Sasbadi Annual Report 2017

ANNUAL REPORT 2017 13 For FYE 31 August 2017, SSB received a Writ and Statement of Claim from Penerbitan Pelangi Sdn Bhd (“PPSB”) alleging infringement of PPSB’s copyright by SSB, resulting from SSB’s publishing and sales of books on past year question papers for the STPM examination and MUET under the licence from MPM as mentioned above. In the Writ and Statement of Claim, PPSB is claiming copyright ownership in, inter alia, the past year question papers for the STPM examination and MUET for the years of 2011 to 2016. SSB had filed its defence against the claim and submitted a counterclaim, and received a reply whereby PPSB denied SSB’s counterclaims and SSB is put to strict proof of the claims. The Group remains steadfast that PPSB’s claim on the copyright ownership is without basis and we will rigorously challenge the allegation of infringement. At this juncture, we are not able to ascertain the financial impact arising from the claims. However, the claims are not expected to have any material operational impact on the Group. Changes in Educational Curriculum and Policies As the Group is principally an education solutions provider, any changes in educational curriculum and policies may have an impact on our operations and would require us to react quickly. Nevertheless, the changes are usually announced ahead of time and this would allow sufficient time for us to align our business activities with the changes. In addition, with our pool of experienced editors, this may turn out to be our competitive advantage as we are able to react quickly to the changes. Political, Economic and Regulatory Uncertainties Any adverse development in the political, economic and regulatory environment in Malaysia may materially and adversely affect the financial and operational conditions of the Group. To mitigate this risk, the Group will fall back on our vast experience, continue to adopt prudent management, remain vigilant and take precautionary measures against the uncertainties. Dependency on Key Management Personnel and Experienced / Skilled Employees The Group’s continued success will depend, to a significant extent, upon the abilities, skills, experience, competency and continuous efforts of our key management personnel (which include our Executive Directors) and experienced/skilled employees. As such, the loss of any of our key management personnel and experienced/skilled employees, without a suitable and timely replacement, may have a material adverse impact on our business and our continuing ability to compete effectively. The Group recognises the importance of attracting and retaining our key management personnel and experienced/ skilled employees, and has put in place competitive compensation packages. In addition, the Group provides a pleasant and comfortable working environment, promotes conducive work culture, upholds good work ethics, and fosters good working relationships among our employees. The Group has also put in place succession planning and provides training and career development opportunities to our employees. Prospects Based on the Economic Report 2017/18, the Malaysian economy is expected to remain resilient in 2018, with real gross domestic product (“GDP”) expanding between 5% and 5.5%, led by domestic demand. Private sector expenditure continues to be the primary driver of growth with private investment and consumption growing 8.9% and 6.8%, respectively. Meanwhile, public sector expenditure is forecast to decline, in line with lower capital outlays by public corporations. The economy is expected to continue to operate under conditions of full employment with an unemployment rate of below 4%, while inflation remains benign. Notwithstanding the above, we anticipate that the retail market conditions will continue to remain weak for FYE 31 August 2018. In this regard, the Group has been stepping up our efforts to diversify beyond the core academic segment into new revenue streams where we do not have a significant presence. The Group has also been streamlining and leveraging resources within the Group to maximise efficiency and effectiveness. The Group was unable to reap the rewards of these efforts during FYE 31 August 2017 as the efforts had not fully turned on, but we believe they will contribute more significantly to the Group in the coming financial years. In addition, the Group will continue to capitalise on our Government’s agenda with regard to STEM and smart classroom solutions by utilising the Group’s existing and expanding digital solutions, technological know-how, as well as 21st Century learning tools and products. The Group will also continue to explore opportunities for synergistic collaborations with third parties that have similar drive and agenda, and to pursue growth in our market share of the direct users market via our network marketing/direct sales business. Premised on the above and barring any unforeseen circumstances, the Group is positive of our prospects and performance for FYE 31 August 2018 despite the poorer-than-expected results for FYE 31 August 2017. Dividend Policy The Group has adopted a policy of paying out up to 50% of our yearly profits as dividends, provided that we have excess funds which are not required to be retained to fund our operations. For FYE 31 August 2017, we have, on 31 May 2017, paid an interim single-tier dividend of 1 sen per ordinary share amounting to RM2.80 million to shareholders (“Interim Dividend”). Given the poorer-than-expected fourth financial quarter results recorded by the Group, the Board of Directors did not recommend any payment of final dividend for FYE 31 August 2017. In this regard, with the Interim Dividend, the Group has paid out approximately 34.8% of the net profit attributable to owners of the Company of RM8.04 million for FYE 31 August 2017 as dividends, in line with the Group’s dividend policy. MANAGEMENT DISCUSSION AND ANALYSIS