Report of Independent Auditors
24. EQUITY
24.5 Subsidiaries with Material Non-controlling Interest
(a) FRC
The University holds 38.18%, 38.04% and 37.52% interest in FRC as of May 31, 2021, 2020 and 2019, respectively. Management considers that the University has de facto control over FRC even though it holds less than 50% of the voting shares of stock of FRC, because it is exposed or has right to variable returns through its power over FRC [see Notes 1.1 and 3.1(i)]. The accumulated NCI of FRC amounted to P785.5 million, P801.9 million and P814.7 million as of May 31, 2021, 2021 and 2019, respectively.
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A summary of financial information of FRC as of and for the years ended May 31, 2021, 2020 and 2019 before intragroup eliminations are shown below.
2021 2020 2019
Current assets P 361,377,412 P 321,925,382 P 302,698,009
Non-current assets 1,139,837,024 1,132,066,986 1,077,932,619
Current liabilities 39,334,609 53,845,991 24,316,472
Non-current liabilites 38,835,480 28,610,615 28,311,279 Total equity 1,423,044,347 1,371,535,762 1,328,002,877
Total revenue 118,487,190 198,056,890 151,811,691
Net profit for the year 44,182,487 99,498,571 88,596,837 Other comprehensive income
(loss) for the year 7,326,098 ( 3,936,554 ) ( 1,694,419 ) Total comprehensive income
for the year 51,508,585 95,562,017 80,735210
Net cash from (used in)
operating activities 77,583,687 ( 4,346,457) 93,631,571 Net cash from (used in)
investing activities ( 79,202,878) 7,039,282 ( 72,201,069 ) Net cash used in financing
activities ( 274,729) ( 23,579,708) ( 13,502,726 )
( P 1,893,920) ( P 20,886,883) P 7,927,776
(b) EACCI and FEUAI
Prior to 2017, EACCI issued its newly authorized preferred shares to EAEF, a related party under common management. In 2020 and 2019, EACCI issued additional authorized preferred shares to NREF, a related party under common management (see Note 23.1). Total cost of preferred shares issued and outstanding amounts to P1.2 billion as of May 31, 2021 and 2020 and P1.1 billion as of May 31, 2019.
In 2021, 2020 and 2019, FEUAI also issued its newly authorized preferred shares to EAEF (see Note 23.1). Total cost of preferred shares issued and outstanding amounts to P750.0 million, P728.0 million and P702.0 million as of May 31, 2021, 2020 and 2019, respectively.
Both non-controlling interests in EACCI and FEUAI relate to non-voting shares.
EACCI and FEUAI’s preferred shares have the following features:
(a) Holders of the preferred stock have no pre-emptive right to subscribe to any or all issues or other disposition of shares of common stock or preferred stock of EACCI or FEUAI, including treasury stock, if any;
(b) Subject to availability of retained earnings and sufficient cash as may be
determined by EACCI’s BOT or FEUAI’s BOD, holders of the preferred stock are entitled to receive, out of unrestricted retained earnings of the EACCI or FEUAI, non-cumulative dividends at the rate of 3% per annum based on the issue value of each share, payable annually on such date as may be determined by the EACCI’s BOT or FEUAI’s BOD from time to time;
(c) Preferred stock shall be non-voting (except in instances specifically provided by law) and non-participating as to the payment of dividends;
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(d) Preferred stock may be redeemed at the option of the issuer regardless of existence of unrestricted retained earnings at an issue price equal to the issue value and under terms and conditions as determined by the EACCI’s BOT or FEUAI’s BOD; and,
(e) In the event of any voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of EACCI or FEUAI’s operations, the holders of preferred stock shall have preference and priority as to the net assets of EACCI or FEUAI or proceeds thereof over the holders of common stock.
During the years ended May 31, 2021, 2020 and 2019, the BOT of EACCI declared cash dividend to all of their stockholders. Accordingly, EAEF received P30.0 million, P27.5 million and P27.5 million from each of the said declarations in 2021, 2020 and 2019, respectively.
A summary of financial information of FEUAI and EACCI as of and for the years ended May 31, 2021, 2020 and 2019, before intragroup eliminations are shown below and in the succeeding page (in thousands).
EACCI FEUAI May 31, 2021
Current assets P 1,312,347 P 87,042
Non-current assets 2,217,893 1,832,570
Current liabilities 270,402 193,466
Non-current liabilities 212,284 162,000
Total equity 3,047,553 1,564,146
Total revenue 898,858 247,978
Net income for the year 443,335 24,730
Other comprehensive income
for the year 23,716 -
Total comprehensive income
for the year 467,051 24,730
Net cash from operating activities 523,641 93,395 Net cash used in investing activities ( 1,203,919 ) ( 13,591 ) Net cash used in financing activities ( 162,689 ) ( 87,691 ) (P 842,967 ) (P 7,887 ) May 31, 2020
Current assets P 1,860,273 P 112,785
Non-current assets 1,384,587 1,923,861
Current liabilities 288,943 312,231
Non-current liabilities 553,883 207,000
Total equity 2,690,977 1,517,414
Total revenue 758,062 288,003
Net income for the year 259,128 58,519
Other comprehensive income
for the year 2,065 -
Total comprehensive income
for the year 261,193 58,519
Net cash from operating activities 330,366 123,801 Net cash used in investing activities ( 28,493 ) ( 141,603 ) Net cash used in financing activities ( 22,010 ) ( 67,000 ) P 279,863 ( P 84,802 )
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EACCI FEUAI May 31, 2019
Current assets P 1,262,321 P 195,763
Non-current assets 1,455,043 1,854,664
Current liabilities 219,988 317,608
Non-current liabilities 93 300,000
Total equity 2,497,283 1,432,819
Total revenue 908,383 132,716
Net income (loss) for the year 416,511 ( 2,571 ) Other comprehensive income
for the year 11,206 -
Total comprehensive income
(loss) for the year 427,717 ( 2,571 )
Net cash from (used in)
operating activities 1,250,030 ( 24,676 )
Net cash used in investing activities ( 231,428 ) ( 364,133 ) Net cash from (used in)
financing activities ( 303,340 ) 473,000
P 715,262 P 84,191 (c) Edustria
Upon incorporation of Edustria, the Parent Company subscribed to 225.0 million shares, representing 51% of the total issued and outstanding shares of Edustria. The NCI of Edustria, amounting to P171.5 million is presented as part of Non-controlling Interest in the 2021 and 2020 consolidated statements of financial position.
A summary of financial information of Edustria as of for the years ended May 31, 2021 and 2020 before intragroup eliminations are shown below.
2021 2020
Current assets P 239,091,800 P 282,581,121
Non-current assets 80,842,303 85,946,223
Current liabilities 9,487,814 8,760.304
Non-current liabilities 19,025,860 26,230,652
Total equity 291,420,429 333,536,388
Total revenue 5,334,581 -
Net loss for the year ( 25,652,347 ) ( 16,463,612 ) Other comprehensive income
for the year - -
Total comprehensive loss
for the year ( 25,652,347 ) ( 16,463,612 )
Net cash used in operating activities ( 10,376,559 ) ( 14,024,851 ) Net cash used in investing activities ( 10,296,251 ) ( 50,935,849 ) Net cash from (used in) financing
activities ( 6,778,913 ) 347,218,907
( P 27,451,723 ) P 282,258,207
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