The Group's nine-month results showed significant improvement compared to the same period last year, as the second semester enrollment of the FEU schools remained stable. The consolidated financial position of the Far Eastern University, Incorporated and subsidiaries (the Group) remains solid as of 28 February 2022, characterized by the sound fundamentals in terms of the Group's liquidity and solvency. FEU management is optimistic about the Group's year-end results, but remains conservative with its outlook on the financial market and the overall economy.
Edustria was established by the University in partnership with the Technological Institute of the Philippines. Below is a graph showing the stable trend of the Group's first semester enrollment for the past five years.
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 are operating as educational institutions providing basic education, schools secondary and higher and/or tertiary and postgraduate study courses. . RCEE, before the cessation of its activities, was engaged in the sale of school supplies and food in several RCI campuses.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FAR EASTERN UNIVERSITY, Form 17-Q INCORPORATED SEC. CCFS are prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The significant accounting policies and calculation methods used in the preparation of these CCFS are consistent with those applied in the ACFS as of and for the fiscal year ended May 31, 2021. There are new IFRS, annual improvements and interpretations of existing standards that are effective for periods after 2022, but were not adopted early in the preparation of the CCFS.
The reclassification of certain accounts in the comparative prior period presented has been made in accordance with the current period presentation 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.
This CCFS is presented in Philippine pesos, the Group's functional currency, and all values represent absolute amounts unless otherwise indicated. Functional currency is the currency of the primary economic environment in which the Group operates. FAR EASTERN UNIVERSITY, INCORPORATED SEC Form 17-Q. a) Effective in Fiscal Year 2022 Relevant to the Group.
The only relevant amendment, namely PFRS 16 (Amendments), Leases – Concessions for rents related to COVID-19 after 30 June 2021 (effective from 1 April 2021), extends for one year the application of practical considerations, but not for evaluation, or rent concessions that reduce payments until June 30, 2022 that occur as a direct result of the COVID-19 pandemic are a rent change and instead consider these rent benefits as if they were not rent changes.
USE OF ACCOUNTING JUDGMENTS AND ESTIMATES
RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's exposure to price risk arises from its investments in equities, which are classified as part of financial assets in FVTPL and financial assets in FVOCI accounts in the consolidated statements of financial position. In accordance with Group policy, no specific hedging activities are undertaken in relation to these investments. Investments are continuously monitored; to ensure that the proceeds of these equity instruments are utilized or reinvested in a timely manner and that the voting rights arising from these equity instruments are in favor of the Group.
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 the credit risk of other receivables from debtors and related parties is controlled by careful 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. Apart from exposure to credit risk in the Group's receivables from students, the risk is minimal, as these financial assets and investments are with reputable companies, financial institutions and/or related parties. At the end of each period, the Group has no overdue but unimpaired financial assets.
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.
CATEGORIES AND OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Treasury controls and procedures are in place to ensure that sufficient cash is held to cover day-to-day operating and working capital needs. Management closely monitors the Group's future and contingent liabilities and ensures that sufficient cash is collected in the future 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 (i.e. related parties) has the option to settle all such amounts on a net basis by approval of the BOT or BOD of both parties.
As such, the Group's outstanding receivables and payables to the same related parties, if any, may be offset to the extent of their respective outstanding balances.
FAIR VALUE MEASUREMENT AND DISCLOSURES 1 Fair Value Hierarchy
The above tables show the fair value hierarchy for the group's classes of financial assets and financial liabilities measured at fair value in the consolidated statement of financial position on a recurring basis per On the other hand, the fair value of investments in the UITF is classified as level 2, as fair values are generally measured based on the intrinsic value of the group's investment, calculated and determined at the end of each reporting period based on the end. market and trading prices of the securities included in the fund's portfolio. 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. i) Fair values of government securities issued by the company. The Philippine government, determined based on the reference price per Bloomberg, which used BVAL.
The fair value of the Group's interest-bearing loans is classified in Level 3 of the fair value hierarchy. Consequently, the Group no longer presented a comparison of their fair values with their book values and, accordingly, their level in the fair value hierarchy. As of 28 February 2022 and 31 May 2021, the total estimated fair value of the Group's parcels of land and buildings and improvements classified as investment property are categorized as Level 3 in the fair value hierarchy.
The fair value of the Group's investment properties, except for some investment properties owned by FRC, which were determined using the discounted cash flow technique, because data on valuation reports are not immediately available, is determined on the basis of valuations performed by an independent valuer with appropriate qualifications. and recent experience in valuing similar properties in relevant locations. The fair values of these non-financial assets were determined based on the following approaches: i) Measurement of 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.
There were also no transfers to or from different levels of the fair value hierarchy as of February 28, 2022 and May 31, 2021.
SEGMENT INFORMATION 1 Business Segments
There was no change in the valuation techniques used by the Group during the period for its non-financial assets. Set out below is a reconciliation of the Group's segment information to the key financial information presented in its CCFS (in thousands).
PROPERTY AND EQUIPMENT
LEASES
The short-term portion of leasing obligations is presented in the consolidated statement of financial position as part of Trade payables and other payables of P10.0 million. per February 28, 2022 and May 31, 2021. The long-term portion amounts to P24.5 million. million is presented separately in the consolidated statement of financial position per 28 February 2022 and 31 May 2021.
INVESTMENT PROPERTIES
Based on the latest valuation report by an independent appraiser, the total fair value of investment property was P293.5 million as of February 28, 2022 and May 31, 2021. Fair value measurement information and disclosures related to investment property are presented in Note 6.4.
INTEREST-BEARING LOANS
EQUITY
All of the university's shares are listed on the PSE, there had been no subsequent listing since first listing in 1986 at a bid price of P100. This account includes the common stock of the university acquired by FRC on various dates during and held on February 28, 2022 and May 31, 2021. The changes in the market value of these stocks, recognized as fair value gains or losses by FRC, have been reclassified own inventories, as presented in the consolidated statements of changes in equity.
Part of the University's retained earnings is limited to the declaration of dividends up to the value of its own shares, excluding the amount acquired and held by the FRC, as this is considered cross-ownership at the end of the reporting period. Allowances are assessed and updated annually, changes in retained earnings carried forward are shown below. Management believes that the University has de facto control of FRC, even though it owns less than 50% of FRC's voting stock, because its power over FRC gives it exposure or rights to variable returns.
Prior to 2017, EACCI issued its newly authorized preferred shares to EAEF, a related party under joint management. In 2020 and 2019, EACCI issued additional authorized preferred shares to the Nicanor Reyes Educational Foundation (NREF), a related party under joint management. Upon the incorporation of Edustria, the parent company subscribed to 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.
EARNINGS PER SHARE
COMMITMENTS AND CONTINGENCIES
There are other contingencies that arise in the normal course of business that are not included in the Group's financial statements. CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group aims to provide shareholder return on equity while operationally managing.
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group aims to provide returns on equity to shareholders while managing operational
SEASONAL FLUCTUATIONS
EVENTS AFTER THE END OF THE REPORTING PERIOD
