Management’s Discussion and Analysis or Plan of Operation

Item 5: Interest of Certain Persons in Matters to be Acted Upon

4. Management’s Discussion and Analysis or Plan of Operation

Financial Position :

As of March 31, 2008, total assets reached P3,157.3 million which was 16.89% higher than the previous year’s P2,701.2 million. Total liabilities amounted to P572.1 million which was 46.96% higher than the previous year’s P389.3 million. Equity amounted to P2,585.2 million which was 11.82% higher than the previous year’s P2,311.9 million. Current ratio was 3.9:1 and debt was 22% of equity.

As of March 31, 2009, total assets amounted to P3,466.1 million which was 9.78% higher than the previous year’s P3,157.3 million. Total liabilities amounted to P576.9 million which was 0.84% higher than the previous year’s P572.1 million. Equity amounted to P2,889.2 million which was 11.76% higher than the previous year’s P2,585.2 million. Current ratio was 4.2:1 and debt was 20% of equity.

As of March 31, 2010 total assets amounted to P3,716.5 million. Total liabilities amounted to P518.9 million while total stockholders’ equity reached P3,197.6 million.

Compared to the previous year, assets and stockholders’ equity increased by 7.22% and 10.67 % respectively while liabilities decreased by 10.05%. Current ratio was 4.79:1 and debt was 16%

of equity.

As of March 31, 2011, total assets amounted to P4,049.8 million which was 8.97% higher than the previous year’s P3,716.5 million. Total liabilities amounted to P491.3 million which was 5.32% lower than the previous year’s P518.9 million. Equity amounted to P3,558.5 million which was 11.29% higher than the previous year’s P3,197.6 million. Current ratio was 4.51:1 and debt was 14% of equity.

For the past four (4) years, total assets increased at an average annual rate of 10.72% or P337.15 million a year. Total liabilities increased during the first two years but gradually decreased on the last two years. On the average, liabilities increased at around P25.5 million a year.

( I n M i l l i o n P e s o s )

Total Increase (Decrease) Total Increase (Decrease) Year Assets Amount % Liabilities Amount %

March 31, 2007 2,701.2 389.3

March 31, 2008 3,157.3 456.1 16.89% 572.1 182.8 46.96%

March 31, 2009 3,466.1 308.8 9.78% 576.9 4.8 .84%

March 31, 2010 3,716.5 250.4 7.22% 518.9 (58.0) (10.05%) March 31, 2011 4,049.8 333.3 8.97% 491.3 (27.6) ( 5.32%) Four year average 337.15 25.50

During the past four years, the company’s solvency steadily improved as shown by the following figures in million Pesos:

Excess of Assets

Year Total Assets Total Liabilities over Liabilities March 31, 2008 P3,157.3 P572.1 P2,585.2 March 31, 2009 3,466.1 576.9 2,889.2 March 31, 2010 3,716.5 518.9 3,197.6 March 31, 2011 4,049.8 491.3 3,558.5

As of March 31, 2011, the company has P8.24 worth of assets to pay for every P1.00 worth of liability.

During the same period of time, the company remained liquid as shown by the following statistics in million Pesos:

Excess of Current Assets

Year Current Assets Current Liabilities over Current Liabilities

March 31, 2008 P2,228.7 P572.1 P1,656.6 March 31, 2009 2,443.9 576.9 1,867.0 March 31, 2010 2,484.5 518.9 1,965.6 March 31, 2011 2,215.1 491.3 1,723.8

As of March 31, 2011, the company has P4.51 worth of current assets to pay for every P1.00 worth of current liability.

The constant and steady improvement in the company’s financial condition both in solvency and liquidity is largely attributed to the company’s net income each year over the past four years, net of cash dividends paid over the same period of time.

( I n M i l l i o n P e s o s )

Excess of Net Cash Income over Cash Year Net Income Dividends Paid % Dividends Paid %

2007 – 2008 592.9 315.2 53.2% 277.7 46.8%

2008 – 2009 567.0 252.2 44.5% 314.8 55.5%

2009 – 2010 585.2 294.2 50.3% 291.0 49.7%

2010 – 2011 642.4 294.2 45.8% 348.2 54.2%

As a result and based on the above figures, around 51.55% of each year’s net income has

been retained by the company, thus, the steady increase in owners’ equity as follows:

( I n M i l l i o n P e s o s )

Increase

Year Owner’s Equity (Decrease) %

2,311.9

March 31, 2008 2,585.3 273.4 11.8%

March 31, 2009 2,889.2 303.9 11.8%

March 31, 2010 3,197.5 308.3 10.7%

March 31, 2011 3,558.5 361.0 11.29%

As of March 31, 2011, owner’s equity accounts for 87.87% of total assets. Since 54.7%

of the company’s total assets is current, the company can pay all its liabilities and still have 42.56% current assets and 45.3% non-current assets. In pesos, this would mean P1,723.8 million current assets and P1,834.7 million non-current assets after paying all liabilities amounting to P491.3 million as of March 31, 2011.

In Million %

Owners’ Equity P3,558.5 87.87%

Total Assets 4,049.8 100%

Non-Current Assets 1,834.7 45.3%

Current Assets 2,215.1 54.7%

Total Liabilities 491.3 12.13%

Current Assets after Total Liabilities 1,723.8 42.56%

Results of Operations

For the year 2007-2008, net income for the period amounted to P592.9 million which was 1.8% lower than the previous year’s P603.5 million. This year’s figure consisted of 78%

operating profit and 22% other income. Operating profit decreased by P21.0 million while other income increased by P15.5 million. The combined effect resulted in a decrease in net income after tax by P10.6 million.

For the year 2008-2009, net income for the period amounted to P567.0 million which was 4.4% lower than the previous year’s P592.9 million. This year’s figure consisted of 74.7%

operating profit and 25.3% other income. Operating profit decreased by P39.8 million while other income increased by P13.3 million. As a result, net income after tax decreased by P25.9 million.

For the year 2009-2010, net income for the period amounted to P585.2 million which was 3.2% higher than the previous year’s P567.0 million. This year’s figure consisted of 74.1%

operating profit and 25.9% other income. Operating profit increased by P10.7 million while

other income increased by P9.02 million. As a result, net income after tax increased by P18.2

million.

For the year 2010-2011, net income for the period was P642.4 million which was 9.77%

higher than the previous year’s P585.2 million. This year’s figure consisted of 67.48%

operating profit and 32.52% other income. Operating profit increased by P1.5 million and other income by P65.7 million. As a result, net income after tax for the year increased by P57.2 million.

The company’s operating profit which is largely dependent on enrollment, was up in 2006-2007 when enrollment was still at the 26,000 level but went down in 2007-2008, 2008- 2009 and 2009-2010 when enrollment dropped to 23,000. In 2010-2011, the first semester enrollment increased to 24,600 but the first year operating cost of the newly opened Makati Campus offset the increase in educational income thus, the minimal increase in operating profit for 2010-2011.

Other income consists largely of investment income. During the past four years, investment income accounted for 69.03% of the total other income. Rental income accounted for 18.86%

while the remaining 12.11% is from management fees and other miscellaneous income.

A Look of What Lies Ahead

For the school year 2011-2012, the first semester enrollment increased by 9.28%

compared to the previous year’s 24,672. The increase in enrollment is attributed to our improved facilities and new course offerings. Our newly-opened branch in Makati brought in 913 students and we expect our branch enrollment to be much bigger in the succeeding years.

The 4.5% tuition fee for 2011-2012 is also higher than the previous year’s 3.5%. With the proper management of resources, we expect that operating profit will again improve this year.

With the company’s current assets amounting to P2,215 million and non-current assets amounting to P1,834 million as of March 31, 2011 and with the expected net income, the company does not foresee any cash flow or liquidity problem in the next 12 months. The company can easily meet all its commitments including those for improvements in instructional and other facilities from its present reserves and from expected future earnings.

For the year’s ahead, management is committed to uplift academic standards even more.

This will be done through continuously updating curricula, strengthening faculty, improving

services to students and providing the best educational facilities. With an additional campus and

with sustained improvement in all fronts, plus a reasonable tuition fee hike, the University is

confident that it will increase its market share in the industry.

Top Five (5) Key Performance Indicators