Chairman’s Statement 2014

2014 Annual Report

On behalf of the Board of Directors, it gives me pleasure to present to you the Annual Report and Audited Financial Statements of SEG International Bhd (“SEGi”) and the Group for the year ended 31 December 2014.

Market Outlook

The Malaysian higher education system has grown from strength to strength over the past decades. We also welcome the commitment of the Ministry of Education to make a quantum leap improvement with the launch of commitment to the Malaysia Education Blueprint 2015 – 2025 (Higher Education). The government has also emphasised the role of educational institutions to drive an economy based on knowledge, high skills, expertise and innovation for it to remain resilient and competitive in the 2015 – 2016 Budget.

As the demand for highly skilled and knowledgeable workers intensifies in the knowledge-based economy, so does the demand for higher education.

Young people are aware that career success is only possible if they are armed with the right skills and knowledge. In addition, pursuing higher education is seen as an important pathway to career success.

Financial Performance

For the year under review, the Group achieved a revenue of RM242.1 million and a profit before taxation of RM24.4 million. The profit before taxation in 2013 consisted of a gain on sale of land of RM15.8 million. Comparing the profit before taxation for 2014 with the previous financial year before this gain, the Group achieved an increase in profits of 53%.

The Group’s balance sheet continues to be healthy, closing the year with cash and bank balances of RM102 million and a low gearing ratio of 0.21 times.

Dividends

The Board maintains a balance approach to dividend payments, ensuring that sufficient funds are maintained for future growth, whilst recognising the need to provide a reasonable return to shareholders. With this in mind, the Board declared two interim dividends in respect of the financial year ended 31 December 2014. The first interim dividend of 5.0 sen per ordinary share was paid on 8 August 2014 while the second interim dividend of 6.0 sen per ordinary share was paid on 26 January 2015. This brings the total dividend paid for the year under review to RM72.62 million.

Operational Review

The Group’s growth in 2014 was a reflection of our strong branding, especially in the global market. SEGi has been building up a wide network of agents and collaborations with international partners over the last few years. This has resulted in a notable growth in our international student enrolment in 2014 and we foresee the trend to continue in the coming years.

In the light of the current economic climate, SEGi has stepped forward to enhance the employability of our students. SEGi has developed the talent enhancement programmes to enhance their career prospects. Certain pre-employment training and internship placements are already underway to equip the students with the competitive advantage in the job market.

SEGi has also engaged with a number of valued corporate partners to create job opportunities for the students.

SEGi has also emerged as one of the best employers in the country as evidenced from our listing of among 100 top companies to work in a survey conducted by M100, a leading human capital development publication.

The Group’s quest for excellence never ceases. In 2014, we received a number of prestigious awards and accolades, including the Reader’s Digest Trusted Brands Awards 2014, the Putra Brand Awards 2014 and the Brand Excellence Award 2014 – 2015 in the Education category at the World Branding Awards in London, United Kingdom.

We have also launched new homegrown programmes at the degree and postgraduate levels.

I am also glad to announce that SEGi achieved another significant milestone with our education offering catered specifically for busy working adults – Professional and Continuing Education (“PACE”). This initiative was acknowledged by the Malaysia Retail Chain Association (“MRCA”) when it awarded the Group with the prestigious Outstanding Innovation Award. Given SEGi’s experience in offering education to this sector and the investment we have put in for the development of the working adults platform, we see PACE as one of our growth areas in the coming years.

The Group continues to forge strong global connections with reputable foreign institutions by adding Troy University from the United States of America to provide quality 4+0 US education for students.

Corporate Developments

During the year, the Group proposed to dispose one of its wholly owned subsidiary company which owns the land for the purpose of setting up an international school. The proposed disposal will enable the Group to unlock its capital resources from being tied up in long term assets while SEGi is granted an option to lease back the school building.

This is in line with the Group’s strategy to focus on its core business, which is education and training. Property holding and property management are not part of the Group’s forte.

Human Capital

One of the main pillars of the Group is the dedicated and strong staff force that we possess. The Board recognises the importance of the people in the Group and has approved and launched a Long Term Incentive Plan to further motivate and reward them. This scheme consists of an employees’ share option scheme and a share grant plan. The granting and vesting of the share options and share grants will be subject to certain vesting conditions.

As part of the focus on succession planning and talent management, the Group introduced a Leadership Programme to identify and develop successors for critical positions. This Leadership Programme provides key talents with the opportunity to grow and perform at their highest potential through guidance given by the professional coach and senior management team members. We believe that as the Group seeks sustainable growth through expansions in its business operations, the development of a strong pool of talents and high potentials will enable the Group to achieve its goals.

Corporate Sustainability

Good governance plays a critical role in ensuring that SEGi sustains its position as a successful company. The Board places great emphasis on ensuring and maintaining the highest standards of corporate governance throughout the Group to promote the long-term interests of all stakeholders.

Corporate Responsibility

Ever mindful of our role in corporate responsibility, the Group has actively integrated corporate responsibility initiatives as part of our business operations. The Group believes that effective corporate responsibility is of benefit to its businesses and, in turn, to its shareholders. We are working towards making corporate responsibility an integral component of future strategies to enable the Group to contribute towards society in ways that will create value for shareholders.

During the year, the Group continued with its corporate responsibility initiatives in education and participated actively in social community. SEGi participated actively in activities which included the offering of scholarships, bursaries and research funds, organising school outreach projects and public workshops, and promotion of charity, sports and other nation building initiatives.

SEGi is aware of the importance of health and safety at work place. In our quest to provide a conducive working environment where the employees’ health and safety are treated with utmost priority, various health and safety policies and procedures are adopted and implemented.

Our contributions go beyond plain financial support. The Group also actively encourages its employees to support and participate in the various community service projects and philanthropic activities.

Future Outlook and Way Forward

2015 marks an exciting chapter for the Group. The Group launched a number of new initiatives in the last two years which have put us in a strong footing to prepare the Group for its next phase of growth. SEGi will continue to adopt forwardthinking strategies which will enable the Group to maintain a sustainable growth rate, profitability, and maximise returns to all stakeholders. With this in place coupled with our strong foundation, the Board is confident that the outlook for the year 2015 will be promising.

Acknowledgements

SEGi is a strong organisation built on years of hard work, innovation and above all, the endeavours and commitment of its people. It is my privilege to serve as the Company’s Chairman and be part of its continued success.

In closing, I would like to express my gratitude to my fellow Board members who have contributed greatly to the Group with their invaluable expertise and experience. On behalf of my fellow Directors, I would like to take this opportunity to welcome Mr. Edwin Fua Chye Jin to the Board.

My heartfelt appreciation goes to the management and staff for their commitment, dedication and perseverance in facing the challenges during the year under review. I would also like to extend my sincere appreciation to all our valued shareholders, global partners, students, regulatory authorities, bankers and business associates for their unwavering trust and continuous support throughout the years.

TAN SRI DATO’ SERI MEGAT NAJMUDDIN BIN DATO’ SERI DR HAJI MEGA T KHAS
Chairman
30 April 2015