Part II OPERATIONAL AND FINANCIAL INFORMATION
29. SUPPLEMENTARY INFORMATION REQUIRED BY THE BUREAU OF INTERNAL REVENUE
29.2 Requirements Under RR 19-2011
RR 19-2011 requires schedules of taxable revenues and other non-operating income, costs of sales and services, itemized deductions and other significant tax information, to be disclosed in the notes to financial statements.
The amounts of taxable revenues and income, and deductible costs and expenses presented below are based on relevant tax regulations issued by the BIR, hence, may not be the same as the amounts of revenues reflected in the 2015 statement of profit or loss.
(a) Taxable Revenues
The composition of the University’s taxable revenues for the fiscal year ended March 31, 2015 at special tax rate of 10% mainly comprise of tuition and other school fees amounting to P2,287,687,219.
(b) Deductible Costs of Services
The deductible costs of services for the year ended March 31, 2015, which is presented as Instructional and Academic and Maintenance and University Operations expenses under Operating Expenses in the 2015 statement of profit or loss, comprise the following:
Salaries, wages and benefits P 886,836,844
Depreciation and amortization 127,199,394
Rental 86,745,527
Outside services 30,238,800
Materials, supplies and facilities 21,977,003
Miscellaneous 173,175,116
P 1,326,172,684
(c) Taxable Non-operating and Other Income
The details of taxable non-operating and other income in fiscal year 2015, which are subject to special tax rate of 10% are shown below.
Rental income P 53,580,955
Management fees 43,494,910
Realized foreign exchange gains 18,342,082
Income from sale of books
and other merchandise 8,579,361
Others 43,883,042
P 167,880,350
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(d) Itemized Deductions
The amounts of itemized deductions in fiscal year 2015 at special tax rate of 10% are as follows:
Salaries and allowances P 122,481,448
Impairment losses on receivables 43,033,521
Interest 36,056,787
Professional fees 34,957,262
Depreciation and amortization 33,802,982
Security services 22,761,459
SSS, GSIS, Philhealth, HDMF and
other contributions 16,936,688
Subscriptions 15,637,951
Directors’ bonus 13,500,000
Advertising and promotions 7,730,460
Taxes and licenses 7,137,385
Communication, light and water 4,894,591
Membership and registration 2,800,491
Bank charges 2,311,034
Other services 2,305,551
Software license costs 2,219,747
Conference and seminars 1,989,550
Other supplies and materials 1,600,097
Other employee-related expenses 1,502,055
Insurance 1,411,897
Office supplies 1,289,313
Fuel and oil 882,704
Transportation and travel 490,518
Representation and entertainment 80,226
Miscellaneous 2,663,776
P 380,477,493
Notes 2015 2014 2013 A S S E T S
CURRENT ASSETS
Cash and cash equivalents 8 P 887,447,257 P 559,584,420 P 338,059,095 Trade and other receivables - net 9 538,195,294 363,282,079 402,521,059 Financial asset at fair value through profit or loss 10 340,800 - 18,629,900 Available-for-sale financial assets 11 2,045,219,220 1,765,336,184 1,652,448,209 Real estate held-for-sale 12 131,526,860 131,526,860 94,837,617 Other current assets - net 13 201,672,695 226,482,865 440,320,758 Total Current Assets 3,804,402,126 3,046,212,408 2,946,816,638 NON-CURRENT ASSETS
Trade and other receivables - net 9 - 47,465,839 98,226,853
Available-for-sale financial assets 11 422,640,557 552,556,482 367,039,668 Investments in an associate and a joint venture 14 6,726,839 6,769,756 6,846,595 Property and equipment - net 15 4,192,338,598 3,914,179,071 3,221,446,603 Investment property - net 16 647,176,278 476,094,579 366,291,755 Deferred tax assets 23 6,645,677 2,238,847 12,897,723 Other non-current assets 13 10,949,072 7,931,610 7,702,000 Total Non-current Assets 5,286,477,021 5,007,236,184 4,080,451,197
TOTAL ASSETS P 9,090,879,147 P 8,053,448,592 P 7,027,267,835
CURRENT LIABILITIES
Trade and other payables 17 P 751,289,327 P 579,407,538 P 478,263,447 Interest-bearing loans 18 688,955,389 12,763,501 3,154,777
Derivative liability 10 - 14,433,500 -
Deferred revenues 19, 24 46,510,369 14,569,321 5,679,787 Income tax payable 29,812,454 13,095,621 10,204,672 Total Current Liabilities 1,516,567,539 634,269,481 497,302,683 NON-CURRENT LIABILITIES
Interest-bearing loans 18 33,591,271 846,936,083 806,984,744 Deferred tax liabilities 23 8,097,018 20,352,881 41,480,547 Other non-current liabilities 13,793,018 13,630,418 16,953,803 Total Non-current Liabilities 55,481,307 880,919,382 865,419,094 Total Liabilities 1,572,048,846 1,515,188,863 1,362,721,777
EQUITY 25
Equity attributable to owners of the parent company
Capital stock 1,651,435,400 1,376,863,400 1,376,863,400
Treasury stock - at cost ( 33,855,641 ) ( 3,733,100 ) ( 3,733,100 ) Revaluation reserves 136,401,540 42,077,941 179,686,293 Retained earnings 4,135,378,155 3,743,328,450 3,259,048,975 Total equity attributable to owners of parent company 5,889,359,454 5,158,536,691 4,811,865,568 Non-controlling interest 1,629,470,847 1,379,723,038 852,680,490
Total Equity 7,518,830,301 6,538,259,729 5,664,546,058
TOTAL LIABILITIES AND EQUITY P 9,090,879,147 P 8,053,448,592 P 7,027,267,835 LIABILITIES AND EQUITY
See Notes to Consolidated Financial Statements.
THE FAR EASTERN UNIVERSITY, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
MARCH 31, 2015, 2014 AND 2013 (Amounts in Philippine Pesos)
Notes 2015 2014 2013
REVENUES
Educational 19
Tuition fees - net P 2,477,844,874 P 2,208,746,459 P 2,138,536,245
Other school fees 134,153,061 73,422,000 58,440,971 2,611,997,935
2,282,168,459 2,196,977,216
Rental 16 117,937,492 98,411,239 89,322,857
Management fees 24 43,494,910 55,358,978 55,358,978
Sale of real estate 12 - - 184,434,952
Other operating income 5,036,721 12,253,788 4,993,641 2,778,467,058
2,448,192,464 2,531,087,644
COSTS AND OPERATING EXPENSES 20 1,772,881,489 1,618,887,807 1,625,892,874
OPERATING INCOME 1,005,585,569 829,304,657 905,194,770
FINANCE INCOME 21 221,596,123 223,421,624 248,832,138
FINANCE COSTS 21 ( 50,118,822 ) ( 35,085,309 ) ( 97,264,455 )
OTHER INCOME 17 51,219,404 13,362,850 7,138,280
OTHER CHARGES 14 ( 42,917 ) ( 76,839 ) ( 37,481 )
PROFIT BEFORE TAX 1,228,239,357 1,030,926,983 1,063,863,252 TAX EXPENSE 23 150,077,061 128,109,779 173,007,093
NET PROFIT P 1,078,162,296 P 902,817,204 P 890,856,159
Attributable to:
Owners of the parent company P 1,028,967,513 P 855,024,656 P 800,228,225 Non-controlling interest 49,194,783 47,792,548 90,627,934
1,078,162,296
P P 902,817,204 P 890,856,159
Earnings Per Share
Basic and Diluted 26 P 62.48 P 51.89 P 48.57
See Notes to Consolidated Financial Statements.
THE FAR EASTERN UNIVERSITY, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
FOR THE YEARS ENDED MARCH 31, 2015, 2014 AND 2013 (Amounts in Philippine Pesos)
Note 2015 2014 2013
NET PROFIT P 1,078,162,296 P 902,817,204 P 890,856,159
OTHER COMPREHENSIVE INCOME (LOSS) Item that will be reclassified subsequently
to profit or loss
Fair value gains on available-for-sale financial
assets - net of tax 11
Gains during the year 180,878,737 44,421,859 126,557,100 Fair value gains reclassified to profit or loss ( 86,555,138 ) ( 182,030,211 ) ( 30,420,305 ) Other Comprehensive Income (Loss) - Net of tax 94,323,599 ( 137,608,352 ) 96,136,795
TOTAL COMPREHENSIVE INCOME P 1,172,485,895 P 765,208,852 P 986,992,954
Attributable to:
Owners of the parent company P 1,123,291,112 P 717,416,304 P 896,365,020
Non-controlling interest 49,194,783 47,792,548 90,627,934
1,172,485,895
P P 765,208,852 P 986,992,954 THE FAR EASTERN UNIVERSITY, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED MARCH 31, 2015, 2014 AND 2013
(Amounts in Philippine Pesos)
See Notes to Consolidated Financial Statements.
Treasury Stock Revaluation Non-controlling
Notes Capital Stock - at Cost Reserves Appropriated Unappropriated Total Interest Total Equity
Balance at April 1, 2014 25 P 1,376,863,400 ( P 3,733,100 ) P 42,077,941 P 2,055,433,100 P 1,687,895,350 P 3,743,328,450 P 1,379,723,038 P 6,538,259,729 Transactions with owners
Issuance of shares of stock 25 - - - - - - 240,000,000 240,000,000
Acquisition of treasury stock 25 - ( 30,122,541 ) - - - - - ( 30,122,541 )
Stock dividend 25 274,572,000 - - ( 274,572,000 ) ( 274,572,000 ) - -
Cash dividends 25 - - - - ( 362,345,808 ) ( 362,345,808 ) ( 36,117,570 ) ( 398,463,378 )
Reduction in non-controlling interest 25 - - - - - - ( 3,329,404 ) ( 3,329,404 )
274,572,000
( 30,122,541 ) - - ( 636,917,808 ) ( 636,917,808 ) 200,553,026 ( 191,915,323 ) Appropriations of retained earnings
Appropriations for the period 25 - - - 35,800,000 ( 35,800,000 ) - - -
Reversal of appropriations during the period 25 - - - ( 56,730,000 ) 56,730,000 - - -
- - - ( 20,930,000 ) 20,930,000 - - -
Total comprehensive income
Net profit for the year - - - - 1,028,967,513 1,028,967,513 49,194,783 1,078,162,296
Other comprehensive income 11 - - 94,323,599 - - - - 94,323,599
- - 94,323,599 - 1,028,967,513 1,028,967,513 49,194,783 1,172,485,895
Balance at March 31, 2015 25 P 1,651,435,400 ( P 33,855,641 ) P 136,401,540 P 2,034,503,100 P 2,100,875,055 P 4,135,378,155 P 1,629,470,847 P 7,518,830,301
Balance at April 1, 2013 25 P 1,376,863,400 ( P 3,733,100 ) P 179,686,293 P 1,628,733,100 P 1,630,315,875 P 3,259,048,975 P 852,680,490 P 5,664,546,058 Transactions with owners
Issuance of shares of stock 25 - - - - - - 479,250,000 479,250,000
Cash dividends 25 - - - - ( 370,745,181 ) ( 370,745,181 ) - ( 370,745,181 )
- - - - ( 370,745,181 ) ( 370,745,181 ) 479,250,000 108,504,819
Appropriations of retained earnings
Appropriations for the year 25 - - - 432,500,000 ( 432,500,000 ) - - -
Reversal of appropriations during the year 25 - - - ( 5,800,000 ) 5,800,000 - - -
- - - 426,700,000 ( 426,700,000 ) - - -
Total comprehensive income (loss)
Net profit for the year - - - - 855,024,656 855,024,656 47,792,548 902,817,204
Other comprehensive loss 11 - - ( 137,608,352 ) - - - - ( 137,608,352 )
- - ( 137,608,352 ) - 855,024,656 855,024,656 47,792,548 765,208,852
Balance at March 31, 2014 25 P 1,376,863,400 ( P 3,733,100 ) P 42,077,941 P 2,055,433,100 P 1,687,895,350 P 3,743,328,450 P 1,379,723,038 P 6,538,259,729 THE FAR EASTERN UNIVERSITY, INCORPORATED AND SUBSIDIARIES
FOR THE YEARS ENDED MARCH 31, 2015, 2014 AND 2013 (Amounts in Philippine Pesos)
Retained Earnings Attributable to Owners of the Parent Company
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Treasury Stock Revaluation Non-controlling
Notes Capital Stock - at Cost Reserves Appropriated Unappropriated Total Interest Total Equity
Balance at April 1, 2012 25 P 1,376,863,400 ( P 3,733,100 ) P 83,549,498 P 1,718,503,100 P 1,069,868,922 P 2,788,372,022 P 481,302,556 P 4,726,354,376 Transactions with owners
Issuance of shares of stock 25 - - - - - - 280,750,000 280,750,000
Dividends declared 25 - - - - ( 329,551,272 ) ( 329,551,272 ) - ( 329,551,272 )
- - - - ( 329,551,272 ) ( 329,551,272 ) 280,750,000 ( 48,801,272 )
Appropriations of retained earnings
Appropriations for the period 25 - - - 120,230,000 ( 120,230,000 ) - - -
Reversal of appropriations during the year 25 - - - ( 210,000,000 ) 210,000,000 - - -
- - - ( 89,770,000 ) 89,770,000 - - -
Total comprehensive income
Net profit for the year - - - - 800,228,225 800,228,225 90,627,934 890,856,159
Other comprehensive income 11 - - 96,136,795 - - - - 96,136,795
- - 96,136,795 - 800,228,225 800,228,225 90,627,934 986,992,954
Balance at March 31, 2013 25 P 1,376,863,400 ( P 3,733,100 ) P 179,686,293 P 1,628,733,100 P 1,630,315,875 P 3,259,048,975 P 852,680,490 P 5,664,546,058 - 2 -
See Notes to Consolidated Financial Statements.
Attributable to Owners of the Parent Company
Retained Earnings
Notes 2015 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax P 1,228,239,357 P 1,030,926,983 P 1,063,863,252
Adjustments for:
Depreciation and amortization 20 216,597,678 146,856,813 113,128,527
Interest income 21 ( 117,582,349 ) ( 126,315,197 ) ( 173,385,612 )
Other investment income from available-for-sale financial assets 21 ( 89,197,997 ) ( 78,677,681 ) ( 56,816,626 )
Interest expense 21 35,189,430 1,067,645 2,592,997
Unrealized foreign exchange losses (gains) - net 21 14,929,392 ( 18,428,746 ) 10,765,730 Share in net losses of an associate 14 42,917 76,839 37,481 Impairment losses on receivables from related parties 21 - 954,264 83,905,728 Operating profit before working capital changes 1,288,218,428 956,460,920 1,044,091,477 Decrease (increase) in trade and other receivables ( 69,699,689 ) 80,712,423 ( 162,306,690 ) Decrease (increase) in financial asset at
fair value through profit or loss ( 340,800 ) 18,629,900 ( 18,629,900 )
Decrease (increase) in real estate held-for-sale - ( 36,689,243 ) 24,621,654
Decrease (increase) in other current assets 22,459,658 217,784,232 ( 6,667,134 ) Increase in trade and other payables 138,219,985 80,332,004 65,415,396 Increase (decrease) in derivative liability ( 14,433,500 ) 14,433,500 ( 1,145,972 ) Increase (decrease) in deferred revenues 31,941,048 8,889,534 ( 26,242,706 ) Increase (decrease) in other non-current liabilities 162,600 ( 3,323,385 ) 12,049,871
Cash generated from operations 1,396,527,730 1,337,229,885 931,185,996
Income taxes paid ( 134,455,958 ) ( 134,431,605 ) ( 163,080,412 )
Net Cash From Operating Activities 1,262,071,772 1,202,798,280 768,105,584
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of property and equipment 15 ( 600,066,483 ) ( 785,367,171 ) ( 1,529,116,913 )
Interest received 215,698,568 7,625,547 20,130,941
Advances to related parties 24 ( 86,645,801 ) ( 30,537,540 ) ( 19,717,134 ) Acquisitions of investment properties 16 ( 71,027,801 ) ( 133,315,204 ) ( 105,560,173 ) Net investment on available-for-sale financial assets ( 69,128,833 ) ( 225,735,693 ) ( 113,711,250 )
Advances from related parties 24 26,934,928 - -
Collections of advances to related parties 24 19,490,981 38,870,848 21,856,492
Proceeds from disposal of property and equipment - 27,326 -
Collection of loans receivable - - 55,200,000
Net Cash Used in Investing Activities ( 564,744,441 ) ( 1,128,431,887 ) ( 1,670,918,037 )
Forward
THE FAR EASTERN UNIVERSITY, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2015, 2014 AND 2013 (Amounts in Philippine Pesos)
Notes 2015 2014 2013 CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid 25 ( P 406,538,357 ) ( P 349,933,094 ) ( P 312,088,083 )
Proceeds from issuance of preferred stocks
to a related party under common management 24 240,000,000 479,250,000 280,750,000 Repayments of interest-bearing loans 18 ( 135,090,424 ) ( 7,421,452 ) ( 6,146,862 )
Interest paid 15 ( 35,189,430 ) ( 31,804,701 ) ( 7,696,765 )
Acquisition of treasury shares 25 ( 30,122,541 ) - -
Proceeds of interest-bearing loans 18 - 56,981,515 800,000,000
Net Cash From (Used in) Financing Activities ( 366,940,752 ) 147,072,268 754,818,290 Effect of Exchange Rate Changes
on Cash and Cash Equivalents ( 352,092 ) 86,664 ( 42,731 ) NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 330,034,487 221,525,325 ( 148,036,894 ) Effect of Deconsolidation
of a Subsidiary 1 ( 2,171,650 ) - -
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 559,584,420 338,059,095 486,095,989
CASH AND CASH EQUIVALENTS
AT END OF YEAR P 887,447,257 P 559,584,420 P 338,059,095
Supplemental Information on Noncash Investing and Financing Activities:
- 2 -
See Notes to Consolidated Financial Statements.
1) In 2015, 2014 and 2013, the University declared cash dividends totaling P362.3 million, P370.7 million and P329.6 million, respectively, of which, P6.0 million, P20.8 million and P17.5 million, respectively, were not paid in the year of declaration (see Notes 17 and 25).
2) In 2015 and 2014, certain assets amounting to P154.8 million and P12.9 million, respectively, were reclassified from the Property and Equipment account to the Investment Property account (see Notes 15 and 16).
3) In 2015, the University declared and issued stock dividend of P274.6 million (see Note 25).
4) In 2015, TMC - FRC Sports Performance and Physical Medicine Center, Inc. (SPARC) was deconsolidated (see Note 1).
5) In 2014 and 2013, the Group capitalized borrowing costs amounting to P30.7 million and P7.6 million, respectively (see Note 15).
- 1 -
THE FAR EASTERN UNIVERSITY, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2015, 2014 AND 2013
(Amounts in Philippine Pesos)
1. CORPORATE INFORMATION