242 F INANC IAL Statements 05 Sect ion Ranhi ll Ut i l i t i es Berhad NOTES TO THE F INANC I AL STATEMENTS For the year ended 31 December 2022 38. EMPLOYEE SHARE SCHEME On 11 April 2019, the Company implemented the Long Term Incentive Plan (“LTIP”), which involves the allotment and issuance of new ordinary shares in the Company to eligible employees and executive directors of the Group and the Company, provided that the total number of shares so allotted shall not at any time exceed ten percent of the total number of issued shares in the Company (“LTIP Grants”). On 11 September 2020, the Company awarded up to 9,989,600 LTIP Grants, comprising of the following: (i) 8,992,400 performance shares (“PS”) under the PS Grant to be vested on 29 September 2023; and (ii) 997,200 restricted shares (“RS”) under the RS Grant to be vested on 29 September 2023. The LTIP Grants were awarded, without any cash consideration to those who have attained the identified performance objectives of the Group and the Company. It serves to attract, retain, motivate and reward valuable employees of the Group and the Company. LTIP movement Number of LTIP Grants Amount Group and Company 2022 ’000 2021 ’000 2022 RM’000 2021 RM’000 At 1 January 9,990 9,990 671 459 Charge for the year - - 514 212 At 31 December 9,990 9,990 1,185 671 Fair value of shares granted The fair values of the shares granted are estimated at the grant date using a Monte Carlo Simulation pricing model, taking into account the terms and conditions which the instruments were granted. The following table lists out the relevant input to the share scheme pricing model: 2022 LTIP 2021 LTIP Fair value per share (RM) - Restricted shares RM0.088 RM0.088 - Performance shares RM0.752 RM0.752 Dividend yield (%) 4.71% 4.71% Expected volatility (%) 35.02% 35.02% Risk-free interest rate (% p.a.) 1.96% 1.96% Expected life of the scheme (years) - Restricted shares 3 years 3 years - Performance shares 3 years 3 years Underlying share price (RM) RM0.862 RM0.862 The expected life of the share scheme is based on the contractual life of the scheme. The expected volatility reflects the assumption that the historical volatility, over a period similar to the life of the scheme, is indicative of future trends, which may not necessarily be the actual outcome.
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