Chairman’s Statement 2004

2004 Annual Report
Chairman’s Statement

On behalf of the Board of Directors, I am pleased to
present the Annual Report and Audited Financial Statements of SEG International
Bhd (SEGi) and SEGi Group for the financial year ended 31 December 2004.

Review of Financial Performance in 2004
SEGi Group recorded satisfactory results in 2004 despite the year being
a challenging one for the private education industry as a whole. The
Group posted a pre-tax profit of RM12.0 million on the back of revenue
of RM 86.3 million, and a net profit for the year of RM 9.3 million.

In 2004, the private education industry achieved a
less robust performance generally, with the contributory factors being
the commencement of national service for Form 5 school leavers affecting
private college enrolments, as well as the increase in places
available to students opting for sixth form of Government schools.

Although the Group was affected by these external
factors, it was able to minimise the impact by having a diversified
business model whereby the Group focused on various market segments
within the business of education and training besides the full-time
school leavers market.

The Board of Directors is recommending a final dividend of 6 sen per
share less tax for the financial year ended 31 December 2004, compared
to 8 sen per share less tax in the previous year.

Review of Operations
Arising from the challenging environment the Group was operating in,
new ideas were formulated and new market segments were developed. Strategies
and plans were put in place to strengthen the core business of the Group
and new ventures were explored to diversify and expand the income base
of the Group.

The Group has continuously explored and developed new programmes to
target the changing education needs of students. This is evident with
the launch of new specialisations in the past year, including courses
in Human Resource Management and Project Management.

Besides the development of new programmes, the Group
also entered into new collaborations with University of Sunderland,
UK and Ottawa University, USA.

The Group continues to expand overseas to market our programmes to foreign
education institutes. During the year, the Group signed five new collaborative
agreements in The People’s Republic of China, including with Huludao
Municipal People’s Government (Liaoning), Jinken College (Nanjing),Yin
Hua College (Shangdong), Jin Hua University (Zhejiang) and Gansu AnDe
Vocational Training Centre (Gansu).

Apart from school leavers, SEGi Group specialises in training and educating
adult learners. During the year under review, the Group signed up with
over 200 corporate groups and companies to meet the training needs of
employees in these companies.

Our colleges and centres have put reasonable efforts into upgrading
student amenities, facilities and equipment in the last few years. Additionally,
as part of our business growth strategy, SEGi has reinvested a major
part of the Group’s earnings to build three fullfledged campuses
in the Klang Valley and Kuching.

With the completion of all three campuses in the next
two years, SEGi Group of colleges and centres will be able to accommodate
over 20,000 additional students.

Corporate Development
On 5 August 2004, SEGi’s listing was upgraded from the Second
Board to the Main Board of Bursa Malaysia Securities Berhad.

Future Outlook
We believe the education sector will continue to be a crucial conduit
for the key functions contributing to the nation’s sustainable
growth and development. These include idea exchange, enterprise, research,
social change and intercultural understanding.

The advent and realities of globalisation are upon
us. In order to become more substantive in the education sphere, we
will leverage on our strength in numbers by increasing brand recognition
of our institutional groups to make our presence felt. We also aim to
achieve better profitability by improving margins, pursuing international
academic collaborations, identifying non-traditional education markets,
diversifying products and managing capital resources effectively.

We are committed to innovate our products and services
to meet students’ and investors’ expectations, engage in
building closer relationships with the government ministries and other
collaborative agents, in an effort to deliver better returns and excellent
value to our shareholders.

On behalf of the Board, I would like to thank the management and staff
of SEGi Group for the dedication and hard work they have put in to meet
the aspirations of our organisation.

My gratitude also goes to my fellow Board of Directors
for their invaluable support during the year. I would like to welcome
Tan Sri Datuk Arshad bin Ayub who has joined the Board this year.

The achievements of SEGi would not be possible without
the support and confidence of our partner universities, our students
and valued corporate partners, our regulators and our bankers.

Not least, our appreciation also goes to our shareholders,
for your loyalty and faith in our Company. Let me reaffirm our commitment
to you for the continued advancement of the Company through achieving
greater profitability, growth, innovation and the fulfilment of our
corporate goals in the years ahead.