The above nominees were submitted to the Far Eastern University Nomination Committee by a shareholder, Ms. Aurelio Montinola III, 67, Filipino: Chairman of the Board of Trustees (August 2013 to present), Vice Chairman (June 1989 to August 2013), Far Eastern University, Inc.
Angelina Palanca Jose, 65, Filipino: Trustee (June 1990 to present), Far Eastern University, Inc
Montinola, 60, Philippines: Vice President Corporate Affairs, Far Eastern University, Inc. November 2013 to date) University, Inc. Nagal, 60, Filipino: Controller, Far Eastern University, Inc. 1996 to present) Other corporate affiliation: Director and Treasurer, FEU High School, Inc.
Compensation of Trustees and Executive Officers
The External Auditor, Punongbayan & Araullo, audited the Company's financial statements for the fiscal year ended May 31, 2018. The Signatory Partners of the External Auditor will be rotated every five (5) years of engagement.
Item 8: Compensation Plans
ISSUANCE AND EXCHANGE OF SECURITIES
There are no proceedings or actions to be taken to amend any class of securities of the Company or to issue or authorize the issuance of one class of securities of the Company in exchange for outstanding securities of another class. There are no matters or actions to be taken up at the Annual General Meeting in respect of merger, consolidation, purchase by sale or liquidation of the Company.
Item 13: Acquisition or Disposition of Property
There are no matters or actions to be taken in connection with the authorization or issuance of the securities. The audited financial statements as of May 31, 2018, Management's Discussion and Analysis, market price of shares and dividends and other data related to the Company's financial information are attached hereto as Appendix F.
Item 14: Restatement of Accounts
There is no business to be transacted at the meeting that will not require a vote of the stockholders on the record date. Ratification and confirmation of all actions during the past year of the Board of Administrators, Board and Management Committees, and Management and other Officers.
Interest of Certain Persons in Matters to be Acted Upon
ANNEXES
ANNEX A
- Call of meeting to order
- Proof of notice of meeting and determination of quorum
- Approval of minutes of the annual meeting of stockholders held on 21 October 2017
- Academic report of the President
- Approval of Annual Report and Audited Financial Statements
- Ratification and confirmation of all actions during the past year of the Board of Trustees, Board and Management Committees, and Management and other
- Election of Trustees, including Independent Trustees
- Appointment of External Auditor
- Consideration of such other business as may properly come before the meeting
- Adjournment
In his/her discretion, the attorney-in-fact and proxy named above are authorized to vote on such other matters as may be properly brought before the meeting. If no direction is given, this proxy will be voted "for" the election of all nominees and "for" the approval of the matters set forth above and "for" such other matters as may properly come before the meeting in such manner as that is described in the Information Statement and/or as recommended by the management or the board.
ANNEX F
Brief Discussion of Business
- FAR EASTERN UNIVERSITY
- EAST ASIA COMPUTER CENTER, INC. (EACCI)
Bachelor of Science in Business Administration, majoring in Internal Auditing (leading to Bachelor of Science in Accountancy). The Bachelor of Science in Nursing is the only on-campus academic program in Manila accredited by PAASCU.
FEU INSTITUTE OF TECHNOLOGY
- FEU ALABANG
- FAR EASTERN COLLEGE SILANG, INC
- FEU HIGH SCHOOL, INC
- ROOSEVELT COLLEGE, INC
Value-added courses are primarily embedded to prepare FEU Diliman basic education graduates to pursue higher education in the best universities in the country. Shortly after its founding, the academy ranked among the top 20 of the 70 private high schools in the Philippines.
Number of Shareholders
There are no sales of unregistered or exempt securities, including recent issues of securities, constituting an exempt transaction.
Management’s Discussion and Analysis or Plan of Operation
- Test of Liquidity
- Test of Solvency
- Test of Profitability
- Product/Service Standards
- Market Acceptability
Below is a four-year table showing the sufficiency of the Group's net income compared to the total cash dividend declared and paid. Below is the University's first semester enrollment trend for the past five years.
Corporate Governance
The minutes of the FEU shareholders' annual meeting on 21 October 2017 (a Saturday) were published on the FEU website on 25 October 2017, three working days after the meeting closed. Note: In the event of the death, resignation or termination of office of the officer designated as contact person, such occurrence shall be reported to the Commission within thirty (30) calendar days of its occurrence with information and complete contact information for the new contact person designated.
COVER SHEET COVER SHEET COVER SHEET
CORPORATE INFORMATION 1 Background of the University
- Acquisition of New Subsidiaries
- Change in Fiscal Year
- Other Corporate Information
- Approval for Issuance of Consolidated Financial Statements
To determine the goodwill, the university determined the fair value of the identified net assets as at 12 May 2017. The university's application for fiscal year amendment was approved by the Bureau of Internal Revenue (BIR) on June 30, 2016.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- Basis of Preparation of the Consolidated Financial Statements (a) Statement of Compliance with Philippine Financial Reporting Standards
- Adoption of Amended PFRS
- Basis of Consolidation
- Business Combinations
- Financial Assets
- Real Estate Held-for-Sale
- Prepayments and Other Assets
- Property and Equipment
- Investment Properties
- Financial Liabilities
- Offsetting Financial Instruments
- Provisions and Contingencies
- Revenue and Expense Recognition
- Leases
- Foreign Currency Transactions and Translation
- Impairment of Non-financial Assets
- Employee Benefits
- Borrowing Costs
- Income Taxes
- Related Party Transactions and Relationships
- Equity
- Earnings (Loss) Per Share
- Segment Reporting
- Events After the End of the Reporting Period
Items included in the Group's consolidated financial statements are measured using its functional currency. Financial assets are recognized when the Group becomes a party to the contractual terms of the financial instrument.
SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
- Critical Management Judgments in Applying Accounting Policies
- Key Sources of Estimation Uncertainty
A significant change in these elements can affect the prices and value of the assets. To assess impairment, the Group relies on the value in use of the CGU (ie RCI) against which the carrying amount of goodwill is compared.
RISK MANAGEMENT OBJECTIVES AND POLICIES
- Market Risk (a) Foreign Currency Risk
- Credit Risk
- Liquidity Risk
Nevertheless, the above analysis is considered representative of the Group's currency risk. None of the Group's financial assets are secured by collateral or other credit enhancements, except for the following cash and cash equivalents.
CATEGORIES AND OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
- Carrying Amounts and Fair Values by Category
- Offsetting of Financial Assets and Financial Liabilities
See notes 2.5 and 2.10 for a description of the accounting policies used for each category of financial instruments. A description of the group's risk management objectives and policies for financial instruments can be found in note 4.
FAIR VALUE MEASUREMENT AND DISCLOSURES 1 Fair Value Hierarchy
- Financial Instruments Measurement at Fair Value
- Financial Instruments Measured at Amortized Cost for which Fair Value is Disclosed
- Fair Value Measurement for Non-financial Assets (a) Determining Fair Value of Investment Properties
- Business Segments
- Segment Assets and Liabilities
- Intersegment Transactions
- Analysis of Segment Information
- Reconciliation
The preceding tables show the fair value hierarchy of the Group's classes of financial assets and financial liabilities measured at fair value in the consolidated statements of financial position on a recurring basis from:. This is followed by the information on how the fair values of the Group's classes of financial assets and financial liabilities are determined. a) Shares Securities.
CASH AND CASH EQUIVALENTS
TRADE AND OTHER RECEIVABLES This account is composed of the following
Shown below is a reconciliation of the provision for impairment of receivables at the beginning and end of each accounting period. Full compensation is provided for receivables from students for uncollected tuition fees for the previous school term, when the specific student from whom it is to be paid does not register for the following school term.
CROSS-CURRENCY SWAPS
The provision for impairment of receivables from students per May and 2016 relate to amounts that have been outstanding for more than one semester and specifically identified as impaired. From May and 2016, no provision has been made for impairment of all other receivables, as the management believes that these can be recovered in full.
FINANCIAL ASSETS 1 AFS Financial Assets
- Held-to-Maturity Investments
P3 87.5 million and P3 16.2 million for the periods ended May and 2016, respectively, were reinvested as part of the increase in available-for-sale financial assets and are presented separately as interest income on available-for-sale financial assets, and as another. Net amortization of discount for the years ended May 31, 2018 and 2017 of P4.2 million P3.8 million is presented as part of other investment income from available-for-sale financial assets and HTM investments (see explanation 21.1).
REAL ESTATE HELD-FOR-SALE
As of May 31, 2018 and 2017, certain foreign currency denominated HTM investments of P190.5 million and P238.5 million, respectively, are subject to. An analysis of the movements in the carrying amount of the Group's HTM investments for the years ended 31 May 2018 and 2017 is presented below.
INVESTMENT IN AN ASSOCIATE This account consists of the following
PROPERTY AND EQUIPMENT
Construction in progress relates to the costs of the construction of the EACCI school building and the ongoing construction of the FEUAI school building. In 2018, the group adjusted its consolidated accounts per and for the year ended May 31, 2017, because a portion of the cost reclassifications to land attributable to the Group of P381.2 million was inadvertently misallocated between property and equipment and investment property [see Note 2.1(d)].
INVESTMENT PROPERTIES
- Related Income and Direct Expenses
- Fair Values of Investment Properties
The carrying amount of property and equipment for the period ended May 31, 2016 includes the capitalized borrowing costs of P3.9 million incurred on bank loans obtained to finance the purchase of land and the eventual construction of the school building, which is part of the qualifying asset to be leased out to FEUAI. For the year ended May 31, 2018, borrowing costs of P15.9 million were (nil in 2017) capitalized by applying the effective interest rate of 8.53% on said property after the transfer of ownership of the school building from the parent company to FEUAI in 2017.
OTHER ASSETS
The total rental income earned by the Group from its investment properties amounting to P42.0 million, P43.4 million and P10.8 million respectively for the periods ending May and 2016 is presented as part of Other operating income in the consolidated statements of profit or loss. These investments have maturities of more than three months, but within one year of the end of each accounting period.
TRADE AND OTHER PAYABLES This account consists of
Other short-term assets include merchandise inventories relating to the Group's bookstore and the current portion of refundable deposits. Related earnings are presented as part of other income in the consolidated statements of income for the years ended May 31, 2018 and 2017.
INTEREST-BEARING LOANS
Related interest amounting to P4.1 million was recognized in 2018. i) In December 2017, the University obtained a P60.0 million interest-bearing loan from a local commercial bank for additional working capital. Related interest amounting to P1.1 million was recognized for the year ended May 31, 2018. j) In March 2018, the University obtained a P80.0 million interest-bearing loan from a local commercial bank for additional working capital.
EDUCATIONAL REVENUES
COSTS AND OPERATING EXPENSES Costs and operating expenses consist of
FINANCE INCOME AND FINANCE COSTS 1 Finance Income
- Finance Costs
EMPLOYEES’ HEALTH, WELFARE AND RETIREMENT FUND (a) Characteristics of the Defined Contribution and Defined Benefit Plans
Movements in the present value of pension liabilities recognized in the accounting books are as follows: The present value of defined benefit liabilities is calculated using a discount rate determined based on the market yields of government bonds.
INCOME TAXES
The net deferred tax assets of the University are not allowed to be offset against net deferred tax liabilities of other subsidiaries, or vice versa, for consolidation purposes. The total unrecognized deferred tax assets and related sources as at the reporting dates are presented below.
RELATED PARTY TRANSACTIONS
- Subscription of Preferred Shares of Stock of EACCI
- Noninterest-bearing Advances (a) Advances of the University to a Related Party
- Management Services
- Leases
- Retirement Funds
- Key Management Personnel Compensation
- Advances from RCI’s BOT
- Financial Guaranty for Subsidiaries’ Loans
- Reimbursement of Expenses
- Others
P4.9 million, P9.2 million and P7.9 million as of May and 2016, respectively, are presented as part of Non-trade advances to related parties under the Trade and other receivables account in the consolidated balance sheet (see Note 9). Outstanding payables to non-controlling interests amounted to P1.5 million as at May and 2016 and are presented as part of Other payables to related parties under the Trade and other payables account in the consolidated balance sheet (see Note 17).
EQUITY
- Capital Stock
- Treasury Stock
- Retained Earnings
In March 2017, the BOT approved that for and as consideration for the loan or credit facilities obtained by a subsidiary of the University, where the University owns at least 75% of the outstanding voting capital of such subsidiary, from a local commercial bank, the University gives its full consent and authority to provide surety for the subsidiary's obligations arising from any loan or disposition of any credit. During the periods ended May 31, 2017 and 2016 (nil in 2018), the University billed EAEF for related services such as security and janitorial services, light and water and other utilities at cost.
