Chairman’s Statement 2003

2003 Annual Report
Chairman’s Statement

Dear Shareholders,
On behalf of the Board of Directors of SEG International Bhd (SEGi), I am pleased to present the Annual Report and Financial Statements of the Group and Company for the financial year ended 31 December 2003.

Financial Performance
The Group achieved a turnover of RM92.6 million and a pre-tax profit of RM19.7 million compared to a turnover of RM80.6 million and a pre-tax profit of RM12.7 million in the previous financial year. Pre-tax profit margin increased from 15.8% in 2002 to 21.3% attained in 2003.

The notable increase in revenue, pre-tax profit and pre-tax profit margin was mainly due to the right business strategies that were put in place for the Group colleges and centres. The strategies include focusing on different segments of learners such as full-time students, adult learners and skill-based training. These were further complemented by the introduction of high margin degree-linked programmes with reputable foreign universities towards the end of 2002 and in 2003.

Apart from the increase in operational profits, the net profit has also increased partly due to the gain from sale of properties during the year. Net profit for the year increased to RM14.4 million, compared to RM5.1 million achieved in the previous year.

The Board of Directors is recommending a final dividend of 8 sen per share less tax for the financial year ended 31 December 2003, subject to the approval of the shareholders at the Annual General Meeting. For the year ended 31 December 2002, the Company paid out a final dividend of 7 sen per share less tax amounting to RM4.0 million.

Operational Review
Despite the general slowdown in the private education industry during the year under review, SEGi Group recorded an almost triple-fold increase in its after-tax profits. The resilience shown by the Group in the face of competition is due to the change in direction on products offered within our core business, which has opened up educational opportunities for different markets.

New Programmes
SEGi Group launched various new programmes during the year under review.

These programmes are offered in collaboration with the University of Newcastle, the University of the Sunshine Coast and James Cook University. The new programmes together with existing courses from other institutional partnerships, formed one the main contributors to the earnings of the Group during the year.

In addition to the new academic programmes, the Group also offered courses for learners who preferred skill-based training. These courses provide occupational skills training to students or employees looking to upgrade their competencies without having to fulfil the disciplines of academic courses. The Group launched these training programmes towards the end of 2002 and have since become the market leader in vocational training amongst the private education providers.

Besides the focus on full-time school leavers, SEGi Group also increased emphasis on educating working adults. The Group identified this potential looking at the approximately 10 million working adults, out of which only a small fraction possess tertiary qualifications. Through the Group’s collaboration with top-notch partner universities, coupled with the strategic location of our colleges and centres, a large number of these learners have gained access to higher education. SEGi Group is now widely perceived as the market leader for adult learning, distributed learning and skillsbased training, apart from being a key player in providing full-time learning opportunities.

SEGi UNISEL Joint Venture
SEGi has recently entered into a joint venture agreement with Universiti Industri Selangor (UNISEL) whereby SEGi and UNISEL will jointly design, develop and implement new academic programmes for UNISEL, as well as recruit students for these programmes. SEGi intends to offer UNISEL qualifications at our colleges throughout Malaysia, thus giving our students an additional option to pursue a local undergraduate or postgraduate degree, besides the foreign qualifications currently offered.

The tie-up will allow SEGi to work closely with this state government-owned institution, mutually capitalising on each other’s strengths and enhancing the success of both.

New Campuses
The Group has entered into two sales and purchase agreements to purchase land and building for new flagship campuses. The main campus will be built on a 10-acre piece of land in Kota Damansara, Selangor. The completed campus will be equipped with state-of-the-art learning facilities, recreational and hostel amenities, and is scheduled for completion within 3 years. The second acquisition will be for a new campus for PRIME College, situated in a 12-storey stand-alone building in Subang Jaya, Selangor and will be ready in 18 months’ time. These two new campuses, being located within the greater Kuala Lumpur area will provide SEGi Group with an added advantage in attracting school leavers seeking a full campus learning experience.

Corporate Proposals
The Company has announced the proposed private placement exercise of not exceeding 10% of its issued and paid-up share capital and has obtained approval from the Securities Commission for the exercise on 20 April 2004. The proposal will be implemented within 6 months from the date of approval.

SEGi is honoured and proud to be awarded the prestigious Kuala Lumpur Stock Exchange (KLSE) Corporate Excellence Award 2003. The KLSE Corporate Awards recognise the soughtafter traits of a company, premised on transparency, sound management, corporate disclosure and market best practices. The Awards are given to companies listed on the KLSE, which have shown exemplary corporate conduct in complying with the KLSE’s Listing Requirements and which demonstrate high standards of corporate governance, disclosure and transparency along with proactive investor relations efforts.

Apart from the requirements of the listing guidelines of KLSE, SEGi has further promoted transparency to the investors and the general public by quarterly announcements of results in the major newspapers and regular analysts’ and fund managers’ briefings. Announcements are also made for major events of the SEGi Group.

Future Outlook
While seeking to make further inroads into the full-time student market, the Group will also in the long-term leverage on its strengths, which are in developing innovative programmes and collaborative partnerships to maximise resources and tap new markets. We expect to gain further inroads into professional training by focusing on the highly-demanded vocational, competency-based and continuing education programmes for mature learners and the corporate sector. We will seek to increase our presence in niche training to create a new breed of edupreneurs. We envision greater external business opportunities through increasing the number of foreign collaborations particularly China, where our academic expertise and courseware will cater to a wider scope of learners in the region.

Capping our plans to expansion strategically, the Group’s upcoming new campuses will maintain our competitive edge in the education sector locally. These, along with the ethical and proactive management of human resources and our corporate assets, will seal the Group’s commitment to excel in the provision of educational services, teaching and training, while giving opportunities for all students to reach their goals of obtaining tertiary and higher qualifications.

On behalf of the Board, I wish to express my gratitude to the management and staff of the Group for their unrelenting effort and contributions to make the year 2003 a success. My appreciation also goes to our students, business associates, bankers and regulatory authorities for their continuous support and confidence in the Group. And to our shareholders, we reaffirm our commitment to further enhance the value of your shareholdings.

Tan Sri Dato’ Seri (Dr)
Abdullah Bin Ayub