Sasbadi Annual Report 2019

MANAGEMENT DISCUSSION AND ANALYSIS PAGE 09 Overview of Operations Sasbadi Holdings Berhad (“Sasbadi Holdings” or “the Company”) is an investment holding company while the Group (i.e. Sasbadi Holdings and its subsidiaries) is an education solutions provider. Further details on the Group’s subsidiaries are disclosed in Note 6 to the Financial Statements section of this Annual Report. The Group’s history began with the incorporation of Sasbadi Sdn Bhd ("SSB") in 1985, which commenced its operations as a publisher of printed educational materials within the same year. In order to meet the learning and teaching needs of the 21st Century, the Group evolved from being mainly an educational print publisher to a provider of diverse education solutions including digital technology that enables effective and efficient teaching and learning, applied learning tools that facilitate Science, Technology, Engineering and Mathematics ("STEM") education, education services, and a direct selling business, all of which complement our print publishing business. On 23 July 2014, the Company was successfully listed on the Main Market of Bursa Malaysia Securities Berhad. The Group’s premises include our Head Office in Kota Damansara, Petaling Jaya, Selangor, an office in Sungai Buloh, Selangor where Sanjung Unggul Sdn Bhd ("SUSB") and its subsidiaries ("SUSB Group") operate, an office in Sri Petaling, Kuala Lumpur where United Publishing House (M) Sdn Bhd ("UPH") and its subsidiaries ("UPH Group") operate, and an office in Cova Square, Kota Damansara, Petaling Jaya, Selangor where MindTech Education Sdn Bhd ("MindTech Education") operates. The Group’s operations are divided into the following segments: (i) Print publishing, which is further divided into the following: (a) Academic print publishing focusing on both national and national-type (Chinese) schools and also early childhood education; and (b) Non-academic print publishing which includes comic books, novels, dictionaries and other general titles. (ii) Digital/Online and technology-enabled solutions; (iii) Applied Learning Products and STEM education services (collectively known as “ALP”); and (iv) Direct selling business. Financial Review In the past few years, the Group has seen increasing difficulties in the retail market stemming from poor consumer sentiment. Despite growing challenges, the Group managed to achieve a higher revenue of RM87.727 million for the current financial year, an increase of RM1.869 million (equivalent to 2.2%) from RM85.858 million for the preceding financial year. The increase in revenue was mainly attributed to the growth achieved by the Group’s print publishing segment where it recorded an increase of RM3.302 million (equivalent to 4.4%) in revenue from RM75.827 million in the preceding financial year to RM79.129 million in the current financial year due to better performance from academic book sales. The Group’s ALP segment also recorded an increase in revenue by RM0.532 million (equivalent to 14.6%) from RM3.638 million for the preceding financial year to RM4.170 million for the current financial year. However, the increase in revenue from both the print publishing segment and the ALP segment were partly offset by the lower contribution from the digital & direct selling segment, which declined by RM1.965 million (equivalent to 30.7%) from RM6.393 million for the preceding financial year to RM4.428 million for the current financial year. The Group recorded a profit before tax (“PBT”) of RM6.876 million for the current financial year vis-à-vis PBT of RM4.229 million for the preceding financial year, representing a significant increase of RM2.647 million (equivalent to 62.6%). The increase in PBT was mainly attributed to the higher revenue achieved and overall lower expenses incurred as a result of the Group's continuous effort to optimise operational efficiency. There were also lower impairment losses on trade receivables and provision for impairment of inventories which decreased from RM1.909 million and RM3.634 million in the preceding financial year to RM0.482 million and RM2.996 million respectively in the current financial year. A detailed analysis of the operating segments is provided below. During the FYE 31 August 2019, two mandatory standards had been adopted by the Group, which are MFRS 9, Finan- cial Instruments and MFRS 15, Revenue from Contract with Customers . In respect of MFRS 9, the Group has adopted the transitional exemptions permitted under the standards, where comparative information for prior periods were not restated. The differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of MFRS 9, amounting to RM3.080 million were recognised directly in the Group’s retained earnings and reserves as at 1 September 2018. Had the comparative information for prior year be restated, the PBT for the Group for the FYE 31 August 2018 would have been RM1.255 million. As for MFRS 15, Revenue from Contract with Customers , the comparative information for prior periods have been restated as there is no transitional exemption applied. After adjusting for the abovementioned effects from the adoption of MFRS 9 and MFRS 15, the equity attributable to owners of the Company increased marginally from RM154.739 million as at 31 August 2018 to RM154.942 million as at 31 August 2019. In terms of earnings per share ("EPS"), the Group EPS increased by 0.29 sen from 0.49 sen for FYE 31 August 2018 to 0.78 sen for FYE 31 August 2019. ANNUAL REPORT 2019