The consolidated financial position of Far Eastern University, Incorporated and subsidiaries (the Group) remains strong as of 31 August 2019. Total income increased by 40%, mainly as a result of education income due to increased registrations for the first semester of the current Academy Year (AY). The Group's net income after tax was P61.60 million, an improvement of P62.92 million compared to net income for the same period last year.
Investment properties
Other non-current assets
Trade and other payables
Interest-bearing loans
Deferred revenue
Revaluation reserves
Retained Earnings
Non-controlling Interest (NCI)
Educational revenues-net
Sale of investment property
Other income - net
Tax and license expense increased by P33.83 million mainly due to the amount recognized as a provision by FEU related to certain local taxes assessed for previous years. Other maintenance and university operations increased by P5.50 million mainly due to expenses incurred for other outside services such as mobile x-ray services for first-year students, various outsourced manpower services for maintenance works. Security services expense increased by P3.53 million mainly due to the amount incurred by FEU due to the increase in services involved in relation to its increased student population.
Test of Liquidity
Test of Solvency
Test of Profitability
Product/Service Standard
Although EACCI was incorporated in 1992, it began doing business under the name and style of FEU Institute of Technology (or "FIT" or "FEU Tech") as of 2014. It is housed in two buildings: the Technology Building on the FEU Manila campus along Nicanor Reyes Street and the 17-story FEU Tech Building at P. It is located inside MetroGate Silang Estates, a gated community in Silang, Cavite, and therefore serves as the “Home of the Tamaraws in the South.
Market Acceptability
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Items included in the consolidated financial statements of the Group are measured in the functional currency (see Note 2.15). Of the provisions of the RCC, the following would have an impact on the consolidated financial statements of the Group:. Any subsequent changes in the associate's share of equity are reflected in the carrying amount of the University's investment.
Financial assets are recognized when the Group becomes a party to the contractual terms of the financial instrument. For credit-impaired financial assets, the effective interest rate is applied to the net book value of the financial assets (net of the allowance for losses). For credit-impaired financial assets, the effective interest rate is applied to the net book value of the financial assets (net of the allowance for losses).
Advances and other current assets of the Group include stockable items such as books and merchandise. Financial liabilities, which include trade and other payables [except tax-related liabilities, Deposits payable and National Service Training Program (NSTP) trust fund], interest-bearing loans, derivative liability and repayable deposits (presented under Other Non-current liabilities) are recognized when the Group is a party become the contractual terms of the instrument. The difference between the carrying amount of the financial liability that has been derecognised and the consideration paid or payable is recognized in profit or loss.
The Group determines whether an arrangement is, or contains, a lease based on the nature of the arrangement. Other reserves refer to the amount attributable to the parent company resulting from the changes in the ownership of the NCI in the Group. Any post-year-end event that provides additional information about the Group's consolidated financial position at the end of the reporting period (adjustment event) is reflected in the consolidated financial statements.
USE OF ACCOUNTING JUDGMENTS AND ESTIMATES
In addition, corporate assets that are not directly attributable to the business activities of any operating segment are not allocated to a segment. There were no changes from prior periods in the measurement methods used to determine reported segment profit or loss. Post-year-end events that are not corrective events, if any, are disclosed when they are material to the consolidated financial statements.
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 the Financial Assets at FVTPL and Financial Assets at FVOCI accounts in the consolidated statements of financial position. None of the Group's financial assets are also secured by collateral or other credit enhancements; except for cash and cash equivalents as described above. The Group has no overdue but unvalued financial assets at the end of each year.
The Group's management considers that all its financial assets are not impaired and of good credit quality, except for those specifically provided for impairment at the end of the accounting periods. A description of the Group's risk management objectives and policies for financial instruments is given in note 4. The Group's golf club shares are included in level 2 as their prices are not derived from the market considered active due to the lack of trading activities among market participants at the end of or close to the end of the reporting period.
The fair value of the group's debt securities, which consist of government and corporate bonds, is estimated with reference to the quoted purchase price in an active market at the end of the reporting period and is categorized within level 1. d) Derivatives. The group has therefore no longer presented a comparison of their fair values with their accounting values and correspondingly their level in the fair value hierarchy. Based on management's assessment, the best use of the Group's non-financial assets is their current use indicated above.
Below and on the following page is presented a reconciliation of the Group's segment information with the key financial information presented in its consolidated financial statements (in thousands) for the three months ended 31 August 2019 and 2018 and from 31 August and 31 May. 2019.
PROPERTY AND EQUIPMENT
Construction in Progress refers to costs incurred for the ongoing construction of FEUAI's school building in Alabang and the University's new building located at Lerma St., Sampaloc, Manila, both of which have been substantially completed as of August 31 and May. 31, 2019. As of August 31 and May 31, 2019, certain fully depreciated assets with a purchase cost of P723.8 million are still being used in the Group's operations.
INVESTMENT PROPERTIES
The total rental income earned by the group from its investment properties was PSP 9.8 million and PSP 8.7 million in the three months ended 31 August 2019 and 2018 respectively. Direct operating expenses, which include depreciation, insurance and property taxes incurred by the Group in connection with investment properties, are shown as part of Depreciation, Property Insurance and Taxes and Licenses, under Expenses and operating expenses in the consolidated statements of income. Based on the latest valuation report of the independent appraiser, the total fair value of the investment properties as of August 31 and May 31, 2019 was P205.1 million.
Information on fair value measurement and disclosures related to investment properties is presented in note 6.4.
INTEREST-BEARING LOANS
Related interest in the amount of P8.1 million and P37.2 million was recognized for the periods ended August 31 and May 31, 2019. Related interest in the amount of P0.4 million and P2.8 million was recognized for the period ended August 31 and May 31 2019, respectively. g). Related interest of P1.8 million and P11.2 million was recognized for the period ended August 31 and May 31, respectively. h).
For the period ended August 31, 2019, related interest was recognized in the amount of PSP 1.5 million and PSP 9.8 million, respectively. me). Related interest of P1.0 million and P4.4 million was recognized for the period ended August 31 and May 31, 2019, respectively. k) In April 2018, the University obtained an interest-bearing loan of P100 million from a local commercial bank for additional working capital. The related interest accrued for the period ended on August 31 and May 31, 2019, respectively, in the amount of PSP 1.2 million and PSP 5.9 million. l) In March 2019, the university obtained a PPP 100.0 million short-term loan for additional working capital from a local commercial bank.
Related interest of P1.5 million and P1.7 million was incurred for the period ended August 31 and May 31, 2019, respectively. m). In April 2019, the University received a P70.0 million interest loan from a local commercial bank for additional working capital. Related interest of P1.1 million and P1.2 million was incurred for the period ended August 31 and May 31, 2019, respectively. n).
In July 2019, the University received a P50.0 million interest loan from a local commercial bank for additional working capital.
EARNINGS PER SHARE
In the event of any voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of operations of EACCI or FEUAI, the holders of preferred stock will have priority and preference as to the net assets of EACCI or FEUAI or the proceeds thereof on holders of ordinary shares. During the year ended 31 May 2019, the BOT of EACCI declared cash dividend to all their shareholders.
COMMITMENTS AND CONTINGENCIES
Per 31 August 2019 no final decision has been made by the courts in the above cases; therefore, no provisions are recognized for unforeseen expenses. Provisions have been recognized in the consolidated statement of financial position which arise as part of the normal operations of certain subsidiaries. There are also other unforeseen circumstances that arise in the normal course of business, which are not recognized in the group's consolidated accounts.
Management believes that any losses arising from these provisions, commitments and contingent liabilities will not materially affect the consolidated financial statements.
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group aims to provide returns on equity to shareholders while managing operational
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group strives to provide a return on equity to shareholders while managing operations. This is in accordance with the University's banking covenants relating to its loans, which require the University to maintain a debt-to-equity structure ratio of no more than and debt service coverage ratio of at least 1.2x. The University has fulfilled its covenant obligations, including maintaining the required debt-to-equity ratio for all the years offered.
There were no major changes in the Group's approach to capital management during the year.
SEASONAL FLUCTUATIONS
EVENTS AFTER THE END OF THE REPORTING PERIOD
