GBP'000 GBP'000

Dividends received --

Amounts (due to)/owed by subsidiary undertaking (758) 78

18. FINANCIAL ASSETS AND LIABILITIES

The Company's financial instruments comprise securities, cash balances and debtors and creditors that arise from its operations, for example, in respect of sales and purchases awaiting settlement and debtors for accrued income.

The investment policy and objectives of the Company are stated on page 1.

As an investment trust, the Company invests in securities for the long term. Accordingly it is, and has been, throughout the year under review, the Company's policy that no short-term trading in investments or other financial instruments shall be undertaken.

The main risks arising from the Company's financial instruments are market price risk, liquidity risk and credit risk. The Board's policy for managing these risks is summarised below. These policies have remained unchanged since the beginning of the year to which these financial statements relate.

Market price risk

Market risk arises from uncertainty about future prices of financial instruments held. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. The Board meets at least quarterly to consider the asset allocation of the portfolio in order to minimise the risk associated with industry sectors. The Investment Director has responsibility for monitoring the existing portfolio selected in accordance with the Company's investment objectives and seeks to ensure that individual stocks meet an acceptable risk-reward profile.

The Company's exposure to changes in market prices at 31st December 2020 on its quoted equity investments was GBP157,245,000 (2019: GBP154,941,000).

Liquidity risk

Liquidity risk is the possibility of the Company having difficulties in realising sufficient assets to meet its financial obligations. All investments are made in quoted securities, which are normally listed on the London Stock Exchange or AIM. Transactions in these securities may be subject to some short-term liquidity constraint, in common with other smaller and medium sized listed securities, but subject to that they are considered to be reasonably realisable.

Credit risk

Credit risk is the failure of the counterparty to a transaction to discharge its obligations which could result in the Company suffering a loss. At the year end the Company's maximum exposure to credit risk was as follows:


                             2020   2019 
 
                             GBP'000  GBP'000 
Trade and other receivables  681    534 
Cash and cash equivalents    12,474 15,322 
                             13,155 15,856 

The risk is managed by dealing only with brokers and banks who have satisfactory credit ratings and are approved by the Audit and Compliance Committee.

Financial assets and liabilities

All assets and liabilities are included at fair value.

Valuation of financial instruments

IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 1 Investments.

18. FINANCIAL ASSETS AND LIABILITIES continued

The fair value hierarchy has the following levels:

Level 1 - Unadjusted prices quoted in active markets for identical assets and liabilities.

Level 2 - Having inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly (ie as prices) or indirectly (ie derived from prices).

Level 3 - Having inputs for the asset or liability that are not based on observable data.


31st December 2020                                    Level 1 Level 2 Level 3 Total 
Financial assets at fair value through profit or loss GBP'000   GBP'000   GBP'000   GBP'000 
UK Equity Listed                                      123,654 -       -       123,654 
AIM traded stocks                                     33,591  -       -       33,591 
Delisted stock                                        -       2       -       2 
Investment in subsidiary                              -       -       758     758 
Net fair value                                        157,245 2       758     158,005 
31st December 2019                                    Level 1 Level 2 Level 3 Total 
Financial assets at fair value through profit or loss GBP'000   GBP'000   GBP'000   GBP'000 
UK Equity Listed                                      115,395 -       -       115,395 
AIM traded stocks                                     39,546  -       -       39,546 
Delisted stock                                        -       2       -       2 
Investment in subsidiary                              -       -       758     758 
Net fair value                                        154,941 2       758     155,701 
There were no transfers between Level 1 and Level 2 during the period. 
 
A reconciliation of fair value measurements in Level 3 is set out in the following table. 
                                                                                          2020  2019 
                                                                                          GBP'000 GBP'000 
Opening Balance                                                                           758   706 
Purchases                                                                                 -     - 
Sales                                                                                     -     - 
Total gains or losses included in gains on investments in the income statement: 
- on assets sold                                                                          -     - 
- on assets held at year end                                                              -     52 
Closing Balance                                                                           758   758 

The Level 3 investment relates to the Company's subsidiary, Discretionary Unit Fund Managers Limited, which has been valued based of the most recent estimated NAV. -----------------------------------------------------------------------------------------------------------------------


ISIN:           GB0007392078 
Category Code:  FR 
TIDM:           RIII 
Sequence No.:   93689 
EQS News ID:    1168794 
 
End of Announcement  EQS News Service 
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(END) Dow Jones Newswires

February 16, 2021 11:11 ET (16:11 GMT)