Any questions regarding the data contained herein should be directed directly to the disclosing party's Corporate Information Officer. The consolidated financial position of Far Eastern University, Incorporated and subsidiaries (the Group) remains stable as of 31 August 2021, which is characterized by sound fundamentals in terms of the Group's liquidity and solvency. FEU's management remains aware of the Group's exposure to risks in its business environment.
Asia Pacific Institute of Event Management (APIEM) accreditation of the BS in Tourism Management program as a Center of Excellence. Edustria was founded by the university in partnership with the Philippine Institute of Technology.
CORPORATE INFORMATION 1 Background of the University
Apart from FRC, a real estate company that leases most of its investment properties to the University and other related parties, all other directly owned subsidiaries operate as educational institutions offering basic education, junior and senior high school and/or tertiary and postgraduate courses of study. Before ceasing its operations, RCEE was engaged in the sale of educational school supplies and food items at various campuses of RCI.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies and methods of calculation used in the preparation of this CCFS are consistent with those applied in the ACFS from and for the fiscal year ended 31 May 2021. There are new PFRS, annual improvements and interpretations to the existing standards that are effective for periods after 2022, but were not adopted early in the preparation of the CCFS. The CCFS therefore does not reflect the impact of any adoption of these new PFVS, annual improvements and interpretations to existing standards that are effective for periods after 2022.
The reclassification of some accounts in the comparative prior period presented has been made in accordance with the presentation of the current period so that comparability is not impaired. The Group presents a consolidated statement of comprehensive income separately from a consolidated statement of profit or loss in its annual financial statements and uses this format for this CCFS as well. As permitted by the PFRS, these subsidiaries take into account their school years (i.e. trimester and half-year), so different reporting dates (non-uniform year-ends) are used compared to the university.
These CCFS are presented in Philippine pesos, the Group's functional currency, and all values represent absolute amounts unless otherwise stated. Functional currency is the currency of the primary economic environment in which the Group operates. a) Applicable in the financial year 2022, which are relevant for the group. The only relevant amendment, namely PFRS 16 (Amendments), Leases – COVID-19-related lease concessions beyond 30 June 2021 (effective from 1 April 2021), extends for one year the use of practical means, not to assess whether rent concessions that reduce payments until June 30, 2022 that occur as a direct consequence of the COVID-19 pandemic are lease changes and instead account for these rent concessions as if they were not lease changes.
There are other amendments and annual improvements to existing standards effective for annual periods after fiscal year 2022 that have been approved by the Financial Reporting Standards Council.
USE OF ACCOUNTING JUDGMENTS AND ESTIMATES
RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's exposure to price risk arises from its investments in shares classified as part of Financial assets on FVTPL and Financial assets on FVOCI accounts in the consolidated statement of financial position. In accordance with the group's policies, no specific hedging activities are carried out in relation to these investments. The investments are continuously monitored; to ensure that returns from these equity instruments are utilized or reinvested in a timely manner and that voting rights arising from these equity instruments are in the group's favour.
Credit risk represents the loss the Group would incur if the counterparty defaults on its contractual obligations. The Group's exposure to credit risk on its other receivables from debtors and related parties is managed through close monitoring of accounts and setting limits. Also, none of the Group's financial assets are secured by collateral or other credit protection.
In relation to the credit risk arising from its financial assets, the Group's maximum exposure is equal to the book value of these instruments. Apart from credit risk exposure for the Group's receivables from students, the risk is minimal as these financial assets and investments are with reputable corporations, financial institutions and/or related parties. The Group has no deferred but unimpaired financial assets at the end of each period.
The Group's management considers that all of its financial assets are not impaired and of good credit quality, except for those secured by provision for impairment at the end of the reporting periods.
CATEGORIES AND OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Financial controls and procedures are in place to ensure that sufficient cash is maintained to meet day-to-day operating and working capital needs. Management closely monitors the Group's future and contingent liabilities and ensures that future cash collections are sufficient to meet them in accordance with internal policies. All other financial assets and financial liabilities are settled on a gross basis; however, each party to the financial instrument (ie related parties) will have the option to settle all such amounts on a net basis through the approval of both parties' BOT or BOD.
As such, the Group's outstanding receivables from and payables to the same related parties, if any, could potentially be offset to the extent of their corresponding outstanding balances.
FAIR VALUE MEASUREMENT AND DISCLOSURES 1 Fair Value Hierarchy
The above tables show the hierarchy of fair value of the classes of financial assets and financial liabilities of the Group measured at fair value in the consolidated statements of financial position on a recurring basis from:. The fair value of the Group's debt securities, which consist of government and corporate bonds, is estimated based on the quoted bid price in an active market at the end of the reporting period and is classified in Level 1. i) Fair values of government securities issued by the Philippine government , are determined based on the Bloomberg reference price, which used BVAL. As of 31 August and 31 May 2021, respectively, the fair value of debt securities classified as investments at amortized cost amounted to PSP 602.2 million and PSP 590.7 million, respectively, which is level 1 in the fair value hierarchy (see note 5.1 ).
The fair values of the Group's interest-bearing loans are classified under Level 3 of the fair value hierarchy. Consequently, the Group no longer presented a comparison of their fair values with their carrying amounts and accordingly their level in the fair value hierarchy. From 31 August and 31 May 2021, the total estimated fair value of the Group's parcels of land and buildings and improvements classified as investment property is categorized as Level 3 in the fair value hierarchy.
The fair values of these non-financial assets were determined based on the following approaches: i) Measuring the fair value of land. Under this approach, the higher estimated costs used in the valuation will result in a higher fair value of the properties. Also, on 31 August and 31 May 2021, there were no transfers to or from different levels of the fair value hierarchy.
There were no transfers into or out of the Level 3 fair value hierarchy during the periods ended August 31 and May 31, 2021.
SEGMENT INFORMATION 1 Business Segments
There has been no change in the valuation techniques used by the Group for its non-financial assets during the period. Below is a reconciliation of the Group's segment information with the key financial information presented in its CCFS (in thousands).
PROPERTY AND EQUIPMENT
LEASES
The current portion of the lease liabilities is presented in the consolidated balance sheet as part of Trade and other payables for an amount of P10.0 million as of August 31 and May 31, 2021. The non-current portion for an amount of P24.5 million is presented separately in the consolidated balance sheet as at 31 August and 31 May 2021.
INVESTMENT PROPERTIES
Based on the latest valuation report by an independent appraiser, the total fair value of investment property amounted to P293.5 million as of August 31 and May 31, 2021. Fair value measurement information and disclosures related to investment property are presented in Note 6.4.
INTEREST-BEARING LOANS
EQUITY
Below is the ownership structure of the university's outstanding shares as of August 31 and May 31, 2021. All of the university's shares are listed on the PSE, there has been no subsequent listing since first listing in 1986 at a bid price of P100. This account contains the common stock of the university acquired by FRC on various dates during and held on August 31 and May 31, 2021.
A portion of the University's retained earnings is limited by the declaration of dividend to the cost of treasury shares, excluding the amount purchased and held by FRC as this is considered a cross-ownership at the end of the reporting period. Budget allocations are estimated and updated annually, changes in retained earnings are shown below. Management considers that the University has de facto control over FRC even though it owns less than 50% of the voting stock of FRC because it is exposed to or entitled to variable returns through its power over the FRC.
The total cost of issued and outstanding preferred shares amounts to P1.2 billion as of August 31 and May 31, 2021. The total cost of issued and outstanding preferred shares amounts to P750.0 million as of August 31 and May 31, 2021. After incorporation of Edustria, the Parent Company subscribed to 255.0 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 the Non-Controlling Interest Account in the condensed consolidated statements of financial position.
LOSS PER SHARE
COMMITMENTS AND CONTINGENCIES
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group aims to provide returns on equity to shareholders while managing operational
SEASONAL FLUCTUATIONS
The second semester enrollment is approximately at least 90% of the first semester's enrollment, while the half term is the lowest at an approximate at least 30%. The maximum load, in terms of subject units, of a student during the half-year term is only nine units compared to the 21 to 24 units during the first and second semesters. The tuition fee increase, if any, usually takes effect during the first semester of a particular SY.
Old rates are therefore followed during the summer term while new rates are applied during the first and second semesters. Since the first quarter is from June to August, the revenue and the resulting net income for the first quarter are at the lowest among the four quarters of the fiscal year.
EVENTS AFTER THE END OF THE REPORTING PERIOD
