CEO’s Insight 2005

2005 Annual Report
CEO’s Insight

EXTRACTED FROM “A Leaner SEGi After Merger,
(Reprinted with the permission from Starbiz
dated 11 January 2006)

Starbiz: SEG International Bhd’s
(SEGi) merger and re-branding
will make the educational group
leaner, and enable it to
react promptly to changes
in the marketplace…

said Chief Executive Officer, Datuk Clement Hii.

The exercise entails the disposal of seven smaller colleges and the
merger of the group’s remainder colleges into six main campuses
under a new brand name, SEGi College.

Hii said the disposal of the smaller colleges, which were not profitable
or only breaking even, would enable the group to focus on enhancing
the profitability of its other colleges.

“Although the disposal of the colleges would reduce the student
population by 2,500, the capacity of our new Subang Jaya campus
will increase by 3,500,” he said in an interview.

The group would get RM18mil from the disposal, comprising RM7mil
sale price and RM11mil inter-company debt to be settled by the buyer
over a period of time.

“We will also be collaborating with the buyer, a training company,
on a feeder system, whereby students from the disposed colleges will
complete their degree programmes at SEGi Colleges. It will be a winwin
situation for us,” Hii said.

In addition, the re-branding of the colleges, which took effect on Jan 7,
would enable the group to reduce substantially its operational costs,
especially for advertising and promotion (A&P).

Currently, about 5% of the group revenue is spent on A&P.

Hii said the group had also signed an agreement with a government
-linked fund to sell and lease back the Subang Jaya campus for

“Besides making a tidy profit from the deal, we can enjoy the use of
a campus built according to our needs.

The funds generated from the sale and lease back and the disposal
will help us reduce our gearing,” he said.

On SEGi’s financial results for this year, Hii is optimistic the group
would turn in a better performance.

“All indications point to that direction. With the disposal, our lossmaking
centres will not drag down profits anymore and operational
costs will be reduced,” he said.

“We are planning to launch 50 new programmes throughout the
year and this will help to increase student enrolment.”

SEGi had recently obtained approval to launch 17 new 3+0
undergraduate programmes in collaboration with Australian and
British universities and the company expects its student population
to grow by 15% to 20% from this year.