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SECURITIES AND EXCHANGE COMMISSION

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Academic year: 2023

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This is the result of adjustments to temporary differences between taxable income and financial income at the reporting date. This is due to the net profit of the current period attributable to the owners of the parent company. The equity to assets ratio measures the amount of assets provided by the owners relative to the total assets of the group.

CORPORATE INFORMATION 1 Background of the University

Apart from FRC, which is 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, secondary education and/or advanced and postgraduate studies. Before ceasing its activities, RCEE was engaged in selling educational materials and food items on RCI campuses.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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. The functional currency is the currency of the primary economic environment in which the Group operates. a) Effective in the financial year 2021, which are important for the group. Important information about these amendments and revisions, the application of which, unless otherwise noted, did not have a material impact on the Group's CCFS is discussed below: i) IFRS 16 (Amendments), Leases – Lease concessions related to COVID-19.

The changes allow tenants, as a practical aid, not to assess whether certain rent concessions that occur as a direct consequence of the COVID-19 pandemic are tenancy changes and instead account for those rent concessions as if they are not rent changes. Important changes include (a) increasing the prominence of governance in the purpose of financial reporting, (b) reintroducing prudence as a component of neutrality, (c) defining a reporting entity which can be a legal entity or part of an entity, ( d) revising the definitions of an asset and a liability, (e) removing the probability threshold for recognition and adding guidance on derecognition, (f) adding guidance on different measurement bases, and (g) stating that profit or loss is the primary performance indicator, and that income and expenses in other comprehensive income must in principle be reused where this increases the relevance or faithful presentation of the annual accounts. Consequently, the partial recognition of gains or losses (ie to the extent of the unrelated investor's interest in an associate or joint venture) applies only to the sale of contributions from assets that do not constitute a business.

USE OF ACCOUNTING JUDGMENTS AND ESTIMATES

The amendments to PFRS 10 require full recognition in the investor's financial statements of gains or losses arising from the sale or contribution of assets constituting a business as defined in PFRS 3, Business Combinations, between an investor and its associate or joint venture. In addition, PAS 28 has been amended to clarify that when determining whether assets sold or contributed constitute a business, an entity must consider whether the sale or contribution of those assets is part of multiple arrangements that must be accounted for as a single transaction become .

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 condensed consolidated statements of financial position. In accordance with the Group's policies, no specific hedging activities are undertaken in relation to these investments. The Group's exposure to credit risk on its other receivables from debtors and related parties is managed through careful account monitoring and the setting of 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. The Group has no delinquent but unaffected financial assets at the end of each year.

CATEGORIES AND OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

FAIR VALUE MEASUREMENT AND DISCLOSURES 1 Fair Value Hierarchy

The above tables show the fair value hierarchy of the Group's financial asset classes measured at fair value in the consolidated statements of financial position on a periodic basis since: The fair value of the Group's interest-bearing loans is classified in Level 3 of the hierarchy of fair value. As of 28 February 2021 and 31 May 2020, 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 values ​​of these non-financial assets were determined based on the following approaches: i) Fair value measurement for land. Under this approach, higher estimated costs used in the valuation will result in higher fair value of the properties. There were also no transfers to or out of the various levels of the fair value hierarchy per 28 February 2021 and 31 May 2020.

SEGMENT INFORMATION 1 Geographic Segments

The valuation techniques used by the Group during the year for its non-financial assets have not changed. There were no transfers into or out of the Level 3 fair value hierarchy during the periods ended February 28, 2021 and May 31, 2020. The geographic segment of the Group, based on the location of all of the Group's school campuses, for the periods ended February 28 , 2021 and May 31, 2020 will follow (in thousands).

Below is a reconciliation of the Group's segment information with the key financial information presented in its CCFS (in thousands).

PROPERTY AND EQUIPMENT

A reconciliation of the carrying amounts of property and equipment at the beginning and end of the nine months ended February 28, 2021 and the year ended May 31, 2020 are presented below. Construction in progress amounting to P762.8 million as of February 28, 2021 and P1.1 billion as of May 31, 2020, relates to the costs incurred for the ongoing constructions of the school buildings of Edustria in Batangas, RCI in Rizal. , EACCI in Manila, FEUAI in Alabang, and various ongoing construction projects of the University in its Manila campus. With the adoption of IFRS 16, the right-of-use asset, amounting to P42.1 million, was recognized as part of Property and Equipment in the consolidated statements of financial position.

LEASES

INVESTMENT PROPERTIES

INTEREST-BEARING LOANS

EQUITY

On July 11, 1986, the SEC approved the listing of the university's common stock, its only publicly traded securities, at an offering price of P100 per share. stock. This account includes the University's common stock that FRC holds and acquires on various dates during the periods ended February 28, 2021 and May 31, 2020. A portion of the University's retained earnings is limited from the dividend declaration up to the cost of treasury stock, excl. the amount acquired and held by the FRC as this is considered a cross-holding at the end of the reporting periods.

Net book value P P During the period ended February 28, 2021, the University canceled part of the appropriations for the purchase of property and investment, the purchase of equipment and furniture, as well as the expansion and improvement of facilities, as the purpose for which these allocations were made was completed . . Management considers that the University has de facto control over FRC even though it owns less than 50% of the voting stock of FRC because it is exposed to or entitled to variable returns through its power over the FRC. Edustria's NCI in the amount of P171.5 million is presented as part of the non-controlling interest account in the consolidated statements of financial position.

EARNINGS PER SHARE

COMMITMENTS AND CONTINGENCIES

FRC also leases certain land and buildings to various unrelated parties for periods ranging from one to ten years. As of February 28, 2021 and May 31, 2020, the university is a defendant in one civil case in a regional court and a number of labor cases in various stages of civil litigation in the National Labor Relations Commission, Court of Appeals, and Supreme Court. Also, since May 31, 2020, the university is a defendant in a local corporate tax case at the Court of Tax Appeals.

However, in February 2021, a compromise agreement was reached between the University and the City of Manila, which released and exempted the University from all taxes, fees and charges for operating with deficiencies for the taxable years 2009 to 2019. Management considers any exposures in these cases to be immaterial and have been adequately covered by provisions in its condensed consolidated statements of financial position. These contingencies arising in the ordinary course of business are not discussed in detail in order not to seriously affect the Group's position in related disputes.

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

OBJECTIVES, POLICIES AND PROCEDURES OF CAPITAL MANAGEMENT The Group aims to provide shareholders with returns on capital through operational management. The Group defines capital as paid-in share capital and retained earnings, both appropriated and undistributed. Profiles for capital ratios are determined based on changes in the group's external environment and the risks underlying the group's operations, operations and industry.

The Group's goal in capital management is to maintain a lower adjusted liability compared to adjusted capital or debt-to-equity structure ratio of no more than 1.00:1.00. This is in line with the Group's banking covenants in relation to its borrowings, which require the Group to maintain a debt to equity ratio of no more than 2.00:1.00 and a debt service coverage ratio of at least 1.2x. 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.

SEASONAL FLUCTUATIONS

Other components of equity, such as own shares and revaluation reserves, are excluded from capital for capital management purposes. The University monitors capital based on the debt ratio, which is calculated as total liabilities excluding deferred revenue divided by total adjusted equity (consisting of share capital, distributed dividends and retained earnings) attributable to the owners of the parent company.

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