Chairman’s message

Dear Shareholders,

During the financial period from 1 April 2019 to 30 June 2020 (“FY2020”), the Group maintained the momentum of the turnaround of the business and achieved a marked improvement to its bottom line results, in spite of the challenges presented by the COVID-19 pandemic. The impact of the pandemic was somewhat cushioned by investments made since financial year ended 31 March 2018 (“FY2018”) into digital transformation initiatives and across-the-board cost efficiencies.

We expect to be in a strong enough position to continue our business activities and to return to a more stable financial position. Additionally, the Group has substantially improved its operating profit performance, after several years of declining operating profit results. Whilst continuing to improve the cash burn rate, some business units within the Group are now at or near profitability levels and we are confident in continuing the trend, especially as geo-economic conditions improve.

I believe that the Group is now well-placed to move to its next phase of recovery and growth. To achieve this, we intend to ramp up efforts to improve business capabilities and to develop academic product which include both degree-level and short courses. These new academic programmes which have been rolled out progressively this financial period including a Cyber Security Advanced Diploma, a Level 7 Diploma of Business and Pre-Masters in Business, as well as a collection of short-courses, vocational, skills based programmes, with in-demand specialisation such as data science.

For FY2020, the Group recorded total revenue of $10.9 million, representing a 14.1% annualised increase from $7.6 million for the financial year ended 31 March 2019 (“FY2019”). The Group reported a modest loss before tax of $0.5 million for FY2020, which represents a substantial improvement over the $3.5 million loss in FY2019 and the loss of $6.1 million in FY2018. Whilst still in a loss position, these financial results represent a significant turnaround. The executive education business in Hong Kong maintained healthy profitable margins, NCC Education is now at near-profitability level, and Informatics Academy in Singapore is trending upward.

Whilst enrolment levels for Informatics Academy in the second half of 2019 were encouraging, they have since been impacted by the inability to issue visas to foreign students. Fortunately, some of the students have been willing to undertake their studies online.

We continued to improve productivity from initiatives started in FY2018 which have improved the operating costs of the Group, from manpower optimisation and the termination and renegotiation of unprofitable university partnership fees. In FY2020, staff costs reduced by a further 10.9% on an annualised basis, after a 23.0% reduction in the prior year, while other operating expenses decreased by 26.6% against FY2019. University partnership fees, particularly for NCC Education, were a significant factor in contributing to the lack of profitability in the past. Many such partnerships have since been renegotiated or terminated between 2018 and 2020. The Group has also achieved cost savings from the consolidation of office spaces in Singapore, Beijing and Cape Town, and we expect the cost of leases to continue to reduce beyond 2020 with the greater use of technology in academic delivery. Towards the end of the financial period, we were able to cushion the impact of loss in revenue because we were fortunate enough to take advantage of Government stimulus measures in Singapore and the United Kingdom.

FOCUS ON BUSINESS GROWTH

With long-term operational and cost efficiencies accomplished,the Group is now pushing forward with the singular objective of revenue growth. The Group expects this growth to come from all of its key markets including Singapore and Hong Kong, and intends to leverage its global presence through NCC Education through its accredited teaching centres in over 50 countries. The Group remains committed to its core markets that have been a mainstay for many years, but believe that it is now better positioned to explore new academic and vocational programmes. Our continuing success in the profitable adult education business in Hong Kong, validates our view that short courses and skills-based training programmes can be a pillar for future revenue growth. With an eye to the future, NCC Education is developing a more modern technology platform for delivery and assessment of its qualification and education services. The Digi computer science curriculum is now being delivered to children aged 5 to 16 in many countries and in particular, The Philippines, where NCC Education has a deal in place to eventually deliver the programme to over 100,000 students by 2022.

RIGHTS ISSUE

To fund the ongoing growth of the Group and ensure financial capability, the Group introduced a renounceable non-underwritten rights cum warrant issue and raised $5.3 million in funding. The funds are being used to implement the new revenue growth plans including new academic programmes, such as cyber security, digital transformation of existing programmes and short vocational-based courses, as well as updating and refreshing existing computing diploma and degree top-up programmes.

The Berjaya Group demonstrated its commitment to this rights issue by confirming its commitment to procure all its rights shares plus additional excess rights shares totalling $5.0 million resulting in it now holding 68% of the total shares in the Group. Once again, on behalf of the Group, I would like to record my appreciation to the directors, staff, partners, students and shareholders for their continued support. In particular, I would like to record my gratitude for the support of the Governments of Singapore, United Kingdom and Hong Kong, whose business-friendly financial stimulus measures have helped us to mitigate the impact of COVID-19 to the Group’s business.

Dato’ Sri Robin Tan Yeong Ching

Non-Executive Chairman