As of 31 August 2022, the consolidated financial position of the group continues to show stability, characterized above all by the group's strong liquidity and solvency. Shown below is the group's income from education and scholarships awarded to students over the past ten years.
CORPORATE INFORMATION
A notable rise in the World Universities with Real Impact (WURI) rankings was seen as FEU ranked 74th in the Global Top 100 Innovative Universities in 2022 from its 79th and 91st positions in 2021 and 2020 respectively. in 2020, FEU was the first university in the Philippines included in the world's top 100. Compared to other educational ranking systems that assess quantitative metrics such as the number of journal publications and graduate employment rates, the WURI assesses the flexibility and adaptability of universities. innovative efforts to nurture contributions to a workforce that meets the demands of industry and society at large.
Except for FRC, a real estate company that leases the majority of its investment properties to the university and other related parties, all other directly owned subsidiaries operate as educational institutions offering primary, junior and senior secondary education and/or tertiary and postgraduate degree programs. RCEE was engaged in the sale of educational school supplies and food at several RCI campuses before it ceased operations.
BASIS OF PREPARATION OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CHANGES TO ACCOUNTING POLICIES
USE OF ACCOUNTING JUDGEMENTS AND ESTIMATES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1 Application of PFRS
Functional currency is the currency of the primary economic environment in which the Group operates. In accordance with PFRS 13, Fair Value Measurement, the fair value of financial assets and financial liabilities and non-financial assets that are measured at fair value on a recurring or non-recurring basis and those assets and liabilities that are not measured at fair value but for which fair value is disclosed in accordance with other relevant PFRS are categorized into three levels based on the importance of inputs used to determine fair value. The fair value of quoted common and preferred shares was measured based on their market prices stated in the PSE at the end of each reporting period.
On the other hand, the fair value of investments in UITF is generally measured based on the net asset value of the Group's investment, calculated and determined at the end of each reporting period based on the closing market and trading prices of the securities that make up the fund's portfolio. The fair value of the Group's golf club shares is derived from a market that is not considered active due to the lack of trading activity among market participants at or near the end of the reporting period. The fair value of the Group's debt securities, which consist of government and corporate bonds, is estimated based on the quoted offer price on the active market at the end of the reporting period.
SEGMENT INFORMATION 1 Business Segments
FINANCIAL ASSETS AND LIABILITIES 1 Carrying Amounts and Fair Values by Category
As of August 31 and May 31, 2022, the fair value of debt securities classified as investments at amortized cost was P644.5 million P642.3 million, which is Level 1 in the fair value hierarchy (see note 7.2). ). For interest-bearing loans with a maturity of more than one year, the estimated fair value represents the discounted amount of future cash flows expected to be paid, discounted at current market rates. The fair values of the Group's interest-bearing loans are classified in level 3 of the fair value hierarchy.
With the exception of the investments in securities at amortized cost and interest-bearing borrowings, management has determined that due to the short maturities of the Group's other financial assets and financial liabilities measured at amortized cost, their fair values as of August 31 and May 31, 2022 , equal to or approaching their book value. Consequently, the Group no longer presented a comparison of their fair value with their carrying amount and their level in the fair value hierarchy accordingly. Nevertheless, if presented in the hierarchy, only cash and cash equivalents and short-term investments would fall under level 1 and the rest would fall under level 3.
INVESTMENT PROPERTIES
A reconciliation of the carrying amounts of property, plant and equipment at the beginning and end of the three months ended August 31, 2022 and the year ended May 31, 2022 is presented below. Total rental income earned by the Group from its investment properties amounted to P5.4 million and P11.1 million for the three months ended August 31, 2022 and 2021, respectively. Direct operating expenses, which include depreciation and amortization, insurance and property taxes incurred by the Group in relation to investment properties, are presented as part of depreciation and amortization, property insurance, and taxes and licenses under Costs and Operating Expenses in the consolidated statements of profit or loss.
The fair values (which are at level 3) of the Group's investment properties presented below are determined on the basis of the latest valuations carried out by an independent valuer in July 2022 covering the period ended 31 August 2022 and the year ended 31 May 2022 The valuation process was carried out by the valuer with appropriate qualifications and recent experience in the valuation of similar properties in the relevant locations, to some extent in discussion with the Group's management with regard to determining inputs such as size, age, and the condition of the land and buildings, and the comparable prices in the corresponding property placement with an average of 5%. There were no known events that may have devalued the properties from the most recent assessment.
PROPERTY AND EQUIPMENT
LEASES
Current portion of lease obligations is presented in the consolidated statement of financial position as part of Trade and other payables amounting to P11.9 million on August 31 and May 31, 2022. The non-operating portion amounting to P13.1 million is presented separately in the consolidated statement of financial position as at 31 August and 31 May 2022.
INTEREST-BEARING LOANS
RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's exposure to price risk arises from its investments in equity securities, which are classified as part of financial assets in the FVTPL accounts and financial assets in the FVOCI accounts in the consolidated statements of financial position. In accordance with the Group's policies, no specific hedging activities are undertaken in relation to these investments. In addition, the Group's exposure to credit risk for its other receivables from debtors and related parties is managed through close account monitoring and setting limits.
Also, none of the Group's financial assets are secured by assets or other credit enhancements. Considering the credit risk arising from financial assets, the Group's maximum exposure is equal to the book value of these instruments. At the end of each period, the Group has no overdue but unimpaired financial assets.
EQUITY
Credit risk represents the loss that would occur to the Group if the counterparty did not fulfill its contractual obligations. The Group's exposure to credit risk from receivables is primarily related to the inability of debtors, most of whom are students, to fully settle the unpaid amounts of school fees and other duties owed to the Group based on installment repayment schemes. The Group is not significantly exposed to any single counterparty, nor does it have any other concentration of credit risk arising from counterparties in similar business activities, geographic regions or economic entities.
Apart from the exposure to credit risk on the Group's debtors from students, the risk is minimal as these financial assets and investments are with reliable corporations, financial institutions and/or with related parties. The Group's management is of the opinion that all its financial assets are not impaired and of good credit quality, except for those that provide for impairment at the end of the reporting periods. 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.
EARNINGS (LOSS) PER SHARE
During the year ended May 31, 2022, the University made an allocation worth P340.6 million; no acquisition or reversal of acquisition was made for the period ended August 31, 2022. Management considers that the University has de facto control over FRC even though it holds less than 50% of the voting shares of FRC stock because it is exposed or is entitled to variable returns through its power over the FRC (see Note 1). As of August 31 and May 31, 2022, the total cost of issued and outstanding preferred shares of EACCI and FEUAI amounts to P1.2 billion and P750.0 million, respectively.
Upon the formation of Edustria, the parent company subscribed for 255.0 million shares, representing 51% of the total issued and outstanding shares of Edustria. NCI of Edustria amounting to P171.5 million is presented as part of non-controlling interest account in the condensed consolidated statement of financial position.
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group aims to provide returns on equity to shareholders while managing operational
COMMITMENTS AND CONTINGENCIES
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group strives to provide return on equity to shareholders while being operationally managed. VVK also leases certain land and buildings to various unrelated parties for a period of one to ten years. FRC also receives customer and security deposits related to its leasing activities as a lessor which are recognized under Other Non-Current Liabilities in the consolidated statements of financial position.
Future minimum rent receivables, excluding contingent rent, arising from these operating leases receivable within one year are P2.9 million and P11.7 million, respectively, as of August 31 and May 31, 2022. There are other contingencies that arise in normal business operations that are not included in the Group's financial statements. Management believes that any losses arising from these liabilities and contingencies will not materially affect the financial statements, but the University has elected to appropriate a portion of its retained earnings to cover such contingencies .
SEASONALITY OF OPERATIONS
APPROVAL FOR THE ISSUANCE OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
EVENTS AFTER THE END OF THE REPORTING PERIOD
