Financial Statements for the year ended 31 December 2003

Transcription

1 Financial Statements for the year ended 31 December Directors Report 086 Statement by Directors and Statutory Declaration 087 Report of the Auditors 088 Balance Sheets 089 Income Statements 090 Statement of Changes in Equity 092 Cash Flow Statements 095 Notes to the Financial Statements

2 directors report for the year ended 31 december 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 Company is principally engaged in investment holding and the provision of management consultancy services and business advisory services, whilst the principle activities of the subsidiaries are as stated in Note 28 to the financial statements. There has been no significant change in the nature of these activities during the financial year. RESULTS Group Company RM 000 RM 000 Net profit for the year 14,373 6,032 RESERVES AND PROVISIONS 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 paid a final dividend of 7% less tax totalling RM3,988,000 in respect of the year ended 31 December 2002 on 12 August The final dividend recommended by the Directors in respect of the year ended 31 December 2003 is 8% less tax totalling RM4,665,000. DIRECTORS OF THE COMPANY Directors who served since the date of the last report are: Director Senator Tan Sri Dato Seri (Dr) Abdullah bin Ayub Dato (Dr) Patrick Teoh Seng Foo Dato Clement Hii Chii Kok Kee Lian Yong Dato Seri Megat Najmuddin bin Datuk Seri Dr Haji Megat Khas Amos Siew Boon Yeong Simon Hue Fook Chuan Dato Pahamin A. Rajab Datin Fadzilah bte Saad Alternate Hj. Mohd Razi bin Yaacob

3 directors report for the year ended 31 december 2003 (cont d) 083 The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end as recorded in the Register of Directors Shareholdings are as follows: Number of ordinary shares of RM1.00 each Balance at Balance at Name Bought Sold Direct interest: Senator Tan Sri Dato Seri (Dr) Abdullah bin Ayub 11,200 10,000 21,200 Dato Clement Hii Chii Kok 606, , ,000 Dato Seri Megat Najmuddin bin Datuk Seri Dr Haji Megat Khas , ,297 Indirect interest: Senator Tan Sri Dato Seri (Dr) Abdullah bin Ayub 19,287,478 19,287,478 + Dato (Dr) Patrick Teoh Seng Foo 24,755,025 (1,000,000) 23,755,025 # Hj. Mohd Razi bin Yaacob 15,226,865 15,226,865 ^ Dato Pahamin A. Rajab 15,226,865 15,226,865 ^ Datin Fadzilah bte Saad 15,226,865 15,226,865 ^ # Deemed interest held through Kumpulan Emas Berhad and Sawitani Sdn. Bhd. + Deemed interest held through Koperasi Pegawai-Pegawai Melayu Malaysia Berhad and Ladang MOCCIS Sdn. Bhd. ^ Deemed interest held through Koperasi Pegawai-Pegawai Melayu Malaysia Berhad By virtue of their interests in the shares of the Company, the above Directors are also deemed interested in the shares of the subsidiaries during the financial year to the extent that SEG International Bhd. has an interest. None of the other Directors holding office at 31 December 2003 had any interest in the ordinary shares of the Company and of its related corporations during the financial year. DIRECTORS BENEFITS Dato (Dr) Patrick Teoh Seng Foo has interest in companies which traded with certain companies in the Group in the ordinary course of business either as landlord of office space or provider of services. Other than the above, since the end of the previous financial year, no Director of the Company has received nor 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 corporation 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. 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 corporate bodies, other than as stated in this report.

4 directors report for the year ended 31 december 2003 (cont d) 084 ISSUE OF SHARES During the financial year, the Company issued 737,000 and 1,125,800 new ordinary shares of RM1.00 each under the Employees Share Option Scheme ( ESOS ), at the option price of RM1.40 and RM1.35 per share, respectively. OPTIONS GRANTED OVER UNISSUED SHARES AND DEBENTURES No options were granted to any person to take up unissued shares or debentures of the Company during the year apart from the issue of options pursuant to the Employees Shares Option Scheme ( ESOS ). At an extraordinary general meeting held on 15 November 2001, the Company s shareholders approved the establishment of an ESOS of not more than 10% of the issued share capital of the Company at any one time at the point of granting of the options to Executive Directors and eligible employees of the Group. The options offered and the option prices are as follows: Number of options over ordinary shares of RM1 each Date of Option Balance at Balance at offer price Granted Exercised RM1.40 2,713, ,000 1,976, RM1.35 2,380,000 1,125,800 1,254,200 The external auditors have verified the allocation of options granted during the financial year. The salient features of the scheme are as follows: i) Eligible persons are full time employees or any Executive Directors who are citizens or residents of Malaysia and employed by a member of the Company or its subsidiaries ( SEG Group ) for a continuous period of at least one (1) year and whose service of employment has been confirmed in writing as at the date of offer. In addition, where an employee is serving under a fixed term of employment contract, the contract must be for a duration of at least three (3) years and whose service of employment has been confirmed in writing. ii) As at the date of offer, employees must not participate or have not been offered option (s) under any other ESOS implemented by any other member of the SEG Group which is in force for the time being. iii) The option is personal to the grantee and is non-assignable. iv) The options granted may be exercised at any time within a period of five years from the date of offer of the option or such shorter period as may be specifically stated in the offer upon giving notice in writing. v) The options granted may be exercised in full or in lesser number of ordinary shares provided that the number shall be in multiples of 1,000 shares. iv) The option price shall be determined at a discount of not more than 10% from the five (5)-day weighted average market price of the Company s ordinary shares ( SEG Shares ) immediately preceding the date of the offer of the option or at par value of SEG Shares, whichever is higher.

5 directors report for the year ended 31 december 2003 (cont d) 085 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 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, the results of the operations of the Group and of the Company for the financial year ended 31 December 2003 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: Senator Tan Sri Dato Seri (Dr) Abdullah bin Ayub Dato Clement Hii Chii Kok Subang Jaya, Selangor Date: 07 April 2004

6 statement by directors pursuant to section 169(15) of the Companies Act, In the opinion of the Directors, the financial statements set out on pages 088 to 124 are 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 the state of affairs of the Group and of the Company at 31 December 2003 and of the results of their operations and cash flows for the year ended on that date. Signed in accordance with a resolution of the Directors: Senator Tan Sri Dato Seri (Dr) Abdullah bin Ayub Dato Clement Hii Chii Kok Subang Jaya, Selangor Date: 07 April 2004 Statutory Declaration pursuant to section 169(16) of the Companies Act, 1965 I, Kee Lian Yong, the Director primarily responsible for the financial management of SEG International Bhd., do solemnly and sincerely declare that the financial statements set out on pages 088 to 124 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 in Subang Jaya, Selangor on 07 April Kee Lian Yong MIA Number: 3208 Before me: Choy Yee Cheong (P.P.N.) No. B083 Commissioner for Oaths

7 report of the auditors to the members of SEG International Bhd. 087 We have audited the financial statements set out on pages 088 to 124. 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 2003 and the results of their operations and cash flows for the year ended on that date; 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; and 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 28 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 Chartered Accountants Hew Lee Lam Sang Partner Approval Number: 1862/10/05(J) Kuala Lumpur, Date: 07 April 2004

8 balance sheets at 31 december Group Company Note RM 000 RM 000 RM 000 RM 000 Property, plant and equipment 2 100, ,552 29,826 35,447 Investment in subsidiaries 3 71,395 71,820 Investment in associates 4 3,591 3,587 Other investments 5 7,015 7,013 4,000 4,000 Intangible assets 6 35,385 32,546 Current assets 146, , , ,267 Inventories Trade and other receivables 8 70,735 33,754 59,203 37,663 Other investments Tax recoverable Cash and cash equivalents 9 7,035 20,691 1,783 9,304 79,327 55,137 60,986 46,967 Current liabilities Other payables 10 17,751 17,902 5,934 2,309 Borrowings 11 10,317 7, Taxation 6,303 5, ,371 30,916 6,105 2,673 Net current assets 44,956 24,221 54,881 44, , , , ,561 Financed by: Capital and reserves Share capital 12 80,996 79,133 80,996 79,133 Reserves 13 52,093 41,019 37,848 35, , , , ,248 Minority shareholders interest 14 1,063 3,152 Long term and deferred liabilities Borrowings 11 54,769 54,048 40,212 40,329 Deferred tax liabilities 15 2,221 2,567 1, ,990 56,615 41,258 41, , , , ,561 The financial statements were approved and authorised for issue by the Board of Directors on 07 April The notes set out on pages 095 to 124 form an integral part of, and should be read in conjunction with, these financial statements.

9 income statements for the year ended 31 december Group Company Note RM 000 RM 000 RM 000 RM 000 Revenue - services 92,571 80,580 6,752 5,109 Cost of services (28,316) (26,274) (1,941) (1,889) Gross profit 64,255 54,306 4,811 3,220 Distribution costs (6,492) (3,254) (467) (328) Administration expenses (25,257) (27,792) (2,756) (2,149) Other operating expenses (13,709) (10,162) (2,163) (1,965) Other operating income 6,528 3,086 10,184 6,604 Operating profit 17 25,325 16,184 9,609 5,382 Financing costs 19 (6,137) (3,507) (3,748) (191) Interest income , Share of gain/(loss) of associate 196 (13) Profit before tax 19,679 12,746 8,274 5,973 Tax Company and subsidiaries (5,082) (6,019) (2,242) (2,191) associates (56) Tax expense 20 (5,138) (6,019) (2,242) (2,191) Profit after taxation 14,541 6,727 6,032 3,782 Less: Minority interests (168) (1,616) Net profit for the year 14,373 5,111 6,032 3,782 Basic earnings per ordinary share (sen) Diluted earning per ordinary share (sen) Dividends per ordinary share (net) - sen The notes set out on pages 095 to 124 form an integral part of, and should be read in conjunction with, these financial statements.

10 statement of changes in equity for the year ended 31 december Non- Distributable Distributable Share Share Revaluation Retained Note capital premium reserve profits Total Group RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January ,128 24,827 3,050 11, ,873 Effect of adopting MASB 25 (477) 56 (421) Restated balance 79,128 24,827 2,573 11, ,452 Net profit for the year 5,104 5,104 Effect of adopting MASB Restated balance 5,111 5,111 Transfer to retained profits on the realisation of revaluation reserve (25) 25 Issue of shares under ESOS Dividend 2001 final 22 (3,418) (3,418) At 31 December ,133 24,829 2,548 13, ,152 Net profit for the year 14,373 14,373 Transfer to retained profit on the realisation of revaluation reserve (25) 25 Issue of shares under ESOS 1, ,552 Disposal of revalued property (291) 291 Dividend 2002 final 22 (3,988) (3,988) At 31 December ,996 25,518 2,232 24, ,089 Note 12 The notes set out on pages 095 to 124 form an integral part of, and should be read in conjunction with, these financial statements.

11 statement of changes in equity for the year ended 31 december 2003 (cont d) 091 Non- Distributable Distributable Share Share Revaluation Retained Note capital premium reserve profits Total Company RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January ,128 24,827 2,613 7, ,257 Effect of adopting MASB 25 (436) 56 (380) Restated balance 79,128 24,827 2,177 7, ,877 Net profit for the year 3,775 3,775 Effect of adopting MASB Restated balance 3,782 3,782 Transfer to retained profit on the realisation of revaluation reserve (25) 25 Issue of shares under ESOS Dividend final 22 (3,418) (3,418) At 31 December ,133 24,829 2,152 8, ,248 Net profit for the year 6,032 6,032 Transfer to retained profit on the realisation of revaluation reserve (25) 25 Issue of shares under ESOS 1, ,552 Dividend final 22 (3,988) (3,988) At 31 December ,996 25,518 2,127 10, ,844 Note 12 The notes set out on pages 095 to 124 form an integral part of, and should be read in conjunction with, these financial statements.

12 cash flow statements for the year ended 31 december Cash flows from operating activities Group Company RM 000 RM 000 RM 000 RM 000 Profit before taxation 19,679 12,746 8,274 5,973 Adjustments for: Impairment loss on investment in subsidiaries 425 Amortisation of goodwill 1,640 1,284 Amortisation of development costs Depreciation 5,262 5, Development costs written off 40 Dividend income (2) (2) (7,363) (6,329) Impairment loss on goodwill 26 Interest expense 6,137 3,507 3, Interest income (295) (82) (2,413) (782) Loss on partial disposal of investment in subsidiary 104 Gain on disposal of quoted investments (278) Gain on disposal of property, plant and equipment (4,149) (76) (2,265) Property, plant and equipment written off Share of partnership loss 16 Share of (gain)/loss in associate (196) 13 Operating profit before working capital changes 29,156 23,880 1, Change in working capital: Inventories Trade and other receivables (28,806) (20,535) 4,203 (2,310) Other payables (238) 2,735 3,625 (723) Cash generated from/(used in) operations 204 6,146 8,972 (2,983) Income taxes paid (4,442) (4,199) (312) (333) Interest paid (6,137) (3,507) (3,748) (191) Interest received , Net cash (used in)/generated from operating activities (10,080) (1,478) 7,325 (2,725)

13 cash flow statements for the year ended 31 december 2003 (cont d) 093 Cash flows from investing activities Group Company Note RM 000 RM 000 RM 000 RM 000 Proceeds from disposal of quoted investment 3,172 Proceeds from partial disposal of investment in subsidiary 40 Proceeds from disposal of property, plant and equipment 7, ,248 Purchase of property, plant and equipment (i) (3,007) (8,226) (105) (843) Purchase of quoted investments (3,781) Purchase of addition interest in existing subsidiaries (7,681) (175) Development expenditure incurred (19) Net cash (used in)/generated from investing activities (4,005) (7,926) 3,143 (1,018) Cash flows from financing activities Advances to subsidiaries (16,436) (18,926) Dividend paid (3,988) (3,418) (3,988) (3,418) Payments of finance lease/hire purchase liabilities (1,004) (1,262) (117) (192) Repayments of term loans (2,430) (4,962) Increase in deposits pledged (29) (6) Proceeds from term loans 2,074 38,144 35,000 Proceeds from issuance of shares 2, ,552 7 Net cash (used in)/generated from financing activities (2,825) 28,953 (17,989) 12,471 Net (decrease)/increase in cash and cash equivalents (16,910) 19,549 (7,521) 8,728 Cash and cash equivalents at beginning of year 17,951 (1,598) 9, Cash and cash equivalents at end of year (ii) 1,041 17,951 1,783 9,304

14 cash flow statements for the year ended 31 december 2003 (cont d) 094 i) Purchase of property, plant and equipment During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM4,402,000 ( RM9,377,000) and RM Nil ( RM993,000), respectively, of which RM1,395,000 ( RM1,151,000) and RM Nil ( RM150,000), respectively, were acquired by means of finance leases/hire purchases. ii) Cash and cash equivalents Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts: Group Company RM 000 RM 000 RM 000 RM 000 Cash and bank balances 6,831 4,991 1,783 1,290 Deposits with licensed banks ,700 8,014 Bank overdrafts (5,790) (2,565) 1,245 18,126 1,783 9,304 Fixed deposits pledged to banks (204) (175) 1,041 17,951 1,783 9,304 The notes set out on pages 095 to 124 form an integral part of, and should be read in conjunction with, these financial statements.

15 notes to the financial statements SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies are adopted by the Group and by the Company and are consistent with those adopted in previous years except for the adoption of the following: i) MASB 25, Income Taxes; ii) MASB 27, Borrowing Costs; and iii) MASB 29, Employee Benefits. In addition to the new policies and extended disclosures where required by these new standards, the effects of the changes in the above accounting policies are disclosed in Note 30 to these financial statements. a) Basis of accounting The financial statements of the Group and of the Company are prepared on the historical cost basis except as disclosed in the notes to the financial statements and in compliance with the provisions of the Companies Act, 1965 and 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. A subsidiary is excluded from consolidation when either control is intended to be temporary if the subsidiary is acquired and held exclusively with a view of its subsequent disposal in the near future and it has not previously been consolidated or it operates under severe long term restrictions which significantly impair its ability to transfer funds to the Company. Subsidiaries excluded on these grounds are accounted for as investments. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of 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 negative goodwill 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) Associates Associates are those enterprises in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the total recognised gains and losses of associates on an equity accounted basis from the date that significant influence effectively commences until the date that significant influence effectively ceases. Unrealised profits arising on transactions between the Group and its associates which are included in the carrying amount of the related assets and liabilities are eliminated partially to the extent of the Group s interests in the associates. Unrealised losses on such transactions are also eliminated partially unless cost cannot be recovered. Goodwill on acquisition is calculated based on the fair value of net assets acquired.

16 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) d) Property, plant and equipment i) Owned assets Freehold land and capital work in progress are stated at cost. All other property, plant and equipment are stated at cost/valuation less accumulated depreciation. It is the Group s policy to state property, plant and equipment at cost. ii) Assets under hire purchase Property, plant and equipment financed by hire purchase agreements are capitalised at cost. The interest element of the hire purchase instalments is charged to income statement over the period of the agreement and accounted for on a straight line method. Depreciation Freehold land and capital work in progress are not amortised. Leasehold land and buildings are 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. The straight line method is used to write off the cost of the other assets over the term of their estimated useful lives at the following principal annual rates. Computer hardware and software 20% - 25% Motor vehicles 20% Plant and equipment 10% - 25% Furniture, fittings and office equipment 10% % Library books and manual 10% % Capital work in progress are not depreciated until it is completed and in use in the operation. e) Investments Long term investments other than in subsidiaries and associates are stated at cost. An allowance is made when the Directors are of the view that there is a diminution in their value which is other than temporary. Long term investments in subsidiaries and associates are stated at cost in the Company less impairment loss where applicable. Current quoted investments are stated at the lower of cost and market value on an individual investment basis. f) Intangible assets Goodwill Goodwill represents the excess of the cost of acquisition over the fair values of the net identifiable assets acquired and is stated at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised from the date of initial recognition over its estimated useful life of not more than 25 years. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associates. Development expenditure Development expenditure consists of direct costs net of income of trial courses to develop new curriculum to be submitted to the Ministry of Education and Lembaga Akreditasi Negara for approval and direct cost related to the development of educational courses.

17 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) The development expenditure relating to approved courses is amortised and recognised as an expense on a systematic basis so as to reflect the pattern in which the related economic benefit are recognised over five (5) years. g) Inventories Inventories are valued at the lower of cost and net realisable value and are determined on a first-in-first-out basis. The cost of inventories comprise the original purchase price plus incidentals in bringing these inventories to their present location and conditions. h) Trade and other receivables Trade and other receivables are stated at cost less allowance for doubtful debts. i) Employee benefits Obligations for contributions to defined contributions plan are recognised as an expense in the income statement as incurred. j) 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 and pledged deposits. k) Impairment The carrying amount of assets, other than inventories and financial assets (other than investments in subsidiaries and associates), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment losses are recognised in the income statement, unless the asset is carried at a revalued amount, in which case the impairment loss is charged to equity. The recoverable amount is the greater of the asset s net selling price and its value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss in respect of goodwill is not reversed unless the loss was caused by a specific external event of an exceptional nature that is not expected to recur and subsequent external events have occurred that reverse the effect of that event. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The reversal is recognised in the income statement, unless it reverses an impairment loss on a revalued asset, in which case it is taken to equity. l) Liabilities Borrowings and other payables are stated at cost.

18 098 m) Income tax Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that at the time of the transaction affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. n) Revenue Goods sold and services rendered The revenue of the Group comprises tuition, lecture and examination fees received, sales of books, manuals and other training materials and accessories and rental. The revenue of the Company comprises management fees and rental. Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from course fee is recognised over the period of the course. Management fees and rental are recognised on accrual basis. o) Dividend income Dividend income is recognised when the right to receive payment is established. p) Interest income Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. q) 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. ii) Financing costs All interest and other costs incurred in connection with borrowings are expensed as incurred. The interest component of hire purchase 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.

19 notes to the financial statements xxxxxxxxxx (cont d) PROPERTY, PLANT AND EQUIPMENT Furniture, Freehold Leasehold Computer fittings Library Capital Group land and land and software and Motor Plant and and office books and work-inbuildings buildings hardware vehicles equipment equipment manuals progress Total Cost/Valuation RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Opening balance 19,594 37,311 10,598 1,842 2,237 27,486 2,271 35, ,134 Additions 1,150 3, ,402 Disposals (5,800) (6,795) (3) (119) (12,717) Write off (18) (434) (452) Transfer 35, (35,795) Acquisition of subsidiary Closing balance 13,794 65,651 11,727 1,723 2,237 30,830 2, ,422 Representing items at: Cost 2,627 65,521 11,727 1,723 2,237 30,830 2, ,125 Directors valuation , ,297 Accumulated Depreciation 13,794 65,651 11,727 1,723 2,237 30,830 2, ,422 Opening balance 1,175 1,839 7, ,510 10,597 1,312 24,582 Charge for the year , , ,262 Disposals (417) (897) (1) (105) (1,420) Write off (2) (195) (197) Closing balance 948 1,435 8, ,585 13,107 1,599 28,227 Net Book Value At 31 December ,846 64,216 2, , ,195 At 31 December ,419 35,472 3,043 1, , , ,552 Depreciation charge for the year ended 31 December , , ,121

20 PROPERTY, PLANT AND EQUIPMENT (CONT D) Furniture, Freehold Leasehold Computer fittings Library Company land and land and software and Motor and office books and buildings buildings hardware vehicles equipment manuals Total Cost/Valuation RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Opening balance 13,794 21,557 1, , ,178 Additions Disposals (3,267) (2,286) (5,553) Closing balance 10,527 19,271 1, , ,730 Representing items at: Cost ,141 1, , ,700 Directors valuation , ,030 At 31 December ,527 19,271 1, , ,730 Accumulated Depreciation Opening balance , ,731 Charge for the year Disposals (269) (296) (565) Closing balance , ,904 Net book value At 31 December ,710 18, ,080 29,826 At 31 December ,833 20, ,194 35,447 Depreciation charge for the year ended 31 December

21 PROPERTY, PLANT AND EQUIPMENT (CONT D) i) Revaluation It is the Group s policy to state property, plant and equipment at cost. The Group s certain freehold land and buildings are stated at Directors valuation based on a professional valuation on open market basis conducted in December The surplus arising on revaluation has been taken to revaluation reserve. 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 valuation of these assets have not been updated and they continue to be stated at their existing carrying amounts less accumulated depreciation. The Directors are of the view that the current market values of the revalued properties are not less than their net book values as at 31 December Had the land and buildings been carried at historical cost less accumulated depreciation, the carrying amount of the revalued assets that would have been included in the financial statements at the end of the year are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Freehold land and buildings 8,236 9,575 6,351 6,410 Apartments ,338 9,679 6,453 6,514 ii) Security Certain freehold land and buildings of the Group and of the Company are charged to banks as security for borrowings (see Note 11). iii) Assets under hire purchase The net book value of property, plant and equipment as at the year end held under hire purchase agreements of the Group and of the Company amounted to RM3,810,000 ( RM3,052,000) and RM425,000 (2002 RM575,000) respectively. 3. INVESTMENT IN SUBSIDIARIES Company RM 000 RM 000 Unquoted shares at cost 71,820 71,820 Less: Impairment loss (425) 71,395 71,820 The details of the subsidiaries are disclosed in Note 28 to the financial statements.

22 INVESTMENTS IN ASSOCIATES Group RM 000 RM 000 Unquoted shares, at cost 3,640 3,640 Share of post-acquisition reserves 87 (53) Less: Goodwill amortised (136) 3,591 3,587 Represented by: Group s share of net assets other than goodwill Goodwill on acquisition, less amortisation 3,205 3,341 The associates of the Group are as follows: 3,591 3,587 Effective Principal Ownership Country Activities Interest % % Palm Leisure Sdn. Bhd. Malaysia Property development Upward Portfolio Sdn. Bhd. Malaysia Provision of educational services 5. OTHER INVESTMENTS Group Company RM 000 RM 000 RM 000 RM 000 Long term Quoted unit trusts stock Quoted shares at cost 2,970 2,970 Unquoted shares at cost 8 8 Unquoted bonds at cost 4,000 4,000 4,000 4,000 7,015 7,013 4,000 4,000 Market value Quoted unit trusts stock Quoted shares 1,530 1,204 Current Quoted shares 887 Market value Quoted shares 1,045

23 INTANGIBLE ASSETS Development Group Goodwill costs Total Cost RM 000 RM 000 RM 000 Opening balance 32,008 4,874 36,882 Acquisition of additional interest in existing subsidiary 5,342 5,342 Closing balance 37,350 4,874 42,224 Accumulated amortisation Opening balance 3, ,336 Amortisation charge for the year 1, ,477 Impairment loss for the year Closing balance 4,886 1,953 6,839 Net book value At 31 December ,464 2,921 35,385 At 31 December ,652 3,894 32, INVENTORIES Inventories comprise text books and manuals which are stated at cost. 8. TRADE AND OTHER RECEIVABLES Group Company RM 000 RM 000 RM 000 RM 000 Trade receivables 44,069 20,632 Other receivables, deposits and prepayment 26,666 13,122 11,769 3,155 Subsidiaries non-trade 47,434 34,508 70,735 33,754 59,203 37,663 The amounts due from subsidiaries are unsecured, interest free and have no fixed terms of repayment except for advances to certain subsidiaries amounting to RM35,361,542 ( RM18,926,000) which bear interest at 8.5% ( %) per annum. 8.1 Included in the Group and the Company s other receivables is an amount of RM8,194,000 ( Nil) and RM4,005,000 ( Nil), respectively, due from the purchasers of the land and buildings which were disposed during the year.

24 TRADE AND OTHER RECEIVABLES (CONT D) 8.2 Included in the Group and the Company s deposits are deposits of RM3,742,000 ( Nil) and RM2,992,000 ( Nil), respectively paid for the acquisition of two new campus properties. 8.3 Included in the Group and the Company s prepayments is an interest prepaid of RM1,250,000 ( RM1,600,000) on term loan. The prepayment will be amortised over the period of the term loan of 5 years. 8.4 Also included in the Group s other receivables are related party balances of RM898,000 ( RM2,563,000), RM111,000 ( RM118,000) and RM933,000 ( RM915,000) due from the Meda Group of Companies, SYF Resources Group of Companies (Formerly known as Tomisho Group of Companies) and Kumpulan Emas Group of Companies, respectively (refer Note 25). 8.5 Also included in the Company s other receivables are related party balances of RM11,000 (2002 RM17,000), RM53,000 ( RM8,000) and Nil ( RM118,000) due from the Kumpulan Emas Group of Companies, Meda Group of Companies and SYF Resources Group of Companies (Formerly known as Tomisho Group of Companies), respectively (refer Note 25). 9. CASH AND CASH EQUIVALENTS RM 000 RM 000 RM 000 RM 000 Cash and bank balances 6,831 4,991 1,783 1,290 Deposits with licensed banks ,700 8,014 7,035 20,691 1,783 9,304 Fixed deposits in the Group of RM204,000 ( RM175,000) have been pledged to financial institutions for banking facilities extended to certain subsidiaries in the ordinary course of business. (Note 11). 10.OTHER PAYABLES Group Company RM 000 RM 000 RM 000 RM 000 Other payables and accrued expenses 17,751 17,902 1,581 1,671 Subsidiaries non-trade 4, ,751 17,902 5,934 2,309

25 OTHER PAYABLES (CONT D) 10.1 The amounts due to subsidiaries are unsecured, interest free and have no fixed terms of repayment Included in other payables and accrued expenses of Group is an amount of RM2,768,000 ( RM2,776,000) and RM2,361,000 (2002 Nil) which represents fees received in advance and accruals for students allowance, respectively In 2002, included in other payables were related party balances of RM147,000 and RM819,000 due to the Meda Group of Companies and Kumpulan Emas Group of Companies, respectively (refer Note 25). 11.BORROWINGS Group Company RM 000 RM 000 RM 000 RM 000 Current Term loans - secured 3,156 4,206 Overdrafts - secured 5,790 2,236 - unsecured 329 Hire purchase and finance lease liabilities 1, ,317 7, Non-current Long term loans - secured 13,505 12,811 - unsecured 40,000 40,000 40,000 40,000 Hire purchase and finance lease liabilities 1,264 1, ,769 54,048 40,212 40,329 The bank overdraft and term loan facilities of the Group and the Company are subject to interest rates ranging from 7.0% to 8.5% ( % to 10.4%) per annum.

26 BORROWINGS (CONT D) Terms and debts repayment schedule Under Over 5 Total 1 year years years years Group RM 000 RM 000 RM 000 RM 000 RM 000 Unsecured term loan - fixed 8.5% ( %) 40,000 40,000 Secured term loans -variable at 7.25% to 8.5% 16,661 3,156 3,156 9,100 1,249 ( % to 10.4%) Secured overdrafts -variable at 7.0% to 7.5% 5,790 5,790 ( % to 7.9%) Hire purchase and finance lease liabilities - fixed at 4.65% to 6.90% 2,635 1, ( % to 6.90%) Company 65,086 10,317 4,078 49,442 1,249 Unsecured term loan - - fixed at 8.5% ( %) 40,000 40,000 Hire purchase and finance lease liabilities - fixed at 4.65% to 5.00% ( % to 5.75%) , ,095 The secured term loans and overdraft facilities are secured by fixed charges over freehold and long term leasehold land and buildings of the Company and subsidiaries with net book value of RM53,793,000 ( RM22,467,000) and building in progress of subsidiaries with cost of RMNil ( RM35,135,000) and fixed deposits of RM204,000 ( RM175,000).

27 BORROWINGS (CONT D) Hire purchase and lease liabilities Hire purchase and lease liabilities are payable as follows: Gross Interest Principal Gross Interest Principal Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Less than one year 1,637 (266) 1,371 1,123 (127) 996 Between one and five years 1,565 (301) 1,264 1,480 (243) 1,237 3,202 (567) 2,635 2,603 (370) 2,233 Company Less than one year 145 (28) (28) 117 Between one and five years 263 (51) (79) SHARE CAPITAL 408 (79) (107) 446 Group and Company Ordinary shares of RM1.00 each RM 000 RM 000 Authorised 100, ,000 Issued and fully paid Opening balance 79,133 79,128 Issuance of shares under ESOS 1,863 5 Closing balance 80,996 79, RESERVES Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exempt income to frank all its distributable reserves at 31 December 2003, if paid out as dividends. 14.MINORITY SHAREHOLDERS INTERESTS This consists of minority shareholders proportion of share capital and reserves of subsidiaries, net of their share of subsidiary s goodwill on consolidation and amortisation of goodwill charged to the minority shareholders.

28 DEFERRED TAX The amounts, determined after appropriate offsetting, are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Deferred tax liabilities 2,221 2,567 1, Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxation authority. The recognised deferred tax assets and liabilities (before offsetting) are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Property, plant and equipment - capital allowances 2,116 2, revaluation Unabsorbed capital allowances (261) (217) (261) (217) 2,221 2,567 1, The unrecognised deferred tax assets are as follows: Group RM 000 RM 000 Deductible temporary differences (3,025) (3,662) Unabsorbed capital allowances 3,514 3,126 Unutilised tax losses 12,168 12,598 12,657 12,061 The unutilised tax losses and deductible temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits. The Group has tax losses carried forward of RM12,168,000 ( RM12,598,000) which give rise to the recognised and unrecognised deferred tax assets in respect of unutilised tax losses above.

29 EMPLOYEE BENEFITS Share option plan The Group offers vested share options over ordinary shares to Directors and employees with more than one year service. Movements in the number of share options held by employees are as follows: Group and Company RM 000 RM 000 Outstanding at 1 January 2,713 Issued 2,380 2,718 Exercised (1,863) (5) Outstanding at 31 December 3,230 2,713 Detail of share options granted during the period: Expiry date 14/1/ /1/2007 Exercise price per ordinary share (RM) Aggregate proceeds if shares are issued (RM 000) 3,213 3,805 Details of share options exercised during the period: Expiry date 14/1/ /1/2007 Exercise price per ordinary share (RM) Aggregate issue proceeds (RM 000) 2,552 7 Fair value at date of issue (RM 000) 3,689 7 Term of the options outstanding at 31 December: Expiry date Exercise price Number 14/1/2007 RM1.40 1,976,000 14/1/2007 RM1.35 1,254,200 The Group received proceeds of RM2,552,000 in respect of the 1,863,000 options exercised during the year: RM1,863,000 was credited to share capital and RM689,000 was credited to share premium.

30 OPERATING PROFIT Group Company RM 000 RM 000 RM 000 RM 000 Operating profit is arrived at after charging: Amortisation of goodwill 1,504 1,284 Amortisation of goodwill in investment in associate 136 Amortisation of development costs Audit fees Depreciation 5,262 5, Development costs written off 40 Holding company s Directors: - Remuneration Fees Subsidiary Directors remuneration 699 1,008 Impairment loss on investments in subsidiaries 425 Impairment loss on goodwill 26 Loss on disposal in subsidiary 104 Property, plant and equipment written off Rental expense on land and buildings 3,964 4, Rental of equipment Share of partnership loss 16 After crediting: Gross dividends from: - Unquoted subsidiaries 7,363 6,329 Rental income on land and buildings 1,170 1,826 2,103 2,229 Dividend income 2 2 Gain on disposal of property, plant and equipment 4, ,265 Gain on disposal of quoted investments 278 The estimated monetary value of Directors benefits-in-kind of the Group and Company is RM34,450 ( RM37,400) and RM18,000 (2002 RM18,600) respectively.

31 EMPLOYEE INFORMATION Group Company RM 000 RM 000 RM 000 RM 000 Staff costs 26,527 20,633 1,941 1,888 The defined contributions to the Employee Provident Fund of the Group and of the Company during the financial year are RM2,296,000 (2002-1,938,000) and RM187,000 ( RM166,000), respectively. The number of employees of the Group and of the Company (including Directors) at the end of the year was 705 ( ) and 69 ( ) respectively. 19.FINANCING COSTS Group Company RM 000 RM 000 RM 000 RM 000 Interest payable: Term loans 5,259 2,551 3,625 Bank overdrafts Hire purchase Other interest ,137 3,507 3, TAX EXPENSE Group Company RM 000 RM 000 RM 000 RM 000 Current tax expense - current 5,442 4,563 2,168 2,075 - prior year (126) 404 (100) (40) 5,316 4,967 2,068 2,035 Deferred tax expense - Origination and reversal of temporary differences (571) (43) - prior year ,970 6,019 2,130 2,191 Tax expenses on share of profit of associate 56 Real property gain tax ,138 6,019 2,242 2,191