Sasbadi Annual Report 2020

(a) Academic Print Publishing – National and International Schools The series of the Movement Control Order ("MCO") pursuant to the Prevention and Control of Disease Act 1988 ("PCDA") to curb the spread of COVID-19 over an extended period has resulted in significant disruptions to the Company's overall business operations. The significant drop in revenue was also due to the slow economic recovery and decline in retail activities despite the lifting of the MCO. Besides, the Ministry of Education (“MOE”) also announced the cancellation of this year’s public examinations for Year 6 and Form 3 i.e. Ujian Penilaian Sekolah Rendah (“UPSR”) and Pentaksiran Tingkatan Tiga (“PT3”) respectively, while the Form 5 and Form 6 public examinations i.e. Sijil Pelajaran Malaysia (“SPM”) and Sijil Tinggi Persekolahan Malaysia (“STPM”) respectively, are postponed. These changes have a negative impact on the Group as they reduced the consumer’s demand for our academic products. The Group strived to adapt to the current demands by innovating our publications to meet the unique needs of the market during these unprecedented times. While online teaching and learning method are implemented in place of classroom teaching during the MCO period, some students, namely those from rural areas or lower income families, may be left behind due to a lack of Internet accessibility. On the other hand, those who do have proper Internet access may also face difficulties adjusting to these new learning methods, especially when their family members are not as technologically savvy. In response to this, the Group has developed and published a new series comprising of 27 titles for students from Year 1 to 3, named Praktis Kendiri Pelajar (“PKP”). This series is specially published to ensure that students have access to Teaching and Learning (“PdPc”) at home and are able to complete the academic syllabus effectively. The contents have been developed according to textbooks and are designed to be carried out at home in the absence of a teacher. It also fulfils the requirements of the Dokumen Standard Kurikulum dan Pentaksiran (“DSKP”) and enables parents or guardians to be directly involved in a student’s learning process, in line with the objective of the Pelibatan Ibu Bapa dan Garis Panduan Pengurusan Pembukaan Semula Sekolah published by the MOE. On the textbook publishing front, during the year, the Group won eight (8) new textbook contracts from the government which are valued at an estimated total of RM6.248 million. The value of textbook contracts secured by the Group in the current year has increased by RM2.979 million (equivalent to 91.1%) as compared to the previous year’s total contract value of RM3.269 million. As some of the textbook tender processes were delayed due to the MCO, subsequent to the financial year end, the Group won an additional three (3) new textbook contracts valued at an estimated total of RM1.771 million. The revenue for these new textbook contracts will be reflected in the financial year ending 31 August 2021. The revenue contribution from the new textbook contracts for the FYE 31 August 2020 has decreased by RM6.031 million from RM13.372 million for the preceding financial year to RM7.341 million for the current financial year (equivalent to 45.1%). The decrease was mainly attributable to lesser contracts won in 2019. (b) Non-Academic Print Publishing Similar to the Academic Print Publishing segment, the results from the non-academic related segment were also affected by the impact from the MCO and consumers’ conservative spending habits. As part of a collaborative initiative of the Group, our wholly- owned subsidiary, Sasbadi Sdn Bhd (“Licensee”) entered into a licensing agreement with HarperCollins Publishers Limited in November 2020 for the rights to 200 titles of levelled and Common European Framework of Reference for Languages (“CEFR”) aligned English Readers. The Group will create a Licensee’s Edition in accordance with the terms of the agreement. The rights granted include exclusive right to distribute print volumes and non-exclusive right to distribute electronic versions in Malaysia, Singapore and Brunei. The term of the licensing agreement is for five (5) years from the publication date which is scheduled to be on or before 31 March 2021. The Group will leverage on our in-house developed technology such as augmented reality (“AR”) and mobile applications to enhance the original works, thus making learning and teaching of the Licensee’s Edition more effective and interactive. MANAGEMENT DISCUSSION AND ANALYSIS 10 SASBADI HOLDINGS BERHAD (continued) Scan this page with the Sasbadi Play app for interactive content