Chairman’s Statement 2013

2013 Annual Report

On behalf of the Board of Directors, I have great pleasure in presenting the Annual Report and Audited Financial Statements of SEGi and the Group for the year ended 31 December 2013.

SEGi University Group (“SEGi”) continued to demonstrate its resilience by staying ahead of competition and further strengthened its market leadership position in Malaysia. Overall, SEGi’s operations, competitive posture and foundation for profitable growth remain strong, and we will continue to be diligent in improving operational efficiencies, innovating and  aking advantage of market momentum in unique ways.

Economic Review

Much has been made of Malaysia’s rise as an education hub in recent years. With more than 100,000 international students from over 100 countries, Malaysia is the world’s 10th largest provider of educational services. Based on Education Malaysia data, Malaysia’s international student population grows by an average of 16% each year, and if the encouraging growth continues, Malaysia should meet its 200,000 international student target by 2020.

Financial Performance

The Group achieved a revenue of RM236.8 million and a profit before taxation of RM31.7 million for the financial year ended 31 December 2013, reflecting a decline as compared to the previous financial year.

The decline in profits as compared to the previous financial year is mainly attributed to the high number of graduating students from the nursing faculty and the delayed arrival of international students following the establishment of the Education Malaysia Global Services (EMGS) Agency.

Despite the overall challenges throughout 2013, the Group has continued to maintain a strong financial position with shareholders’ funds at  RM253.6million, cash and bank balances of RM68.1million and a low gearing ratio of 0.18. A strong balance sheet, built on the robust allocation of capital and efficient management of capital and assets, allows the Group the financial flexibility to capitalise on growth opportunities and maximise shareholders’ value.

Dividend

As part of our mission to deliver strong shareholder value in the form of dividend yield, the Board of Directors has declared two interim dividends in respect of t e financial year ended 31 December 2013. The first interim single tier dividend of 5 sen per ordinary share, totalling RM32,062,000 was paid on 25 April 2013. The second interim single tier dividend of 2.5 sen per ordinary share amounting to RM16,057,000 was paid on 15 January 2014.

The Group will strive to maintain a balance by providing its shareholders with sustainable cash returns from dividends while conserving adequate funds for reinvestment to enhance future profitability.

Operational Review

In 2013, a Quality Enhancement Task Force (“QETF”) was set up to raise the brand and quality of the Group’s institution with the objective to drive SEGi towards Tier-1 status in 3 years’ time. The team looked at what SEGi stands for and have unanimously agreed that our promise to our customers, partners and stakeholders can be summarised in our brand promise, “The Best in You, Made Possible”.

To continuously deliver our brand promise, we need to be inspiring those who aspire, which is not an easy goal to attain. But I’m confident of everyone in SEGi rising to the challenge because the ability to adapt and change for the better is embedded in the DN A of every SEGi staff. We, the Segians, also need to first look deep within us and change the way we think and the way we do things and react.

SEGi has further enhanced our programmes by the launch of the various Centres of Excellence (“COE”). These COEs are located at the different SEGi institutions and focus on enhancing the quality and delivery of their niche programmes.

Going forward, we are excited by the rapidly emerging shift towards online learning in the global scene. Students are now more comfortable with the digital technology and thus are spending more time learning through interactive learning platforms. I am glad to announce that SEGi has recently launched its own online university – Professional and Continuing Education (PACE), under SEGi University. Unlike other online universities, PACE provides the option of guided learning via face-to-face classes provided by SEGi  University. Learners can also log in to their classes at any time of the day, at any location with access to the internet with support provided if and when necessary. This venture will enable us to tap into the large adult learners market.

SEGi has built strong strategic collaboration with internationally recognised universities such as Teesside University, Abertay University, University of Greenwich, University of London, University of Sunderland, York St John University and University of St Mark & St John, from the United Kingdom; Upper Iowa University from the United States; and University of Southern Queensland from Australia.

Corporate Developments

Subsequent to the financial year, the Company proposed to establish a long term incentive plan of up to 15% of the issued and paid-up share capital of SEGi (excluding treasury shares, if any) (“the Proposed LTIP”), for the employees and Executive Directors of SEGi and its subsidiary companies, who meet the criteria of eligibility for participation in the Proposed LTIP as set out in the by-laws of the Proposed.

The Proposed LTIP serves to attract, retain, motivate and reward valuable employees and Executive Directors of SEGi through the award of ordinary shares of par value RM0.25 each in SEGi or the rights to subscribe for SEGi Shares pursuant to the by-laws.

Human Capital

In line with the Group’s commitment to continuously identify and develop leadership potential and high performance standards, SEGi introduced a talent management programme aimed at sustaining the Group’s high performance culture and growth in the long term. This initiative will cater for the increasing demands within the Group for leaders as well as to develop and hone talented employees’ capabilities and skills. We have identified individuals who will be moulded to take on additional cross functional responsibilities and be moulded to take on the reins of SEGi in the future.

Corporate Sustainability

The Board recognises the importance of corporate governance as it underpins the management and business operations of the Group to deliver sustainable value to all stakeholders. The Board is committed to develop a sustainable future, maintaining the highest standards in corporate governance and integrity in driving SEGi to its long-term success.

Corporate Responsibility

At SEGi, sustainable business practices are essential to how we operate. We see corporate responsibility as a major part of doing business and strive to be a socially responsible entity that ensures not only the safety of our workforce and host communities but also the environment in which we operate.

SEGi has been proactive in its commitment to corporate responsibility. We are not only focusing on business strategy that is grounded by strong core values and brand promise, but also operational efficiency, proactive governance and risk mitigation, stakeholder engagement and strategic philanthropy.

We strongly believe that SEGi can benefit from having a focused and well planned corporate responsibility programme, to create shared values with Segians and the local community and also provide financial benefits through improving the way we work and approach problems and solutions.

Future Outlook and Way Forward

We continuously strive to deliver strong financial returns through operational excellence and high performance standards. We strongly believe that focusing on our ability to innovate and to grow will place the Group in an excellent position to maintain our business success and industry leadership position.

The Group consolidated its localoperations in the previous year focusing on improving the quality of its programmes. The Group is also increasing its overseas market, in addition to the launching of new online programmes. There are also continued emphasis on stringent cost controls, increased effectiveness and efficiency, and not to mention, stronger collaboration amongst university partners. We expect all these to provide a more sustainable growth in the near future.

Acknowledgements

On behalf of the Board, I wish to thank our valued shareholders for their continuous support. It remains our priority to consistently deliver shareholder value while expanding the Group’s business.

I would like to express my heartfelt appreciation to all our global partners, students, regulatory authorities, bankers and business associates for their continued support.

Special thanks and gratitude also go to my fellow Board members, management and staff who, through their hard work and unwavering dedication, continue to maximise the value of our assets for our shareholders.

On this note, I would like to acknowledge the contribution of our former Board member, Mr. Lee Kok Cheng, for his enormous contribution to the Group.

In 2014, SEGi is positioned for growth, and I am encouraged and excited about the future as we continue to focus on building our competitive advantage and making positive decisions that will shape the Group for years to come. I look forward to your continued interest and support as we progress to the next chapter.

TAN SRI DATO’ SERI MEGAT NAJMUDDIN BIN DATO’ SERI DR HAJI MEGA T KHAS
Chairman
30 April 2014