As of November 30, 2022, the Group's consolidated financial position remains stable, as the Group's liquidity and solvency are maintained at a stable level. The group expects to maintain a good financial position and maintain positive operating results in the remainder of the year. All FEU schools are well on their way to successfully establishing on-campus learning for the remaining SY schools.
CORPORATE INFORMATION
Remarkable increase in the World's Universities with Real Impact (WURI) Ranking was observed as FEU placed 74th in the Global Top 100 Innovative Universities in 2022 from its 79th and 91st positions in 2021 and 2020 respectively. Furthermore, FEU was the 1st university in Philippines included in the global top 100 in the year 2020. Compared to other education ranking systems that evaluate quantitative metrics such as the number of journal publications and the employment rate of graduates, WURI evaluates the flexible and innovative efforts of universities to cultivate contributions to a workforce that meets the demands of industry and society as a whole.
Except for FRC, a real estate company that leases most of its investment properties to the university and other related parties, all other direct subsidiaries operate as educational institutions offering primary education, junior and senior high school and/or tertiary and postgraduate degrees . Before going out of business, RCEE was in the business of selling educational school supplies and food items at various RCI campuses.
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
These CCFS are presented in Philippine pesos, the Group's functional currency, and all values represent absolute amounts unless otherwise stated. The functional currency is the currency of the primary economic environment in which the Group operates. In accordance with IFRS 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 one-time 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 IFRS are classified into three levels according to the materiality of the inputs used to measure fair value.
The fair value of the listed common and preferred shares was estimated based on their quoted market prices on 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 value of the Group's investment assets, calculated and determined at the end of each reporting period based on the closing market and trading prices of the securities that include fund portfolio. This valuation method takes into account the period-end performance of the funds, including all trades made within the funds and the related income and expenses arising therefrom.
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 November 30 and May 31, 2022, the fair value of debt securities classified as investments at amortized cost was P648.8 million P648.3 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, its 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.
In addition to the investment securities at amortized cost and interest-bearing loans, management determined that their fair value per , 2022, equal to or approximating their carrying amounts. 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. Nevertheless, if presented in the hierarchy, only cash and cash equivalents and short-term investments would fall below level 1 and the rest would be below level 3.
INVESTMENT PROPERTIES
There were no transfers between levels, nor changes in instrument classification levels in any of the periods presented. A reconciliation of the carrying amount of investment properties at the beginning and end of six months ended November 30, 2022 and the year ended May 31, 2022 is shown below. The total rental income the Group earned on its investment properties was P11.2 million and P11.9 million for the six months ended November 30, 2022 and 2021, respectively.
The direct operating costs, which include depreciation, insurance and property taxes incurred by the group in respect of investment properties, are presented as part of Depreciation and amortisation, Property insurance and Taxes and licenses under Costs and operating costs in consolidated income statements. 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 30 November 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 a certain extent in discussion with the group's management with regard to the determination of 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 could devalue the properties from the last assessment.
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 P11.9 million as of November 30 and May 31, 2022. The non-current portion of P13.1 million is presented separately in the consolidated balance sheet as of November 30 and May 31, 2022.
INTEREST-BEARING LOANS
RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group does not engage in trading in financial assets for speculative purposes, nor does it write options. The Group's exposure to price risk arises from its investments in shares classified as part of the 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.
In addition, 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. With respect to the credit risk arising from its financial assets, the Group's maximum exposure is equal to the carrying amount of these instruments.
Apart from exposure to credit risk on the Group's student receivables, the risk is minimal as these are financial assets and investments with reputable companies, financial institutions and/or related parties. The Group has no past due but unaffected financial assets at the end of each period.
EQUITY
Credit risk represents the loss the Group would incur if the counterparty defaulted on its contractual obligations. The Group's exposure to credit risk related to its receivables was primarily related to the inability of the debtors, the majority of whom are students, to collect in full the unpaid balance of tuition and other fees payable to the Group under staggered payment arrangements. comply. The Group has no significant exposure to any individual counterparty, nor does it have any other concentration of credit risk arising from counterparties in similar business lines, geographies or economic entities.
The Group's management believes that all of its financial assets are unimpaired and of good credit quality, with the exception of those for which an allowance for impairment has been made at the end of the reporting period. 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. Below is the ownership structure of the university's outstanding shares as of November 30 and May 31, 2022.
Part of the University's retained earnings is limited from dividend declaration up to the cost of own shares, excluding the amount acquired and held by the FRC, as this is considered a cross-holding from the end of the reporting period. Material transactions affecting retained earnings, which are also legally limited to an amount equal to the price of the University's own shares of P3.7 million, are presented below and on the following page.
EARNINGS PER SHARE
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group aims to provide returns on equity to shareholders while managing operational
The Group has met its covenant obligations, including maintaining the required debt-to-equity ratio and debt service coverage ratio for all periods presented. There has been no significant change in the Group's approach to capital management during the most recent period presented.
COMMITMENTS AND CONTINGENCIES
SEASONALITY OF OPERATIONS
The tuition fee increase, if any, usually takes effect during the first semester/quarter of a given SY. Thus, the old rates are followed during the midterm/third term of the previous SY, while the new rates are applicable during the first semester/quarter and subsequent terms of the current SY.
APPROVAL FOR THE ISSUANCE OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
EVENTS AFTER THE END OF THE REPORTING PERIOD
