what is in the best interests of shareholders. We continue to believe the Managed Wind-down is in the best interest of our shareholders.
Statement of Financial Position
As at
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As at |
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As at |
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30 June |
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31 December |
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2025 |
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2024 |
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(Unaudited) |
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(Audited) |
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£ |
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£ |
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Assets |
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Financial assets at fair value through profit or loss |
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97,855,874 |
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94,780,296 |
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Other receivables |
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3,377,866 |
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913,777 |
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Margin account |
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587,037 |
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1,041,581 |
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Cash and cash equivalents |
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13,005,240 |
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1,224,127 |
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Total assets |
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114,826,017 |
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97,959,781 |
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Liabilities |
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Derivative financial liabilities |
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- |
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283,591 |
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Other payables |
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2,240,131 |
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715,723 |
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Total liabilities |
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2,240,131 |
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999,314 |
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Net assets |
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112,585,886 |
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96,960,467 |
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Represented by: |
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Shareholders' equity and reserves |
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Share capital |
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33,912,856 |
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33,912,856 |
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Other reserves |
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78,673,030 |
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63,047,611 |
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Total Shareholders' equity |
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112,585,886 |
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96,960,467 |
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Net Assets Value per Ordinary Share |
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1.6254 |
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1.3998 |
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The Financial Statements were approved and authorised for issue by the Board of Directors on
Chair
Director
Statement of Comprehensive Income
For the period ended
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For the period ended |
For the period ended |
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(Unaudited) |
(Unaudited) |
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£ |
£ |
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Income |
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Net gain on financial assets at fair value through profit or loss |
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18,501,449 |
8,955,523 |
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Net gain on derivative financial instruments at fair value through profit or loss |
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283,591 |
334,628 |
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Net foreign currency losses |
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(78,141) |
(317,329) |
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Dividend income |
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1,984,071 |
2,945,724 |
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Bank interest income |
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8,655 |
2,788 |
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Total income |
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20,699,625 |
11,921,334 |
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Expenses |
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Operating expenses |
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(1,812,512) |
(1,915,084) |
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Total operating expenses |
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(1,812,512) |
(1,915,084) |
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Profit for the period before dividend withholding tax |
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18,887,113 |
10,006,250 |
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Dividend withholding tax |
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(436,489) |
(647,437) |
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Profit for the period after dividend withholding tax |
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18,450,624 |
9,358,813 |
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Profit and total comprehensive income for the period |
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18,450,624 |
9,358,813 |
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Basic and diluted earnings per Share |
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0.2664 |
0.1351 |
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All items derive from continuing activities.
Following review of the AIC SORP and its impact on the Statement of Comprehensive Income, the Board has decided not to follow the recommended income and capital split. This is due to the fact that the Company’s dividend policy is not influenced by its expense policy.
Statement of Changes in Equity
For the period ended
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Share |
Other |
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capital |
reserves |
Total |
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For the period ended |
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£ |
£ |
£ |
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Balance as at |
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33,912,856 |
63,047,611 |
96,960,467 |
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Total comprehensive income for the period |
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- |
18,450,624 |
18,450,624 |
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Transactions with Shareholders, recorded directly in equity |
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Distributions paid |
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- |
(2,825,205) |
(2,825,205) |
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Balance as at |
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33,912,856 |
78,673,030 |
112,585,886 |
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Share |
Other |
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capital |
reserves |
Total |
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For the period ended |
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£ |
£ |
£ |
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Balance as at |
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33,912,856 |
82,936,848 |
116,849,704 |
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Total comprehensive income for the period |
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- |
9,358,813 |
9,358,813 |
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Transactions with Shareholders, recorded directly in equity |
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Distributions paid |
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- |
(3,591,484) |
(3,591,484) |
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Balance as at |
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33,912,856 |
88,704,177 |
122,617,033 |
Statement of Cash Flows
For the period ended
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For the period ended |
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For the period ended |
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(Unaudited) |
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(Unaudited) |
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£ |
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£ |
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Cash flows from operating activities |
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Profit and total comprehensive income for the period |
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18,450,624 |
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9,358,813 |
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Adjustments for: |
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Interest income |
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(8,655) |
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- |
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Net gains on financial assets at fair value through profit or loss |
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(18,501,449) |
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(8,955,523) |
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Exchange losses on cash and cash equivalents |
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235,138 |
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557,166 |
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Net gains on derivative financial instruments at fair value through profit or loss |
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(283,591) |
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(334,628) |
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Increase in receivables excluding dividends |
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(1,539,090) |
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(13,594) |
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(Decrease)/increase in other payables excluding withholding tax |
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(109,933) |
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172,882 |
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Dividend income net of withholding taxes |
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(1,547,582) |
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(2,298,287) |
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Dividend received net of withholding taxes |
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2,256,924 |
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3,358,429 |
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Bank interest received |
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8,655 |
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- |
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Purchase of financial assets at fair value through profit or loss |
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(76,471,607) |
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(39,218,509) |
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Proceeds from the sale of financial assets at fair value through profit or loss |
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91,897,478 |
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40,041,173 |
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Net cash generated from operating activities |
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14,386,912 |
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2,667,922 |
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Cash flows from investing activities |
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Opening of derivative financial instruments |
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- |
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87 |
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Closure of derivative financial instruments |
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- |
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(141) |
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Decrease/(increase) in margin account |
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454,544 |
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(27,001) |
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Net cash generated from/ (used in) from investing activities |
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454,544 |
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(27,055) |
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Cash flows from financing activities |
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Distributions paid |
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(2,825,205) |
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(3,591,484) |
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Net cash used in financing activities |
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(2,825,205) |
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(3,591,484) |
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Net increase/(decrease) in cash and cash equivalents |
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12,016,251 |
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(950,617) |
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Exchange losses on cash and cash equivalents |
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(235,138) |
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(557,166) |
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Cash and cash equivalents at the beginning of the period |
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1,224,127 |
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3,364,287 |
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Cash and cash equivalents at the end of the period |
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13,005,240 |
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1,856,504 |
For further information, please contact:
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Singer
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+44 20 7496 3000 |
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Northern
Trust
International
Company Secretary |
+44 1481 745001 |