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31'2 4567 - FEU Investor Relations - Far Eastern University


Academic year: 2023

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The Group's first half-year results showed significant improvement compared to the same period last year, as the VEU schools move towards the completion of the first semester/trimester of the current SY. The consolidated financial position of Far Eastern University, Incorporated and subsidiaries (the Group) remains solid as of 30 November 2021, characterized by the sound fundamentals in terms of the Group's liquidity and solvency. FEU management remains aware of the Group's exposure to the risks in its business environment.

Asia Pacific Institute of Events Management (APIEM) accreditation of the BS in Tourism Management program as a Center of Excellence. Edustria was established by the University in partnership with the Technological Institute of the Philippines.

CORPORATE INFORMATION 1 Background of the University

With the exception of 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 advanced and postgraduate studies. Before ceasing its activities, RCEE was engaged in selling educational materials and food items at several campuses of RCI.


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 after 30 June 2021 (effective 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 of accounting for these rent concessions as if they were not lease changes.

There are other amendments and annual improvements to existing standards that are effective for annual periods subsequent to Fiscal Year 2022, which are adopted by the Financial Reporting Standards Board.



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. Investments are constantly monitored; to ensure that the returns of these equity instruments are used or reinvested in time and the voting rights derived from these equity instruments are in favor of the Group.

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.

With respect to credit risk arising from its financial assets, the group's maximum exposure is equal to the carrying amount of these instruments. Apart from the exposure to credit risk on 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. The Group has no overdue but not impaired 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.


Treasury controls and procedures are in place to ensure that sufficient cash is available to meet daily operating and working capital requirements. Management closely monitors the Group's future and contingent liabilities and ensures that future monetary recoveries are sufficient for their settlement in accordance with internal guidelines. All other financial assets and financial liabilities are settled in the gross amount; however, each party to the financial instrument (ie, related parties) will have the option to settle all such amounts on a net basis with the approval of the BOT or BOD of both parties.

As such, the Group's outstanding receivables from and payables to the same related parties, if any, may be offset against their corresponding outstanding balances.


The above tables show the fair value hierarchy of the Group's financial asset and financial liability classes 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 November 30 and May 31, 2021, the fair value of debt securities classified as investments at amortized cost was P3552.5 million and P3590.7 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 in the fair value hierarchy. 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. Per 30 November and 31 May 2021, the total estimated fair value of the Group's land and buildings and improvements classified as investment property is categorized as level 3 in the fair value hierarchy.

The fair value of these non-financial assets was determined based on the following approaches: i) Measurement of the fair value of the land. Under this method, the highest estimated costs used in the valuation will result in the highest fair value of the properties. Also, there were no transfers in or out of the different levels of the fair value hierarchy on November 30 and May 31, 2021.

There were no transfers into or out of the Level 3 fair value hierarchy during the periods ended November 30 and May 31, 2021.


There was no change to 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).



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 November 30 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 30 November and 31 May 2021.


Based on the latest appraisal report by an independent appraiser, the total fair value of investment properties was P293.5 million. per 30 November and 31 May 2021. Information on fair value measurement and information regarding investment properties is presented in note 6.4.



Below is the ownership structure of the outstanding shares of the university as of November 30 and May 31, 2021. All shares of the university 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 on November 30 and May 31, 2021 and held.

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. Appropriations are assessed and updated annually, the changes in the retained earnings are shown below. Management believes that the University has de facto control of FRC even though it holds less than 50% of FRC's voting shares because it is exposed or entitled to variable returns through its power over FRC.

The total value of issued and outstanding preference shares on November 30 and May 31, 2021 is 1.2 billion PSP. The total value of issued and outstanding preferred shares is 750.0 million PSP as of November 30 and May 31, 2021. When Edustria was established, the parent company subscribed for 255.0 million shares, which represents 51% of all issued and outstanding Edustria shares.

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.



There are other unforeseen events that occur in the normal course of business that are not recognized in the group's accounts. OBJECTIVES, POLICIES AND PROCEDURES FOR CAPITAL MANAGEMENT The Group aims to provide shareholders with a return on equity while being operational.

CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The Group aims to provide returns on equity to shareholders while managing operational


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12.2 Rental Income The total rental income earned from the investment property amounted to P92.9 million in 2012, P72.1 million in 2011 and P58.8 million in 2010 and presented as