Message from the Chairman 2017

2017 Annual Report
Message from the Chairman

“On behalf of the Board of Directors, it gives me great pleasure to present to you the Annual Report and Audited Financial Statements of SEG International Bhd (“SEG¡”) and the Group for the year ended 31 December 2017.”
Tan Sri Dato’ Seri Megat Najmuddin Bin Dato’ Seri Dr. Haji Megat Khas
Independent Non-Executive Chairman

Market Outlook 

The Malaysian government is committed to providing the highest quality of education to its students. This can be seen in the various initiatives it has introduced to produce holistic graduates with a balance of academic knowledge and industrial experience. Preparing the students for workplace has been and will also be given an even greater emphasis by SEGi in the coming years.

Some of the initiatives by the government include 2u2i (study for two years and intern for another two years), and the CEO @ Faculty Programme and APEL (Accreditation of Prior Experiential Learning). SEGi has participated in some of these initiatives and we believe that they will enhance the quality of education and enrolment for SEGi.

Another significant focus under the government initiatives is the move towards online learning. Malaysia online education is expected to project a strong compound annual growth rate of 16.4% over the forecast period from 2016 to 2023. This is attributed to the initiatives by the government and the smart phone and tablet users in the country. In line with this initiative, SEGi has also established on online learning platform, PACE (Professional and Continuing Education) which should see further growth in near future.

Financial Performance

I am pleased to report that the Group achieved a revenue of RM256.3 million and a profit before taxation of RM45.8 million, a decrease of 1.5% and an increase of 52.3% respectively, as compared to the previous financial year. The Group achieved a commendable performance with the earnings before interest, tax, depreciation and amortisation (“EBITDA”) of RM61.7 million compared to RM42.6 million in the previous financial year. This reflects an increase of 44.8% in EBITDA.

The improvement in EBITDA and profit before tax is mainly a result of our streamlining exercise where assets and resources were utilised efficiently. I am proud to announce that the Group has put in place the right strategies to enhance the shareholders’ value. The Group’s balance sheet continues to be healthy, closing the year with deposits, cash and bank balances of RM83.5 million and total assets of RM265 million.

Looking ahead to 2017, we are perfectly placed to lead SEGi as the leading higher education provider in Malaysia. It may bring forth its own set of challenges, but I am confident we are prepared to face them and to emerge victoriously, together as a team. Our unique strengths and talents are our greatest assets in order to make sure all 5 campuses get the relevant support they need to function effectively.

Dividends and Cash Distributions 

As part of our mission to deliver strong shareholder value in the form of dividend yield, the Board of Directors has declared an interim single tier dividend of 3.5 sen per ordinary share in respect of the financial year ended 31 December 2017. This interim dividend was paid on 18 January 2018, totaling more than RM43 million.

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

Operational Review

SEGi is passionate about what we do, sparking enthusiasm and inspiring the curious young minds to achieve their goals and dream career. We provide a high-quality and conducive environment for our current student population of 20,000 across five campuses to learn and continue to grow. SEGi encourages the leaders of tomorrow to embrace lifelong learning, hence, the establishment of Professional and Continuing Education (PACE).

Alongside our investment in world-class facilities and talented scholars, we are committed to enhancing student learning experience through our innovative and industry-relevant teaching techniques, and career service advice for graduates.

It has been a remarkable 12 months for us. SEGi has implemented various initiatives to nurture young people such as the introduction of Jom ke SEGi interest-free education loan scheme. This financial aid from SEGi is an exclusive offer to underprivileged Bumiputera students in the B40 income group.

We have also introduced a new tuition fee payment method via JomPAY to help students settle their tuition fee online with just a few clicks. The new payment method was aimed at eliminating the long queue at Student Bursaries.

SEGi was founded on the ethos, “quality education within the reach of willing minds and natural talents”, and it continues to guide us in our strategic plans. We believe that access to education and opportunities to learn should be made available to all, regardless of background or financial circumstances.

With that in mind and in line with our strategy to expand our range of affordable and internationally-recognised degree programmes, SEGi has launched BSc (Hons) Architecture under the Faculty of Engineering and The Built Environment.

In the past year, we have also inked several agreements with prestigious international universities – University of Albany, Minnesota State University, University of Toledo and University of Wyoming as our university partners for the American Degree Program (ADP).

Our search for excellence never ceases. I am delighted to share our accomplishments in the 2016/2017 Malaysia Quality Evaluation System (MyQuest) ratings, as three campuses – SEGi College Subang Jaya, SEGi College Penang and SEGi College Sarawak received a six-star rating (outstanding) while SEGi College Kuala Lumpur obtained a five-star rating (excellent).

The six-star ratings were another accolade to SEGi’s trove as we have also won bronze in the Education & Learning category at the Putra Brand Awards (PBA) 2017. We will always strive to do the best for our students.

Corporate Developments 

I am pleased to report that during the year under review, the Company issued bonus shares on the basis of 5 bonus shares for every 7 existing SEGi shares held. The Board was of the view that the Bonus Issue was the most appropriate avenue of rewarding the existing shareholders for their continuous support through the years. The Bonus Issue also enhanced the Company’s capital base to a level which is more reflective of its current scale of operations and assets employed.

On 18 January 2017, the Company completed its Capital Repayment consisting of a cash distribution of 15 sen per ordinary share amounting to RM108.3 million to the shareholders. The Capital Repayment had again enabled the Company to reward the shareholders for their continuous support through cash distribution and value enhancement by returning equity to shareholders and increase the Group’s return on equity without affecting shareholders’ shareholding.

Corporate Sustainability

Sustainability has always been a part and parcel of SEGi’s culture as we strive to achieve continual growth. We recognise that we need to be sustainable to add value to our organisation.

Through the Board engagements, we have identified several key themes of sustainability practices that will contribute towards the betterment of SEGi, environment and society. The practices of SEGi include the following:

• Social sustainability
• Environmental sustainability
• Sustainability governance

SEGi has always encouraged its management and staff to be involved with charity work because we believe in giving back to the community. Among the programmes were:

(a) Scholarship programmes 

Since our establishment in 1977, SEGi has offered more than RM100 million worth of scholarships to the brightest and most talented young minds to enable them to continue with their tertiary studies. In 2017, we have also introduced a new interest free education loan scheme, Jom ke SEGi to reach more underprivileged Bumiputera students.

(b) Faculty of Dentistry community work 

Staff and dental students from the Faculty of Dentistry at SEGi University have organised various events throughout 2017 to raise awareness of oral health care. Some of the campaigns were The Future Smiles, A Mighty Molars and Friends, Health Behind Every Smile, and many more.

(c) A Heartbeat’s Journey 

SEGi organised A Heartbeat’s Journey event for children of Yayasan Chow Kit (YCK) in conjunction with Universal Children’s Day.


Environmental Sustainability 

In recent years, society have become increasingly concerned about environmental preservation. SEGi has also long adopted environmental stewardship as part of its strategy towards sustainability. Throughout the year 2017, we continued to make progress to operate responsibly to meet the expectation of the society.

Ongoing efforts were carried out to establish teaching and research methodology to promote sustainability within and beyond SEGi. Our initiatives have been realigned to reflect our commitment to be a responsible Group with effective policies to protect the environment and promote sustainability at all levels.

Sustainability Governance 

Strong governance structures and clear policies of accountability enabled SEGi to promote sustainability in our business strategy. These structures were embedded into our business agenda whereby the Board was ultimately responsible for the management, direction, and long-term success for SEGi.

Moving forward, SEGi will be looking into developing a longer-term governance structure to ensure smooth incorporation of responsibilities over sustainability in the day-to-day operations. The structure will take into consideration the aspiration to improve our sustainability efforts and develop a long-term sustainability programme.

Future Outlook and Way Forward 

Our ambition in the coming year is to exceed the students, staff and partners expectations. SEGi aims to provide the best environment for our staff and support for our students, to empower them to be the best, in line with our brand promise, The Best in You, Made Possible.

Although higher education is expected to be increasingly competitive, SEGi will continue to be a leading university that offers a rewarding student experience. We are ambitious and optimistic for the coming year, with plans to build on and create new partnerships.

The Group has taken positive steps to expand its adult learning market and its network to escalate the recruitment of international students. The Group has also successfully streamlined its operations in the previous year resulting in a significant improvement in its margins.

The Group is poised to see further growth particularly in international student recruitment in the near future.

Acknowledgements 

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

I would like to take this opportunity to convey my thanks and appreciation to the management and staff of the Group for their commitment and dedication in delivering the results of the Group. I also wish to acknowledge our global partners, students, regulatory authorities, bankers and business associates for their unwavering support and confidence in the Group. It is with your gracious support that we are able to continue reaching even greater heights.

2018 will be another eventful year for SEGi. We are poised and positioned for growth, and I am encouraged and excited about the future as we continue to focus on building our competitive advantage and strategise to shape the Group for years to come. I look forward to your continued interest and support as we progress to the next chapter in 2018.

Tan Sri Dato’ Seri Megat Najmuddin Bin Dato’ Seri Dr Haji Megat Khas
Chairman
30 March 2018

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