Sasbadi Annual Report 2020

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 in 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, English language learning and assessment solutions 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 solutions and direct selling business; and (iii) Applied learning products and STEM education services (collectively known as “ALP”). Financial Review The financial year ended (“FYE”) 31 August 2020 proved to be a challenging year for the Group, largely due to the COVID-19 pandemic and the Movement Control Order which significantly impacted the Group’s overall operations. The Group recorded a revenue of RM62.814 million for the current financial year whereas RM87.727 million was recorded for the preceding financial year. This shows a decrease of RM24.913 million (equivalent to 28.4%) across all our segments, with the Print Publishing Division taking up the largest portion that is RM21.850 million, with a revenue of RM57.279 million in the current financial year compared to RM79.129 million in the preceding financial year. The Group’s Digital and Direct Selling segment also recorded a decrease in revenue of RM1.595 million (equivalent to 36.0%) from RM4.428 million for the preceding financial year to RM2.833 million for the current financial year. Our ALP segment recorded a decrease in revenue by RM1.468 million (equivalent to 35.2%) from RM4.170 million for the preceding financial year to RM2.702 million for the current financial year. The significant decrease in revenue has resulted in the Group recording a loss before tax (“LBT”) of RM9.304 million for the current financial year vis-à-vis a profit before tax (“PBT”) of RM6.876 million for the preceding financial year despite the various cost cutting measures we have implemented. The current financial year’s results were also affected by higher provision for inventories write down and general provision for impairment loss on trade receivables (calculated based on MFRS 9) of RM5.293 million and RM1.544 million respectively as compared to RM2.996 million and RM0.482 million respectively in the preceding financial year. A detailed analysis of the operating segments is provided below. The equity attributable to owners of the Company decreased from RM154.942 million as at 31 August 2019 to RM146.042 million as at 31 August 2020. The Group recorded a loss per share (“LPS”) of 2.14 sen for FYE 31 August 2020 as compared to an earnings per share (“EPS”) of 0.78 sen for FYE 31 August 2019 as a result of the loss incurred during the financial year. The Group’s debt-to-equity ratio was 0.26 times as at 31 August 2020 vis-à-vis 0.23 times as at 31 August 2019. The increase in the Group’s debt-to-equity ratio was mainly due to higher loan and borrowings and the decrease in equity attributable to the owners of the Company. The increase in bank borrowings also resulted in the decrease in the current ratio from 3.10 times as at 31 August 2019 to 3.01 times as at 31 August 2020. For the FYE 31 August 2020, the Group did not incur any major capital expenditure save for the acquisition of two (2) units of retail lots located at Endah Parade, Taman Sri Endah, Kuala Lumpur for a total consideration of RM2.100 million. The purchase consideration was settled through a contra arrangement with an amount due of RM1.500 million and a cash payment of RM0.600 million. Prior to the acquisition, the properties were being tenanted by UPH Group as their office. Review of Operating Segments Print Publishing Business The Group’s print publishing segment’s revenue decreased from RM79.129 million for the preceding financial year to RM57.279 million for the current financial year, representing a decrease of RM21.850 million (equivalent to 27.6%). MANAGEMENT DISCUSSION AND ANALYSIS 09 ANNUAL REPORT 2020