The following discussion and analysis of our financial condition and results of operations in conjunction with the pro forma consolidated financial information and the related notes thereon for the past four (4) Financial Year Ended (FYE) 31 August 2010 to 2013 and Financial Period Ended (FPE) 28 February 2014 as set out in Section 11.4 of Sasbadi Holdings Berhad’s Prospectus dated 7 July 2014.

 

This discussion and analysis contains data derived from our audited financial statements as well as forward-looking statements that involve risks and uncertainties. The results may differ significantly from those projected in the forward-looking statements. Factors that may cause future results to differ significantly from those included in the forward-looking statements include, but are not limited to, those discussed below and elsewhere in our Prospectus, particularly the risk factors as set out in Section 4 of our Prospectus.

 

OVERVIEW

 

Revenue

Our Group is mainly involved in the following activities:

 

For the past 4 FYE 31 August 2010 to 2013 and FPE 28 February 2014, our Group’s revenue was derived from the following business segments:

 

Overall, our total revenue grew from RM47.0 million to RM78.0 million between FYE 31 August 2010 and 2013. This represented an AAGR of 18.4%. Our revenue was mainly derived from our largest revenue segment, namely educational publishing, which contributed 83.5%, 88.3%, 86.1% and 90.0% of our total revenue for the FYE 31 August 2010, 2011, 2012 and 2013 respectively. Distribution of applied learning products accounted for 4.9%, 3.8%, 7.3% and 5.4% of our total revenue for the past 4 financial years under review respectively. Educational publishing and distribution of applied learning products grew at an AAGR of 21.3% and 22.2% respectively between FYE 31 August 2010 and 2013.

 

 

FYE 31 August 2011 compared to FYE 31 August 2010

For the FYE 31 August 2011, our total revenue increased by 27.7% or RM13.0 million from RM47.0 million in FYE 31 August 2010 to RM60.0 million in FYE 31 August 2011. This was mainly due to the increase in demand for our educational publishing products contributed by the following factors:

 

For FYE 31 August 2011, Sasbadi, which is mainly involved in publishing of printed educational materials and distribution of applied learning products, was our largest revenue contributor at 98.9% (before consolidation adjustment) of our total revenue. Our largest revenue segment was educational publishing, which contributed 88.3% of our total revenue. Within educational publishing, print publishing accounted for 87.2% of our total revenue whilst online publishing only contributed 1.0% of our total revenue for the FYE 31 August 2011.

 

Based on the foregoing factors, our Group’s Profit After Tax (PAT) consequently increased by 55.7% or approximately RM3.4 million, from RM6.1 million in FYE 31 August 2010 to RM9.5 million in FYE 31 August 2011, which was in line with the increase in our Profit Before Tax (PBT).

 

FYE 31 August 2012 compared to FYE 31 August 2011

For the FYE 31 August 2012, our total revenue grew by 8.0% or RM4.8 million, from RM60.0 million in FYE 31 August 2011 to RM64.8 million in FYE 31 August 2012. This was mainly due to the following reasons:


For the FYE 31 August 2012, Sasbadi continued to contribute the largest proportion of our total revenue at 96.7% (before consolidation adjustment). Our main revenue contribution segment continues to be educational publishing, which contributed 86.1% of our total revenue. Within educational publishing, print publishing continues to be the dominant segment constituting 84.3% of our total revenue. Nevertheless, revenue contribution from online publishing improved from 1.0% in FYE 31 August 2011 to 1.8% in FYE 31 August 2012.

 

Based on the foregoing factors, our Group’s PAT consequently increased by 14.7% or approximately RM1.4 million, from RM9.5 million in FYE 31 August 2011 to RM10.9 million in FYE 31 August 2012.

 

FYE 31 August 2013 compared to FYE 31 August 2012

For the FYE 31 August 2013, our total revenue grew by 20.4% or RM13.2 million, from RM64.8 million in FYE 31 August 2012 to RM78.0 million in FYE 31 August 2013. This was mainly due to the following reasons:

 

For the FYE 31 August 2013, Sasbadi continued to contribute the largest proportion of our total revenue at 92.1% (before consolidation adjustment). Our main revenue contribution segment continues to be educational publishing, which contributed 90.0% of our total revenue. Within educational publishing, print publishing continues to be the dominant segment constituting 82.6% of our total revenue. Nevertheless, revenue contribution from online publishing improved significantly from 1.8% in FYE 31 August 2012 to 7.4% in FYE 31 August 2013.

 

Based on the foregoing factors, our Group’s PAT increased by 17.4% or approximately RM1.9 million, from RM10.9 million in FYE 31 August 2012 to RM12.8 million in FYE 31 August 2013.

 

FPE 28 February 2014 compared to FPE 28 February 2013

For the FPE 28 February 2014, our total revenue declined by 12.0% or RM6.0 million, from RM50.0 million in FPE 28 February 2013 to RM44.0 million in FPE 28 February 2014. This was mainly due to the following reasons:

 

 

Nevertheless, the decrease in revenue in FPE 28 February 2014 due to the above factors was partially compensated by the distribution and sales of Pearson titles comprising post-secondary, secondary and primary educational materials, as well as increase in sales of supplementary educational materials, namely logbooks to facilitate the teaching and learning process.

 

For the FPE 28 February 2014, Sasbadi continued to contribute the largest proportion of our total revenue at 90.9% (before consolidation adjustment). Our main revenue contribution segment continues to be educational publishing, which contributed 93.1% of our total revenue. Within educational publishing, print publishing continues to be the dominant segment constituting 92.9% of our total revenue. Revenue contribution from online publishing dropped significantly from 4.8% in FPE 28 February 2013 to 0.2% in FPE 28 February 2014 due to the high sales returns for our iPBS online educational products as mentioned above.

 

Based on the foregoing factors, our Group’s PAT declined by 25.9% or approximately RM2.8 million, from RM10.8 million in FPE 28 February 2013 to RM8.0 million in FPE 28 February 2014.

 

* Please read this section in conjunction with Section 12 from page 234 to page 244 of Sasbadi Holdings Berhad's Prospectus dated 7 July 2014.