SYSTEMATIC EDUCATION GROUP BERHAD SYSTEMATIC EDUCATION GROUP BERHAD ( U)

Transcription

1 SYSTEMATIC EDUCATION GROUP BERHAD SYSTEMATIC EDUCATION GROUP BERHAD ( U) Annual Report 2000

2 SYSTEMATIC EDUCATION GROUP BERHAD 1 PRIME College (Kedah) Systematic Business Training Centre (Penang) PRIME College (Miri) Klang Valley Institute of Business & Management Studies (Kuching) King s Business Institute (Kuching) Institut Makmur Klang PRIME College Summit International College MSC International College Petaling Jaya Subang Jaya Systematic Business Training Centre Systematic Institute of Information Technology Systematic Secretarial Centre KUALA LUMPUR Systematic College KLANG VALLEY Systematic College (Johor Bahru) MEMBER COLLEGES IN MALAYSIA TABLE OF CONTENTS Notice of Annual General Meeting 2 Group Five Years Financial Summary 11 Board of Directors 4 Financial Statements 13 Corporate Information 5 Group Properties 43 Chairman s Review 6 Shareholders Information 45 Audit Committee Terms of Reference 9 Proxy Form 47

3 2 SYSTEMATIC EDUCATION GROUP BERHAD NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Fifteenth Annual General Meeting of Systematic Education Group Berhad will be held at Windows on KL 1, 30 th Floor Mutiara Kuala Lumpur, Jalan Sultan Ismail, Kuala Lumpur on WEDNESDAY, 20 JUNE 2001 AT AM for the following purposes : AGENDA As Ordinary Business 1. To receive and adopt the Audited Financial Statements for the year ended 31 December 2000 together with the Ordinary Resolution 1 Reports of the Directors and Auditors thereon. 2. To approve the payment of Directors Fees. Ordinary Resolution 2 3. To re-elect the following Directors retiring under Article 112 of the Company s Articles of Association: i) Mr Teoh Seng Foo Ordinary Resolution 3 ii) Mr Kee Lian Yong Ordinary Resolution 4 iii) Dr Tan Beng Cheok Ordinary Resolution 5 iv) YBhg Dato Megat Najmuddin bin Dato Ordinary Resolution 6 Seri (Dr) Haji Megat Khas v) Mr Lim Chee Khang Ordinary Resolution 7 vi) Mr Siew Boon Yeong Ordinary Resolution 8 4. To re-elect YB Senator Tan Sri Dato Seri (Dr) Abdullah bin Ordinary Resolution 9 Ayub pursuant to Section 129(6) of the Companies Act, To re-elect YBhg Tan Sri Dato (Dr) Abdullah bin Mohd Ordinary Resolution 10 Salleh pursuant to Section 129(6) of the Companies Act, To re-appoint Messrs KPMG as Auditors of the Ordinary Resolution 11 Company and to authorise the Directors to fix their remuneration.

4 SYSTEMATIC EDUCATION GROUP BERHAD 3 As Special Business To consider and, if thought fit, to pass the following Resolutions:- 7. SPECIAL RESOLUTION - PROPOSED ADOPTION OF THE ARTICLES OF ASSOCIATION That the existing Articles of Association of the Company be deleted in its entirety and that the new set of Articles of Association as set out in Appendix I which is enclosed with the Annual Report for year 2000 be and is hereby adopted in substitution for and to the exclusion of the existing Articles of Association of the Company. Special Resolution BY ORDER OF THE BOARD LUM CHEE YENG (MAICSA ) SAW BEE LEAN ((MAICSA ) Secretaries Kuala Lumpur Date: 29 May 2001 NOTES 1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company. A member may appoint any person to be his proxy without limitation and the provisions of Section 149 (1) (b) of the Companies Act, 1965 shall not apply. 2. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or signed by an officer or attorney so authorised. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 11th Floor, Wisma Damansara, Jalan Semantan, Damansara Heights, Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. 5. Explanatory Note to Special Resolution under item 7 of the Agenda - Proposed adoption of new Articles of Association The Special Resolution proposed under item 7 of the Agenda, if passed, will render the Company s Articles of Association to be consistent and compliant with the Kuala Lumpur Stock Exchange s revamped Listing Requirements, other regulatory requirements of the Companies Act, 1965 and Rules of the Malaysian Central Depository Sdn Bhd. The new Articles of Association also contain the following new provisions: i. to empower the Directors at any time, and from time to time, to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors without maximum number fixed. ii. to enable any Director and member of a committee of Directors to participate at Board of Directors meetings and committee meetings respectively by way of telephone and video conferencing. This will facilitate the convening of Board of Directors meetings and committee meetings at short notice when any director or committee member may be abroad or away.

5 4 SYSTEMATIC EDUCATION GROUP BERHAD BOARD OF DIRECTORS SEATED (LEFT TO RIGHT) STANDING (LEFT TO RIGHT) Dr Tan Beng Cheok, YBhg Tan Sri Dato (Dr) Abdullah Bin Mohd Salleh, YB Senator Tan Sri Dato Seri (Dr) Abdullah Bin Ayub, Teoh Seng Foo, Kee Lian Yong Tn Hj. Mohd. Razi Bin Yaccob, Lim Chee Khang,Siew Boon Yeong, YBhg Dato Megat Najmuddin Bin Dato Seri (Dr) Haji Megat Khas, Hassan Bin Hussain (Advisor), YBhg Dato Shamsir Bin Omar

6 SYSTEMATIC EDUCATION GROUP BERHAD 5 CORPORATE INFORMATION BOARD OF DIRECTORS YB Senator Tan Sri Dato Seri (Dr) Abdullah Bin Ayub Teoh Seng Foo Dr Tan Beng Cheok Kee Lian Yong YBhg Tan Sri Dato (Dr) Abdullah Bin Mohd Salleh YBhg Dato Shamsir Bin Omar YBhg Dato Megat Najmuddin Bin Dato Seri (Dr) Haji Megat Khas Siew Boon Yeong Lim Chee Khang Kee E-Lene Tuan Haji Mohd Razi Bin Yaccob (Chairman) (President) (Chief Executive Officer/Executive Director) (Executive Director) (Alternate Director) (Alternate Director) AUDIT COMMITTEE COMPANY SECRETARIES REGISTERED OFFICE SHARE REGISTRAR AUDITORS STOCK EXCHANGE LISTING Siew Boon Yeong (Chairman) YBhg Dato Shamsir Bin Omar Lim Chee Khang Lum Chee Yeng (MAICSA ) Saw Bee Lean (MAICSA ) 11th Floor, Wisma Damansara Jalan Semantan, Damansara Heights Kuala Lumpur Tel: Fax: M&C Services Sdn Bhd (3775-X) 11th Floor, Wisma Damansara Jalan Semantan, Damansara Heights Kuala Lumpur KPMG Wisma KPMG, Jalan Dungun Damansara Heights Kuala Lumpur Kuala Lumpur Stock Exchange, Second Board

7 6 SYSTEMATIC EDUCATION GROUP BERHAD CHAIRMAN S REVIEW FINANCIAL PERFORMANCE Systematic continues to improve on its financial performance over the previous financial year. The Group s turnover for the year ended 2000 has increased to RM26.3 million from the RM24.0 million recorded for This increase by 9.6% shows a healthier growth compared to that achieved in the previous year. Profit before exceptional item and taxation rose 24.0% to RM5.2 million. The earnings per share after tax and minority interest also increased to sen from sen achieved in the previous year. DIVIDENDS YB SENATOR TAN SRI DATO' SERI (DR) ABDULLAH BIN AYUB Chairman The Company declared two interim dividends for this financial year of 15 sen per share and 5 sen per share for the first and second interim dividend respectively. The total sum declared and paid amounted to RM 3.5 million. No final dividend has been has been recommended for this financial year. OPERATIONAL REVIEW On behalf of the Board of Directors, I am pleased to present the Annual Report of Systematic Education Group Berhad (Systematic) for the financial year ended 31 December The financial year which ended on 31 December 2000 continued to be a very challenging year for the Group. The trend that occurred in 1999 continued as an increasing number of students were inclined to pursue degree related courses rather than professional and sub-professional programmes. Degree-linked programmes, as forecasted, continued to experience a steady growth of 19% during the year More Malaysian students continue to complete three-year programmes in the Group s Petaling Jaya, Kuala Lumpur and Penang centres, which lead to the awarding of the BA (Honours) in Accountancy & Finance, BA (Honours) in Business Administration, and the BA (Honours) in Marketing, by the University of Abertay Dundee, UK. The computing and IT sector again increased its contribution by 44%. The increase in revenue collected was contributed primarily by the Petaling Jaya centre and Systematic Institute of Information Technology in Kuala Lumpur which offer three-year programmes leading to the BSc (Honours) in Computing awarded by the University of Greenwich, UK.. The Group s traditional areas of strength in the professional programmes, having carved a niche for itself over the past two decades, continued to register declining numbers of new students, especially for the Association of Chartered Certified Accountants (ACCA), UK; Chartered Institute of Management Accountants (CIMA), UK; and the Institute of Chartered Secretaries and Administrators (ICSA), UK programmes. Similarly, the London Chamber of Commerce and Industry (LCCI), UK programme, once a much sought after qualification amongst secondary school leavers, followed this trend.

8 SYSTEMATIC EDUCATION GROUP BERHAD 7 The Group however, believes that the market for professional qualifications will always be present as this forms an alternative route to become qualified accountants, company secretaries, secretaries and administrators, and as such, these programmes will continue to be an important segment of our educational offerings. MAJOR CORPORATE DEVELOPMENTS The Company completed its issuance of bonus shares of 2 ordinary shares for every 5 ordinary shares held as well as the issuance of new ordinary shares for the acquisition of various companies listed below and assets subsequent to the financial year end. With the allotment of these new shares, the share capital of the Company has increased from 19,000,000 to 79,127,755 ordinary shares of RM1.00 each. The aim of the Group pursuant to this corporate exercise is to further diversify its earnings base. Consequently, the acquisitions of Berrington Bay Corporation Sdn Bhd, Summit Education Sdn Bhd, Summit Montessori Edu-Care Sdn Bhd and Rekaan Medianet Sdn Bhd have been completed and the Group now controls PRIME Colleges, Summit International College, MSC International College and a number of Montessori nursery schools and kindergartens. With the merger of the specialisations of the new colleges and schools with that of the Systematic Colleges, the Group is now able to offer programmes in most fields of study and is set to be one of the largest private education providers in the country. It has 14 campuses in Malaysia, currently the largest in number amongst the private education providers. These campuses are located in Subang Jaya, Kuala Lumpur, Petaling Jaya, Klang, Pulau Pinang, Alor Setar, Johor Bahru, Kuching and Miri. The Group has also expanded its base to provide education for all ages, spanning early childhood education, pre-university to university, adult education as well as other specialised niche educational programmes. The Group also acquired IPPP Batu Lintang Sdn Bhd, the operator of Institute of Business & Management Studies (IBMS) in March IBMS, which is based in Kuching is one of the largest colleges in Sarawak and it offers MBAs, Bachelor Degrees and Diplomas in a wide range of management courses, such as Mass Communication, Public Relations, Accounting, Information Technology and Human Resource Management, through full-time, part-time or distance learning modes. FUTURE OUTLOOK The demand for private education has been increasing every year as more students seek for opportunities to pursue tertiary education, coupled with the inability of public universities to accommodate them. There is also the Government s plan to increase the number of Malaysians with tertiary education from the present 22 per cent to 30 per cent by This strong demand has, however, contributed to a large number of private colleges springing up over the last few years. Many large corporations have joined in the fray, resulting in strong competition amongst private colleges. In the Fiscal Stimulus announced by the Prime Minister recently and as part of the Eighth Malaysian Plan, the Government has also allotted a sizeable budget for the provision of universities in every State in Malaysia. As such, competition in the long term for the education industry is expected to remain intense as the number of places in public universities increases. To ensure that the Group remains competitive, it is constantly looking at ways to improve the quality of education it offers and also the range of programmes it provides. Besides the new colleges it has acquired recently, the Group has also introduced new products which will further strengthen the Group s position in the education industry. Uppermost on the list of new products to be launched is the delivery of full-time, part-time and distance learning programmes leading to undergraduate and postgraduate degrees awarded by the University of Southern Queensland, Australia. Direct marketing activities will also be increased to recruit more international students, besides continuing efforts to increase student enrolment in the various colleges.

9 8 SYSTEMATIC EDUCATION GROUP BERHAD The Group is optimistic of its future prospects in view of its strong positioning in the market as well as its commitment to provide quality education. APPRECIATION On behalf of the Board, I wish to express my appreciation to the management and staff of the Group for their contributions towards the achievements of the Group during the past year. My appreciation is also extended to the relevant authorities, business associates, bankers and shareholders for their continued support and confidence in the Group. I am pleased to welcome Mr Teoh Seng Foo, Mr Kee Lian Yong, Dr Tan Beng Cheok, YBhg Dato Megat Najmuddin bin Dato Seri (Dr) Haji Megat Khas, Mr Lim Chee Khang and Mr Siew Boon Yeong who have joined us as members of the Board of Directors in February My sincere thanks and appreciation also to Tuan Haji Taib bin Rasak, Mr Tan Hong Aik, Tuan Haji Othman bin Haji Dahlan and Mr Yeoh Ah Tu, who have resigned from the Board, for their invaluable contributions during their tenure as Directors of the Company. YB SENATOR TAN SRI DATO SERI (DR) ABDULLAH BIN AYUB Chairman 18 May 2001

10 SYSTEMATIC EDUCATION GROUP BERHAD 9 AUDIT COMMITTEE TERMS OF REFERENCE The objective of the Audit Committee is to review the adequacy and the integrity of the Company s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines, as well as: a) to oversee the conduct of the Company s business and to ensure proper management thereof. b) to identify principal risks and ensure the implementation of appropriate systems to manage such risks. COMPOSITION FUNCTIONS The Audit Committee shall be appointed by the Directors from among their number (pursuant to a resolution of the Board of Directors) and the appointment must fulfil the following requirements: a) the audit committee must be composed of no fewer than 3 members; b) a majority of the audit committee must be independent directors; and c) at least one member of the audit committee:- i) must be a member of the Malaysian Institute of Accountants; or ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years working experience and: - he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act, 1967; or - he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, The company must ensure that no alternate director is appointed as a member of the audit committee. The members of the Audit Committee shall elect a chairman from among their number who shall be an independent director. In the event of any vacancy in the Audit Committee resulting in the non-compliance of item 2 (a) to (c) above, the vacancy must be filled within 3 months of that event. The Board of Directors must review the term of office and performance of the Audit Committee and each of its members at least once every 3 years to determine whether the Audit Committee and its members have carried out their duties in accordance with the terms of reference. The functions of the Audit Committee are as follows: a) review the following and report the same to the Board of Directors: i) with the external auditors, the audit plan; ii) with the external auditors, their evaluation of the system of internal controls; iii) with the external auditors, their audit report; iv) the assistance given by the Company s employees to the external auditors; v) the adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary authority to carry out its work;

11 10 SYSTEMATIC EDUCATION GROUP BERHAD vi) the internal audit programme, process, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; vii) the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on: changes in or implementation of major accounting policies; significant and unusual events; and compliance with accounting standards and other legal requirements; viii) any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of management integrity; ix) any letter of resignation from the external auditors of the Company; and x) whether there is reason (supported by grounds) to believe that the Company s external auditors are not suitable for re-appointment; and b) recommend the nomination of a person or persons as external auditors. RIGHTS OF THE AUDIT COMMITTEE MEETINGS The Audit Committee shall, wherever necessary and reasonable for the Committee to perform all of its duties, in accordance with a procedure to be determined by the Board of Directors and at the cost of the Company: a) have authority to investigate any matter within its terms of reference; b) have the resources required to perform its duties; c) have full and unrestricted access to any information pertaining to the Company; d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any); e) be able to obtain independent professional or other advice; and f) be able to convene meetings with the external auditors, excluding the attendance of the executive members of the committee, whenever deemed necessary. The Audit Committee shall meet at least 4 times a year with authority to conduct such additional meetings as the Chairman shall decide in order to fulfil its duties. However, at least once a year the Audit Committee shall meet with the external auditors without executive Board members present. In addition, the Chairman may call a meeting of the Audit Committee if a request is made by any committee member, the Company s Chief Executive, or the internal or external auditors. The Company Secretary or other appropriate senior official shall act as secretary of the Audit Committee and shall be responsible, in consultation with the Chairman, for drawing up the agenda and circulating it, supported by explanatory documentation to committee members prior to each meeting. The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, and circulating them to committee members and to the other members of the Board of Directors. A quorum shall consist of a majority of independent directors. When invited by the Audit Committee, the Company must ensure that the invited directors and employees attend any particular audit committee meeting as specified by the committee.

12 SYSTEMATIC EDUCATION GROUP BERHAD 11 GROUP FIVE YEARS FINANCIAL SUMMARY OPERATIONS RM 000 Turnover 26,253 24,021 23,641 28,406 28,607 Profit Before Tax 6,493 4,122 2,490 4,411 3,958 Profit After Tax before Minority Interest 4,470 4, ,886 2,554 Minority Interest Profit after Taxation After Minority Interest 4,466 4, ,792 2,501 BALANCE SHEET RM 000 Shareholders Funds 34,297 33,365 31,260 32,109 30,685 Fixed Assets 33,962 36,197 36,869 38,169 36,149 Current Assets 9,592 5,777 3,462 5,181 3,598 PER SHARE DATA SEN Net Earnings Net Tangible Assets RM RM 000 Sen Turnover Profit Before Tax Net Tangible Assets Per Share

13 12 SYSTEMATIC EDUCATION GROUP BERHAD

14 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 13 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2000

15 14 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES DIRECTORS REPORT FOR THE YEAR ENDED 31 DECEMBER 2000 The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company comprise investment holding and the provision of management consultancy services and business advisory services. The principal activities of its subsidiary companies are described in Note 3 to the accounts. There has been no significant change in the nature of the activities of the Company and its subsidiaries during the financial year. SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE (i) The Corporate Proposals in relation to the acquisition of Berrington Bay Corporation Sdn. Bhd., Summit Education Sdn. Bhd., Summit Montessori Edu-Care Sdn. Bhd., and Rekaan Medianet Sdn. Bhd. and one office building each from Koperasi Pegawai- Pegawai Melayu Malaysia Berhad ( MOCCIS ) and Ladang MOCCIS Sdn. Bhd. ( Ladang MOCCIS ) has been completed. The total acquisitions amounting to RM78,791,633 was fully satisfied by the issue of shares. The shares were listed on 2 February (ii) On 19 February 2001, an announcement was made in respect of the signing of an agreement with the vendors of IPPP Batu Lintang Sdn. Bhd. ( IBL ) for the proposed acquisition of 70% equity interest in IBL for a purchase consideration of RM2,450,000. The acquisition was completed on 21 March RESULTS Group RM 000 Company RM 000 Net profit after tax for the year 4,466 4,279 ===== ===== RESERVES There were no material transfers to or from reserves and provisions during the year except as disclosed in the financial statements. DIVIDENDS Since the end of the previous financial year, the Company made the payment of a first and final dividend of 10 sen per share, tax exempt in respect of the year ended 31 December 1999, totalling RM1,900,000 on 21 June The Company made the payment of a first interim dividend of 15 sen per share, tax exempt in respect of the year ended 31 December 2000, totalling RM2,850,000 on 28 August The Directors recommended on 15 January 2001, the payment of second interim dividend of 5 sen per share less tax at 28%, totalling to RM684,000 in respect of the year ended 31 December 2000 and was paid on 5 February The directors do not recommend any final dividend to be paid for the financial year under review.

16 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 15 DIRECTORS OF THE COMPANY Directors who served since the date of the last report are:- Director Alternate Tan Sri Dato Seri Dr Abdullah bin Ayub Tan Sri Dato Dr Abdullah bin Mohd Salleh Dato Shamsir bin Omar Kee Lian Yong (appointed on ) Teoh Seng Foo (appointed on ) Hassan bin Hussain (appointed on ) Dr Tan Beng Cheok (appointed on ) Lim Chee Khang (appointed on ) YB Dato Megat Najmuddin bin Dato Seri (Dr) Haji Megat Khas (appointed on ) Siew Boon Yeong (appointed on ) Taib bin Rasak (resigned on ) Tan Hong Aik (resigned on ) Othman bin Haji Dahlan (resigned on ) Yeoh Ah Tu (resigned on ) Hj. Mohd Razi bin Yaacob (appointed on ) Dr Anuar bin Ahmad (appointed on ) Kee E-Lene (appointed on ) The Directors in office at the end of the year who have direct interests in the shares of the Company are as follows:- Number of shares Balance at Balance at Name Bought Sold Direct: Tan Sri Dato Seri Dr Abdullah bin Ayub 3,000 3,000 Othman bin Haji Dahlan 23,000 23,000 Tan Hong Aik 721, ,000 Taib bin Rasak 119, ,000 By virtue of their interests in the shares of the Company, the above Directors are also deemed to have interests in the shares of all its subsidiaries to the extent the Company has an interest. The other Directors did not hold or deal in the shares of the Company or related companies during the year. DIRECTORS BENEFITS

17 16 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related companies/corporations) by reason of a contract made by the Company or a related company with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, other than certain Directors who have significant financial interests in companies which traded with companies in the Group in the ordinary course of business. There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. ISSUE OF SHARES There were no changes in the issued and paid up capital of the Company during the year. OPTIONS GRANTED OVER UNISSUED SHARES AND DEBENTURES No options were granted to any person to take-up unissued shares of the Company during the year. OTHER STATUTORY INFORMATION Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:- i) all known bad debts have been written off and adequate provision made for doubtful debts, and ii) all current assets have been stated at the lower of cost and net realisable value. At the date of this report, the Directors are not aware of any circumstances:- i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or ii) that would render the value attributed to the current assets in the Group and in the Company financial statements misleading, or iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report there does not exist:- i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable

18 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 17 within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. In the opinion of the Directors, except as disclosed in the financial statements, the results of the operations of the Group and of the Company for the financial year ended 31 December 2000 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report. AUDITORS The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment. Signed in accordance with a resolution of the Directors: TAN SRI DATO SERI DR ABDULLAH BIN AYUB KEE LIAN YONG Kuala Lumpur Date: 23 April 2001

19 18 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965 In the opinion of the Directors, the financial statements set out on pages 21 to 42, are drawn up in accordance with applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2000 and of the results of their operations and of their cash flows for the year ended on that date. Signed in accordance with a resolution of the Directors: TAN SRI DATO SERI DR ABDULLAH BIN AYUB KEE LIAN YONG Kuala Lumpur Date: 23 April 2001

20 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 19 DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, Kee Lian Yong, the director primarily responsible for the financial management of Systematic Education Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 21 to 42 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the abovenamed at Kuala Lumpur on 23 April KEE LIAN YONG Before me: ZAINAL ABIDIN BIN MD. NOOR (PPN) NO. W 254 Commissioner for Oaths

21 20 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES REPORT OF THE AUDITORS TO THE MEMBERS OF SYSTEMATIC EDUCATION GROUP BERHAD We have audited the financial statements set out on pages 21 to 42. The preparation of the financial statements is the responsibility of the Company s Directors. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards require that we plan and perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to give reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit also includes an assessment of the accounting principles used and significant estimates made by the Directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of: i) the state of affairs of the Group and of the Company at 31 December 2000 and the results of their operations and cash flows for the year ended on that date; and and ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act. The subsidiaries in respect of which we have not acted as auditors are identified in Note 3 to the financial statements and we have considered their financial statements and the auditors reports thereon. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment made under subsection (3) of Section 174 of the Act. KPMG Firm Number: AF 0758 Public Accountants Hew Lee Lam Sang Partner Approval Number: 1862/10/01(J) Kuala Lumpur Date: 23 April 2001

22 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 21 BALANCE SHEETS AT 31 DECEMBER 2000 Group Company Note RM 000 RM 000 RM 000 RM 000 Property, plant and equipment 2 33,962 36,197 21,795 24,126 Investments in subsidiaries 3 8,618 10,892 Other investments Expenditure carried forward, at cost ,019 36,359 30,413 35,105 Current assets Inventories Trade and other receivables 7 2,538 1,568 1, Cash and cash equivalents 8 6,773 3,907 3, ,592 5,777 4,552 1,127 Current liabilities Other payables 9 5,724 4, ,033 Hire purchase and lease creditors Borrowings Taxation 1, Dividend payable 684 1, ,900 7,749 7,365 1,624 3,698 Net current assets/(liabilities) 1,843 (1,588) 2,928 (2,571) 35,862 34,771 33,341 32,534 Financed by: Capital and reserves Share capital 12 19,000 19,000 19,000 19,000 Reserves 13 15,297 14,365 13,724 12,979 34,297 33,365 32,724 31,979 Minority shareholders' interests Long term and deferred liabilities Hire purchase and lease creditors Deferred taxation 15 1,409 1, ,435 1, ,862 34,771 33,341 32,534 The notes set out on pages 26 to 42 form an integral part of, and, should be read in conjunction with, these financial statements.

23 22 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2000 Group Company Note RM 000 RM 000 RM 000 RM 000 Revenue 26,253 24,021 2,232 2,283 ===== ===== ===== ===== Operating profit 16 5,108 4,192 3,988 2,996 Financing costs 17 (78) (140) (64) (101) Interest income Profit before exceptional item and taxation 5,198 4,122 4,024 2,895 Exceptional item 18 1,295 1,295 Profit after exceptional item and before taxation 6,493 4,122 5,319 2,895 Tax expense 19 (2,023) (109) (1,040) (196) Profit after taxation 4,470 4,013 4,279 2,699 Less: Minority interests (4) (8) Net profit from ordinary activities 4,466 4,005 4,279 2,699 ===== ===== ===== ===== Basic earnings per ordinary share (sen) 20(a) ===== ===== Pro forma basic earnings per ordinary share (sen) 20(b) ===== ===== Dividends per ordinary share ===== ===== The notes set out on pages 26 to 42 form an integral part of, and, should be read in conjunction with, these financial statements.

24 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 23 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2000 Share Share Revaluation Retained Note capital premium reserve profits Total Group RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January , ,452 8,265 31,260 Net profit for the year 4,005 4,005 Dividends 21 (1,900) (1,900) At 31 December 1999/ 1 January , ,452 10,370 33,365 Transfer from revaluation reserve (460) 460 Net profit for the year 4,466 4,466 Dividends 21 (3,534) (3,534) At 31 December , ,992 11,762 34,297 ===== ===== ===== ===== ===== Company At 1 January , ,555 9,082 31,180 Net profit for the year 2,699 2,699 Dividends 21 (1,900) (1,900) At 31 December 1999/ 1 January , ,555 9,881 31,979 Net profit for the year 4,279 4,279 Dividends 21 (3,534) (3,534) At 31 December , ,555 10,626 32,724 ===== ===== ===== ===== ===== The notes set out on pages 26 to 42 form an integral part of, and, should be read in conjunction with, these financial statements.

25 24 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2000 Group Company RM 000 RM 000 RM 000 RM 000 Cash flows from operating activities Profit before taxation and extraordinary item 6,493 4,122 5,319 2,895 Adjustments for: Depreciation 1,999 2, Amortisation of preliminary and pre-operating expenses Amortisation of research and development expenses 35 Advances to subsidiaries written off 1,486 Bad debts written off Dividend income (3) (3,350) (3,600) Loss/(Gain) on disposal of property, plant and equipment (1,295) (49) (1,295) Fixed assets written off Interest expense Interest income (168) (70) (100) Hire purchase interest Operating profit before working capital changes 7,367 6,337 1,397 1,525 (Increase)/Decrease in working capital: Inventories 21 (96) Trade and other receivables (925) (335) (763) (258) Other payables 1, (510) 53 Pre-operating expenses (4) (3) Subsidiary companies 2,274 (1,706) Cash generated from/(used in) operations 8,019 6,472 2,398 (386) Income taxes paid (1,351) (1,277) (103) Interest paid (14) (59) (4) (27) Interest received (operating only) Hire purchase interest paid (64) (81) (58) (63) Income tax refunded Net cash generated by/(used in) operating activities 6,761 5,397 2,333 (358) Cash flows from investing activities Proceeds from disposal of fixed assets 3, ,188 Purchase of property, plant and equipment (1,896) (1,534) (200) (55) Dividends received 2,687 3,404 Pre-operating/preliminary expenses (109) Net cash generated from/(used in ) investing activities 1,414 (1,414) 5,675 3,240

26 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 25 Group Group Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cash flows from financing activities Dividend paid to minority shareholders (41) Dividend paid (4,750) (1,368) (4,750) (1,368) Repayment of loans (283) (62) (281) (60) Payment of finance lease/hire purchase liabilities (341) (278) (329) Dividend received 2 Net cash used in financing activities (5,415) (1,428) (5,309) (1,757) Net increase in cash and cash equivalents 2,760 2,555 2,699 1,125 Cash and cash equivalents at beginning of year 3,898 1, (464) Cash and cash equivalents at end of year 6,658 3,898 3, ===== ===== ===== ===== Cash and cash equivalents Cash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts: Group Group Company Company RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cash and bank balances 4,435 2, Fixed deposits with licensed banks 2,338 1,279 2,699 Bank overdrafts (115) (9) 6,658 3,898 3, ===== ===== ===== ===== The notes set out on pages 26 to 42 form an integral part of, and, should be read in conjunction with, these financial statements.

27 26 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies are adopted by the Group and the Company and are consistent with those adopted in previous years. (a) Basis of accounting The financial statements of the Group and of the Company are prepared under the historical cost convention as modified by the revaluation of certain property, plant and equipment and in compliance with applicable approved accounting standards in Malaysia. (b) Basis of consolidation Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or indirectly to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed during the year are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries net assets are determined and these values are reflected in the Group financial statements. The difference between the acquisition cost and the fair values of the subsidiaries net assets is reflected as goodwill or reserve on consolidation as appropriate. Intragroup transactions and balances and the resulting unrealised profits are eliminated on consolidation. Unrealised losses resulting from intragroup transactions are also eliminated unless cost cannot be recovered. (c) Property, plant and equipment Owned assets Property, plant and equipment are stated at cost less accumulated depreciation. The carrying amounts of property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such an indication exists, the asset s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an item of property, plant and equipment exceeds its recoverable amount. The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it will be charged to equity. Any subsequent increase in recoverable amount is reduced by the amount that would have been recognised as depreciation had the write-down or write-off not occurred. (d) Finance leases Leases in which the Group and the Company assume substantially all the risks and rewards of ownership are classified as finance leases. Other leases are classified as operating leases. Assets acquired by way of finance leases are stated at amounts equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in the lease, if this is practicable to determine; if not, the Group s incremental borrowing rate is used.

28 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 27 (e) Depreciation Freehold land is not amortised. Leasehold land is amortised in equal instalments over the period of the respective leases which range from sixty to ninety-nine years while buildings are depreciated on a straight line basis over the shorter of 50 years or the lease period. Other fixed assets are depreciated on a straight-line basis to write off the cost of the assets over the term of their estimated useful lives. The principal annual rates of depreciation used are as follows:- Computers, software and hardware 20% - 25% Motor vehicles 20% Furniture, fittings and office equipment 10% % Library books and manuals 10% % Capital work in progress is not depreciated until it is completed and in use. (f) Investments Investments in subsidiaries are stated at cost. A provision is made when the Directors are of the view that there is a permanent diminution in their value. Short term quoted investments are stated at the lower of cost and market value on a portfolio basis with a specific write down for shares where a permanent diminution has occurred. (g) Intangible assets Goodwill Goodwill arising on an acquisition represents the excess of the cost of the acquisition over the fair values of the net identifiable assets acquired. Goodwill on consolidation is written off in the year of acquisition. (h) Inventories Inventories are valued at the lower of cost and net realizable value. (i) Cash and cash equivalents Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts.

29 28 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES (j) Taxation The tax expense in the income statement represents taxation at current tax rates based on profit earned during the year. Deferred taxation is provided on the liability method for all timing differences except where no liability is expected to arise in the foreseeable future and there are no indications the timing differences will reverse thereafter. Deferred tax benefits are only recognised where there is a reasonable expectation of realisation in the near future. (k) Revenue i) Goods sold and services rendered The revenue of the Group comprises tuition and lecture fees received, sales of books, manuals and other training materials and accessories. The revenue of the Company comprises management fees and rental. Revenue from course fee is recognised over the period of the course. ii) Dividend income Dividend income is recognised when the right to receive payment is established. iii) Interest income Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. (l) Expenses i) Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease payments made. ii) Financing costs All interest and other costs incurred in connection with borrowings are expensed as incurred. The interest component of finance lease payments is recognised in the income statement so as to give a constant periodic rate of interest on the outstanding liability at the end of each accounting period.

30 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT GROUP Cost Freehold land and buildings RM 000 Apartments, Leasehold land and buildings RM 000 Computers, software and hardware RM 000 Motor vehicles RM 000 Furniture, fittings and office equipment RM 000 Library books and manuals RM 000 Capital work-in progress RM 000 Total RM 000 At 1 January ,544 12,765 5, , ,822 Additions ,896 Disposals (1,950) (208) (210) (307) (2,675) Write off (28) (433) (6) (467) At 31 December ,594 12,765 6, , ,576 Representing items at: Cost 3,893 12,635 6, , ,745 Directors valuation , ,781 Disposal (1,950) (1,950) At 31 December ,594 12,765 6, , ,576 Accumulated depreciation At 1 January , , ,625 Charge for the year ,999 Disposal (57) (160) (169) (274) (660) Write off (16) (328) (6) (350) At 31 December , , ,614 Net book value At 31 December ,736 11,963 2, , ,962 At 31 December ,779 12,179 2, , ,197 Depreciation charge for the year ended 31 December ,095

31 30 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES COMPANY Cost Freehold land and buildings RM 000 Apartments, Leasehold land and buildings RM 000 Computers, software and hardware RM 000 Motor vehicles RM 000 Furniture, fittings and office equipment RM 000 Library books and manuals RM 000 Capital work-in progress RM 000 Total RM 000 At 1 January ,744 8,255 1, ,841 Additions Disposals (1,950) (2) (1,952) Write off (14) (14) At 31 December ,794 8,255 1, ,075 Representing items at: Cost 3,893 8,125 1, ,044 Directors valuation , ,981 Disposal (1,950) (1,950) At 31 December ,794 8,255 1, ,075 Accumulated depreciation At 1 January ,715 Charge for the year Disposal (57) (1) (58) Write off (2) (2) At 31 December ,280 Net book value At 31 December ,083 7, ,795 At 31 December ,101 7, ,126 Depreciation charge for the year ended 31 December

32 SYSTEMATIC EDUCATION GROUP BERHAD AND ITS SUBSIDIARIES 31 Revaluation It is the Group s policy to state property, plant and equipment at cost. The Group s certain freehold land and building are stated at Directors valuation based on a professional valuation on open market basis conducted in December The revaluation of the freehold land and building was carried out in connection with the Group s corporate exercise then and was not intended to effect a change in the accounting policy to one of revaluation of properties. In accordance with the transitional provisions issued by the Malaysian Accounting Standard Board ( MASB ) on the adoption of International Accounting Standards ( IAS ) No. 16 (Revised) on Property, Plant and Equipment, the valuations of these assets have not been updated and they continue to be stated at their existing carrying amounts less accumulated depreciation. The net book value of assets as at the year end held under hire purchase in the Group amounted to RM198,000 ( RM784,000) respectively. The net book value of assets as at the year end held under hire purchase in the Company amounted to RM172,647 ( RM692,506) Had the land and building been carried at historical cost less accumulated depreciation, the carrying amount of the revalued assets that would have been included in the accounts at the end of the year are as follows:- Group Company RM 000 RM 000 RM 000 RM 000 Freehold land and buildings 9,737 11,633 6,528 8,606 Apartments ,846 11,743 6,637 8,716 ===== ===== ===== ===== Security Certain freehold land and buildings are charged to banks as security for borrowing facilities (see Note 11) granted to the Company and a subsidiary.