Sasbadi Annual Report 2019

On behalf of the Board of Directors ("the Board") of Sasbadi Holdings Berhad ("Sasbadi" or "the Group"), it is our pleasure to present to you Sasbadi’s Annual Report for the financial year ended ("FYE") 31 August 2019. Overview Over the last 3 years, the Group has faced many challenges, largely owing to various external factors and economic developments. For our FYE 2019, we found that consumer sentiment was particularly low, which had a direct negative impact on our academic print publishing segment. As part of the Ministry of Education’s ("MoE") initiative to promote a more fun learning environment, primary schools have been given strict instructions to discontinue the use of workbooks for Year 1 to Year 3. The use of workbooks for Year 4 to Year 6 was limited to one title per subject. Further to that, with the MoE’s goal to gradually revamp our education system by way of adopting digital and enquiry-based learning approaches, as stipulated in our Malaysia Education Blueprint 2013-2025, interactive textbooks containing elements of texts, graphics, audio visuals and animations are being introduced for selected subjects. These are all aspects that have affected our academic print publishing segment. In the face of these adversities, we managed to perform rather well in our non-academic print publishing segment which allowed the Group to see marginal improvement in earnings for FYE 31 August 2019. This is mainly attributable to our fundamental strengths and tireless efforts in providing quality reading materials to our customers. Prospects The MoE’s direction to go digital is not entirely unfavourable to us. Despite being a drawback for our print publications, it brings promising opportunities to our digital and technology-enabled solutions segment. The Group’s extensive in-house developed technology for education could see us reaping the rewards through this transformation. We have various products and platforms that can meet the individual needs of students and teachers in schools, such as our flagship digital learning platform i-LEARN Ace which features self-paced learning, customisability and automated functions to make learning both effective and efficient. Additionally, with the 5G roll-out on the horizon, the Group has developed cutting-edge technology, such as our virtual classroom platform in anticipation of this game-changing infrastructure. As such, we believe an exhilarating turnaround can be expected from this segment. There has also been heightened interest from both the private and public sectors towards our STEM (Science, Technology, Engineering and Mathematics) products, particularly for primary school students. The Group hopes to benefit from this as we prepare to launch a new range of LEGO Education products targeting children between the ages of 10 to 15 in January 2020. Another new development for the Group is our recent appointment as the Preferred Partner for Cambridge Assessment English ("CAE") Linguaskill and Exclusive Partner for New York City ("NYC") English, an online English learning programme. Both these products are benchmarked to the Common European Framework of Reference for Languages ("CEFR"). These products will generate a new revenue stream for the Group as they target a whole new customer base which is made up of job seekers and working professionals. In addition to that, the demand for upskilling English proficiency for employment, professional development and career advancement is on the rise. Also to note that these products, being fully digital, are practical and user-friendly which meets the needs of society today. Moving foward, we foresee the operating environment to remain challenging as we expect risk averse consumers to be spending conservatively in the next financial year. However, upon taking into consideration our initiatives currently in the pipeline, we are optimistic about the Group’s performance in FYE 2020. Appreciation My sincerest thanks to our fellow Board members for leading the Group through this challenging year. To the management team and employees of Sasbadi, thank you for your tireless dedication and resilience in maintaining the Group’s operations in the face of volatility. To our business associates, thank you for your trust in the Group and for your continuous support and confidence in us. In anticipation of a better year ahead, and to appreciate our team, we are pleased to say that we have announced on 6 December 2019 an offer of options to eligible employees under our Employee Share Option Scheme ("ESOS") to subscribe for the new ordinary shares in Sasbadi. We hope this motivates our employees to give their very best in striving for greater results so that we may enjoy the fruition together as a Group. The Group humbly requests for your continuous support and trust as we pave the way to greater heights in the years ahead. MESSAGE TO SHAREHOLDERS PAGE 08 Dato’ Salleh Bin Mohd Husein Independent Non-Executive Chairman Law King Hui Group Managing Director SASBADI HOLDINGS BERHAD