ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) D3 Post-employment benefits (continued) The expenses are recognised in the following line items in profit or loss: Group 2020 2019 $’000 $’000 Cost of sales 25,865 19,960 Administrative expenses 4,571 1,610 Other operating expenses 83 16 Finance cost, net 7,272 214 Defined benefit obligation expenses 37,791 21,800 The fair value of plan assets in each category are as follows: Group 2020 2019 $’000 $’000 Equity securities 140,777 135,201 Government bonds 31,268 30,314 Corporate bonds 122,547 108,642 Derivatives 778 208 Cash/money markets 6,873 4,183 Property occupied by the Group 34,991 40,777 Funds managed by a trustee 2,216 2,234 Funds with insurance companies 22,573 15,298 Fair value of plan assets 362,023 336,857 All equity securities and government bonds have quoted prices in active markets. All government bonds have an average rating of A+. In the case of the funded plans, the Group ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension schemes. Within this framework, the Group’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency. / ST ENG I NEER I NG 232