ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) C15 Classification and fair value of financial instruments (continued) (b) Fair value (continued) Measurement of fair values The Group regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair value, then the Group assesses and documents the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of SFRS(I)s, including the level in the fair value hierarchy the resulting fair value estimate should be classified. The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. In 2020 and 2019, other than transfers from Level 2 to Level 3, there were no other transfers between the different levels of fair value hierarchy. The following methods and assumptions are used to estimate the fair value of other classes of financial instruments: Types of financial instruments Valuation method Bank balances, other liquid funds and short-term receivables Short-term borrowings and other current payables Carrying amounts approximate fair values due to the relatively short-term maturity of these instruments. Long-term receivables Estimated based on the expected cash flows discounted to present value. Long-term payables Estimated based on present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. 22 1 ANNUAL REPORT 2 0 2 0 / CORPORATE OVERVI EW PERFORMANCE REVI EW SUSTAINABI L ITY CORPORATE GOVERNANCE F INANCIAL REPORT