Registration Number: 201201038178 (1022660-T) NURTURING STUDENTS FOR TOMORROW, TODAY ANNUAL REPORT 2022
Printed in Malaysia by: VINLIN Press Sdn. Bhd. (25680-X) No. 2, Jalan Meranti Permai 1, Meranti Permai Industrial Park, Batu 15, Jalan Puchong, 47100, Puchong, Selangor Darul Ehsan Download the Sasbadi Play app for interactive content Education Solutions Provider since 1985
Corporate Information Sasbadi At A Glance Our Significant Milestones Our Core Competencies Group of Companies Financial Highlights Message to Shareholders Management Discussion and Analysis Board of Directors Directors’ Profiles Profile of Key Senior Management Sustainability Statement Corporate Governance Overview Statement Audit Committee Report Statement on Risk Management and Internal Control Additional Compliance Information Statement on Directors’ Responsibility Financial Statements List of Properties Analysis of Shareholdings Notice of Tenth Annual General Meeting Statement Accompanying Notice of Annual General Meeting Form of Proxy 132 128 125 124 58 57 56 53 50 41 32 30 24 22 14 12 11 10 8 6 4 3 CONTENTS 02 SASBADI HOLDINGS BERHAD
REGISTERED OFFICE Lot 5, Level 10 Menara Great Eastern 2 No. 50, Jalan Ampang 50450 Kuala Lumpur Tel: (603) 2031 1988 Fax: (603) 2031 9788 HEAD OFFICE Lot 12, Jalan Teknologi 3/4 Taman Sains Selangor 1 Kota Damansara 47810 Petaling Jaya Selangor Darul Ehsan Tel: (603) 6145 1188 Fax: (603) 6145 1199 Website: www.sasbadiholdings.com SHARE REGISTRAR Boardroom Share Registrars Sdn Bhd 11th Floor, Menara Symphony No. 5, Jalan Professor Khoo Kay Kim Seksyen 13 46200 Petaling Jaya Selangor Darul Ehsan Tel: (603) 7890 4700 Fax: (603) 7890 4670 Website: www.boardroomlimited.com AUDITORS BDO PLT (LLP0018825-LCA & AF 0206) Level 8, BDO @ Menara CenTARa 360, Jalan Tuanku Abdul Rahman 50100 Kuala Lumpur Federal Territory of Kuala Lumpur Tel: (603) 2616 2888 Fax: (603) 2616 3191 PRINCIPAL BANKERS Alliance Bank Malaysia Berhad Alliance Islamic Bank Malaysia Berhad AmBank Islamic Berhad Malayan Banking Berhad STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Sector: Telecommunications & Media Stock Name: SASBADI Stock Code: 5252 BOARD OF DIRECTORS Dato’ Salleh Bin Mohd Husein Independent Non-Executive Chairman Law King Hui Group Managing Director Lee Swee Hang Executive Director Law Yi Chian Executive Director Dato’ Noor Rezan Binti Bapoo Hashim Senior Independent Non-Executive Director Tang Yuen Kin Independent Non-Executive Director AUDIT COMMITTEE Tang Yuen Kin (Chairman) Dato’ Salleh Bin Mohd Husein Dato’ Noor Rezan Binti Bapoo Hashim NOMINATION COMMITTEE Dato’ Noor Rezan Binti Bapoo Hashim (Chairman) Dato’ Salleh Bin Mohd Husein Tang Yuen Kin REMUNERATION COMMITTEE Tang Yuen Kin (Chairman) Dato’ Salleh Bin Mohd Husein Dato’ Noor Rezan Binti Bapoo Hashim COMPANY SECRETARY Tan Fong Shian @ Lim Fong Shian (SSM PC No. 201908004045) (MAICSA 7023187) Lim Fei Chia (SSM PC No. 202008000515) (MAICSA 7036158) CORPORATE INFORMATION 03 ANNUAL REPORT 2022
OUR BUSINESS NOTABLE AWARDS SINCE 2016 Anugerah Buku Malaysia 2020, by the Malaysian Book Publishers Association (“MABOPA”) “Anugerah Buku Pendidikan Sekolah (Rendah & Menengah)”, “Anugerah Buku Bukan Fiksyen”, “Anugerah Kulit Buku Terbaik”, “Anugerah Buku Bahasa Inggeris”, and “Anugerah Buku Bahasa Cina” awarded to Sasbadi Group Most Outstanding Malaysian Brand 2019 Awarded to Sasbadi Holdings Berhad Industry Excellence Award 2019, Gold Winner for STEM Education, by the Institution of Engineering and Technology (“IET”) Awarded to Sasbadi Learning Solutions Sdn Bhd Best Under Billion Awards 2017 by Focus Malaysia: Best in Online Presence Awarded to Sasbadi Holdings Berhad The BrandLaureate Great Entrepreneur Brand Icon Leadership Award 2016� Awarded to Mr Law King Hui, Group Managing Director of Sasbadi Holdings Berhad Developing Technologies Creating Contents Nurturing Skills Enriching Life Forging Connections Excellence & Innovation Accountable Partnership Integrity & Honesty Responsible Corporate Citizenship OUR CORE COMPETENCIES OUR CORE VALUES “Nurturing Students for Tomorrow, Today.” OUR VISION OUR MISSION 1. Create value through product innovations 2. Be Malaysia’s top digital solutions provider in education 3. Be Malaysia’s top STEM education provider To be a total education solutions provider by evolving to meet the dynamic demands of the 21st century. Revenue RM69.034 million 2021: RM62.902 million Earnings/(Loss) per share 0.20 sen 2021: (2.20 sen) Net assets RM139.250 million 2021: 137.888 million Net profit/(loss) RM0.841 million 2021: (RM9.251 million) 2022 Financial Snapshot Print Publishing Digital Solutions & Network Marketing ALP & STEM Education Our Operating Segments Academic Books Non-Academic Books Early Childhood Education Digital Education Solutions Multi-Level Marketing Robotics Education Robotics Competitions OUR JOURNEY 1985 2004 SASBADI Today 2014 Incorporation of Sasbadi Sdn Bhd Debuted on the Main Market of Bursa Malaysia Trusted by 2 Generations Textbook Publisher Education Technology and Solutions Developer Science, Technology, Engineering, and Mathematics (“STEM”) Education Provider Moved into our head office in Kota Damansara, Selangor Scan this page with the Sasbadi Play app for interactive content Scan this page with the Sasbadi Play app for interactive content SASBADI AT A GLANCE SASBADI AT A GLANCE 05 ANNUAL REPORT 2022 04 SASBADI HOLDINGS BERHAD
• Debuted on the Main Market of Bursa Malaysia as a Public Listed Company • Sasbadi Online was appointed as the National Science Challenge (“NSC”) preliminary level online system developer and smart partner • Incorporation of MBP Publications Sdn Bhd (“MBP”) and Sasbadi Learning Solutions Sdn Bhd (“Sasbadi Learning”) • Acquired Intellectual Property (“IP”) for teacher education segment from Penerbitan Multimedia Sdn Bhd • Co-organised the World Robot Olympiad 2012 with the Government of Malaysia in Kuala Lumpur • Incorporation of Sasbadi Holdings Berhad (“Sasbadi Holdings”) • Incorporation of Sasbadi Online Sdn Bhd (“Sasbadi Online”) and launched the first online teaching product, Penjana Pentaksiran Instan • Launched our digital Learning Engagement Platform, i-LEARN Ace • Obtained direct sales license from the Ministry of Domestic Trade, Co-operatives and Consumerism for MindTech Education • Acquired United Publishing House Sdn Bhd (“UPH”) and its subsidiaries • Acquired Distinct Motion Sdn Bhd and its subsidiary, Distinct Element Sdn Bhd • Signed an Memorandum of Agreement (“MoA”) with the University of Malaya to collaborate on research and product development of robotics in Science, Technology, Engineering and Mathematics (“STEM”) education • Acquired Pinko Creative Sdn Bhd as a wholly-owned subsidiary of UPH • Launched our digital Learning Engagement Platform for young learners, i-LEARN Ace Junior • Acquired the remaining 30% of Sanjung Unggul Group • Launched the Professional Robotics Skills Certificate with the University of Malaya during the National Robotics Competition 2017 • Signed an agreement with Marshall Cavendish Education Pte for the exclusive right to promote, market, advertise, sell and distribute certain MCE-published titles in Malaysia • Incorporation of Sasbadi Sdn Bhd (“Sasbadi”) and commencement of operations • Publication of our first Textbook ‘Bahasa Malaysia KBSM Tingkatan 1’ • Incorporation of Maya Press Sdn Bhd as an imprint for general titles for Sasbadi • Launched ‘Total eDictionary’, our first generation electronic dictionary • Secured the rights as sole distributor and partner of LEGO Education for Brunei and Malaysia • Organised our first Malaysia Robot Olympiad (now known as National Robotics Competition)® 07 ANNUAL REPORT 2022 OUR SIGNIFICANT MILESTONES OUR SIGNIFICANT MILESTONES 06 SASBADI HOLDINGS BERHAD 1985 SPM 2020 CANDIDATES i-LEARN Ace USERS Content and Platform Provider Cloud Service Provider Technology Provider 2011 2016 • Acquired 70% of Sanjung Unggul Sdn Bhd and its subsidiaries (“Sanjung Unggul Group”) • Celebrated Sasbadi’s 30th Anniversary • Incorporation of MindTech Education Sdn Bhd (“MindTech Education”) 2015 2020 2021 1987 2017 2002 2012 2018 2005 2014 2019 • Corporate Social Responsibility Initiatives: - Collaborated with Huawei and TM ONE to provide SPM 2020 candidates free access to i-LEARN Ace from December 2020 until March 2021 - Hosted a series of 21 webinars named BONGKAR SPM which covered 13 SPM subjects for Form 4 and 5 students to attend free of charge • Signed an Memorandum of Collaboration (“MoC”) with Huawei Technologies (Malaysia) Sdn Bhd (“Huawei”) to develop intelligent solutions, empowering both teachers and students to digitalise and transform in the domain of Artificial Intelligence (“AI”) • Obtained the official recognition from the Ministry of Higher Learning that accepts Linguaskill as a CEFR English entrance assessment for diploma and degree courses in Private Higher Education Institutions (“IPTS”) in Malaysia • Partnered with HarperCollins Publishers Limited to co-develop a series of readers for young learners by embedding audio reading technology, and lead its distribution in Malaysia, Singapore and Brunei • Signed an agreement with Cambridge Assessment English as the preferred partner for Linguaskill in Malaysia • Signed an agreement with NYC English as the Exclusive Partner for NYC English products in Malaysia www.ilearnace.com 365 HARI www.ilearnace.com 180 HARI www.ilearnace.com 365 HARI
The strengths of Sasbadi Group are anchored on these five strategic competencies which drive the Company’s missions and vision. 09 ANNUAL REPORT 2022 OUR CORE COMPETENCIES OUR CORE COMPETENCIES 08 SASBADI HOLDINGS BERHAD Scan this page with the Sasbadi Play app for interactive content Scan this page with the Sasbadi Play app for interactive content At Sasbadi, creating quality educational content is at the core of what we do. One of our best practices is working only with experienced writers and teachers for our academic publications. We strive to provide the best content to help national primary and secondary school students in Malaysia to excel in their academic pursuits. Aside from publications for academic studies, we also produce content that nurtures one’s love for reading and learning. For children, we publish supplementary educational materials which include fiction and non-fiction titles, a wide range of comics, illustrated storybooks, and internationally renowned titles which include works by award-winning authors. For adults, we support local content by publishing a variety of genres such as novels, short stories, poems, biographies, and young adult literatures by Malaysian writers. Our pride lies in the quality of our content. Over the years, we were able to leverage and adapt our contents to meet a diverse range of educational needs. This includes producing digital education solutions and technology-enabled blended learning products. We are dedicated to the continuous pursuit of quality and creativity, as well as staying current in creating contents for people of all ages. Creating Contents At Sasbadi, we aim to be a leader in the education technology space as we believe that the Fourth Industrial Revolution will bring a new wave of exciting opportunities for the education industry. As such, we have dedicated significant resources to continuously develop cutting-edge technologies and digital classroom solutions to facilitate 21st century teaching and learning in Malaysia. Our in-house team of programmers, designers and engineers create PC software, mobile applications and cloud-based solutions that include platforms for self-paced learning and the future classroom. We are also able to enhance the learner’s experience via the conventional medium by incorporating Augmented Reality ("AR") and gamified features into our publications. One of our digital solutions is i-LEARN Ace, a mobile learning platform for Year 1 to Form 5 students. A new addition will be our e-tuition and learning resources platform, “Tutor2U”, through which students can attend live classes and subscribe to learning materials prepared by tutors across Malaysia, remotely and on-demand. This platform also enables the Group to tap into the gig economy business. In this new century, we embrace technology as a powerful enabler to foster dynamic and ubiquitous learning. Developing Technologies One of Sasbadi’s missions is to facilitate people of all ages on their continuous journey of lifelong learning. In a hyper disruptive environment that runs on a knowledge-based economy, it is crucial for our society to be provided with products and solutions that enable continuous learning. Sasbadi aims to cater to young learners and adults alike through our array of offerings. In 2019, we expanded into providing upskilling products by offering practical and effective English learning solutions for job seekers and working adults. We recognise the importance of English proficiency for employment, professional development and career advancement so we partnered with global experts in the English language to design unique and effective English learning programmes. Sasbadi is a Preferred Partner for Linguaskill by Cambridge Assessment English and an exclusive partner for NYC English products in Malaysia. Enriching Life Sasbadi takes pride in championing STEM (Science, Technology, Engineering and Mathematics) education since 2005. We believe in the value of cultivating the young generation to be future thinkers, creators and innovators. We encourage them to harness their higher order thinking skills such as complex problem solving, critical thinking, creativity and collaboration. We work with the global brand LEGO Education to provide fun and effective educational tools and platforms that promote hands-on learning through robotics and programming. Sasbadi is the organiser of annual robotics competitions such as the National Robotics Competition ("NRC"), National Robotics Open Competition ("NROC"), FIRST LEGO League ("FLL") Malaysia and FIRST LEGO League Junior ("FLL Jr.") Malaysia, in collaboration with the Ministry of Education Malaysia. To strengthen the role of robotics in Malaysia’s education landscape, we are working with the University of Malaya on research and product development with an aim to provide a comprehensive certification programme in the field of STEM and robotics skills. Nurturing Skills At Sasbadi, we believe collaboration is key in providing value to our customers and stakeholders. Innovation, inclusiveness, and equity are crucial elements in the process of making learning happen. To leverage on the collaborative effort of passionate individuals who share the same goal, we founded MindTech Education, our network marketing division to deliver a personal touch in providing our educational solutions across Malaysia. We understand that our diverse cultural backgrounds, level of accessibility, and experiences mean education solutions should be customisable and personalised to individual needs. Today, MindTech Education is actively reaching out to help close the gaps in education by making our digital education solution, i-LEARN Ace, highly accessible and affordable for all. Forging Connections
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Print Publishing Digital Solutions and Network Marketing Applied Learning Products and STEM Education Services Investment Holding Operating Segment: GROUP OF COMPANIES Sasbadi Holdings Berhad Sasbadi Sdn Bhd MindTech Education Sdn Bhd Sasbadi Online Sdn Bhd Orbit Buku Sdn Bhd MBP Publications Sdn Bhd Malaysian Book Promotions Sdn Bhd Maya Press Sdn Bhd Sasbadi Learning Solutions Sdn Bhd Sanjung Unggul Sdn Bhd Sanjung Unggul Sdn Bhd The Malaya Press Sdn Bhd Big Tree Publications Sdn Bhd Media Distribution Sdn Bhd Media Distribution Sdn Bhd Jinbang Publication Sdn Bhd United Publishing House (M) Sdn Bhd UPH Distributor Sdn Bhd G-Apple Studio Sdn Bhd Penerbitan Minda Sdn Bhd Penerbitan Daya Sdn Bhd Pinko Creative Sdn Bhd Distinct Motion Sdn Bhd Distinct Element Sdn Bhd Distinct Element Sdn Bhd 10 SASBADI HOLDINGS BERHAD
Assets As at 31 August 2022 (RM'000) Equity and Liabilities As at 31 August 2022 (RM'000) *Restated for effect of MFRS 15 Shareholders' equity Loans and borrowings Trade and other payables Deferred tax liabilities Other liabilities RM139,250 (76.5%) RM12,222 (6.7%) RM19,009 (10.5%) RM5,713 (3.1%) RM5,873 (3.2%) Property, plant and equipment Investment properties Intangible assets Inventories Trade and other receivables Cash and cash equivalents Other assets RM37,943 (20.8%) RM2,320 (1.3%) RM20,287 (11.2%) RM64,785 (35.6%) RM35,536 (19.5%) RM10,378 (5.7%) RM10,818 (5.9%) Revenue FINANCIAL YEAR ENDED 31 AUGUST 100000 80000 60000 40000 20000 0 2022 RM’000 69,034 2021 RM’000 62,902 85,858 2018* RM’000 2019 RM’000 87,727 2020 RM’000 62,814 Gross Profit (“GP”) 50000 40000 30000 20000 10000 0 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% FYE 31 AUG GP (RM’000) GP Margin (%) 23,043 11,273 43.1% 2018* RM’000 2019 RM’000 2020 RM’000 2022 RM’000 16,261 2021 RM’000 41.4% 25.9% 33.3% 17.9% 36,354 36,988 Profit/(Loss) before Tax ("PBT/(LBT)") 20000 15000 10000 5000 0 -5000 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% -10000 -10.00% -15000 -15.00% -20000 -20.00% 2018* RM’000 2019 RM’000 2020 RM’000 2021 RM’000 2022 RM’000 FYE 31 AUG PBT (RM’000) PBT Margin (%) 4,229 6,876 (9,304) (10,456) 4.9% 7.8% 2.86% -14.8% -16.6% 1,971 2022 RM’000 Net Profit/(Loss) After Tax ("PAT/(LAT)") 20000 15000 10000 5000 0 20.00% 15.00% 10.00% 5.00% 0.00% -5000 -5.00% -10000 -10.00% -15000 -15.00% 2018* RM’000 2019 RM’000 2020 RM’000 2021 RM’000 FYE 31 AUG PAT/(LAT) (RM’000) PAT/(LAT) Margin (%) 2,055 3,264 (8,952) (9,251) -14.3% -14.7% 3.7% 1.22% 2.4% 841 FINANCIAL HIGHLIGHTS 11 ANNUAL REPORT 2022
On behalf of the Board of Directors (“the Board”) of Sasbadi Holdings Berhad (“Sasbadi Holdings” or “the Group”), it is our pleasure to present to you Sasbadi’s Annual Report for the financial year ended (“FYE”) 31 August 2022. Overview For FYE 31 August 2022, the Group is proud to share that we have returned to black after two (2) challenging years of net losses. With tapering Covid-19 cases and the government’s efforts to revitalise the Malaysian economy in 2022, our nation experienced solid recovery firmly supported by the lifting of movement restrictions, resumption of economic sectors, and improvement in retail market conditions and consumer sentiments. The nation was returning to normalcy at a rapid pace, and our Group had to act swiftly in tandem with the recovering education landscape. Most notably, schools went back to full swing in 2022, which was a key signal for our Group to step up efforts in producing the quality education materials that teachers, parents, and students needed. Ultimately, our Group responded accordingly, backed by our decades of experience and know-how, resulting in a healthy and sustained demand for our product offerings. Dato’ Salleh Bin Mohd Husein Independent Non-Executive Chairman Law King Hui Group Managing Director Dear shareholders, We are pleased to share that our Group’s operations are on track to return to full normalcy. The revitalisation of the Malaysian economy and education sector have boded well for the demand of our product offerings, and we were able to respond swiftly to fast-moving trends in the education landscape, backed by our decades of experience. MESSAGE TO SHAREHOLDERS 12 SASBADI HOLDINGS BERHAD
well-received and are increasingly sought for by teachers and students. We believe there is much more room for innovation in this area, and we believe that we are able to deliver a better hybrid experience in our future print publications. Digital education is constantly in our sights, and as the education sector experiences increasing digitalisation day by day, our Group is committed to strengthen our digital expertise to enable us to respond swiftly to rapidly changing digital education needs. Our flagship digital learning platform, i-LEARN Ace, remains a key focus to our Group as we ensure that the platform is constantly updated to adhere to the latest national curriculum of Malaysia. Besides i-LEARN Ace, our Group is also looking to develop other digital platforms that are more targeted towards specific student groups, leveraging on over a decade of digital experience. Another area of focus for the Group is the under-tapped early childhood education market. We are aiming to grow our presence in this market via Peapod Readers by Collins from the United Kingdom which comprises 200 titles of levelled and CEFR-aligned English readers. Peapod Readers is a powerful educational tool for young children to kick-start their early English literacy journey and will be instrumental towards growing our market share in the early childhood education market. Beyond the Peapod Readers, our Group is also looking to expand our repertoire of early childhood education classroom solutions to strengthen our product portfolio. With these initiatives, we believe that our Group will be able to position ourselves at a more competitive position in the education solutions market. Coupled by the scaling-down/exiting of several competing education solutions providers in recent times due to the detrimental effects of the pandemic and encouraging recovery of the economy and education sector, we are cautiously optimistic about our prospects and performance for the FYE 31 August 2022. Offer of Options Under Employees’ Share Option Scheme (“ESOS”) In appreciation of our team and as a form of motivation for our employees to strive for greater results, the Group had, on 10 March 2022, offered 12,000,000 options at an exercise price of RM0.10 each to its eligible employees under the ESOS. As at the end of the FYE 31 August 2022, a total of 5,535,000 options granted have been exercised. Appreciation Our sincerest thanks to our fellow Board members for charting the way through these challenging times. Our utmost appreciations go to the management team and employees of Sasbadi, who have steadfastly fought on in the face of great market volatility to defend our market position. To our business associates, a big thank you for your continued support and confidence you place in the Group. With continuing commitment and cooperation by all, the Group aims to achieve greater success in the years ahead. Throughout FYE 31 August 2022, our Group managed to produce a wide range of print publications that have cemented itself in the Primary, Secondary and Tertiary education space, including our Modul Aktiviti Integrasi Digital series of workbooks, Masterclass and WOW Grafik guidebooks, mock exam paper publications such as Kertas Model Bitara Pra-SPM and Kertas Model Bitara SPM, MUET and IPG reference books, and more. We are pleased and humbled to learn that even after close to four (4) decades of operation, students, teachers, and parents across 2 generations continue to place their trust in our product offerings. Besides our strength in print publications, our Group also capitalised on our decade long expertise and experience to produce quality digital education solutions that are effective, scalable, and cost-effective. This is a strong indication that our Group is consistently making the right moves to remain ahead of the curve, particularly so in this rapidly evolving 21st century landscape. As a testament to our digital capabilities, it is notable that our Group had managed to clinch two (2) Letters of Acceptance from the Ministry of Education (“MoE”) on 11 October 2022 to supply and deliver market-ready digital solutions in line with the Common European Framework of Reference for Languages (“CEFR”) Year 1 and Year 3 for the school session usage from 2023 with a total contract value of RM2.238 million. In addition, in the textbook publications space, our Group had also clinched two (2) Letters of Acceptance (Package 3 – Peninsula Malaysia and Package 5 – Peninsula Malaysia) from the MoE on 11 October 2022 to supply reprinted textbooks (“BCS”) to schools under the MoE for the period from 2022 to 2024 with a total contract value of RM14.363 million. Prospects The Group continues to place heavy emphasis towards the development and enhancement of our array of in-house developed educational technology, including our ensemble of print publications and digital education products. Print publishing is our Group’s most significant segment. We are constantly assessing and keeping up with current and future trends to deliver innovative, high-quality products that serve not only to satisfy our customers, but to generate brand loyalty amongst our users. We plan to further develop our print publications’ hybrid elements (combines conventional print media with digital solutions) which have historically been (continued) MESSAGE TO SHAREHOLDERS 13 ANNUAL REPORT 2022
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 8 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 teaching and learning needs of the 21st century, the Group evolved from being mainly an educational print publisher to a provider of diverse education solutions which include 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 cum assessment solutions and a direct selling business. On 23 July 2014, the Company was successfully listed on the Main Market of Bursa Malaysia Securities Berhad. Chan Yuet Leng Group Chief Financial Officer Law King Hui Group Managing Director Opening statement: FYE 31 August 2022 has been a favourable year for our Group as we have managed to return to black after two years of net losses. This was firmly supported by healthy demand for our suite of quality education solutions that have been trusted by teachers, parents, and students across 2 generations. MANAGEMENT DISCUSSION AND ANALYSIS 14 SASBADI HOLDINGS BERHAD
Across the Group’s segments, the Print Publishing segment recorded a revenue of RM63.280 million in the current financial year compared to RM57.214 million in the preceding financial year, representing an increase of RM6.066 million (equivalent to 10.60%). The Digital & Network Marketing segment recorded a revenue of RM3.441 million for the current financial year as compared to RM3.493 million for the preceding financial year, representing a decrease of RM0.052 million (equivalent to 1.49%). Lastly, our ALP & STEM segment recorded a revenue of RM2.313 million for the current financial year as compared to RM2.195 million for the preceding financial year, representing an increase of RM0.118 million (equivalent to 5.38%). With the increase in overall revenue, the Group recorded a profit before tax (“PBT”) of RM1.971 million for the current financial year vis-à-vis a loss before tax (“LBT”) of RM10.456 million for the preceding financial year. This represents an improvement of RM12.427 million primarily due to the higher revenue achieved and lower provision of inventories write down where RM3.450 million was recognised in the current quarter as compared to RM10.997 million recognised in the previous financial year corresponding quarter. A detailed analysis of the operating segments is provided below. The equity attributable to owners of the Company increased from RM137.888 million as of 31 August 2021 to RM139.250 million as of 31 August 2022. The Group recorded an earnings per share (“EPS”) of 0.20 sen for FYE 31 August 2022 as compared to a loss per share (“LPS”) of 2.20 sen for FYE 31 August 2021 resulting from the higher profit achieved during the financial year. The Group’s debt-to-equity ratio was 0.09 times as of 31 August 2022 vis-à-vis 0.13 times as of 31 August 2021. The decrease in the Group’s debt-to-equity ratio was mainly due to lower loan and borrowings which decreased from RM17.491 million to RM12.222 million as of 31 August 2021 and 31 August 2022 respectively. The decrease in loan and borrowings were mainly attributed to the Group’s cash management measures where we disposed our non-core assets to increase liquidity and reduce finance cost. Current ratio is consistent with the previous financial year at 3.41 times as of 31 August 2022 and 3.42 times as of 31 August 2021. For the FYE 31 August 2022, the Group did not incur any major capital expenditure. Dividend Policy The Board of Directors did not recommend the payment of any final dividend for the FYE 31 August 2022. 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 solutions and network marketing; and (ii) Applied learning products (“ALP”) and STEM education services. Financial Review The financial year ended (“FYE”) 31 August 2022 served as a notable turning point for our Group after several challenging years due to the COVID-19 pandemic. The Group recorded a revenue of RM69.034 million and net profit of RM0.841 million for the current financial year as compared to a revenue of RM62.902 million and net loss of RM9.251 for the preceding financial year, representing an increase of RM6.132 million (equivalent to 9.75%) in revenue and a return to black after 2 consecutive years of net losses. (continued) MANAGEMENT DISCUSSION AND ANALYSIS 15 ANNUAL REPORT 2022
sought for by teachers and students and is an area we will further develop and incorporate into our future print publications. On the textbook publishing front, the Group managed to secure a new textbook contract from the government during the financial year, which was valued at an estimated total of RM0.725 million as compared to RM2.494 million new contracts in the previous financial year. This was due to smaller order quantities for the new contract won and fewer tenders being offered by the Ministry of Education ("MoE"), attributed to the end of the Kurikulum Standard Sekolah Menengah (“KSSM”) textbook publishing program cycle. As a whole, the revenue contribution from textbook contracts has decreased by RM2.240 million to RM6.839 million from RM9.079 million in the previous financial year. This was due to fewer contracts won as mentioned above and smaller order quantities received for Buku Cetakan Semula ("BCS") during the current financial year. Subsequent to the financial year end, the Group had clinched two (2) Letters of Acceptance (Package 3 – Peninsula Malaysia and Package 5 – Peninsula Malaysia) from the MoE on 11 October 2022 to supply reprinted textbooks (“BCS”) to schools under the MoE for the period from 2022 to 2024 with a total contract value of RM14.363 million. Part of the revenue from these contracts will be reflected in the financial year ending 31 August 2023. Print Publishing Business The Group’s print publishing segment’s revenue increased from RM57.214 million for the preceding financial year to RM63.280 million for the current financial year, representing an increase of RM6.066 million (equivalent to 10.60%). The Group’s academic print publishing segment had performed favourably throughout FYE 31 August 2022. With the improvement of the nation’s COVID-19 situation, easing of movement restrictions, and transition towards the endemic phase, the resumption of economic activities and recovery of consumer sentiment have bolstered well for the demand of our Group’s print publishing products. This was further supported by the full reopening of schools nationwide, spurring the need for printed academic publications for teaching and learning purposes. Furthermore, our Group has managed to gain market share due to market consolidation resulting from the Covid-19 pandemic. Throughout the years, our Group has been successful in assessing the needs of teachers and students and responding to current trends to produce education solutions that are innovative, effective and competitive. In order to meet the 21st century needs of students, teachers, and parents, many of our print publications products are now aided by hybrid elements (combining conventional print media with digital solutions), such as our Modul Aktiviti Integrasi Digital series of workbooks targeting both Primary and Secondary School students, flagship Masterclass series of guidebooks for SPM and MUET, and more. These hybrid elements have been well-received and Review of Operating Segments (continued) MANAGEMENT DISCUSSION AND ANALYSIS 16 SASBADI HOLDINGS BERHAD
Applied Learning Products (“ALP”) and STEM Education Services The Group’s ALP and STEM segment recorded a small increase in revenue from RM2.195 million for the FYE 31 August 2021 to RM2.313 million for the FYE August 2022 (equivalent to 5.38%), mainly attributed to the signing of a Letter of Acceptance with the Penang Regional Development Authority (“PERDA”) to supply LEGO robotic sets to schools under the Program Rural Outreach STEM with a contract value of RM0.497 million. Despite that, the revenue has not fully recovered to the pre-Covid period as physical robotics competitions are still not permitted during the year under review. We are hopeful for physical robotics competitions to resume during FYE 31 August 2023. Since 2005, the Group has been the MoE’s Strategic Partner for robotics programme catering to both the primary and secondary schools. Malaysian contingent consistently made outstanding performances in the prestigious World Robot Olympiad (“WRO”), having emerged as the Overall Champion 10 times in the last 17 years. For WRO 2022, held in Dortmund, Germany from 17-19 November 2022 and involving 375 international teams from more than 73 countries, the Malaysian contingent managed to clinch 2 silver medals, 1 bronze medal, and 2 Excellence awards for their excellent performance. Similar to the academic print publishing segment, the non-academic related segment had performed positively in the financial year 31 August 2022. As Covid-19 restriction were lifted, our sales channels for non-academic publications such as book fairs, school exhibitions, and traditional bookstores, which were previously subjected to forced closures, could resume per usual resulting in increased retail activity and higher sales of our product offerings. Digital/Online Solutions and our Direct Selling Business The Group’s digital and network marketing segment’s revenue of RM3.441 million for the current financial year is consistent with the revenue of RM3.493 million for FYE 31 August 2021, representing a minor decrease of 1.49%. Despite the slight decrease in performance, our Group remains hopeful of our digital education segment. With over a decade of experience in developing quality digital education technologies, our Group is poised to capitalise on the rising digitalisation of the education landscape in tandem with the aspirations to digitalise the education sector as stated in the Malaysia Digital Economy Blueprint and Twelfth Malaysian Plan (“12MP”) 2021-2025. As a testament to our capabilities, the Group had clinched two (2) Letters of Acceptance from the MoE subsequent to the financial year end to supply and deliver market-ready digital solutions in line with the Common European Framework of Reference for Languages (“CEFR”) Year 1 and Year 3 for the school session usage from 2023 with a total contract value of RM2.238 million. The revenue from these contracts will also be reflected in the financial year ending 31 August 2023. (continued) MANAGEMENT DISCUSSION AND ANALYSIS 17 ANNUAL REPORT 2022
Risks & How We Mitigate Them Anticipated or Known Risks Competition We face competition from existing competitors as well as potential new entrants to the educational publishing industry. The barriers to entry in the industry are relatively low based on capital requirements since most of the functions in the publishing processes may be outsourced to third parties. However, product development and operating costs can be high as there is a long lead time between conceptualisation to completion in product development. Our competitive strengths such as our established track record of 37 years in the industry, brand awareness among students, teachers and parents, extensive distribution network, large customer base, diverse product range, in-house content development, experienced management and editorial personnel, economies of scale and, in particular, in-house technology development put us in a strong position to fend off competition. Seasonality The Group’s business operations are exposed to seasonality patterns as the Group generally experiences significantly higher quarterly sales in months approaching the beginning of the school academic year. As a result, the seasonal sales patterns may adversely impact the Group’s quarterly revenues, profit and cash flow. The Group takes seasonality patterns into consideration for our cash flow planning. In addition, the Group is consistently seeking ways to reduce the impact of seasonality patterns such as stepping up our efforts to grow our non-academic and digital solutions segments, which are less prone to seasonality, and the private and international schools segment which follows a different academic year period from that of our national schools. Fluctuations in the Price of Paper Paper is a major raw material used in our business. As paper is a commodity, it is subject to fluctuations according to world paper prices. In the event that the increase in paper prices is prolonged, there is a risk that we may be unable to pass the price increase to our customers or, if we do, it may affect the affordability of our products. This may then adversely affect our financial performance. To mitigate this risk, we maintain a certain level of paper inventory which can serve our purposes for up to six (6) months while we source for alternative paper sources that are favourable. 18.72 19.25 32.80 (continued) MANAGEMENT DISCUSSION AND ANALYSIS 18 SASBADI HOLDINGS BERHAD
Stock Returns and Obsolescence The Group typically publishes new editions of our educational materials every year. Some of the educational materials that we sell may be returned to us (subject to compliance with our return policy which requires that, among others, our approval is obtained prior to returning the stocks, stocks are returned to us within 12 months after the release of a new edition or when titles become out of print, stocks are returned in good condition, stocks are received at our warehouse within an agreed time frame, etc.) for either a full refund or an offset against future purchases. Such returned stocks are commonly resold to other customers. Returned stocks that are not resold after a period of time, as with all other stocks that cannot be sold after a period of time, will become obsolete and may need to be written off and sold as scrap. This may adversely affect our profitability if the volume of obsolete stocks is large. To mitigate this risk, the Group has put in place an inventory management system to monitor the sales and distribution of stocks. This includes analysing historical and current trends of demand for our titles which enables us to plan our supply effectively to reduce the risk of overproduction and sales returns. Dependency on Key Management Personnel and Experienced Editors The Group’s continued success will depend, to a significant extent, on the abilities, skills, experience, competency and continuous efforts of our key management personnel (which include our Executive Directors) and experienced editors. As such, the loss of any of our key management personnel and experienced editors, 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 editors, and have put in place competitive compensation packages, including Employees’ Share Option Scheme (“ESOS”). In addition, the Group provides a healthy working environment, practices a 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. Compliance Management During the course of business, the Group is subject to the risk of legal or regulatory sanctions, financial loss or damage to reputation resulting from failure to comply with laws, regulations, rules, other regulatory requirements or codes of conducts. To mitigate this risk, the Group actively identifies and assesses all applicable laws, regulations, rules and policies (including internal policies) applicable to all our operating activities to ensure compliance. Furthermore, we take active steps in implementing good corporate governance in compliance to the Malaysian Code on Corporate Governance (“MCCG”) to promote corporate accountability and to build sustainable value. Foreign Exchange Transaction Risk As paper is a commodity traded worldwide, its prices are quoted in United States Dollar (“USD”). In this regard, even though our purchases of paper are invoiced to us in Ringgit Malaysia (“RM”), the invoiced prices are determined by spot exchange rates. As such, purchasing paper exposes us to foreign exchange transaction risk, albeit indirectly. In addition, our purchases of LEGO Education robotics products are also denominated in USD. Therefore, any unfavourable movements in USD against RM may have an impact on our profitability. For the FYE 31 August 2022, we did not experience any material losses arising from these transactions. Our Group will use forward exchange contracts to hedge against this risk if necessary. Infringement of Intellectual Properties (“IPs”) The Group develops and uses various Ips in connection with our business. In this regard, we are susceptible to claims by third parties to have infringed the copyright of their Ips and, similarly, we are also susceptible to the copyright of our Ips being infringed by third parties. As such, in defending our legal rights, the Group may be exposed to suits and counter suits by third parties. Such disputes and the resolution of such disputes may be time consuming and costly. Therefore, the Group requires our authors to indemnify us of any losses and damages that arise should their works be found to have infringed on any copyright. We also own the copyrights to all published versions of our titles, which are protected under the Copyright Act 1987. 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 which provides us sufficient time to align our business activities with the changes. In addition, having a pool of experienced editors puts us in a good position to respond in a timely manner. (continued) MANAGEMENT DISCUSSION AND ANALYSIS 19 ANNUAL REPORT 2022
Sasbadi is a household brand in the education landscape, gaining the trust of 2 generations over 37 years through its quality and innovate product offerings. Looking back at FYE 31 August 2022, the improvement of the nation’s Covid-19 situation, easing of movement restrictions, resumption of economic activities, and recovery of consumer sentiment have bolstered well for the demand of our Group’s products and solutions. The Group managed to swing back to black after two (2) trying years and we believe that the worst is now behind us as we venture into FYE 31 August 2023. Much of the positive performance for FYE 31 August 2022 has been firmly supported by the positive reception and demand of Sasbadi’s product offerings by students, teachers, and parents. Leveraging on over 37 years of know-how, our Group has been successful in assessing the needs of our customers and responding strategically to current trends to produce education solutions that are innovative, effective, and competitive in this dynamic 21st century education landscape. Furthermore, the Group has managed to capture additional market share as several competing education solutions providers in Malaysia had scaled-down their operations/exited the market due to the detrimental effects of the pandemic. We expect this to bode well for our Group moving forward as we further cement ourselves in the Malaysian education landscape. For FYE 31 August 2023 and beyond, our Group remains steadfast in producing leading education solutions that extend beyond print publications. We will continue to develop and strengthen our digital education products to cater to the increasing digitalisation of the education landscape. Our Group has been developing in house digital education solutions for over 10 years and as a testament to our digital expertise, our Group had on 11 October 2022 clinched two (2) Letters of Future Prospects ” “ (continued) MANAGEMENT DISCUSSION AND ANALYSIS 20 SASBADI HOLDINGS BERHAD
Another area of focus for our Group is the early childhood education market which is under-tapped. We are aiming to grow our market share in early English literacy development via the CEFR-aligned Peapod Readers by Collins from the United Kingdom. In tandem with the 10-year National Reading Decade 2021-2030 programme launched by the MoE, our Peapod Readers series comprising 200 titles targeting pre-schoolers and primary school year 1-3 students will be instrumental towards growing our market share in the early childhood education market. Beyond the Peapod Readers, our Group is also looking to expand our repertoire of early childhood education classroom solutions to strengthen our product portfolio. Besides early childhood English literacy development, our Group will also continue to place much emphasis in our English competency assessment product, Linguaskill by Cambridge Assessment English (“Linguaskill”). Linguaskill is currently accepted as an official English competency test for university admissions and benchmarking by the Ministry of Higher Learning (“MoHE”), Malaysian Qualifications Agency (“MQA”), and Education Malaysia Global Services (“EMGS”) and has been well received for its speed and accuracy in assessing English competency. For FYE 31 August 2023, our Group will focus on positioning Linguaskill as the go-to English competency assessment solution not only for tertiary education purposes but for corporate uses, such as in the identification of whether employees have the right level of English for their job and if English upskilling is a necessary measure. Overall, we aim to achieve higher growth through our offerings of diverse products that can meet expanding demands as the market returns to normalcy. We will continue to monitor our risk management strategies, including cost reduction and cost optimisation measures, which would benefit the Group as we strengthen our economies of scale and financial position. All things considered, we are cautiously optimistic about the Group’s prospects for FYE 31 August 2023. Acceptance from the Ministry of Education (“MoE”) to supply and deliver market-ready digital solutions in line with the Common European Framework of Reference for Languages (“CEFR”) Year 1 and Year 3 for the school session usage from 2023 with a total contract value of RM2.238 million. Furthermore, our Group has also launched a new digital teaching aid targeting teachers called Bahan Bantu Mengajar Kelas Hibrid which serves to assist teachers in conducting digital teaching and learning (or Pengajaran dan Pembelajaran (“PdP”) Digital), in consistence with the MoE’s education transformation initiatives which stressed on Information and Communications Technology (“ICT”) empowerment. In addition, our Group will continue to market and position our flagship m-learning platform, i-LEARN Ace, as Malaysia’s #1 digital learning platform for Primary and Secondary school students. i-LEARN Ace is aligned with the requirements of the latest national curriculum and is backed by our Group’s expert authors and experienced editors. We are proud to share that many users of i-LEARN Ace reported that their academic performance have experienced notable improvements after using the platform, notably SPM students that utilised i-LEARN Ace for exam preparations as the platform contains a wealth of notes, practice questions, mock exam papers, and more that are designed to improve a student’s understanding in tough, challenging topics. Besides i-LEARN Ace, our Group is looking to develop other digital education solutions in FYE 31 August 2023 that are targeted towards specific student groups. By falling back on our extensive experience in digital education and clear understanding of digital education trends, our Group believes that we are able to produce digital education solutions that are relevant, useful, and accessible to students throughout Malaysia. With these initiatives, we are cautiously optimistic that our Group can further capitalise on our digital capabilities for growth in FYE 31 August 2023. Over a decade of experience in producing digital education solutions places our Group in an advantageous and tactical position to capitalise on the rising digitalisation of the education sector. ” “ Scan this page with the Sasbadi Play app for interactive content MANAGEMENT DISCUSSION AND ANALYSIS 21 ANNUAL REPORT 2022
RkJQdWJsaXNoZXIy NDgzMzc=