PART IV SCHEDULES AND OTHER REPORTS
Item 13. SEC Form 17-C and Quarterly Report
9. FINANCIAL ASSETS
9.1 Financial Assets at FVTPL
The types of investments classified under Financial Assets at FVTPL as of May 31 are shown below.
2020 2019
Equity securities P 417,473,189 P 432,043,160
UITF 422,100,278 375,308,885
P 839,573,467 P 807,352,045 The breakdown of Financial Assets at FVTPL as to currency denomination is as follows:
2020 2019
Local P 450,823,714 P 422,943,294
Foreign 388,749,753 384,408,751
P 839,573,467 P 807,352,045 An analysis of the movements in the carrying amounts of the University’s investments is presented below.
2020 2019
Balance at beginning of year P 807,352,045 P 1,020,523,050
Additions 1,179,133,965 1,679,559,036
Disposals ( 1,065,594,699 ) ( 1,882,826,347 )
Foreign currency loss – net ( 7,670,098 ) ( 2,373,943 )
Fair value loss – net ( 73,647,746 ) ( 7,529,751 )
Balance at end of year P 839,573,467 P 807,352,045 In 2019, the University reclassified certain financial assets at FVOCI amounting to P1,020.5 million as part of Financial Assets at FVTPL as a result of adoption of PFRS 9.
financial assets at FVTPL. In 2020, total investment loss, including changes in fair value amounted to P91.0 million. In 2019, total investment income, including changes in fair values amounted to P6.8 million. These are presented as Other investment income (loss) from financial assets at FVTPL under Finance Income in the statements of profit or loss (see Note 20.1).
The related outstanding interest is presented as part of Accrued interest under Receivables account in the statements of financial position (see Note 8). The related interest income is presented under Finance Income (see Note 20.1).
9.2 Financial Assets at FVOCI (Classified as AFS Financial Assets in 2018) As of May 31, the University’s financial assets at FVOCI are classified in the statements of financial position as follows:
2020 2019 2018
Current P 182,283,531 P 184,742,421 P 2,119,491,677
Non-current 279,905,371 280,583,659 -
P 462,188,902 P 465,326,080 P 2,119,491,677
The types of investments classified under Financial Assets at FVOCI as of May 31 are shown below.
2020 2019 2018
Debt securities:
Government P 202,462,446 P 161,338,064 P 240,339,612
Corporate 125,882,804 168,978,588 720,618,778
328,345,250 330,316,652 960,958,390
Equity securities:
Corporate shares 133,843,652 135,009,428 750,072,034
UITF - - 408,461,253
133,843,652 135,009,428 1,158,533,287
P 462,188,902 P 465,326,080 P 2,119,491,677
Government securities bear annual interest rates ranging from 2.90% to 12.13% in 2020, 3.38% to 12.13% in 2019, and 2.13% to 12.13% in 2018. Corporate bonds bear interest ranging from 3.20% to 5.50% in 2020, 3.27% to 7.02% in 2019, and 3.20% to 6.88% in 2018.
The fair values of the equity securities and debt securities have been determined based on quoted prices in active markets (see Note 6.2).
The breakdown of quoted Financial Assets at FVOCI as to currency denomination is as follows:
2020 2019 2018
Local P 437,192,160 P 465,326,080 P 1,833,921,960
Foreign 24,996,742 - 285,569,717
P 462,188,902 P 465,326,080 P 2,119,491,677
2020 2019 2018 Balance at beginning
of year P 465,326,080 P 648,900,622 P 2,139,654,834 Disposals ( 150,690,479) ( 2,788,478,082) ( 2,558,270,287 ) Additions 126,358,875 2,620,522,884 2,608,753,050 Fair value gains
(losses) – net 21,446,446 ( 16,391,446) ( 69,044,772 ) Foreign currency
losses – net ( 429,930) ( 121,392) -
Amortization of discount
(premium) – net 177,910 893,494 ( 1,601,148 )
Balance at end of year P 462,188,902 P 465,326,080 P 2,119,491,677
In 2019, the University reclassified certain financial assets at FVOCI amounting to
P1,470.6 million as part of Investment securities at Amortized Cost and Financial Assets at FVTPL as a result of adoption of PFRS 9.
Investment income from financial assets at FVOCI pertaining to interests and gain or loss on disposal has been reinvested as part of additions to financial assets at FVOCI. Total investment income from financial assets at FVOCI, including dividend income, totaling P31.2 million, P26.2 million and P97.2 million for the years ended May 31, 2020, 2019 and 2018, respectively, is presented separately as Interest income from financial assets at FVOCI and as Other investment income (loss) from financial assets at FVOCI under Finance Income in the statements of profit or loss (see Note 20.1). The related outstanding interest is presented as part of Accrued interest under the Receivables account in the statements of financial position (see Note 8).
The total fair value losses amounted to P6.9 million and P21.9 million for the year ended May 31, 2020 and 2019 (nil in 2018), respectively, which are presented as an item that will be reclassified subsequently to profit or, in the statements of comprehensive income. The total fair value losses amounting to P1.8 million and P32.9 million for the years ended May 31, 2020 and 2018, respectively, and total fair value gains amounting to P14.8 million for the year ended May 31, 2019, are presented as an item that will not be reclassified to profit or loss in the statements of comprehensive income.
In 2019, the University has recognized a reversal of ECL allowance of P0.2 million, respectively, for its debt securities at FVOCI, which is netted against the unrealized fair value gains under other comprehensive income during the year.
9.3 Investment Securities at Amortized Cost (Classified as HTM Investments in 2018)
As of May 31, the University’s investment securities at amortized cost are classified in the statements of financial position as follows:
2020 2019 2018
Current P 227,576,146 P 263,808,437 P -
Non-current 275,559,164 497,963,134 297,284,616
P 503,135,310 P 761,771,571 P 297,284,616
2.5% to 7.8% per annum in 2020 and 3.2% to 7.4% per annum in both 2019 and 2018 and have maturities ranging from one to 25 years.
The breakdown of investment securities at amortized cost as to currency denomination is as follows:
2020 2019 2018
Local P 398,459,475 P 465,288,447 P 15,000,000
Foreign 105,152,008 296,959,297 282,284,616
503,611,483 762,247,744 297,284,616
Expected credit losses ( 476,173) ( 476,173) -
P 503,135,310 P 761,771,571 P 297,284,616
During 2020, portion of the investments, pertaining to foreign currency denominated bonds which are subject to cross-currency swap agreement over the same term of the bonds, with carrying values of P185.6 million and P190.5 million as at May 31, 2019 and 2018,
respectively, and has fair values of P182.8 million and P251.5 million as of May 31, 2019 and 2018, respectively, have already matured.
An analysis of the movements in the carrying amount of the University’s investment securities at amortized cost for the years ended May 31, 2020, 2019 and 2018, is presented below.
2020 2019 2018
Balance at beginning
of year P 762,247,744 P 753,111,128 P 336,566,334
Additions 39,769,449 109,369,204 52,500,099
Maturities ( 287,086,168) ( 94,483,206) ( 102,743,344 ) Amortization of discount – net ( 3,328,497) ( 3,313,681) ( 4,212,352 ) Foreign currency gains
(losses) – net ( 7,991,045) ( 2,435,701) 15,173,879
503,611,483 762,247,744 297,284,616
Expected credit losses ( 476,173) ( 476,173) - Balance at end of year P 503,135,310 P 761,771,571 P 297,284,616
In 2019, the University reclassified certain HTM financial assets with total fair value of P455.8 million as of date reclassification to amortized cost as a result of adoption of PFRS 9.
A reconciliation of the allowance for impairment loss on investment securities at amortized cost at the beginning and end of May 31, 2020 and 2019 is presented below:
2020 2019
Balance at beginning of year P 476,173 P 454,456
Impairment loss during the year - 21,717
Balance at end of year P 476,173 P 476,173
amortization of discount during the years ended May 31, 2020, 2019 and 2018 is netted against Interest income from investment securities at amortized cost (see Note 20.1).