Member Colleges and Centres In Malaysia - INVESTORsegi.investor.net.my/s/SEG AR2001b.pdf · Member Colleges and Centres In Malaysia (PENANG) ... December 2001 • 59 Form of Proxy

Member Colleges and Centres In Malaysia

(PENANG)• Systematic College

(ALOR SETAR)• PRIME College

(KUCHING)

• IBMS College• King’s Business Institute

(MIRI)• PRIME College

• Systematic College• Systematic Institute of Information Technology• Systematic Secretarial Centre

(PETALING JAYA)• Systematic College

• PRIME College• Summit International College• MSC International College• IFPA Resources• Systematic Management Resource Centre

(KLANG)• Institut Makmur

(KLANG VALLEY)

(JOHOR BAHRU)

• Systematic College

CONTENTS

(SUBANG JAYA)

(KUALA LUMPUR)

• 1 Member Colleges In Malaysia • 2 Partner Institutions • 4 Notice of Annual General

Meeting • 5 Statement Accompanying Notice of Annual Gneral Meeting • 6 Chairman’s

Review • 10 Corporate Information • 11 Board of Directors • 12 Profile of Directors • 16

Corporate Governance Statement • 21 Audit Committee Report • 25 Financial Statements

• 54 Group Properties as at 31 December 2001 • 56 Analysis of Shareholdings as at 31

December 2001 • 59 Form of Proxy • Inside Back Cover Corporate Mission and Vision •

Partner In

SEG INTERNATIONAL BHD • ANNUAL REPORT 2001

2

stitutions

The Malaysian Association ofThe Institute of Chartered

Secretaries and Administrators


3

NOTICE IS HEREBY GIVEN THAT THE SIXTEENTH ANNUAL GENERAL MEETING OF SEG INTERNATIONAL BHD. (FORMERLY KNOWN

AS SYSTEMATIC EDUCATION GROUP BERHAD) (“COMPANY”) WILL BE HELD AT ROOM PAHLAWAN 2, LEVEL 5, THE SUMMIT HOTEL,

SUBANG USJ, PERSIARAN KEWAJIPAN USJ1, 47600 UEP SUBANG JAYA, SELANGOR DARUL EHSAN ON THURSDAY, 20 JUNE 2002 AT

10.30 A.M. IN ORDER:-

1. To receive and adopt the audited financial statements for the year ended 31 December 2001 and the Directors’ and Auditors’Reports thereon.

2. To declare a first and final dividend of 6% less tax for the year ended 31 December 2001 as recommended by the Directors in their Report.

3. To approve the Directors’ fees of RM128,050 to be divided amongst the Directors in such manner as the Directors may determine.

4. To re-elect the following Directors retiring in accordance with the Company’s Articles of Association:-a) YBhg Dato’ Shamsir bin Omarb) Mr Teoh Seng Fooc) Mr Hii Chii Kok @ Hii Chee Kokd) Mr Hue Fook Chuan

5. To re-elect YB Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub pursuant to Section 129 of the Companies Act, 1965.

6. To re-elect YBhg Tan Sri Dato’ (Dr) Abdullah bin Mohd Salleh pursuant to Section 129 of the Companies Act, 1965.

7. To re-appoint Messrs KPMG as Auditors of the Company and authorise the Directors to fix their remuneration.

8. As special business, to consider and, if thought fit, pass the following ordinary motion:-

Ordinary Resolution- Authority to allot and issue shares in general pursuant to Section 132D of the Companies Act, 1965

“That, subject to the Companies Act, 1965 and the Articles of Association of the Company and approvals from the SecuritiesCommission and other relevant governmental or regulatory authorities, the Directors be and are hereby empowered pursuant toSection 132D of the Companies Act, 1965 to allot and issue shares in the capital of the Company from time to time upon suchterms and conditions and for such purposes as the Directors may in their discretion deem fit provided that the aggregate numberof shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being.”

9. To transact any other business appropriate to an Annual General Meeting.

FURTHER NOTICE IS HEREBY GIVEN that a depositor shall qualify for entitlement to the first and final dividend only in respect of:-

a) shares transferred into the depositor’s securities account before 12.30 p.m. on 9 July 2002 in respect of ordinary transfers; andb) shares bought on the Kuala Lumpur Stock Exchange on a cum entitlement basis according to the Rules of the Kuala Lumpur Stock

Exchange.

By Order of the Board

LYSIA LIM YEW NEETAI SIEW MAYSecretaries

Subang Jaya, Selangor28 May 2002

EXPLANATORY NOTE TO SPECIAL BUSINESS

Ordinary Resolution

The proposed Ordinary Resolution, if passed, will give the Directors of the Company the power to issue shares in the Company up to

an amount not exceeding in total 10% of the issued share capital of the Company for such purposes as the Directors consider would

be in the interest of the Company. This would avoid any delay and cost involved in convening a general meeting to specifically

approve such an issue of shares. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General

Meeting of the Company.

NOTES

1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote insteadof him.

2. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of theCompanies Act, 1965 shall not apply to the Company.

3. The instrument appointing a proxy must be deposited at the Registered Office at 10th Floor, MenaraSummit, Persiaran Kewajipan USJ1, 47600 UEP Subang Jaya, Selangor Darul Ehsan not less than 48hours before the time appointed for holding the Meeting or adjourned meeting.

4. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of itsAttorney.

5. Where a member appoints more than two (2) proxies, the appointment shall be invalid unless he specifiesthe proportion of his holdings to be represented by each proxy.

6. Where a member of the Company is an authorised nominee as defined under the Securities Industry(Central Depositories) Act, 1991, it may appoint at least one proxy in respect of each securities account itholds with ordinary shares of the Company standing to the credit of the said securities account.

Notice of Annual General Meeting


4

1. Directors who are standing for re-election at the Sixteenth Annual General Meeting of the Company.

Pursuant to Article 86 of the Company’s Articles of Associationa) YBhg Dato’ Shamsir bin Omarb) Mr Teoh Seng Foo

Pursuant to Article 93 of the Company’s Articles of Associationa) Mr Hii Chii Kok @ Hii Chee Kokb) Mr Hue Fook Chuan

Pursuant to Article 129 of the Company’s Act, 1965a) YB Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayubb) YBhg Tan Sri Dato’ (Dr) Abdullah bin Mohd Salleh

2. Details of attendance of Directors at Board MeetingsThere were eight (8) Board meetings held during the financial year ended 31 December 2001. Details of attendance of theDirectors are set out in the Corporate Governance Statement appearing on pages 16 to 17 of the Annual Report.

3. Place, Date and Time of Board MeetingsThe place, date and time of the Board meetings held were as follows:-

Date of meetings Place Time

1. 17 January 2001 MOCCIS Board Room, 14 Medan Setia Dua, 10.30 a.m.Plaza Damansara, 50490 Kuala Lumpur

2. 2 February 2001 MOCCIS Board Room, 14 Medan Setia Dua, 10.30 a.m.Plaza Damansara, 50490 Kuala Lumpur

3. 26 February 2001 MOCCIS Board Room, 14 Medan Setia Dua, 3.45 p.m.Plaza Damansara, 50490 Kuala Lumpur

4. 11 May 2001 18th Floor, Menara Summit, Persiaran Kewajipan 3.30 p.m. USJ1, 47600 UEP Subang Jaya

5. 20 June 2001 Windows on KL2, 30th Floor 11.30 a.m.Mutiara Kuala Lumpur, Jalan Sultan Ismail50250 Kuala Lumpur

6. 28 August 2001 MOCCIS Board Room, 14 Medan Setia Dua, 3.30 p.m.Plaza Damansara, 50490 Kuala Lumpur

7. 10 October 2001 10th Floor, Menara Summit, Persiaran Kewajipan 3.00 p.m.USJ1, 47600 UEP Subang Jaya

8. 15 November 2001 10th Floor, Menara Summit, Persiaran Kewajipan 3.00 p.m.USJ1, 47600 UEP Subang Jaya

4. Further details of Directors who are standing for re-electionDetails of Directors who are standing for re-election are set out in the Directors’ Profile appearing on pages 12 to 15 of the AnnualReport.

STATEMENT ACCOMPANYINGNOTICE OF ANNUAL GENERAL MEETING(PURSUANT TO PARAGRAPH 8.28 (2) OF THE LISTING REQUIREMENTS OF THE KUALA LUMPUR STOCK EXCHANGE)


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Chairman’s Review

ON BEHALF OF THE BOARD OF DIRECTORS OF

SEG INTERNATIONAL BHD (SEGi), I AM PLEASED TO PRESENT

THE ANNUAL REPORT AND FINANCIAL STATEMENTS OF THE

GROUP AND THE COMPANY FOR THE FINANCIAL YEAR

ENDED 31 DECEMBER 2001.

FINANCIAL PERFORMANCE

It is my pleasure to report that the Group achieved a turnover of RM55.9 million for the year ended 31 December 2001. This represents a

remarkable increase of 67% over the previous year. The Group also recorded a notable increase in profit before tax of 72% from RM6.5

million in 2000 to RM11.2 million in 2001.


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DIVIDENDS

The Board is recommending a final dividend of 6 sen gross per share less tax. The total payable amounts to RM3.4 million. For the previous

financial year, a total of RM3.5 million was paid out.

OPERATIONAL REVIEW

The Group colleges and centres performed well in the financial year ended 31 December 2001 with most business units outperforming their

previous year’s results. The introduction of new courses that are linked to reputable foreign universities and the upgrading of the colleges’

premises and facilities contributed to this encouraging trend.

In addition to the existing arrangements with various universities, the Group entered into new collaborations with University of Southern

Queensland Australia, James Cook University Australia, Heriot-Watt University Scotland, Napier University Scotland, Huddersfield University

United Kingdom and Touro International University United States during the year.

Year 2001 was an exciting year for the Group with the merger of six established colleges and a number of schools and education centres to

our Group. With these new additions, the Group has expanded its range of courses offered from business to other fields of studies including

science and engineering, media, arts and design, law and early childhood education. Masters programmes were introduced at several Group

colleges and the responses to these new courses have been encouraging. The synergistic benefits from the enlarged group can be seen in the

current financial year and will be more apparent in the coming years.

MAJOR CORPORATE DEVELOPMENTS

Acquisitions

The major acquisitions made by the Group in 2001 were the purchase of Berrington Bay Corporation Sdn Bhd, Summit Education Sdn Bhd,

Summit Early Childhood Edu-Care Sdn Bhd (formerly known as Summit Montessori Edu-Care Sdn Bhd), Rekaan Medianet Sdn Bhd, IPPP Batu

Lintang Sdn Bhd and IFPA Resources Sdn Bhd. With these acquisitions, PRIME Group of Colleges, MSC International College, Summit

International College and IBMS College have been added to our Group.


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Turnover

2001 2000 1999 1998 19970

10,000

20,000

30,000

40,000

50,000

60,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2001 2000 1999 1998 19970

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2001 2000 1999 1998 19970

20,000

40,000

60,000

80,000

100,000

120,000

2001 2000 1999 1998 1997 2001 2000 1999 1998 19970

50,000

100,000

150,000

200,000

Revenue Profit before tax & minority interest Profit attributable to shareholders Shareholders’ funds Total assets

IFPA Resources Sdn Bhd specialises in training of candidates who wish to obtain professional qualifications in Financial Planning to qualify

as Associate Financial Planner of Malaysia (AFP(M)) and Certified Financial Planner (CFP™) licensees.

Employees’ Share Option Scheme

In August 2001, the Company initiated the Employees’ Share Option Scheme (ESOS) for the granting of options to Executive Directors of the

Company and eligible employees of the Group (Eligible Employees) to subscribe for new ordinary shares of RM1 each. The scheme is

designed to motivate, retain and reward Eligible Employees for their contributions and further encourage continued commitment and loyalty

to the Group.

Chairman’s Review

The relevant authorities and shareholders of the Company subsequently approved this scheme and the first offer of the options under the ESOS

was made to the Eligible Employees in February 2002.

Change of Name

To better reflect the enlarged group of companies following the various acquisitions in 2001 and to reflect the Group’s intention to offer

education services both locally and internationally, the Company changed its name to SEG International Bhd with effect from 8 April 2002.

The change of name has been approved by the shareholders at an Extraordinary General Meeting held earlier.

FUTURE OUTLOOK

Education is emerging to be an economically viable industry in the country. In the recent Budget 2002 announcement, the Prime Minister

who is also the Minister of Finance, highlighted the great potential of the service sector of which education was stated as one of the key

components.

With over 600 registered private institutions of higher learning in Malaysia, the competition amongst the private education providers remains

keen. Many of the small players in the industry are aggressively marketing themselves to gain a greater market share. Regardless of such

intense, open competition, the Group is positioning itself to face these challenges, armed with the experience and expertise that has characterised

its activities for 25 years.

The Group is looking at expanding education services over the Malaysian borders to countries such as China and Indonesia. We are currently

working on certain collaborative arrangements with potentially long term partners in these countries as well as other Asian countries to export

our Group’s expertise to them.


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GROUP FIVE YEARS FINANCIAL SUMMARY

2001 2000 1999 1998 1997RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 55,910 33,439 24,021 23,641 28,406

Profit before tax & minority interest 11,167 6,493 4,122 2,490 4,411

Profit attributable to shareholders 7,221 4,466 4,005 519 2,792

Shareholders’ funds 115,455 34,297 33,365 31,260 32,109

Total assets 168,830 43,611 42,136 40,515 43,554

Chairman’s Review

SEGi Group is celebrating its Silver Jubilee this year. We are proud of our achievements and experience gained in the past years, and we

remain confident in our outlook that we will be able to further expand the business and continue to promote academic excellence at all the

Group’s campuses and education centres across Malaysia.

With a strong management team and academic staff supporting the Group, and our commitment to continually meet the education needs of

our students, we are optimistic that we will continue to grow in the years ahead.

APPRECIATION

On behalf of the Board, I wish to express my appreciation to the shareholders, business associates, bankers and relevant authorities for their

continued support and confidence in the Group. My appreciation is also extended to the management and staff of the Group for their

contributions towards the achievements of the Group during the past year.

I wish also to express my grateful thanks to my fellow directors of the Board for their invaluable service and support to the Group.

I am pleased to welcome Mr Clement Hii Chii Kok and Mr Hue Fook Chuan who have joined us as members of the Board of Directors.

My sincere thanks and appreciation also to Dr Tan Beng Cheok and Mr Lim Chee Khang who have resigned from the Board, for their

invaluable contributions during their tenure as Directors of the Company.

SENATOR TAN SRI DATO’ SERI (DR) ABDULLAH BIN AYUB

Chairman

15 May 2002


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BOARD OF DIRECTORS

YB Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub(Chairman)

Mr Teoh Seng Foo(President)

Mr Clement Hii Chii Kok(Chief Executive Officer/Executive Director)

Mr Kee Lian Yong(Executive Director)

YBhg Tan Sri Dato’ (Dr) Abdullah bin Mohd Salleh

YBhg Dato’ Shamsir bin Omar

YBhg Dato’ Megat Najmuddin bin Datuk Seri Dr Haji Megat Khas

Mr Siew Boon Yeong

Mr Hue Fook Chuan

Tuan Haji Mohd Razi bin Yaacob(Alternate Director)

COMPANY SECRETARIES

Lysia Lim Yew Nee (MAICSA 7006382)Tai Siew May (MAICSA 7015823)

REGISTERED OFFICE

10th Floor, Menara SummitPersiaran Kewajipan, USJ1,47600 UEP Subang JayaSelangor Darul EhsanTel: 03-8026 5888Fax: 03-8026 5999

AUDITORS

KPMGWisma KPMG, Jalan DungunDamansara Heights50490 Kuala Lumpur

Corporate Information

REGISTRAR

Signet Share Registration Services Sdn Bhd11th Floor, Tower BlockKompleks AntarabangsaJalan Sultan Ismail50250 Kuala Lumpur

STOCK EXCHANGE LISTING

Kuala Lumpur Stock Exchange,Second Board

WEBSITE

www.systematic.edu.my


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Board of Directors

➩ 1. YB SENATOR TAN SRI DATO’ SERI (DR) ABDULLAH BIN AYUB (CHAIRMAN)

➩ 2. MR TEOH SENG FOO (PRESIDENT)

➩ 3. MR CLEMENT HII CHII KOK (CHIEF EXECUTIVE OFFICER/EXECUTIVE DIRECTOR)

➩ 4. MR KEE LIAN YONG (EXECUTIVE DIRECTOR)

➩ 5. YBHG TAN SRI DATO’ (DR) ABDULLAH BIN MOHD SALLEH

➩ 6. YBHG DATO’ SHAMSIR BIN OMAR

➩ 7. YBHG DATO’ MEGAT NAJMUDDIN BIN DATUK SERI DR HAJI MEGAT KHAS

➩ 8. MR SIEW BOON YEONG

➩ 9. MR HUE FOOK CHUAN

➩ 10. TUAN HAJI MOHD RAZI BIN YAACOB (ALTERNATE DIRECTOR)

5 2 1 7

3 9 68 4

10


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SENATOR TAN SRI DATO’ SERI (DR) ABDULLAH BIN AYUB

Chairman(Non-Independent/Non-Executive)• Malaysian

Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub, aged 76, was appointed to the Board on 4 December 1996.He was appointed Chairman of the Board of Directors on 8 September 1997. He graduated with an honoursdegree in 1953 from Raffles College, Singapore which later became part of the University of Malaya, Singapore.He joined the Malayan Civil Service (later known as Perkhidmatan Tadbir dan Diplomatik) in 1954 and served invarious Ministries, the longest being in the Treasury for 15 years. He became the Director-General of the PublicService Department from 1972 to 1974, Secretary General of the Treasury, from 1974 to 1978 and the ChiefSecretary to the Government in 1979 and retired from Government service in early 1981. He was appointedChairman of the Public Service Tribunal in 1982, the post he held until 1991.

He was the Chairman of the National Electricity Board from 1979 to 1981, Chairman of the Employees’ ProvidentFund from 1974 to 1978, Chairman of Syarikat Perumahan Pegawai Kerajaan and director of several Governmentbodies and companies such as PERNAS, Malaysia Nasional Insurance Berhad and various State EconomicDevelopment Corporations.

At present, he is also the Chairman of Koperasi Pegawai-Pegawai Melayu Malaysia Berhad (“MOCCIS”) and aDirector of Johor Corporation. His involvement in social activities includes his current position as President ofthe Pensioners Association of Malaysia, Director of Lembaga Bersekutu Pemegang Amanah Pengajian TinggiIslam Malaysia and Chairman of the Neurosurgical Foundation. He is also a Pro-Chancellor of the UniversityTeknologi Malaysia, Johor Bahru. He was appointed Senator in April 2001.

He is also the Chairman of the Employees’ Share Option Scheme (“ESOS”), Nominating, Remuneration andExecutive Committees of the Company. He does not hold any other directorships in public companies.

He has direct and indirect shareholdings of 11,200 and 19,337,478 ordinary shares of RM1.00 each in theCompany and has no interest in the shares of the subsidiaries of the Company.

He has no family relationship with any director and/or major shareholder of the Company, no conflict of interestwith the Company and no convictions for offences within the past ten years.

Teoh Seng Foo, aged 45, was appointed to the Board on 2 February 2001. He is a fellow of the Chartered Instituteof Management Accountants, United Kingdom and a Chartered Accountant of the Malaysian Institute of Accountants.He has vast experience in commerce and industry, having held senior management positions in multinationalssuch as Intel Technology, Woodward & Dickerson Inc, Tan Chong Motor Holdings Berhad, PricewaterhouseCoopers(formerly known as Coopers & Lybrand) and Esquel Group. Presently, he is the Group Managing Director ofKumpulan Emas Berhad (“KEB”) and also the President/Non-Executive Director of Meda Inc. Berhad (“MIB”).

He is a member of the Executive, Remuneration and ESOS Committees of the Company.

He is a substantial shareholder of the Company by virtue of his direct shareholding in KEB and indirect shareholdingin KEB through Meda Capital Sdn Bhd. He was granted an option to subscribe for 60,000 ordinary shares ofRM1.00 each pursuant to the ESOS of the Company.

Apart from the above, he has no family relationship with any director and/or major shareholder of the Company.He has not entered into any transaction, whether directly or indirectly, which has a conflict of interest with theCompany other than those disclosed in the accompanying financial statements and he has no convictions foroffences within the past ten years.

Clement Hii Chii Kok, aged 44, was appointed to the Board on 3 September 2001 as the Executive Director ofthe Company and was later appointed as the Chief Executive Officer/Executive Director of the Company on 10October 2001. He graduated with an Honours degree in Law from the University of Wolverhampton, UnitedKingdom.

CLEMENT HIICHII KOK

Chief Executive Officer(Non-Independent/Executive)• Malaysian

TEOH SENG FOO

President(Non-Independent/Executive)• Malaysian

Profile Of Directors


12

He is a former senior journalist holding positions in several national and local newspapers, including as ChiefEditor of Borneo’s leading English daily, “The Borneo Post”. He has also served in senior positions with managementconsultancy and investment firms, including Asbright Sdn Bhd and C & C Group Sdn Bhd.

He is a member of the Executive Committee of the Company. He has a direct shareholding of 556,000 ordinaryshares of RM1.00 each in the Company and is deemed interested in the 30% minority shareholdings in IPPPBatu Lintang Sdn Bhd, a subsidiary of the Company. He was granted an option to subscribe for 60,000 ordinaryshares of RM1.00 each pursuant to the ESOS of the Company.

He has no family relationship with any director and/or major shareholder of the Company. He has not enteredinto any transaction, whether directly or indirectly, which has a conflict of interest with the Company, other thanthose disclosed in the accompanying financial statements and he has no convictions for offences within the pastten years.

Kee Lian Yong, aged 45, was appointed to the Board on 2 February 2001. He is a fellow of the CharteredAssociation of Certified Accountants, United Kingdom and a member of the Malaysian Institute of Accountants.He previously held senior management positions in several public listed companies before he ventured intobusiness.

He is also an Executive Director of KEB and a Non-Executive Director of Tomisho Holdings Berhad (“THB”) andMIB. He was granted an option to subscribe for 60,000 ordinary shares of RM1.00 each pursuant to the ESOS ofthe Company. Apart from this, he does not have any interest in the shares of the Company or its subsidiaries.

He is a member of the Executive and ESOS Committees of the Company.

He has no family relationship with any director and/or major shareholder of the Company. He has not enteredinto any transaction, which has a conflict of interest with the Company and has no convictions for offenceswithin the past ten years.

Tan Sri Dato’ (Dr) Abdullah bin Mohd Salleh, aged 75, was appointed to the Board on 4 December 1996. Hegraduated with a Bachelor of Arts (Hons) degree from University Malaya in 1955. He began his career in theJohore Civil Services in 1955. He was later appointed to the Malaysia Civil Services in 1956. Between 1956 and1969, he held various positions in the Government most notably, as Deputy Secretary, Prime Minister’s Departmentas well as Deputy Secretary in the Ministry of Education. In 1969, he was seconded to University KebangsaanMalaysia to set up the university until 1972.

He was appointed Secretary General, Ministry of Agriculture and Cooperatives from 1972-1974, Director GeneralPublic Services Department in 1974-1976 and finally as Chief Secretary to the Government in 1976. He retiredfrom the government services end of 1978. While holding the post of Chief Secretary, he was appointed asChairman of Lembaga Letrik Negara.

From 1979 to 1988, he held various positions in the Petroliam Nasional Berhad (“Petronas”) Group includingthe Chairman and Chief Executive Officer of Petronas from 1979 to 1984, President and Chief Executive from1984 to 1988, Chairman of the various subsidiaries of Petronas, including Malaysian LNG Sdn Bhd, PetronasDagangan Bhd, Petronas Gas Bhd and Petronas Carigali Sdn Bhd.

He is currently a director of MOCCIS and the Pro-Chancellor of the Universiti Kebangsaan Malaysia. He is alsoa Director of Tanah Emas Corporation Berhad (formerly known as Isuta Holdings Berhad) (“TECB”). His involvementin the social arena includes his current position as Chairman of the Tun Razak Foundation and Deputy Presidentof the Pensioners Association of Malaysia.

KEE LIAN YONG

Executive Director(Non-Independent/

Executive)• Malaysian

TAN SRI DATO’ (DR) ABDULLAH

BIN MOHDSALLEH

Director(Non-Independent/

Non-Executive)• Malaysian



13

DATO’ SHAMSIR BIN OMAR

Director(Non-Independent/Non-Executive)• Malaysian

DATO’ MEGAT NAJMUDDIN BIN DATUK SERI DR HJ MEGAT KHAS

Independent Director(Independent/Non-Executive)• Malaysian

He is a member of the Executive Committee of the Company.

Apart from an indirect shareholding of 15,276,865 ordinary shares of RM1.00 each in the Company, he has nodirect interest in the shares of the Company and no interests in the subsidiaries of the Company.


Dato’ Shamsir bin Omar, aged 67, was appointed to the Board on 3 September 1997. He is a fellow member ofthe Institute of Chartered Accountants in Australia as well as a member of the Malaysian Institute of Accountants.He commenced his career in the service of the Malaysian Government as an Auditor and Accountant in theDepartment of Co-operative Development in 1960. In 1966, he was appointed as the Chief Accountant in theMinistry of Education. In 1967, he became the Deputy Accountant General and from 1968 to 1989, he was theAccountant General in the Accountant General’s Department in the Ministry of Finance.

He is currently the Chairman of Arus Murni Corporation Berhad and a Board Member of TECB.

He is a member of the Audit Committee of the Company.

Apart from an indirect shareholding of 15,276,865 ordinary shares of RM1.00 each in the Company, he has nodirect interest in the shares of the Company and no interests in the subsidiaries of the Company.


Dato’ Megat Najmuddin bin Datuk Seri Dr Hj Megat Khas, aged 58, was appointed to the Board on 2 February2001. He holds an Honours Degree in Law in 1970 from the University of Singapore. Thereafter, he started hisown law firm Megat Najmuddin, Leong & Co. and practised with the firm until his retirement in 1986.

He was elected to the Selangor State Legislative Assembly for two terms i.e. 1986 to 1990 and 1990 to 1995 forthe Kelana Jaya Constituency. For ten years (1985 to 1994) he held the post of Head of the UMNO Petaling Jaya(“PJ”) Division and the UMNO Subang Division for 1994/5. He led the PJ and Subang Barisan Nasional ElectionCampaign from 1982 until 1995. He was formerly the Permanent Chairman of UMNO Subang and the MPPJ/MPSJ Counsellor.

He was appointed Executive Committee Member of the Federation of Public Listed Companies Berhad in August1994 and elected President in October 1997. He represents this organisation in the High Finance Committee ofthe Ministry of Finance. He was also one of the first members of the Management Committee of the MalaysianInstitute of Corporate Governance and was elected President in April 1998.

He was appointed as member of the 2nd National Economic Consultative Council 2 by the Prime Minister,where he is a member of the Human Resources Development Committee. In September 1999, he was appointedto the Capital Market Strategic Committee by the Finance Minister to produce the Capital Market Master Planwhich was released early 2001. Recently he was appointed as a member of the Corporate Debt RestructuringCommittee. He is also a member of the Securities Commission’s Capital Market Advisory Council. He is theChairman for Asian Pac Holdings Berhad, Seal Incorporated Berhad and MyInfotech Berhad.

He has a direct shareholding of 101,297 ordinary shares of RM1.00 each in the Company and has no indirectshareholding in the Company nor has he any interests in the subsidiaries of the Company. He has no familyrelationship with any director and/or major shareholder of the Company, no conflict of interest with the Companyand no convictions for offences within the past ten years.


14


SIEW BOON YEONG

Independent Director(Independent/

Non-Executive) • Malaysian

Siew Boon Yeong, aged 43, was appointed to the Board on 2 February 2001. He qualified as a Certified PublicAccountant in 1984 and currently is a member of The Malaysian Institute of Certified Public Accountants, aChartered Accountant with the Malaysian Institute of Accountants and an associate member of the MalaysianInstitute of Taxation. He started his auditing career and professional training with the accounting firmPricewaterhouseCoopers (formerly known as Coopers & Lybrand) in 1978 before establishing his own practicein 1988. He is currently the sole practitioner of the public accounting firm Siew Boon Yeong & Associates. Hehas knowledge, skills and experience in auditing, accountancy, tax planning, due diligence and related serviceson mergers and acquisitions, project and corporate care and insolvency services. He also sits on the Board ofTHB.

He is the Chairman of the Audit Committee of the Company and a member of the Nominating and RemunerationCommittees of the Company. He does not have any interest in the shares of the Company or its subsidiaries.

He has no family relationship with any director and/or major shareholder of the Company, no conflict ofinterest with the Company and no convictions for offences within the past ten years.

Hue Fook Chuan, aged 40, was appointed to the Board on 20 June 2001. He obtained both the Bachelor ofEconomics and Bachelor of Law degree from the University of Sydney in 1984 and 1986 respectively. Thereafter,he was admitted as a Barrister-At-Law to the Supreme Court of New South Wales, Australia in 1987 and in1988 he was admitted as an Advocate and Solicitor to the High Court of Malaya.

He is presently practising as a Partner with an Advocate and Solicitors firm, namely Messrs Ringo Low &Simon Hue, a position he has held since April 2000. Formerly, he practised in Messrs Ho, Loke & Koh, as aLegal Assistant from 1988 to 1994 and later as a Partner from 1994 to March 2000.

He is a member of the Audit and Nominating Committees of the Company. He does not hold any otherdirectorships in public companies. He does not have any interest in the shares of the Company or its subsidiaries.


Tuan Haji Mohd Razi bin Yaacob, aged 47, was appointed to the Board on 2 February 2001 as the alternateDirector to Senator Tan Sri Dato’ Seri (Dr) Abdullah Bin Ayub. He is a Fellow Member of the MalaysianAssociation of Company Secretaries, the Institute of Cooperative Auditors and a Member of the MalaysianInstitute of Management.

He joined MOCCIS since 16 June 1981 as the General Manager and also as the Group Company Secretary forMOCCIS and its subsidiary companies. He is currently also a Director of MOCCIS Properties Sdn Bhd andMAGPA Properties Sdn Bhd.

He has an indirect shareholding of 15,276,865 ordinary shares of RM1.00 each in the Company and has nointerest in the shares of the subsidiaries of the Company.


HUE FOOK CHUAN

Independent Director(Independent/

Non-Executive)• Malaysian

TUAN HAJIMOHD RAZI

BIN YAACOB

Alternate Director toSenator Tan Sri Dato’

Seri (Dr) AbdullahBin Ayub

• Malaysian


15


Corporate Governance Statement

The Malaysian Code on Corporate Governance (“the Code”) was developed to promote corporate accountability and transparency in

Malaysia in the light of intensifying global economic competition.

The Board of Directors is entrusted with the stewardship responsibility to direct and manage the business of Company towards

business prosperity with the ultimate aim of enhancing shareholder value. Towards this end, the Company has complied with the

Best Practices as set out in Part 2 of the Code and the ensuing paragraphs clarify how the Company has applied the Principles as set

out in Part 1 of the Code.

PRINCIPLE A - BOARD OF DIRECTORS

Constitution of the Board and Board Balance

The Board, led by a Non-Executive Chairman is made up of 10 members (of which 1 is an alternate director), comprising of 3

Executive Directors and 6 Non-Executive Directors, of which 3 are independent. The Board’s composition represents a mix of skills,

expertise and wealth of experience to effectively lead and control the Company.

The role of the Chairman and Chief Executive Officer are distinct and separate with responsibilities clearly drawn out to ensure a

balance of power and authority. Generally, the Executive Directors are responsible for making and implementing operational and

corporate decisions. Non-Executive Directors play key supporting roles, contributing their knowledge and experience towards the

formulation of policies and in the decision-making process. Where a potential conflict of interest may arise, it is mandatory practice

for the director concerned to declare his interest and abstain from the decision-making process.

The Board meets on a scheduled basis, at least 4 times a year. Additional meetings are convened as and when required. For the

financial year ended 31 December 2001, 8 meetings were convened to monitor and control the development of the Group. A

summary of attendance to each of the board meetings held is as follows:

NAME OF DIRECTORS 17.1.01 2.2.01 26.2.01 11.5.01 20.6.01 28.8.01 10.10.01 15.11.01

Senator Tan Sri Dato’ Seri (Dr) Abdullah Bin Ayub ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Teoh Seng Foo (appointed on 2.2.2001) N/A ✓ ✓ ✓ ✓ ✓ ✓ ✓

Clement Hii Chii Kok (appointed on 3.9.2001) N/A N/A N/A N/A N/A N/A ✓ ✓

Kee Lian Yong (appointed on 2.2.2001) N/A ✓ ✓ ✓ ✓ ✓ ✓ ✓

Tan Sri Dato’ (Dr) Abdullah Bin Mohd Salleh ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Dato’ Shamsir Bin Omar ✓ ✓ ✕ ✓ ✓ ✓ ✓ ✓

Dato’ Megat Najmuddin Bin Datuk Seri N/A ✓ ✕ ✓ ✓ ✕ ✓ ✕

Dr Haji Megat Khas (appointed on 2.2.2001)

Siew Boon Yeong (appointed on 2.2.2001) N/A N/A ✓ ✓ ✓ ✓ ✓ ✓

Hue Fook Chuan (appointed on 20.6.2001) N/A N/A N/A N/A N/A ✓ ✓ ✓

Kee E-Lene (alternate director to Dato’ Megat Najmuddin Bin N/A ✕ ✕ ✕ ✕ ✓ ✕ ✓

Datuk Seri Dr Haji Megat Khas) (appointed on 2.2.2001 and resigned on 10.5.2002)


16

Access to Information

All Directors are provided with relevant and comprehensive information on a timely manner concerning various aspects of the

Group’s operations and performance. The Board has unrestricted access to all staff for any information pertaining to the Group’s

affairs. In addition, the Board has access to the advice and services of the Company Secretaries and may seek independent professional

advice to enable them to discharge their duties effectively.

Board Committees

The Board has established 4 committees to assist it to effectively discharge each principal responsibility. These committees are:

• Audit Committee

The terms of reference and further information on the Audit Committee are outlined in the ensuing pages.

• Remuneration Committee

The Remuneration Committee was established by the Board on 10 October 2001 and is responsible for drawing up the policy

framework and to make recommendations to the Board on the remuneration packages of the directors. The Executive Directors

abstain from deliberations and voting decisions in respect of their remuneration. The Board as a whole determines the remuneration

of Non-Executive Directors and the Non-Executive Chairman with the director concerned abstaining from participating in

decisions in respect of his individual remuneration.

The Remuneration Committee comprises mainly of non-executive directors as follows:

Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub - Chairman, Non-Independent / Non-Executive Director

Teoh Seng Foo - Member, Non-Independent / Executive Director

Siew Boon Yeong - Member, Independent / Non-Executive Director

The objectives of the Remuneration Committee are to ensure that the remuneration policies of the Company are competitive,

thereby enabling the Company to attract and retain high calibre executives and at the same time protect the interests of the

shareholders.

• Nominating Committee

The Nominating Committee was established by the Board on 10 October 2001 to recommend candidates with an optimal mix

of qualifications, skills and experience to the Board and put in place succession plans where and when appropriate.

The Nominating Committee will also evaluate annually, the effectiveness of the Board as a whole, the various Committees and

each individual Director’s contribution to the effectiveness of the decision-making process of the Board. The members of the

Nominating Committee comprises wholly of non-executive directors as follows:


Siew Boon Yeong - Member, Independent / Non-Executive Director

Hue Fook Chuan - Member, Independent / Non-Executive Director


NAME OF DIRECTORS (CONT’D) 17.1.01 2.2.01 26.2.01 11.5.01 20.6.01 28.8.01 10.10.01 15.11.01

Tuan Haji Mohd Razi bin Yaacob (alternate director to N/A ✓ ✕ ✓ ✓ ✓ ✓ ✓

Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub) (appointed on 2.2.2001)

Dr. Tan Beng Cheok N/A ✓ ✕ ✓ ✓ ✓ ✕ N/A(appointed on 2.2.2001 and resigned on 10.10.2001)

Hassan bin Hussain N/A ✓ ✓ ✓ N/A N/A N/A N/A(appointed on 2.2.2001 and resigned on 11.5.2001)

Dr. Anuar bin Ahmad (alternate director to Hassan bin Hussain) N/A ✕ ✕ ✕ N/A N/A N/A N/A(appointed on 2.2.2001 and resigned on 11.5.2001)

Lim Chee Khang N/A ✓ ✓ ✓ ✓ N/A N/A N/A(appointed on 2.2.2001 and resigned on 20.6.2001)


17

• Executive Committee

The Executive Committee was established by the Board on 2 February 2001 to transact business activities of the Group subject

to certain limitations as set out in the terms of reference.

The Board shall appoint the Chairman of the Committee. Chairman shall not have a casting vote. The Executive Committee

comprises of:


Teoh Seng Foo - Member, Non-Independent / Executive Director

Clement Hii Chii Kok – Member, Non-Independent / Executive Director

Kee Lian Yong - Member, Non-Independent / Executive Director

Tan Sri Dato’ (Dr) Abdullah bin Mohd Salleh - Member, Non-Independent / Non-Executive Director

Re-election

All Directors will retire at regular intervals by rotation once at least every three years and they shall be eligible for re-election.

PRINCIPLE B - DIRECTORS’ REMUNERATION

The details of the remuneration of the Directors of the Company for the financial year under review are as follows:

1. Aggregate remuneration of the Directors are categorised into appropriate components:

Salary Bonus FeeMeeting Benefits- Fixed Statutory

OthersAllowances in-kind Allowances Contribution

Executive Directors 159,839 19,000 2,000 – – – 22,968 110,027

Non-Executive Directors – – 128,050 29,100 – – – –

Number of DirectorsRange of Remuneration

Executive Non-Executive

Below RM50,000 1 6

RM50,001 to RM100,000 1

RM100,001 to RM150,000

RM150,001 to RM200,000

RM200,001 to RM300,000 1

RM300,001 to RM350,000

RM350,001 to RM450,000

RM450,001 to RM500,000


2. The number of Directors whose total remuneration fall within the following bands:

PRINCIPLE C - SHAREHOLDERS

Relationship with Shareholders and Investors

The Group recognises the importance of establishing a direct line of communication with shareholders and investors through timely

dissemination of information on the Group’s performance and major developments via appropriate channels of communication.

Dissemination of information includes the convening of Annual General Meetings and Extraordinary General Meetings, distribution

of Annual Reports and relevant circulars, issuance of press releases and press conferences. The financial performance of the Group is

communicated to public via its quarterly report to the Kuala Lumpur Stock Exchange(“KLSE”).

To further enhance the transparency and communication with the shareholders and all concerned, the Company has launched its

website at www.systematic.edu.my. Additionally, shareholders and members of the public are invited to access the KLSE website at

www.announcements.klse.com.my to obtain the latest information of the Group.

The Board has appointed Siew Boon Yeong, a senior independent non-executive director to whom concerns may be conveyed.


18

Annual General Meeting (“AGM”)

The Chairman and the Board encourage shareholders to attend and participate in the AGM held annually. Shareholders are given the

opportunity to seek clarification on any matters pertaining to the business and financial performance of the Company.

PRINCIPLE D - ACCOUNTABILITY AND AUDIT

Financial Reporting

The Group presents its year-end financial results on an annual basis through its annual report and its interim results every quarterly via

its submissions to the KLSE and through public announcements. The Audit Committee assists the Board to ensure the correctness and

adequacy of all disclosed information.

Internal Control

The Board is responsible for maintaining a sound system of internal control to safeguard shareholders’ investments and the Company’s

assets. The internal audit function is an integral part of an effective system of corporate governance as it seeks to provide reasonable

assurance on the reliability of the state of internal controls. In this respect, the Company has effected several systems of internal

control covering financial controls, operational and compliance controls and risk management. Some of the systems have been in

place over the years and will continue to be reviewed, added on or updated in line with changes in the operating environment. The

Board seeks regular assurance on the continuity and effectiveness of the internal control system through independent appraisals by the

internal and external auditors.

The Board and the Management have developed an on-going process to identify, evaluate and manage significant risks that may

impact on the Company’s ability to achieve its objectives. These processes are embodied in the Risk Management Policy that was

formally endorsed by the Board on 10 October 2001. Essentially, the Risk Management Policy identifies the significant risks and the

strategies to manage these risks.

The purpose of the Risk Management Policy is to assist in:

1. Maintaining integrity and confidence among shareholders and the public;

2. Strengthening the Group’s competitive strategic and operational efficiency to increase long term shareholders’ value;

3. Minimising unexpected adverse impact to earnings and returns to shareholders; and

4. Safeguarding the assets and resources within the Group.

Relationship with Auditors

The Board, through the establishment of the Audit Committee maintains a formal and transparent arrangement with the Company’s

external auditors.

MATERIAL CONTRACTS

Material contracts entered into by the Company and its subsidiary companies which involve directors’ and major shareholders’

interests still subsisting at the end of the financial year ended 31 December 2001 or entered into since the end of the previous

financial year comprise of the following:-

(a) (i) Tenancy Agreement entered into between Berrington Bay Corporation Sdn Bhd, a subsidiary company and Meda Development

Sdn Bhd (“MDSB”) on 15 June 1999 for the rental of 3rd and 4th Floor, The Summit, Subang USJ1, Subang Jaya, Selangor to

be used for providing educational services. The total monthly rental inclusive of service charges of RM93,645 are at negotiated

rates, taking into account prevailing market terms.



19

(ii) Tenancy Agreement entered into between Premier Media Sdn Bhd, a subsidiary company and MDSB on 1 September 1999

for the rental of 3rd Floor, The Summit, Subang USJ1, Subang Jaya, Selangor for the operation of providing educational

programmes. The total monthly rental inclusive of service charges of RM28,160 are at negotiated rates, taking into account

prevailing market terms.

(iii) Tenancy Agreement entered into between Summit Multimedia Sdn Bhd, a subsidiary company and MDSB on 20 September

1999 for the rental of 3rd Floor, The Summit, Subang USJ1, Subang Jaya, Selangor for the operation of providing educational

programmes. The total monthly rental inclusive of service charges of RM31,080 are at negotiated rates, taking into account

prevailing market terms.

(iv) Tenancy Agreement entered into between Sadec-KE Utilities Corporation Sdn Bhd, a subsidiary company and MDSB on 21

September 1999 for the rental of 1st Floor, The Summit, Subang USJ1, Subang Jaya, Selangor for the operation of children’s

educational and recreational centre. The total monthly rental inclusive of service charges of RM29,304 are at negotiated

rates, taking into account prevailing market terms.

Teoh Seng Foo (“TSF”) is a director of MDSB and has interest in this company by virtue of his direct and indirect interests in

Meda Inc. Berhad (“MIB”), the holding company of MDSB, and therefore is deemed interested in the aforesaid contracts.

b) Tenancy Agreement entered into between the Company and Tomisho Sdn Bhd (“TSB”) on 31 July 2001 for rental of office space at

10th Floor, Menara Summit, Persiaran Kewajipan USJ1, 47600 UEP Subang Jaya, Selangor. The monthly rental of RM32,184 is at

a negotiated rate, taking into account prevailing market rates.

TSF is deemed interested in this contract by virtue of his interest in Kumpulan Emas Berhad (“KEB”), which is a substantial

shareholder of TSB.

c) i) Profit Guarantee and Stakeholder’s Agreement dated 12April 2002 entered between the Company, KEB (“Guarantor”) and

Arab-Malaysian Trustee Berhad (“Stakeholder”) pursuant to the profit guarantee given by the Guarantor for an aggregate profit

before tax of RM37 million and the appointment of the Stakeholder in relation to the placement of security shares.

ii) Settlement Agreement entered into between the Company, KEB and Datin Mah Ming Yuet and Kee Shih-Lene dated 15 April

2002 in relation to the anticipated shortfall of the guaranteed profits amounting to RM3.25 million in accordance with the

Profit Guarantee Agreement dated 22 October 1999 and the Supplemental Agreement dated 17 October 2000 for the financial

year ending 31 December 2001.

KEB, Datin Mah Ming Yuet and her daughter, Kee Shih-Lene are substantial shareholders of the Company.

NON-AUDIT FEE

Non audit fees amounting to RM88,000 was paid to external auditors for the financial year ended 31 December 2001.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS

The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the

Group and of the Company as at the end of the accounting period and of their profit or loss and cashflows for the period then ended.

In preparing the financial statements, the Directors have ensured that applicable approved accounting standards in Malaysia and the

provisions of the Companies Act, 1965 have been applied.

In preparing the financial statements, the Directors have adopted and applied consistently suitable accounting policies and made

reasonable and prudent judgements.

The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the

Group and to prevent and detect fraud and other irregularities.



20

Audit Committee Report

Membership

The present membership of the Committee comprises of:

Siew Boon Yeong - Chairman, Independent / Non-Executive Director

Dato’ Shamsir bin Omar - Member, Non-Independent / Non-Executive Director

Hue Fook Chuan - Member, Independent / Non-Executive Director

Terms of reference

The Audit Committee (“the Committee”) is governed by the terms of reference that was formally endorsed by the Board on 11 May 2001. The

terms of reference is set in the ensuing pages.

Meetings

The Audit Committee convened seven (7) meetings for the financial year ended 31 December 2001. The meetings were appropriately

structured through the use of agendas, which were distributed to members with sufficient notification.

The Company Secretary(ies) were present in all the meetings. Representatives of the external auditors, Messrs KPMG, the Head of Internal

Audit and the Financial Controller also attended the meetings upon invitation.

Summary of activities during the financial year

The Audit Committee carried out its duties in accordance with its terms of reference during the year. The main activities undertaken by the

Committee were as follows:

• Reviewed the external auditors’ scope of work and audit plans for the year. Prior to the audit, representatives from the external auditors

presented their audit strategy and plan.

• Reviewed with the external auditors the results of the audit, the audit report and the management letter, including management’s

response.

• Consideration and recommendation to the Board for approval of the audit fees payable to the external auditors as disclosed in Note 18

to the financial statements.

• Reviewed the internal audit department’s resource requirements, programmes and plan for the financial year under review and the

annual assessment of the internal audit department’s performance.

NAME OF DIRECTORS 26.2.01 19.4.01 11.5.01 19.6.01 28.8.01 3.10.01 12.11.01

Siew Boon Yeong (appointed on 2.2.2001) ✓ ✓ ✓ ✓ ✓ ✓ ✓

Dato’ Shamsir bin Omar ✕ ✓ ✓ ✓ ✓ ✓ ✓

Hue Fook Chuan (appointed on 20.6.2001) N/A N/A N/A N/A ✓ ✓ ✓

Lim Chee Khang ✓ ✓ ✓ ✓ N/A N/A N/A(appointed on 2.2.2001 and resigned on 20.6.2001)


21

talent to succeed . . .

Audit Committee Report• Reviewed the internal audit reports, which highlighted the audit issues, recommendations and management’s response. Effective from

June 2001, the members of the Audit Committee were briefed on pertinent audit issues through the circulation of the Summary of

Pertinent Issues which forms an integral part of the agenda papers. The Audit Committee also discussed the management actions taken

to improve the system of internal control based on improvement opportunities identified in the internal audit reports.

• Recommended to the Board improvement opportunities in internal control, procedures and risk management. The committee, had in

September 2001, initiated a comprehensive risk management programme, assisted by the internal audit department and the external advisors.

• Reviewed the audited financial statements of the Company prior to submission to the Board for their consideration and approval. The

review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act,

1965 and the applicable approved accounting standards approved by the MASB.

• Reviewed the Company’s compliance in particular the quarterly and year-end financial statements with the Listing Requirements of the

KLSE, MASB and other relevant legal and regulatory requirements.

• Reviewed pertinent issues of the Group which had a significant impact on the results of the Group which included enhancement and

further investment in existing products and services offered, cost rationalisation measures, reorganisation of business units and human

resource development.

• Reviewed the quarterly unaudited financial results announcements before recommending them for the Board’s approval. The review and

discussions were conducted with the Financial Controller.

• Reviewed related party transactions entered into by the Group.

• Reviewed the extent of the Group’s compliance with the provisions set out under Part 2 Guideline BB of the Code on for the purpose of

preparing the Corporate Governance Statement and Statement on Internal Control pursuant to the Listing Requirements of KLSE.

Recommended to the Board action plans to address the identified gaps between the Group’s existing corporate governance practices and

the prescribed corporate governance principles and best practices under the Code.

Internal audit function

The internal audit department is independent of the activities or operations of other operating units. The principal role of the department is to

undertake independent regular and systematic reviews of the systems of internal control so as to provide reasonable assurance that such systems

continue to operate satisfactorily and effectively. It is the responsibility of the internal audit department to provide the Audit Committee with

independent and objective review that reports on the state of internal control of the various operating units within the Group and the extent of

compliance with the Group’s established policies and procedures as well as the relevant statutory requirements.

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

Objectives

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

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


22

Audit Committee Reportc) 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, 1967.

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 (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.

Functions

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 function and that it has the necessary authority to carry out

its work;

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

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 Company, whenever

deemed necessary.


23

Meetings

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 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.

Audit Committee Report


24


25


26

Directors’ Report for the year ended 31 December 2001

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the yearended 31 December 2001.

Principal activities

The principal activities of the Company comprise investment holding and the provision of management consultancy services and businessadvisory services. The principal activities of its subsidiary companies are described in Note 29 to the financial statements. There hasbeen no significant change in the nature of the activities of the Company and its subsidiaries during the financial year.

Change of name

At an extraordinary general meeting on 3 April 2002, the shareholders of the Company approved the Company’s change of name to SEGInternational Bhd..

Significant events subsequent to the balance sheet date

Subsequent to the financial year end, the proposed Employee Share Option Scheme (“ESOS”) for granting of options to the ExecutiveDirectors of the Company and eligible employees of the Company and its subsidiaries to subscribe for new ordinary shares of RM1.00each in the Company has been approved by the relevant authorities and shareholders of the company.

The first offer of the ESOS Scheme was issued to the Executive Directors and eligible employees on 5 February 2002 at an offer price ofRM1.40 per ordinary share of RM1.00 each. 286 Executive Directors and eligible employees were issued options totalling 2,718,000.

ResultsGroup Company

RM’000 RM’000

Net profit for the year 7,221 4,178

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 made the payment of a second interim dividend of 5 sen per share less tax at28% totalling RM684,000 in respect of the year ended 31 December 2000 on 5 February 2001.

The Directors recommend the payment of a first and final dividend of 6 sen per share less tax at 28% totalling RM3,418,319 in respect ofthe year ended 31 December 2001 based on the issued and paid-up capital of 79,127,755 ordinary shares of RM1.00 each.

Directors of the Company

Directors who served since the date of the last report are:

Director Alternate

Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub Hj. Mohd Razi bin YaacobTeoh Seng FooHii Chii Kok @ Hii Chee Kok (appointed on 3.9.2001)Kee Lian YongTan Sri Dato’ (Dr) Abdullah bin Mohd SallehDato’ Shamsir bin OmarDato’ Megat Najmuddin bin Datuk Seri Dr Kee E-Lene Haji Megat KhasSiew Boon YeongHue Fook Chuan (appointed on 20.6.2001)Hassan bin Hussain (resigned on 11.5.2001) Dr Anuar bin Ahmad

(resigned on 11.5.2001)Lim Chee Khang (resigned on 20.6.2001)Dr Tan Beng Cheok (resigned on 10.10.2001)


27


The Directors holding office at the end of the financial year who had beneficial interest in the ordinary shares of the Company and of itsrelated corporations during the financial year ended 31 December 2001, as recorded in the Register of Directors’ Shareholdings kept bythe Company under Section 134 of the Companies Act, 1965, are as follows:

Number of ordinary shares of RM1.00 each

Balance at Balance atName 1.1.2001 Bought Sold 31.12.2001

Direct interest: Senator Tan Sri Dato’ Seri

(Dr) Abdullah bin Ayub 3,000 8,200* - 11,200 Hii Chii Kok @ Hii Chee Kok - 556,000 - 556,000 Dato’ Megat Najmuddin

bin Datuk Seri DrHaji Megat Khas - 5,456,800 5,355,503 101,297

Indirect interest: Senator Tan Sri Dato’ Seri

(Dr) Abdullah bin Ayub - 19,337,478 - 19,337,478+ Teoh Seng Foo - 24,881,025 126,000 24,755,025# Tan Sri Dato’ (Dr) Abdullah

bin Mohd Salleh - 15,276,865 - 15,276,865^ Dato’ Shamsir bin Omar - 15,276,865 - 15,276,865^ Hj. Mohd Razi bin Yaacob - 15,276,865 - 15,276,865^

* Includes bonus issue of 1,200 shares# Deemed interest held through Kumpulan Emas Berhad+ 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 to have interests in the shares of all itssubsidiaries to the extent the Company has an interest.

None of the other Directors holding office at 31 December 2001 had any interest in the ordinary shares of the Company and of its relatedcorporations during the year.

Directors’ benefits

Teoh Seng Foo has interest in companies which traded with certain companies in the Group in the ordinary course of business either aslandlord of office space or provider of services.

Hii Chii Kok @ Hii Chee Kok has interest in Asbright Sdn Bhd, a company that has been granted an option to sell the 30% minorityshareholdings in IPPP Batu Lintang Sdn. Bhd. to Berrington Bay Corporation Sdn. Bhd., a company in the Group.

Hii Chii Kok @ Hii Chee Kok has also been granted an option to purchase 40,000 ordinary shares representing 20% of the issued andpaid-up capital in Mutu Unggul Sdn. Bhd.

Other than the above, since the end of the previous financial year, no Director of the Company has received or become entitled toreceive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directorsas shown in the financial statements or the fixed salary of a full time employee of the Company or of related companies/corporations) byreason 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, orwith 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 toacquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than as statedin this report.


28

Issue of shares

During the financial year, the Company issued 7,600,000 new ordinary shares as bonus issue on the basis of 2 shares for every 5 ordinaryshares of RM1.00 each. The Company also issued 52,527,755 new ordinary shares of RM1.50 each to acquire subsidiary companies andoffice buildings.

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.

At an extraordinary general meeting held on 15 November 2001, the Company’s shareholders approved the establishment of an employees’share option scheme (“ESOS”) of not more than 10% of the issued share capital of the Company at the point of granting of the options toExecutive Directors and eligible employees of the Group.

The first offer of the ESOS Scheme was issued to the Executive Directors and eligible employees on 5 February 2002 at an offer price ofRM1.40 per ordinary share of RM1.00 each.

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, andii) 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 theCompany 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, oriii) 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, oriv) 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 theliabilities 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 withinthe period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect theability 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 theCompany for the financial year ended 31 December 2001 have not been substantially affected by any item, transaction or event of amaterial and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial yearand 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

Subang Jaya, SelangorDate: 22 April 2002



29

Statement by Directors pursuant to Section 169(15)of the Companies Act, 1965In the opinion of the Directors, the financial statements set out on pages 31 to 53, are drawn up in accordance with applicable approvedaccounting 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 December2001 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

Subang Jaya, SelangorDate: 22 April 2002

I, Kee Lian Yong, the Director primarily responsible for the financial management of SEG International Bhd. (formerly known as SystematicEducation Group Berhad), do solemnly and sincerely declare that the financial statements set out on pages 31 to 53 are, to the best of myknowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of theprovisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed at Subang Jaya, Selangor on 22 April 2002

Kee Lian Yong

Before me: Choy Yee Cheong (P.P.N.) No. B083Commisioner for Oaths

Statutory Declaration pursuant toSection 169(16) of the Companies Act, 1965


30

We have audited the financial statements set out on pages 31 to 53. The preparation of the financial statements is the responsibility of theCompany’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 andperform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to givereasonable 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 accountingprinciples used and significant estimates made by the Directors as well as evaluating the overall adequacy of the presentation of informationin 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 applicableapproved 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 2001 and the results of their operations and cash flows forthe 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 ofthe Company;

and

(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and thesubsidiaries 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 29 to the financial statements and we haveconsidered 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 statementsare in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we havereceived 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 commentmade under subsection (3) of Section 174 of the Act.

KPMGFirm Number: AF 0758Chartered Accountants

Hew Lee Lam SangPartnerApproval Number: 1862/10/03(J)

Kuala Lumpur,Date: 22 April 2002

Report of the Auditors to the Members of SEG International Bhd.(formerly known as Systematic Education Group Berhad)


31

Balance Sheets at 31 December 2001

Group CompanyNote 2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 2 108,872 33,962 35,451 21,795Investment in subsidiaries 3 - - 71,645 5,837Investment in associates 4 3,600 - - -Other investments 5 57 57 - -Intangible assets 7 34,831 - - -

147,360 34,019 107,096 27,632Current assets

Inventories 8 302 281 - -Trade and other receivables 9 15,383 2,538 10,921 4,443Cash and cash equivalents 10 5,785 6,773 576 3,360

21,470 9,592 11,497 7,803

Current liabilitiesOther payables 11 15,171 5,724 3,083 993Hire purchase and lease creditors 12 1,077 50 108 47Borrowings 13 8,241 115 - -Taxation 4,212 1,176 317 370Proposed dividend 3,418 684 3,418 684

32,119 7,749 6,926 2,094

Net current (liabilities)/assets (10,649) 1,843 4,571 5,709

136,711 35,862 111,667 33,341

Financed by:

Capital and reservesShare capital 14 79,128 19,000 79,128 19,000Reserves 15 36,327 15,297 31,711 13,724

115,455 34,297 110,839 32,724Minority shareholders’ interests 16 1,087 130 - -

Long term and deferred liabilities

Borrowings 13 18,070 - - -Hire purchase and lease creditors 12 1,005 26 380 25Deferred taxation 17 1,094 1,409 448 592

20,169 1,435 828 617

136,711 35,862 111,667 33,341

The notes set out on pages 37 to 53 form an integral part of, and, should be read in conjunction with, these financial statements.


32

Group CompanyNote 2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000Revenue - services 55,910 33,439 4,842 2,232

Cost of services (23,472) (17,906) (2,251) (1,109)

Gross profit 32,438 15,533 2,591 1,123Distribution costs (4,128) (1,636) (223) (240)Administration expenses (11,990) (4,444) (1,792) (789)Other operating expenses (10,789) (5,896) (1,505) (983)Other operating income- Exceptional item 19 3,250 1,295 - 1,295- Others 4,018 1,551 6,568 4,877

Operating profit 18 12,799 6,403 5,639 5,283Financing costs 21 (1,732) (78) (43) (64)Interest income 118 168 283 100Share of loss of associate (18) - - -

Profit before tax 11,167 6,493 5,879 5,319Tax expense 22 (3,297) (2,023) (1,701) (1,040)

Profit after taxation 7,870 4,470 4,178 4,279Less: Minority interests (649) (4) - -

Net profit for the year 7,221 4,466 4,178 4,279

Basic earnings per ordinary share (sen) 23 9.46 23.51

Dividends per ordinary share (sen) 24 6 20


Income Statements for the year ended 31 December 2001


33

Non-Distributable DistributableShare Share Revaluation Retained

Note capital premium reserve profits TotalGroup RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2000 19,000 543 3,452 10,370 33,365Transfer from revaluation

reserve - - (460) 460 -Net profit for the year - - - 4,466 4,466Dividends 24 - - - (3,534) (3,534)

At 31 December 2000 19,000 543 2,992 11,762 34,297Net profit for the year - - - 7,221 7,221Bonus issue 7,600 (543) - (7,057) -Issue of shares for acquisitions 52,528 24,827 - - 77,355Transfer from revaluation

reserves - - 58 (58) -Dividend 24 - - - (3,418) (3,418)

At 31 December 2001 79,128 24,827 3,050 8,450 115,455

Company

At 1 January 2000 19,000 543 2,555 9,881 31,979Net profit from the year - - - 4,279 4,279Dividends 24 - - - (3,534) (3,534)

At 31 December 2000 19,000 543 2,555 10,626 32,724Net profit for the year - - - 4,178 4,178Bonus issue 7,600 (543) - (7,057) -Issue of shares for acquisitions 52,528 24,827 - - 77,355Transfer from revaluation

reserves - - 58 (58) -Dividend 24 - - - (3,418) (3,418)

At 31 December 2001 79,128 24,827 2,613 4,271 110,839


Statement of Changes in Equity for the year ended31 December 2001


34

Group Cash Flow Statement for the year ended31 December 2001

Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000Cash flows from operating activities

Profit before taxation and extraordinary item 11,167 6,493 5,879 5,319Adjustments for:

Amortisation of preliminary andpre-operating expenses 2 112 - 87

Amortisation of goodwill anddevelopment expenses 1,220 - - -

Bad debts written off 33 34 15 37Bad debts written back (43) - - -Depreciation 4,601 1,999 802 625Dividend income (2) (3) (6,380) (3,350)Interest expense 1,732 78 43 62Interest income (118) (168) (283) (100)Gain on sale of investment (107) - - -Loss/(Gain) on disposal of property,

plant and equipment (72) (1,295) - (1,295)Plant and equipment written off 3 117 - 12Share of partnership loss 11 - - -Share of loss in associate 18 - - -

Operating profit before working capital changes 18,455 7,367 76 1,397(Increase)/Decrease in working capital:

Inventories (21) 21 - -Trade and other receivables (3,156) (925) (6,493) (763)Other payables (11,168) 1,560 2,090 (510)Pre-operating expenses - (4) - -

Cash generated from/(used in) operations 4,100 8,019 (4,327) 124

Income taxes paid (1,745) (1,351) (112) (103)Interest paid (1,732) (78) (43) (62)Interest received (operating only) 118 168 283 100Income tax refunded - 3 - -

Net cash generated from/(used in)operating activities 741 6,761 (4,199) 59

Cash flows from investing activitiesAcquisition of subsidiaries,

net of cash acquired (i) (3,482) - - -Dividends received - - 4,594 2,687Intercompany receivables - - - 2,274Corporate exercise expenses (1,437) - (1,437) -Proceeds from sale of subsidiary 187 - - -Proceeds from disposal of property,

plant and equipment 239 3,310 84 3,188


35


Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000

Purchase of property, plant and equipment (14,734) (1,896) (1,004) (200)Purchase of subsidiaries - - (16) -Development expenditure incurred (1,259) - - -

Net cash (used in)/generated frominvesting activities (20,486) 1,414 2,221 7,949

Cash flows from financing activitiesDividend paid to minority shareholders - (41) - -Dividend paid (684) (4,750) (684) (4,750)Payment of finance lease/hire purchase

liabilities (1,036) (341) (122) (278)Repayment of loans (4,534) (283) - (281)Deposits pledged (6) (163) - -Proceeds from term loans 17,912 - - -

Net cash generated from/(used in)financing activities 11,652 (5,578) (806) (5,309)

Net (decrease)/increase in cash andcash equivalents (8,093) 2,597 (2,784) 2,699

Cash and cash equivalents at beginningof year 6,495 3,898 3,360 661

Cash and cash equivalents at end of year (1,598) 6,495 576 3,360

i) Acquisition of subsidiariesDuring the year, the Group acquired subsidiaries (see Note 30). The fair values of assets and liabilities assumed were asfollows:

Group2001

RM’000Assets

Property, plant and equipment 50,354Investments 3,577Intangible assets 11,741

65,672Current assets 13,440Current liabilities (24,356)Long term liabilities (5,234)

Net assets 49,522Goodwill on acquisition 19,066

Total purchase consideration 68,588Less: Portion discharged by issuance of shares (65,792)

Portion discharged by cash 2,796Add: Net bank overdrafts of subsidiaries acquired 890Less: New shares issued in the subsidiary companies (204)

Cash flow on acquisition, net of cash acquired 3,482


36

ii) Purchase of property, plant and equipment

During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM29,605,000 andRM14,542,000, respectively, of which RM675,000 and RM1,871,000, respectively, were acquired by means of finance leases/hirepurchases.

iii) Cash and cash equivalents

Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:

Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000

Cash and bank balances 4,718 4,435 576 661Deposits 1,067 2,338 - 2,699Bank overdrafts (7,214) (115) - -

(1,429) 6,658 576 3,360Fixed deposits pledged to banks (169) (163) - -

(1,598) 6,495 576 3,360




37

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 previousyears except for the change in accounting policy in relation to goodwill.

(a) Basis of accounting

The financial statements of the Group and of the Company are prepared in compliance with applicable approved accountingstandards in Malaysia.

(b) Basis of consolidation

Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly orindirectly to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financialstatements of subsidiaries are included in the consolidated financial statements from the date that control effectively commencesuntil 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 off during the year are includedfrom the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries' net assetsare determined and these values are reflected in the Group financial statements. The difference between the acquisition costand 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 lossesresulting 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 operatingpolicies.

The consolidated financial statements include the total recognised gains and losses of associates on an equity accounted basisfrom 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 ofthe related assets and liabilities are eliminated partially to the extent of the Group’s interests in the associates. Unrealised losseson 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.

(d) Property, plant and equipment

i) Owned assets

Property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and accumulatedimpairment losses.

It is the Group’s policy to state property, plant and equipment at cost.

Property, plant and equipment retired from active use and held for disposal are stated at the lower of net book value and netrealisable value.

The carrying amounts of property, plant and equipment are reviewed at each balance sheet date to determine whether thereis any indication of impairment. If such an indication exists, the asset’s recoverable amount is estimated. An impairmentloss is recognised whenever the carrying amount of an item of property, plant and equipment exceeds its recoverableamount. In determining the recoverable amount of property, plant and equipment, expected future cash flows are notdiscounted to their present values. The impairment loss is charged to the income statement unless it reverses a previousrevaluation in which case it will be charged to equity. Any subsequent increase in recoverable amount is reduced by theamount that would have been recognised as depreciation had the write-down or write-off not occurred.

ii) Leased assets

Leases in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases.Assets acquired by way of finance leases are stated at amounts equal to the lower of their fair values and the present valueof 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, ifthis is practicable to determine; if not, the Group’s incremental borrowing rate is used.


38


(e) Depreciation

Freehold land and leasehold buildings under construction are not amortised. Leasehold land is amortised in equal instalmentsover the period of the respective leases which range from sixty to ninety-nine years while buildings are depreciated on a straightline basis over the shorter of 50 years or the lease period. Other fixed assets are depreciated on a straight-line basis to write offthe cost of the assets over the term of their estimated useful lives.

The principal annual rates of depreciation used are as follows:

Computer hardware and software 20% - 25%Motor vehicles 20%Plant and equipment 10% - 25%Furniture, fittings and office equipment 10% - 33.33%Library books and manual 10% - 33.33%

Capital work in progress is not depreciated until it is completed and in use in the operation.

(f) Investments

Investments in subsidiaries are stated at cost. An allowance is made when the Directors are of the view that there is a diminutionin their value which is other than temporary.

Current unquoted investments are stated at cost while current quoted investments are stated at the lower of cost and marketvalue on a portfolio basis. An allowance is made when the Directors are of the view that there is a diminution in their valuewhich is other than temporary.

(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 identifiableassets acquired. Goodwill is stated at cost less accumulated amortisation.

The Group previously had a policy to write off goodwill in the year of acquisition. However with the acquisition of significantnew businesses during the year, the Board of Directors is of the opinion that the writing off of goodwill in the year of acquisitiondoes not reflect fairly the value of the assets acquired.

In order to reflect a fairer presentation of the assets on the financial statements, the Board of Directors has adopted the policy ofamortising goodwill over its economic life of 25 years as opposed to writing it off in the year of acquisition. Following thischange, no prior year adjustment had been made as the amount is considered immaterial.

Development expenditure

Development expenditure consists of direct costs net of income of trial courses to develop new curriculum to be submitted to theMinistry of Education and Lembaga Akreditasi Negara for approval and direct cost related to the development of educational courses.

The development expenditure relating to approved courses is amortised over the shorter of the period in which the relatedbenefits are to be realised or 5 years.

(h) Inventories

Inventories are valued at the lower of cost and net realisable value and are determined on a first-in-first-out basis.

(i) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which havean insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presentednet of bank overdrafts and pledged deposits.

(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 inthe foreseeable future and there are no indications the timing differences will reverse thereafter. Deferred tax benefits are onlyrecognised where there is a reasonable expectation of realisation in the near future.


39


(k) Revenue

(i) Goods sold and services rendered

The revenue of the Group comprises tuition, lecture and examination fees received, sales of books, manuals and othertraining materials and accessories and rental.

The revenue of the Company comprises management fees and rental.

Revenue from course fee is recognised over the period of the course.

(l) Dividend income

Dividend income is recognised when the right to receive payment is established.

(m) Interest income

Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset.

(n) 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 thelease.

ii) Financing costs

All interest and other costs incurred in connection with borrowings are expensed as incurred. The interest component offinance lease payments is recognised in the income statement so as to give a constant periodic rate of interest on theoutstanding liability at the end of each accounting period.


40

2. Property, plant and equipment

Apartments, Furniture,Freehold leasehold Computers, fittings Library Capital

Group land and land and software and Motor Plant and and office books and work-in-buildings 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 17,594 12,765 6,067 588 - 7,115 333 114 44,576Additions - 22,462 1,054 930 339 4,309 253 258 29,605Disposals - - (24) (449) - (32) (6) - (511)Acquisition of subsidiaries - 2,031 2,520 406 1,901 12,274 1,597 35,338 56,067Write off - - (305) - - (9) (22) (61) (397)

Closing balance 17,594 37,258 9,312 1,475 2,240 23,657 2,155 35,649 129,340

Representing items at:Cost 3,893 37,128 9,312 1,475 2,240 23,657 2,155 35,649 115,509Directors’ valuation - 1993 13,701 130 - - - - - - 13,831

17,594 37,258 9,312 1,475 2,240 23,657 2,155 35,649 129,340

Accumulated Depreciation

Opening balance 858 802 4,035 463 - 4,255 201 - 10,614Charge for the year 150 412 1,277 203 394 1,962 203 - 4,601Charge to deferredexpenditure - - 399 - - 206 211 - 816Disposals - - (9) (321) - (14) - - (344)Acquisition of subsidiaries - 120 723 135 845 2,851 501 - 5,175Write off - - (304) - - (68) (22) - (394)

Closing balance 1,008 1,334 6,121 480 1,239 9,192 1,094 - 20,468

Net Book Value

At 31 December 2001 16,586 35,924 3,191 995 1,001 14,465 1,061 35,649 108,872

At 31 December 2000 16,736 11,963 2,032 125 - 2,860 132 114 33,962

Depreciation charge for theyear ended 31 December2000 150 216 859 113 - 568 93 - 1,999



41

Apartments, Furniture,Freehold leasehold Computers, fittings Library Capital

Company land and land and software and Motor and office books and work-inbuildings buildings hardware vehicles equipment manuals progress Total

Cost RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Opening balance 13,794 8,255 1,372 295 242 3 114 24,075Additions - 13,249 83 675 535 - - 14,542Disposals - - - (295) - - - (295)Transfer - - - - 61 - (61) -

Closing balance 13,794 21,504 1,455 675 838 3 53 38,322

Representing items at:Cost 3,893 21,374 1,455 675 838 3 53 28,291Directors' valuation -1993 9,901 130 - - - - - 10,031

At 31 December 2001 13,794 21,504 1,455 675 838 3 53 38,322

Accumulated depreciation

Opening balance 711 456 832 207 72 2 - 2,280Charge for the year 125 259 298 69 50 1 - 802Disposal - - - (211) - - - (211)

Closing balance 836 715 1,130 65 122 3 - 2,871

Net book value

At 31 December 2001 12,958 20,789 325 610 716 - 53 35,451

At 31 December 2000 13,083 7,799 540 88 170 1 114 21,795

Depreciation charge for the yearended 31 December 2000 125 127 292 59 21 1 - 625



42


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 openmarket basis conducted in December 1993. 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 ofInternational Accounting Standards (“IAS”) No. 16 (Revised) on “Property, Plant and Equipment”, the valuations of these assetshave not been updated and they continue to be stated at their existing carrying amounts less accumulated depreciation.

The Directors are of the opinion that the current market values of the revalued properties are not less than their net book valuesas at 31 December 2001.

Had the land and buildings been carried at historical cost less accumulated depreciation, the carrying amount of the revaluedassets that would have been included in the financial statements at the end of the year are as follows:

Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000

Freehold land and buildings 9,656 9,737 6,469 6,528Apartments 107 109 107 109

9,763 9,846 6,576 6,637

ii) Security

Certain freehold land and buildings are charged to banks as security for borrowings (see Note 13) granted to the Company andsubsidiaries.

iii) Assets under hire purchase and leases

The net book value of property, plant and equipment as at the year end held under hire purchase and lease agreements in theGroup and of the Company amounted to RM2,660,000 (2000 - RM198,000) and RM610,577 (2000 - RM172,647) respectively.

iv) Capital work-in progress

The capital work-in progress consists mainly of properties in a commercial complex under development.

3. Investment in subsidiariesCompany

2001 2000RM’000 RM’000

Unquoted shares at cost 71,645 5,837

The details of the subsidiaries are disclosed in Note 29 to the financial statements.

4. Investment in associatesGroup

2001 2000RM’000 RM’000

Unquoted shares 3,640 -Share of post-acquisition reserves (40) -

3,600 -

Represented by:Group’s share of net assets other than goodwill 259 -Goodwill on acquisition 3,341 -

3,600 -


43


The associates of the Group are as follows:Principal Effective

Country Activities Ownership Interest2001 2000

Palm Leisure Sdn. Bhd. Malaysia Property development 30% -Upward Portfolio Sdn. Bhd. Malaysia Provision of educational services 39.45% -

5. Other investmentsGroup

2001 2000RM’000 RM’000

CurrentQuoted unit trusts stock 33 32Unquoted shares - at cost 24 25

57 57

Market value of quoted unit trusts stock 32 27

6. Expenditure carried forwardGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

CostBalance at 1 January - 108 - 87Increase during the year - 4 - -

- 112 - 87Write off - (112) - (87)

Balance at 31 December - - - -

Expenditure carried forward comprised preliminary and pre-operating expenses which have been written off in the previous yearin accordance with the requirements of MASB 1.

7. Intangible assetsDevelopment

Goodwill costs TotalCost RM’000 RM’000 RM’000Opening balance - - -Acquisition of subsidiary companies 32,008 2,820 34,828Additions - internally developed - 2,075 2,075

Closing balance 32,008 4,895 36,903

AmortisationOpening balance - - -Acquisition of subsidiary companies 852 - 852Amortisation charge for the year 1,220 - 1,220

Closing balance 2,072 - 2,072

Net book valueAt 31 December 2001 29,936 4,895 34,831

At 31 December 2000 - - -


44

Development expenditure is arrived at aftercharging:

RM’000

Depreciation 816Interest expenses 5Rental of equipment 6Rental of premises 388Staff costs 1,586

Development expenditure will be amortised over 5 years upon receiving the necessary approval from the relevant authorities.

8. Inventories

Inventories comprise text books and manuals.

9. Trade and other receivablesGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Trade receivables 889 46 - -Other receivables 11,244 2,492 784 1,192Profit guarantee receivable 3,250 - - -Subsidiaries - - 10,137 3,251

15,383 2,538 10,921 4,443

The amounts due from subsidiaries are unsecured, interest free and have no fixed terms of repayment.

Included in other receivables are related party balances of RM3,034,000, RM302,000 and RM959,000 due from the Meda Group ofCompanies, Tomisho Group of Companies and Kumpulan Emas Group of Companies, respectively (refer Note 27).

10. Cash and cash equivalentsGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Cash and bank balances 4,718 4,435 576 661Deposits with licensed banks 1,067 2,338 - 2,699

5,785 6,773 576 3,360

Fixed deposits in the Group of RM169,000 (2000 – RM163,000) have been pledged to financial institutions for banking facilitiesextended to certain subsidiaries in the ordinary course of business. (Note 13).

11. Other payablesGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Other payables and accrued expenses 14,942 5,724 850 523Subsidiaries - - 2,233 470Amount due to a Director 229 - - -

15,171 5,724 3,083 993

Included in other payables and accruals of Group and Company is an amount of RM1,502,000 (2000 – RM542,000) and Nil (2000– RM127,000) which represents fees received in advance.

Include in other payables are related party balances of RM166,000 and RM2,456,000 due to the Meda Group of Companies andKumpulan Emas Group of Companies, respectively (refer Note 27).



45


12. Hire purchase and lease creditorsGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Total payable 2,460 100 608 96Less: Unexpired interest (378) (24) (120) (24)

2,082 76 488 72Less: Amount repayable within twelve months shown under current liabilities (1,077) (50) (108) (47)

1,005 26 380 25

Hire purchase and lease liabilities

Hire purchase and lease liabilities are payable as follows:Payments Interest Principal Payments Interest Principal

2001 2001 2001 2000 2000 2000RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GroupLess than one year 1,225 (148) 1,077 100 (24) 76Between one and

five years 1,235 (230) 1,005 - - -

2,460 (378) 2,082 100 24 76

CompanyLess than one year 135 (27) 108 96 (24) 72Between one and

five years 473 (93) 380 - - -

608 (120) 488 96 (24) 72

Terms and debts repayment scheduleUnder 1 - 2 2 - 5 Over 5

Total 1 year years years yearsRM’000 RM’000 RM’000 RM’000 RM’000

GroupHire purchase and finance lease liabilities - fixed at 4.65% to 6.90% 2,082 1,077 530 475 -

CompanyHire purchase and finance lease liabilities - fixed at 4.65% to 5.75% 488 108 108 272 -

13. BorrowingsGroup

2001 2000RM’000 RM’000

CurrentTerm loans - secured 1,027 -Overdrafts - secured 6,040 115

- unsecured 1,174 -

8,241 115

Non-currentLong term loans - secured 18,070 -


46


The bank overdraft and term loan facilities of the subsidiary companies are subject to interest rates ranging from 8.3% to 9.8%(2000 – 8.0% to 8.3%) per annum.

The secured term loans and overdraft facilities are secured by fixed charges over freehold and long term leasehold land andbuildings of the Company and subsidiaries with net book value of RM20,698,000 (2000 – RM7,693,000) and building in progressof subsidiaries with cost of RM35,135,000 (2000 - Nil), a fixed and floating charge over all the assets, properties and undertaking ofa subsidiary and fixed deposits of RM169,000 (2000 – RM163,000).

Terms and debts repayment scheduleUnder 1 - 2 2 - 5 Over 5

Total 1 year years years yearsRM’000 RM’000 RM’000 RM’000 RM’000

GroupSecured term loans - fixed at 8.8% 19,097 1,027 5,725 9,800 2,545

Secured overdrafts - variableat 8.3% to 9.8% (2000 – Nil) 6,040 6,040 - - -

Unsecured overdrafts - variableat 8.3% to 9.8% (2000 – Nil) 1,174 1,174 - - -

26,311 8,241 5,725 9,800 2,545

14. Share capitalGroup and Company2001 2000

Ordinary shares of RM1.00 each RM’000 RM’000

AuthorisedOpening balance 20,000 20,000Increased during the year 80,000 -

Closing balance 100,000 20,000

Issued and fully paidOpening balance 19,000 19,000Issuance of bonus shares 7,600 -Issuance of shares for acquisitions of companies and buildings 52,528 -

Closing balance 79,128 19,000

15. Reserves

Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exempt income tofrank all its distributable reserves at 31 December 2001 if paid out as dividends.

16. Minority shareholders' interests

This consists of minority shareholders’ proportion of share capital and reserves of subsidiaries, net of their share of subsidiary'sgoodwill on consolidation and amortisation of goodwill charged to the minority shareholders.

17. Deferred taxationGroup Company

2001 2000 2001 2000RM'000 RM'000 RM'000 RM'000

Balance at 1 January 1,409 1,160 592 482Transfer (to)/from income statement (315) 249 (144) 110

1,094 1,409 448 592


47


Subject to agreement by the Inland Revenue Board, the Group has potential deferred tax benefits not taken up in the financialstatements under the liability method in respect of the following items:

Group2001 2000

RM'000 RM'000

Unutilised tax losses (9,758) (3,641)Other timing differences 1,918 (343)

(7,840) (3,984)

Deferred taxation not recognised in the financialstatements arising from the revaluation ofproperty which are held for long term use 152 150

18. Operating profitGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Operating profit arrived at after charging:Amortisation of goodwill 1,220 - - -Amortisation of preliminary and

pre-operating expenses 19 112 - 87Auditors' remuneration 120 51 17 14Bad debts written off 33 34 15 37Holding company’s Directors

Remuneration 314 296 116 296Fees 128 102 128 102

Other Director’s remuneration 1,032 711 - 193Property, plant and equipment written off 3 117 - 12Depreciation 4,601 1,999 802 625Rental expense on land and buildings 3,404 1,805 115 22Share of partnership loss 11 - - -

After crediting:Bad debts recovered 43 - - -Gross dividends from:

Unquoted subsidiaries - - 6,380 3,350Gain on disposal of subsidiary 106 - - -Rental income on land and buildings 1,791 1,363 2,103 1,514Dividend income 2 - - -Gain on disposal of property, plant

and equipment 72 - - -Liquidated ascertained damages

claim receivable 1,954 - - -

i) The estimated monetary value of Directors’ benefits-in-kind of the Group and Company is RM10,000 and Nil respectively (2000– RM24,000 and RM20,000).

19. Exceptional item

The exceptional item in the current year of RM3.25 million refers to the settlement sums to be given to Berrington Bay CorporationSdn Bhd and Summit Education Sdn Bhd pursuant to the shortfall of the guaranteed profits in accordance to the Profit GuaranteeAgreement dated 22 October 1999 and Supplementary Agreement dated 17 October 2000.

As approved by the Board of Directors, the above amount is to be settled by way of the transfer of equivalent amount of Meda IncBerhad shares on 18 April 2002, based on the weighted average share price from 19 March 2002 to 17 April 2002.

The Profit Guarantee and Supplementary Agreements state the following:

i) The aggregate pre-tax profit of the Berrington Bay Corporation Sdn. Bhd. Group (“BBC”) and Summit Education Sdn. Bhd.Group (“SES”) together with Summit Montessori Edu-Care Sdn. Bhd. Group (“SME”) shall be not less than RM23,700,000 andRM13,300,000, respectively.


48


ii) The minimum BBC and SES together with SME Guaranteed Profit for each and every one year period in the Guarantee Periodshall be not less than RM4,000,000 and RM1,800,000, respectively.

On 15 April 2002, Kumpulan Emas Berhad, Datin Mah Ming Yuet and Kee Shih-Lene and the Company entered into an agreementwhereby the settlement sums of RM3.25 million will be settled solely by Datin Mah Ming Yuet and Kee Shih-Lene.

The exceptional item in the previous year was in relation to a gain on disposal of the Company’s four storey shoplot.

20. Employee informationGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Staff costs 20,116 11,465 2,251 1,109

The number of employees of the Group and of the Company (including Directors) at the end of the year was 553 (2000 - 301) and47 (2000 – 37) respectively.

21. Financing costsGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Interest payableTerm loans 756 14 - 4Bank overdrafts 809 - 12 2Hire purchase 167 64 31 58

1,732 78 43 64

22. Tax expenseGroup Company

2001 2000 2001 2000RM’000 RM’000 RM’000 RM’000

Current tax expenseMalaysian - current 3,720 1,741 2,000 930

- prior year (108) 33 (155) -

3,612 1,774 1,845 930Deferred tax expense

Malaysian - current (315) 249 (144) 110

3,297 2,023 1,701 1,040

The Group’s and Company’s effective tax rates are higher than the prima facie tax rate as certain expenses are not deductible for taxpurposes.

The Company’s taxation charge in the previous year was lower than the prima facie tax rate due to tax exempt dividends received.

23. Earnings per ordinary share - group

Basic earnings per share

The calculation of basic earnings per share is based on the net profit attributable to ordinary shareholders of RM7,221,000 (2000 -RM4,466,000) and the weighted number of ordinary shares of 76,327,000 (2000 - 19,000,000) in issue during the year.

Weighted average number of ordinary shares2001 2000

RM’000 RM’000Issued ordinary shares at beginning of the year 19,000 19,000Effect of shares issued in January 2001 57,327 -

Weighted average number of ordinary shares 76,327 19,000


49


24. Dividends

Group and Company2001 2000

RM’000 RM’000Ordinary:

First interim:Nil (2000 – Tax exempt dividend of 15 sen per share) - 2,850

Second interim:Nil (2000 – Dividend of 5 sen per share less tax at 28%) - 684

- 3,534

Proposed final:Dividend of 6 sen per share less tax at 28%(2000 – Nil) 3,418 -

25. Segmental information

The Group’s turnover and profit are derived mainly from educational activities in Malaysia and accordingly no segment reporting ispresented.

26. Contingent liabilities

Company2001 2000

RM’000 RM’000Guarantees and contingencies relating to borrowings of:

Subsidiaries - secured 23,920 -- unsecured 1,462 -

25,382 -

27. Related parties

Transactions with a Director

Significant transactions and balance with companies in which a Director, Teoh Seng Foo and close members of his family haveinterest are as follows:

Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000Balances in respect of non-trade transactions

Amount due from:Meda Group of Companies

in respect of rental and related servicesrebates, and scholarship funds 2,868 - - -

Amount due from:Tomisho Group of Companies

in respect of rental deposit and broughtforward intercompany balances priorto the acquisition of the subsidiaries 302 - 102 -


50


Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000Balances in respect of non-trade transactionsAmount due to:Kumpulan Emas Group of Companies

in respect of renovations works, liquidatedascertained damages claim and broughtforward intercompany balances priorto the acquisition of the subsidiaries (1,497) - - -

Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000TransactionsKumpulan Emas Group of Companies

Liquidated ascertained damages claim 1,954 - - -Meda Group of Companies

Rental and other related charges 818 - - -Tomisho Group of Companies

Rental 64 - 64 -

These transactions have been entered into in the normal course of business and have been established at negotiated rates, taking intoaccount prevailing market terms.

Transaction with other related parties

Significant transactions and balances with other related parties are as follows:

Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000Balance in respect of non-trade transactionsAmount due from:Datin Mah Ming Yuet & Kee Shih-Lene

Settlement amount in respect ofthe profit guarantee arrangement 3,250 - - -

Group Company2001 2000 2001 2000

RM’000 RM’000 RM’000 RM’000Transactions

Datin Mah Ming Yuet & Kee Shih-LeneSettlement amount in respect of

the profit guarantee arrangements 3,250 - - -

Datin Mah Ming Yuet & Kee Shih-Lene are directors in certain subsidiaries of the Group.

28. Capital commitmentGroup

2001 2000RM’000 RM’000

Approved and contracted for 1,800 645


51


29. Subsidiaries

The principal activities of the subsidiaries in the Group, their places of incorporation and the interest of Systematic Education GroupBerhad are as follows:

Effective interestName2001 2000

Principal Activities

Systematic Business Training 100% 100% Provision of professional, Centre Sdn. Bhd. commercial and academic education.

Systematic Computer Centre 100% 100% Provision of computer Sdn. Bhd. training, commercial

and academic education.

Systematic Business Training 100% 100% Provision of professional, Centre (P.J.) Sdn. Bhd. commercial and academic

education.

Systematic Business Training 100% 100% Provision of professional, Centre (PG) Sdn. Bhd. commercial and academic

education.

Systematic Management Resource 100% 100% Provision of distant learning Centre Sdn. Bhd. education.

SBT Professional Publications 100% 100% Book centre, dealing in all kinds of Sdn. Bhd. reading material, information

research and related business.

Syschom Training Sdn. Bhd. 100% 100% Provision of professional,commercial and academiceducation.

Systematic NVQ Consultants 100% 100% Provision of management Sdn. Bhd. consultancy and investment

holding.

Shaw Commercial Institution 100% 100% To run commercial college and Sdn. Bhd. to provide facilities for the

advancement of education.

Maktab Cambridge Sdn. Bhd. 98.21% 98.21% Operation of an educationalinstitution.

Varia Gaya Sdn. Bhd. 95% 95% Provision of commercialeducation and tuition.

Systematic Secretarial Centre 75% 75% Operation of a training centre Sdn. Bhd. for education and upgrading

of secretarial skills.

Mutu Unggul Sdn. Bhd. * 90% 90% Provision of professional,commercial and academiceducation.

Systematic Academic 100% 100% Provision of job placement Centre Sdn. Bhd. consultancy. formerly known as Jobquest Placement Consultants (M) Sdn. Bhd.)

EWI-Systematic Sdn. Bhd. 100% 100% Provision of education forprofessional examination.


52


Effective interestName2001 2000

Principal Activities

Systematic Business Training 100% 100% Dormant. Centre (SP) Sdn. Bhd.

Berrington Bay Corporation * 100% - Investment holding and Sdn. Bhd. management consultancy.

Prestige Front Sdn. Bhd. * 100% - Property investment.

Organizational Resources * 100% - Provision of educational Sdn. Bhd. and training services.

Superior Element Sdn. Bhd. * 60% - Provision of educationaland training services.

IPPP Batu Lintang Sdn. Bhd. * 70% - Operation of an educationalinstitution for furtherstudies.

IFPA Resources Sdn. Bhd. 60% - Provision of financialplanning and financial relatedcourses.

Summit Education Sdn. Bhd. 98.63% - Investment holding andmanagement consultancy.

Premier Media Sdn. Bhd. 98.63% - Operation of an instituteproviding educationalprogrammes.

Binary Mark Sdn. Bhd. 98.63% - Property investment.

Summit Multimedia Education 73.97% - Operation of an institute Sdn. Bhd. providing educational

programmes.

Summit Early Childhood Edu-Care Sdn. Bhd. * 100% - Provision of childcare (formerly known as Summit services. Montessori Edu-Care Sdn. Bhd.)

Montessori Focus Sdn. Bhd. * 100% - Provision of childcareservices.

Summit Early Childhood Edu-Care (Rawang) Sdn. Bhd. 70% - Provision of childcare (formerly known as Nutele services. Care Solutions Sdn. Bhd.)

Rekaan Medianet Sdn. Bhd. 100% - Investment holding

Sadec-KE Utilities Corporation Sdn. Bhd. 100% - Operation of children’s

educational andrecreational centre.

Sino-Malaysia Educulture Centre Sdn. Bhd. 100% - Provision of cross border

education and cultureactivities

*Not audited by KPMG


53

30. Acquisition of subsidiaries

AcquisitionDuring the year, the Group acquired shares in the following subsidiaries for a total consideration of RM68,588,000 satisfied by theissuance of ordinary shares totalling RM65,792,000 in Systematic Education Group Berhad and cash RM2,796,000. The acquisitionwas accounted for using the acquisition method of accounting. In the year ended 31 December 2001, the subsidiaries contributed apost-acquisition net profit of RM3,323,000 to the consolidated net profit for the year (after taking into account the exceptional item).

Berrington Bay Corporation Sdn. Bhd.Prestige Front Sdn. Bhd.Organizational Resources Sdn. Bhd.Superior Element Sdn. Bhd.IPPP Batu Lintang Sdn. Bhd.IFPA Resources Sdn. Bhd.Summit Education Sdn. Bhd.Premier Media Sdn. Bhd.Binary Mark Sdn. Bhd.Summit Multimedia Education Sdn. Bhd.Summit Early Childhood Edu-Care Sdn. Bhd.(formerly known as Summit Montessori Edu-Care Sdn. Bhd.)Montessori Focus Sdn. Bhd.Summit Early Childhood Edu-Care (Rawang) Sdn. Bhd.(formerly known as Nutele Care Solutions Sdn. Bhd.)Rekaan Medianet Sdn. Bhd.Sadec-KE Utilities Corporation Sdn. Bhd.Sino-Malaysia EduCulture Centre Sdn. Bhd.

31. Comparatives

The following comparative figures have been reclassified to ensure comparability with the current financial year:

Group CompanyAs As

As previously As previouslyrestated reported restated reportedRM’000 RM’000 RM’000 RM’000

Income statementRevenue 33,439 26,253 2,232 2,232Cost of services (17,906) (10,720) (1,109) (1,109)

Gross profit 15,533 15,533 1,123 1,123Distribution costs (1,636) (1,636) (240) (240)Administration expenses (4,444) (4,444) (789) (789)Other operating expenses (5,896) (5,896) (983) (983)Other operating income 2,846 1,551 6,172 4,877

Operating profit 6,403 5,108 5,283 3,988Financing costs (78) (78) (64) (64)Interest income 168 168 100 100

Profit before exceptionalitem and before tax 6,493 5,198 5,319 4,024

Exceptional item - 1,295 - 1,295

Profit after exceptionalitem and before tax 6,493 6,493 5,319 5,319

During the financial year, the Group and the Company changed the presentation of turnover from revenue net of certain direct coststo gross revenue. The other direct costs were classified to cost of services.



54

1. 17-19 Jalan Tun Tan Siew Sin 1,962 sq ft of 5 1/2 Office Freehold 20 2,283 14/12/199350050 Kuala Lumpur storey commercial

building

2. 33-35 Jalan Hang Lekiu 4,515 sq ft of Education Freehold 24 7,615 14/12/199350100 Kuala Lumpur 9-storey commercial Centre

building

3. 10 Jalan SS2/61 1,680 sq ft of 3 1/2 Education Freehold 21 1,478 25/1/199547300 Petaling Jaya storey shophouses CentreSelangor

4. 42 Jalan SS2/61 1,680 sq ft of 4 Office Freehold 21 1,582 25/1/199547300 Petaling Jaya storey shophouseSelangor

5. 1, 3 & 5 Jalan PM3 3,534 sq ft of 3 units Office Leasehold. 4 1,680 30/7/1996Plaza Mahkota, Bandar Hilir of 4-storey Expiring date75000 Melaka shop offices @ 25/7/2090

6. 20 Jalan University 13,377 sq ft of Residential Leasehold. 30 502 23/8/199446200 Petaling Jaya Bungalow Expiring dateSelangor @ 1/2/2060

7. 1 Jalan 11/12 12,834 sq ft of Residential Leasehold. 30 1,494 18/9/199646200 Petaling Jaya Bungalow Expiring dateSelangor @ 31/8/2070

8. 126 & 127 Jalan Masjid 1 2,800 sq ft of Vacant Leasehold. 7 923 13/9/1995Taman Pekan Baru 2 units of 3 1/2-storey Expiring date08000 Sungai Petani, Kedah shophouses @ 14/11/2092

9. 16 & 18 Jalan 5/101C 2,128 sq ft of 2 units Office Leasehold. 4 2,812 25/8/1995Off Jalan Kaskas 1 of 6-storey Expiring dateCheras Business Centre shop offices @ 7/12/207756000 Cheras, Kuala Lumpur

10. 36-4, 4th Floor Block B 2,910 sq ft of Residential Leasehold. 21 112 8/1/1993Jalan Senohong Apartment Expiring dateTaman Cantik, Cheras @ 18/1/207656100 Kuala Lumpur

11. 26-3, 3rd Floor Block A 1,297 sq ft of Residential Leasehold. 21 75 4/4/1994Jalan Senohong Apartment Expiring dateTaman Cantik, Cheras @ 18/1/207656100 Kuala Lumpur

12. 28-3, 3rd Floor Block A 1,297 sq ft of Residential Leasehold. 21 75 4/4/1994Jalan Senohong Apartment Expiring dateTaman Cantik, Cheras @ 18/1/207656100 Kuala Lumpur

No. Address Approximate Areas Existing TenureApproximate NBV as at Date of

/Description UseAge of 31/12/2001 Revaluation/building (years) (RM’000) Acquisition

Owned by Company

Group Properties as at 31 December 2001


55

No. Address Approximate Areas Existing TenureApproximate NBV as at Date of

/Description UseAge of 31/12/2001 Revaluation/building (years) (RM’000) Acquisition

Owned by Subsidiaries

13. Lot 01&02 Block B 4,160 sq ft of 2 units Office Freehold 4 13,116 23/1/1996Phileo Damansara 1 of 12-storey9 Jalan 16/11 commercial buildingOff Jalan Damansara46350 Petaling Jaya

14. 14-18, Jalan SS2/61 5,040 sq ft of 3 units Education Freehold 21 3,628 28/12/199347300 Petaling Jaya of 4-storey CentreSelangor shophouses

15. 24 Jalan 5/89A 5,618 sq ft of 5 Office Leasehold. 7 4,071 24/6/1996Off Jalan Sekilau storey shop offices Expiring dateBatu 3 1/2 Jalan Cheras @ 11/8/208556000 Kuala Lumpur

16. 37 & 39 Jalan 1/137B 3,294 sq ft of 2 units Vacant Leasehold. 17 1,884 11/6/1996Resource Industrial Centre of 4-storey Expiring dateOff Jalan Klang Lama shop offices @ 29/3/206558000 Kuala Lumpur

17. 211 Jalan Bukit Mata Kuching 3,965.1 sq m Education Leasehold. 25 11,218 13/6/200193100 Kuching, Sarawak of 6-storey Centre Expiring date

commercial building @ 13/8/2785

18. Lot 3.09a, Mukim Petaling 21,986 sq ft of Building-in Leasehold. – 8,794 3/7/1998Daerah Petaling shoplot - progress Expiring dateSelangor @ 9/11/2093

19. Lot 3.09b, Mukim Petaling 15,482 sq ft of Building-in Leasehold. – 6,194 8/1/1999Daerah Petaling, Selangor shoplot - progress Expiring date

@ 9/11/2093

20. 5 1/2 storey, Block B 33,586 sq ft of Building-in Leasehold. – 10,747 3/7/1998Mukim Petaling office space - progress Expiring dateDaerah Petaling @ 9/11/2093Selangor

21. 5 1/2 storey, Block A 33,020 sq ft of Building-in Leasehold. – 9,400 21/10/1999Mukim Petaling office space - progress Expiring dateDaerah Petaling @ 9/11/2093Selangor

Group Properties as at 31 December 2001


56

Authorised Share Capital : RM100,000,000Issued and fully paid-up : RM79,132,755Class of shares : Ordinary shares of RM1.00 eachVoting rights- On a show of hand : One vote- On a poll : One vote for every share held

Distribution Schedule of Shareholdings

Size of shareholdings No. of shareholders % of shareholders No. of shares % of issued capital

1 – 999 102 3.77 40,753 0.051,000 – 10,000 2,371 87.65 6,440,930 8.1410,001 – 100,000 182 6.73 3,970,127 5.02100,001 – less than 5% of issued shares 46 1.70 37,161,937 46.965% and above of issued shares 4 0.15 31,519,008 39.83

TOTAL 2,705 100.00 79,132,755 100.00

Substantial Shareholders as at 23 April 2002According to the register required to be kept under Section 69L of the Companies Act, 1965, the following are the substantial shareholders(excluding bare trustees) of the Company:-

No. of shares heldName of Shareholders Direct % Indirect %

1. Koperasi Pegawai-Pegawai Melayu Malaysia Bhd 15,276,865 19.31 - -2. Tan Sri Dato’ (Dr) Abdullah bin Mohd Salleh - - 15,276,865* 19.313. Dato’ Shamsir bin Omar - - 15,276,865* 19.314. Tuan Haji Mohd Razi bin Yaacob - - 15,276,865* 19.315. Kumpulan Emas Berhad (“KEB”) 24,755,025 31.28 - -6. Teoh Seng Foo 60,000# 0.07 24,755,025** 31.287. Meda Capital Sdn Bhd - - 24,755,025+ 31.288. Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub 11,200 0.01 19,337,478++ 24.449. Datin Mah Ming Yuet 7,382,983 9.33 782,531^ 0.9910. Ladang MOCCIS Sdn Bhd 4,060,613 5.13 - -

Directors’ Shareholdings as at 23 April 2002No. of shares held

Name of Directors Direct % Indirect %

1. Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayub 11,200 0.01 19,337,478++ 24.442. Tan Sri Dato’ (Dr) Abdullah bin Mohd Salleh - - 15,276,865* 19.313. Dato’ Shamsir bin Omar - - 15,276,865* 19.314. Tuan Haji Mohd Razi bin Yaacob - - 15,276,865* 19.315. Dato’ Megat Najmuddin bin 101,297 0.13 - -

Datuk Seri Dr Haji Megat Khas6. Teoh Seng Foo 60,000 # 0.07 24,755,025** 31.287. Hii Chii Kok @ Hii Chee Kok 556,000 0.70 - -

60,000 # 0.07 - -8. Kee Lian Yong 60,000 # 0.07 - -

* Deemed interest held through Koperasi Pegawai-Pegawai Melayu Malaysia Bhd** Deemed interest held through his direct interest in KEB and indirect interest in KEB through Meda Capital Sdn Bhd+ Deemed interest held through KEB++ Deemed interest held through Koperasi Pegawai-Pegawai Melayu Malaysia Bhd and Ladang MOCCIS Sdn Bhd^ Deemed interest held through daughter, Kee Shih-Lene# Acquired an option to subscribe ordinary shares of RM1.00 each pursuant to the Company’s Employees’ Share Option Scheme

Analysis of Shareholdings as at 23 April 2002


57

Analysis of Shareholdings as at 23 April 2002THIRTY LARGEST SHAREHOLDERS

Name of shareholders No. of shares %

1. Kumpulan Emas Berhad 12,494,025 15.79

2. Aseam Malaysia Nominees (Tempatan) Sdn Bhd

- Koperasi Pegawai-Pegawai Melayu Malaysia Bhd 8,512,000 10.76

3. Alliance Merchant Nominees (Tempatan) Sdn Bhd

- Kumpulan Emas Berhad 6,490,000 8.20

4. Mah Ming Yuet 4,522,983 5.71

5. Cimsec Nominees (Tempatan) Sdn Bhd


6. Merchant Nominees (Tempatan) Sendirian Berhad

- Koperasi Pegawai-Pegawai Melayu Malaysia Berhad 2,410,000 3.05

7. HSBC Nominees (Tempatan) Sdn Bhd

HSBC (M) Trustee Bhd for OSK-UOB Small Cap Opportunity Unit Trust 2,356,000 2.98

8. Merchant Nominees (Tempatan) Sendirian Berhad

- Ladang MOCCIS Sdn Bhd 2,260,000 2.86

9. Koperasi Pegawai-Pegawai Melayu Malaysia Berhad (MOCCIS) 4,304,865 5.44

10. Public Nominees (Tempatan) Sdn Bhd


11. Alliancegroup Nominees (Tempatan) Sdn Bhd

- Mah Ming Yuet 1,860,000 2.35

12. Ladang MOCCIS Sdn Bhd 1,800,613 2.28

13. Pujian Wajar Sdn Bhd 1,302,000 1.65

14. Mayfin Nominees (Tempatan) Sdn Bhd


15. Cheam Shaw Fin 1,060,000 1.34

16. Kee Shih-Lene 1,782,531 2.25

17. JS Nominees (Tempatan) Sdn Bhd

- Perdana Technology Venture Sdn Bhd 831,600 1.05

18. SBBAM Nominees (Tempatan) Sdn Bhd

- Yayasan Mohd Noah 800,000 1.01

19. Alliancegroup Nominees (Tempatan) Sdn Bhd

- Tan Hong Aik 767,600 0.97


58

THIRTY LARGEST SHAREHOLDERS

Name of shareholders No. of shares %

20. Formis Holdings Berhad 750,000 0.95

21. Cheam Tow Yong 733,225 0.93

22. EB Nominees (Tempatan) Sendirian Berhad

- Mohd Nor bin Ibrahim 700,000 0.88

23. BBMB Securities Nominees (Tempatan) Sdn Bhd

- Perdana Technology Venture Sdn Bhd 558,600 0.71

24. Hii Chii Kok @ Hii Chee Kok 556,000 0.70

25. Mayfin Nominees (Tempatan) Sdn Bhd

- Lim See Teok 550,000 0.70

26. Arab-Malaysia Nominees (Tempatan) Sdn Bhd

Arab-Malaysian Trustee Bhd for BHLB Pacific Dana Al-Ihsan 545,000 0.69

27. EB Nominees (Tempatan) Sendirian Berhad

- Lim See Teok 533,000 0.67

28. Hong Leong Finance Berhad

- Lim Chee Khang 518,000 0.65

29. Kee Ju-Hun 494,000 0.62

30. UOBM Nominees (Tempatan) Sdn bhd

- Lim See Teok 450,000 0.57

Analysis of Shareholdings as at 23 April 2002


59

FORM OF PROXY

I/We _____________________________________________________________________________________________________________

of ________________________________________________________________________________________________________________

being a member/members of SEG International Bhd (formerly known as Systematic Education Group Berhad) hereby appoint

_________________________________________________________________________________________________________________

of ________________________________________________________________________________________________________________

or failing him/her __________________________________________________________________________________________________

of ________________________________________________________________________________________________________________

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Sixteenth Annual GeneralMeeting of the Company to be held at Room Pahlawan 2, Level 5, The Summit Hotel, Subang USJ, Persiaran Kewajipan USJ1, 47600 UEPSubang Jaya, Selangor Darul Ehsan on Thursday, 20 June 2002 at 10.30 a.m. and at any adjournment thereof.

My/Our proxy is to vote either on a show of hands or on a poll as indicated below with an “X”:

RESOLUTIONS FOR AGAINST

1. To receive the Financial Statements and Reports

2. To declare a first and final dividend of 6% less tax

3. To approve the payment of Directors’ Fees

4. To re-elect the following as Directors:

(a) YBhg Dato’ Shamsir bin Omar(b) Mr Teoh Seng Foo(c) Mr Hii Chii Kok @ Hii Chee Kok(d) Mr Hue Fook Chuan

5. To re-elect YB Senator Tan Sri Dato’ Seri (Dr) Abdullah bin Ayubpursuant to Section 129 of the Companies Act, 1965.

6. To re-elect YBhg Tan Sri Dato’ (Dr) Abdullah bin Mohd Sallehpursuant to Section 129 of the Companies Act, 1965.

7. To re-appoint Messrs KPMG as Auditors and authorise theDirectors to fix their remuneration.

8. As special business, to approve the ordinary resolution pursuant toSection 132D of the Companies Act, 1965

Dated this __________ day of __________________________ 2002

Signature of member(s)

Number of shares held

Notes:

1. If you wish to appoint other person(s) to be your proxy, delete the words “the Chairman of the meeting” and insert the name(s) and address(es) of the person(s) desired in the spaceso provided.

2. If there is no indication as to how you wish your vote(s) to be cast, the proxy will vote or abstain from voting at his/her discretion.

3. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

4. A member shall not be entitled to appoint more than two proxies to attend and vote at the same meeting. Where two proxies are appointed, the proportions of shareholdings to berepresented by each proxy must be specified in order for the appointments to be valid.

5. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one proxy in respect ofeach securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

6. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its Attorney.

7. The instrument appointing a proxy must be deposited at the Registered Office at 10th Floor, Menara Summit, Persiaran Kewajipan USJ1, 47600 UEP Subang Jaya, Selangor Darul Ehsan notless than 48 hours before the time appointed for holding the Meeting or adjourned meeting.


60

SEG INTERNATIONAL BHD

10TH FLOOR MENARA SUMMIT

PERSIARAN KEWAJIPAN USJ 1

47600 UEP SUBANG JAYA

SELANGOR DARUL EHSAN

STAMP

FOLD HERE

FOLD HERE

Documents

Member Colleges and Centres In Malaysia - INVESTORsegi.investor.net.my/s/SEG AR2001b.pdf · Member Colleges and Centres In Malaysia (PENANG) ... December 2001 • 59 Form of Proxy