Edustria, Inc., was established in 2019 as a joint venture between Far Eastern University and the Technological Institute of the Philippines. Election of board members including independent trustees for the financial year.
Far Eastern University, Incorporated and Subsidiaries
Report of Independent Auditors
CORPORATE INFORMATION 1 Background of the University
- Impact of COVID-19 Pandemic on the Group’s Operations
- Other Corporate Information
- Approval for Issuance of Consolidated Financial Statements
The group has also made the FEU Alabang campus available to Ayala Health vaccination clients. Despite the 11% decline in the Group's total student population in fiscal year 2021, last year's tuition discounts (see Note 18.3) and the cancellation of the third term for. The consolidated financial statements of the Group as of and for the years ended 31 May 2021 (including the comparative consolidated financial statements of and for the periods ended 31 May 2020 and 2019) were authorized for publication by the Group's Board of Administration (BOT) on August 17, 2021.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- Basis of Preparation of the Consolidated Financial Statements (a) Statement of Compliance with Philippine Financial Reporting Standards
- Adoption of New and Amended PFRS
- Basis of Consolidation
- Business Combinations
- Financial Instruments
- Real Estate Held-for-Sale
- Prepayments and Other Assets
- Property and Equipment
- Investment Properties
- 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 Per Share
- Segment Reporting
- Events After the End of the Reporting Period
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument. Prepayments and other current assets of the Group include inventory items such as books and merchandise. Other reserves refer to the amount attributable to the parent company arising from changes in NCI's ownership in the group.
SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
- Critical Management Judgments in Applying Accounting Policies
- Key Sources of Estimation Uncertainty
At present, all of the group's leasing agreements are defined as operational leasing agreements. k) Recognition of provisions and contingent liabilities. A significant change in these elements can affect the prices and value of the assets. For the purpose of assessing impairment, the group has taken as its starting point the capital value of the CGU (that is, RCI) with which the accounting value of goodwill is compared.
RISK MANAGEMENT OBJECTIVES AND POLICIES
- Market Risk (a) Foreign Currency Risk
- Credit Risk
- Liquidity Risk
For cash and cash equivalents and financial assets of a similar nature, the Group applies the low credit risk simplification. The Group analyzes the receivables on tuition and other school fees based on the number of semesters the receivables are outstanding. The Group judged that the expected loss rates for tuition fees and other receivables are a reasonable approximation of the loss rates for these financial assets.
CATEGORIES AND OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
- Carrying Amounts and Fair Values by Category
- Offsetting of Financial Assets and Financial Liabilities
Gross Amounts Recognized Net Related Amounts Not in Consolidated Presented Setoff v. For financial assets and financial liabilities that are subject to enforceable framework netting agreements or similar arrangements above, each arrangement between the Group and counterparties (i.e. the custodian bank) enables the net settlement of the relevant financial assets and financial liabilities (i.e. interest-bearing loans) when both decide to settle on a net basis. All other financial assets and financial liabilities are settled in the gross amount; however, each party to the financial instrument (ie, related parties) will have the option to settle all such amounts on a net basis with the approval of the BOT or BOD of both parties.
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
The fair value of the Group's interest-bearing loans is classified in Level 3 of the fair value hierarchy. The fair value of these non-financial assets was determined based on the following approaches: i) Measurement of the fair value for the land. Under this method, the highest estimated costs used in the valuation will result in the highest fair value of the properties.
SEGMENT INFORMATION 1 Geographic Segments
- Segment Assets and Liabilities
- Intersegment Transactions
- Analysis of Segment Information
- Reconciliation
There have been no changes in the valuation techniques used by the Group during the year for its non-financial assets. The Group's geographic segment, which is based on the location of all the Group's school campuses, for the years ended May and 2019 follows (in thousands). The following is a reconciliation of the Group's segment information to the key financial information presented in its consolidated financial statements (in thousands).
CASH AND CASH EQUIVALENTS
Income from interest earned on cash and its equivalents is presented as part of financial income in the consolidated statements of profit or loss (see note 20.1). The corresponding interest receivable from placements in May and 2019 is presented as part of the accrued interest under the trade account and other receivables in
TRADE AND OTHER RECEIVABLES This account is composed of the following
The Group uses a simplified IFRS 9 approach in measuring expected credit losses taking into account the expected loss rates determined by the credit impairment assessment observed for student receivables that are outstanding for at least two semesters and are unenrolled in the previous term. During the years ended May and 2019, tuition and other education fees receivable were assessed for impairment and the corresponding impairment losses were recognized as impairment losses on receivables in the consolidated statements of operations. Miscellaneous receivables mainly relate to receivables from intermediaries, which relate to receivables from the Group's trust funds and other various receivables from unrelated persons.
FINANCIAL ASSETS
- Financial Assets at FVTPL
- Financial Assets at FVOCI
- Investment Securities at Amortized Cost
Analyzes of the movements in the accounting value of the group's financial assets at FVOCI are presented below. An analysis of the movements in the carrying value of the group's investment securities at amortized cost for the years ended May and 2019 is presented below. A reconciliation of the provision for impairment of investment securities at amortized cost at the beginning and end of May 31, 2021 is presented below:
REAL ESTATE HELD-FOR-SALE
PROPERTY AND EQUIPMENT
In May and 2019, none of the Group's property and equipment is used as collateral for any of the Group's interest-bearing loans and borrowings. The table below describes the nature of the Group's leasing activities by type of right-of-use asset recognized in the consolidated statements of financial position. As of May 31, 2021 and 2020, no assets of the Group representing the right of use are used as collateral for any interest-bearing loans and borrowings of the Group.
LEASES
- Lease Liabilities
- Lease Payments Not Recognized as Liabilities
- Additional Profit or Loss and Cash Flow Information
In 2020, the Group realized a profit on sales of various equipment for an amount of P2.1 million and is presented as Other income – net account in the 2020 Consolidated Income Statement. Furthermore, the Group has to insure the leased assets and pay maintenance costs for such items in accordance with the lease contracts. The Group has elected not to recognize a lease liability for leases of low-value assets and short-term leases.
INVESTMENT PROPERTIES
- Related Income and Direct Expenses
- Fair Values of Investment Properties
Interest expense related to lease obligations amounted to P1.2 million and P1.2 million and is presented as part of interest expense under Finance costs in the 2021 and 2020 consolidated statements of profit or loss (see note 20.2). In 2020, the Group recognized gain on disposal of buildings and improvements in the amount of P38.0 million and is presented as part of other operating income in the 2020 statements of profit or loss. The total rental income earned by the Group from its investment properties amounting to P10.4 million P33.4 million and P43.8 million for the periods ended May and 2019, respectively, are presented as Rent in the income section of the consolidated statements. of profit or loss.
OTHER ASSETS
Information on fair value measurement and disclosures related to investment properties is presented in note 6.4. Long-term investments include investments in redeemable preferred stock and time deposits that bear effective interest rates ranging from 6.13% to 6.63% for the years ended May 31, 2021 and 2020 and mature more than one year from of the installation date at the end of each reporting period. In 2021, the Group recognized additional value adjustments for input VAT and long-term investments of P23.8 million and P3.7 million (see Note 19).
TRADE AND OTHER PAYABLES This account consists of
As of May and 2019, retention payable includes part of the consideration given for the acquisition of RCI, which is retained by the University to ensure that the selling shareholders of RCI comply with certain provisions of the share purchase agreement. On the other hand, the remaining portion of the retention payable relates to the amounts owed to the Group's contractors from its ongoing construction projects (see Note 12).
INTEREST-BEARING LOANS
All interest-bearing loans and Group loans are pure loans; in May and 2019, there are no funds used and/or required as collateral. The total interest that the Group has on all these loans, which do not already include the capitalization costs of borrowing the Group's real estate and equipment, is presented as part of the interest expense under finance costs in the consolidated statements of profit and loss (see notes 12 and 20.2), while any outstanding obligations for interest recognized as part of pre-charged expenses in the account of business and other liabilities in the consolidated account. Loans obtained from a local commercial bank are subject to loan covenants valid for the years ending May and 2019, respectively, which require the Group to maintain a debt service coverage ratio of at least 1.2x and a debt to equity ratio of no more than 2:1.
EDUCATIONAL REVENUES
- Core Revenue Stream
- Unearned Tuition Fees
- Tuition Fee Rebates
The Group generates income from transactions related to tuition fees, other school fees and other school-related activities such as the sale of school supplies and books. The Group presents below the breakdown of its revenue by school units for the years ending May and 2019. These will be recognized as revenue once the performance obligation of the schools within the Group has been met.
OPERATING EXPENSES Operating expenses consist of
The remaining second semester of the 2019-2020 school year was continued via full online learning platform, the strategic implementation of Canvas since three school years ago, facilitated the group's rapid transition to full online mode. But with the switch of the learning platform, the group found it necessary to return unused miscellaneous fees through a rebate to the students totaling P115.9 million per of student learning as quarantine restrictions follow.
FINANCE INCOME AND FINANCE COSTS 1 Finance Income
- Finance Costs
In 2019, the University and EACCI recognized and paid base tax delinquencies amounting to P225.3 million, presented as part of Taxes and Licenses, covering taxable calendar years 2009 to 2018, as assessed and overdue covered by tax amnesty by the local government of the city of Manila. Other expenses include expenses incurred by the Group for software licenses and subscriptions, transportation and travel, research and other miscellaneous expenses. In 2019 and 2019, interest expense of P6.8 million, P17.0 million and P38.4 million, respectively, has been capitalized as part of work in progress under the property and equipment account, which arose solely from specific borrowings (see Note 12).
EMPLOYEES’ HEALTH, WELFARE AND RETIREMENT FUND (a) Characteristics of the Defined Contribution and Defined Benefit Plans
The present value of the defined benefit obligation is calculated using a discount rate determined by reference to government bond market yields. The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of the plan participants both during and after their employment and with their future salaries. Consequently, increases in the life expectancy and salary of plan participants will result in an increase in the plan's liability.
