ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) D4 Share-based payment arrangements (continued) Singapore Technologies Engineering Performance Share Plan (PSP) and Singapore Technologies Engineering Restricted Share Plan (RSP) PSP RSP Group Year of grant Year of grant 2020 2019 2020 2019 Volatility of the Company’s shares (%) 26.87 13.37 26.87 13.37 Risk-free rate (%) 1.13 1.92 0.99 – 1.21 1.91 – 1.93 Share price ($) 2.80 3.75 2.80 3.75 Cost of equity (%) 7.2 7.0 N.A. N.A. Dividend yield (--Management’s forecast in line with dividend policy--) (--Management’s forecast in line with dividend policy--) The fair value of the performance and restricted shares is determined on grant date using the Monte Carlo simulation model. During the current year, the Group met the pre-determined target performance level and hence, 2,377,103 performance shares were awarded in respect of the grant made in 2017 under PSP2010. In the prior year, 2,041,497 performance shares were awarded in respect of the grant made in 2016 under PSP2010. Recognition and measurement The Group operates a number of share-based payment plans. A description of each type of share-based payment arrangement that existed at any time during the period is described in the Directors’ Statement. The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. / ST ENG I NEER I NG 236