PADINI HOLDINGS BERHAD

Registration No: 197901005918 (50202-A)

(Incorporated in Malaysia)

PADINI HOLDINGS BERHAD

c orp orate. padi ni . com

2023

PADINI HOLDINGS BERHAD INTEGRATED ANNUAL R EP ORT

Registration No: 197901005918 (50202-A)
No. 19, Jalan Jurunilai U1/20, Hicom Glenmarie Industrial Park 2 0 2 3
40150 Shah Alam, Selangor Darul Ehsan, Malaysia
T.+603.5021.0500 F.+603.7805.1066

PADINI AR(23)Cov(PANTONE 4535 C)_FINAL.indd 1 23/10/2023 9:30 AM

 INSIDE THIS REPORT
ABOUT THIS REPORT

Section 1 Section 4 Section 7

Who We Are Our Value Creation Financial Statements
04 Corporate Profile 40 Our Business Model 102 Directors’ Report
06 Corporate Milestones 44 Our Value Creation 108 Statement by Directors
08 Brands Portfolio Model 108 Statutory Declaration
10 Corporate Information 48 Our Business Risks and 109 Independent Auditors’
11 Corporate Structure Mitigation Report
12 Award and Recognition 50 Our Progress: 114 Statements of Financial
13 Our Presence Sustainability Journey Position
116 Statements of Profit or
Loss and Other
Section 2 Section 5 Comprehensive
Income
FY2023 Highlights Sustainability Statement 117 Consolidated
& Leadership Statement
53 Sustainability of Changes in Equity
14 Five Years Group Approach 118 Statement of Changes
Financial Highlights 54 Sustainability in Equity
16 Business Highlights Governance 119 Statements of Cash
17 Non-Financial 55 Stakeholder Flows
Highlights Engagement 122 Notes to Financial
18 Chairman’s Statement 58 Materiality Assessment Statements
20 Message from 61 Economic
Managing Director Responsibility
22 Profile of Directors 64 Environmental

Section 8
30 Directors’ Responsibility Responsibility
Statement in Respect of 70 Social Responsibility
the Annual Audited Other Information
Financial Statements

Section 6
172 Directors’
Shareholdings and
Interests
Section 3
Governance
173 Analysis of
83 Corporate Governance Shareholdings
Management Discussion & Overview Statement 178 List of Group Properties
Analysis 94 Report of the Audit and 179 GRI Content Index
Risk Committee 183 Notice of Annual
31 Overview of the
98 Statement on Risk General Meeting
Group’s
Management and 186 Statement
Business and Operation
Internal Control Accompanying the
32 Financial Results and
Notice of the 42nd
Business Review
Annual General
37 Risks and Uncertainties
Meeting
39 Dividends
187 Administrative Guide
39 Forward-looking
for Shareholders
Statement
Proxy form
ABOUT THIS

REPORT
This is Padini Holdings Berhad’s (“Padini” or REPORTING FRAMEWORKS
“the Group”) first integrated Annual Report
(“IAR”) for the financial year ended 30 June In line with best practices, our report is guided by the
2023. following reporting frameworks and principles.

This Report addresses stakeholder • Main Market Listing Requirements (“Listing

information needs by offering an overview Requirements”) of Bursa Malaysia Securities Berhad
• Malaysian Financial Reporting Standards (“MFRSs”)
of integration of sustainability in Padini's
• International Financial Reporting Standards (“IFRSs”)
business operation and performance. It goes • Companies Act 2016 in Malaysia (“Act”)
beyond traditional financial disclosures to • Malaysia Code on Corporate Governance 2021 (“MCCG
encompass a broader set of data, including 2021”)
non-financial information, with the aim to • International Integrated Reporting Council (“IIRC”)
provide our stakeholders with economic, Framework
governance, environmental and social • Global Reporting Initiative (“GRI”) Standards for
information about the Group. By presenting Sustainability Reporting
integrated financial and non-financial
disclosures, this Report enables readers
to gain insights into Padini’s sustainability SCOPE AND BOUNDARIES
initiatives, responsible business practices
The report disclosures encompass all business entities
and their implication for the environment, in which the Group has full control in Malaysia as well as
society and corporate governance. It aims Group’s subsidiaries in Cambodia and Thailand. This report
to promote transparency, accountability covers information and activities for the reporting period
and sustainability in Padini’s operations and from 1 July 2022 to 30 June 2023, unless otherwise stated.
future endeavors.

We will continuously enhance our reporting ASSURANCE

disclosures and remain guided by the
evolving reporting requirements towards Financial statements are aligned towards the Malaysian
achieving a more transparent corporate Financial Reporting Standards, International Financial
Reporting Standard, and requirement of the Companies Act
reporting in tandem with global reporting
2016. BDO PLT was engaged to provide an independent
standards or frameworks. limited assurance opinion.

Padini Group has not obtained any independent assurance

of our non-financial report. However, our non-financial
report is underpinned by our robust internal controls and
the implementation of good corporate governance practices.
Continually, we will work to improve our data collection
systems and enhance its reporting processes to provide
more insight of Padini to our stakeholders.

MATERIALITY

We assessed our material matters in the financial, economic,

environmental, social and governance aspects on a yearly
basis though our risk assessment framework to ensure that
the matters continued to be applicable and relevant. Our
strategic response to these material matters is reflected
throughout this report and in our sustainability statement.

2 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 About This Report
(Cont’d)

FORWARD-LOOKING STATEMENT
NAVIGATION ICONS
This report contains forward-looking statements characterised using
words and phrases such as “might”, “forecast”, “anticipate”, “may”,
“believe”, “predict”, “expect”, “continue”, “will”, “estimate”, “target”, OUR CAPITALS
and other similar expressions. As the business environment is
constantly changing, all forward-looking statements are subject to
uncertainties that could cause actual results to differ from those
reflected in them. Therefore, these statements should not be
construed as absolute guarantees or predictions of the Group’s future Natural Capital Human Capital
outcomes. Readers of this integrated report are advised not to place
undue reliance on them.

Social and Financial

BOARD APPROVAL Relationship Capital Capital

The Board acknowledges its responsibility and accountability for the

integrity of this Integrated Annual Report and collectively reviewed
this report as guided by the IIRC and approved the Integrated Annual
Intellectual Capital Manufactured Capital
Report on 29 September 2023.

OUR GROWTH STRATEGY

FEEDBACK

In serving our stakeholders better, we are committed to continuous

improvements on our disclosures and reporting areas through
feedback and comments from our stakeholders. Sustainable Product Strengthening
Differentiation Value Chain

Feedback, suggestions or enquiries on this report can be directed to:

Tel: 03-5021 0500
Fax: 03-7805 1066
Email: [email protected] Market Responsive Empowering Talents

42nd Annual General Meeting Community Giving

OUR STAKEHOLDERS

Saujana Ballroom
Date: 28 November 2023
The Saujana Hotel Kuala Lumpur, Local Communities Shareholders and
and Public Investors
Jalan Lapangan Terbang Subang,
Time: 10.00 am
40150 Shah Alam,
Selangor Darul Ehsan

Government and Customers

Regulatory Authorities

Our Integrated Annual Report 2023 is Employees Suppliers

accessible at corporate.padini.com or by
scanning this QR code.

Shopping Malls

INTEGRATED ANNUAL REPORT 2023 3

 »»»» WHO WE ARE

CORPORATE
PROFILE

Founded in 1971, Padini Holdings Berhad (“Padini” stores in multiple markets around the world such as
or “the Group”) initially established its presence in the Brunei, Bahrain, Myanmar, Oman, Qatar and United Arab
apparel industry as a sole proprietorship, primarily Emirates. Our brands are also available online via our
catering to departmental stores within Malaysia. e-commerce site in Malaysia and Singapore.
Progressively, driven by a vision, we have transformed
from manufacturing and wholesaling to distribution and Despite our growth in size, we have consistently strived,
retailing by creating our very own brands catering to and will continue to strive, to focus our efforts to have
specific consumer niches. the best valued products, whilst practising responsibility
and sustainability.
We address fashion-conscious consumers of both
genders and all ages through our multi-brand labels
which are under Padini Concept Stores and Brands Outlet
stores. Our products carried are under brand names as QUICK FACTS ABOUT PADINI
Padini, Padini Authentics, PDI, Seed, Miki, P&Co, Vincci,
PUBLIC
Vincci Mini, Vincci Accessories, BO Accessories, Blitz, 148 APPROX
LISTED
Filanto, Gamesters, Garage Inc., Hotshots, Industrie Co., IN BURSA
OWN 3,200
Move, Oceano, Portofino, Ropé and Studio. STORES EMPLOYEES
MALAYSIA
GLOBALLY GLOBALLY
SINCE 1998
Today, we have grown to become one of the country’s
prominent fashion companies. Padini is listed on the Main
>RM222
Market of Bursa Malaysia and year-on-year market ESTABLISHED
MILLION
>RM1.8
capitalisation has grown to RM2.6 billion as of 30 June COMPANY BILLION
IN PROFIT
SINCE 1971 IN SALES
2023. In total, we have over one hundred thirty-five (135) AFTER TAX
stores in Malaysia, six (6) stores in Cambodia, seven
(7) stores in Thailand and twenty-six (26) franchise

4 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» WHO WE ARE

corporate profile
(Cont’d)

OUR OUR OUR CORE

VISION MISSION VALUE
To Be The Best Fashion Company To Exceed Customers’ Expectations "Caring From the Heart” expressing
Ever and Our Brands’ Promise. genuine care in our practice in our
community and company.
We have to focus our efforts to have Our aim is to go beyond merely
the best valued products in the market meeting customer’s expectations
with the best shopping experience and fulfilling our brands’ promises by
we can offer, whilst practicing offering fashionable, affordable and
responsibility and sustainability. high-quality products, accompanied
by outstanding service that delivers
exceptional value.

OUR CULTURE
• • • • •

• •

»»»»

INTEGRATED ANNUAL REPORT 2023 5

 »»»» WHO WE ARE

CORPORATE
MILESTONES

2019 »»»» 2007 »»»» 2003 »»»»

Thailand Market was expanded Entered Oman Market Entered Philippines and Saudi
Arabia Market

2009 »»»»
Entered Syria Market 2004 »»»»
Entered Main Board of Bursa
Malaysia

2010 »»»»
Entered Qatar and Pakistan Market

2011 »»»»
2020 »»»» Entered Bahrain, Egypt and
Morocco Market
Started selling via Lazada,
Facebook Live and Shopee

2021 2012 »»»»

»»»»
Entered Myanmar Market 2005 »»»»
Padini App was launched and Entered Indonesia, UAE and
expanded Cambodia Market
2017 »»»»
Cambodia Market was expanded
2006 »»»»
BRANDS OUTLET was
launched

Expanded e-Commerce in
Singapore

2023 »»»»
Sustainability series were launched

6 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» WHO WE ARE

corporate milestones
(Cont’d)

1998 »»»» 1990 »»»» 1971 »»»»

PADINI HOLDINGS SEED was launched Started with Hwayo Garments
BERHAD was listed on the Manufacturer Company as small
Second Board of Kuala Lumpur ladies garment and wholesaling to
Stock Exchange departmental stores

1999 »»»»
1975 »»»»
P&CO and PDI were launched
PADINI was founded and entered
PADINI CONCEPT STORE the retail industry
The first of the Group’s multi brand
shops.
1992 »»»»
PADINI HOLDINGS SDN
BHD was established

1981 »»»»
VINCCI was launched

2000 »»»»
First SEED store was opened at
Entered Brunei Market Sungei Wang

2001 »»»»
1993 »»»»
Entered Thailand Market
PADINI AUTHENTICS was
launched

1987 »»»»
MIKI was launched

INTEGRATED ANNUAL REPORT 2023 7

 »»»» WHO WE ARE

OUR BRANDS
PORTFOLIO

Each of these Brands represent a unique fashion philosophy and encompasses a comprehensive range
of products that fit into our targeted consumer universe.

Modern and simple work wear Casual wear Comfort and laidback style
essential campus-wear

Trendy yet comfortable Fashion forward for girls and ladies New-born and toddler wear

Children footwear and bags Ladies’ footwear and bags Ladies’ accessories

8 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» WHO WE ARE

our brands portfolio

(Cont’d)

BO Accessories Blitz (Newborn products) Filanto (Ladies’ trendy wear) Garage Inc. (Adult tee shirts
and denim bottom)

Gamesters (Kids Boy) Studio (Men’s work wear) Industrie Co. (Adult polo and Move (Ladies’ shoe, lounge
Hotshots (Kids girl) Khaki pants) wear and undies)

Oceano (Men’s boardshort) Portofino (Adult sport and Ropé (Adult casual wear)
active wear)

INTEGRATED ANNUAL REPORT 2023 9

 »»»» WHO WE ARE

CORPORATE
INFORMATION

BOARD OF DIRECTORS

Chairman, Independent Executive Directors: Independent Non-

Non-Executive Director: Mr Andrew Yong Tze How Executive Directors:
Mr Chia Swee Yuen Mr Benjamin Yong Tze Jet Mr Lee Peng Khoon
Ms Chew Voon Chyn Ms Tan Shi Wen
Ms Sung Fong Fui Ms Tan Poh Ling
Managing Director,
Mr Christopher Yong Tze-Yao Datuk Lee Say Tshin
Executive Director:
(Appointed on 1 September 2023) (Appointed on 1 July 2023)
Mr Yong Pang Chaun Ms Chong Chin Lin Mr Timothy Tan Heng Han
(Resigned on 31 August 2023) (Appointed on 1 July 2023)
Mr Foo Kee Fatt
(Resigned on 31 May 2023)

COMPANY SECRETARIES SHARE REGISTRAR

Ms Ho Mun Yee Tricor Investor & Issuing House Services
(SSM PC NO. : 201908003292) Sdn. Bhd.
(MAICSA 0877877) Unit 32-01, Level 32, Tower A
Ms Cho Mei Tho Vertical Business Suite
(SSM PC NO. : 201908003284) Avenue 3, Bangsar South
(MAICSA 7036543) No. 8, Jalan Kerinchi
59200 Kuala Lumpur
Tel : 03 – 2783 9299
PRINCIPAL BANKER
Fax : 03 – 2783 9222
OCBC Al–Amin Bank Berhad Email : [email protected]

REGISTERED OFFICE STOCK EXCHANGE LISTING

3rd Floor Main Market
No. 17, Jalan Ipoh Kecil Bursa Malaysia Securities Berhad
50350 Kuala Lumpur
Tel : 03 – 4044 3235
Fax : 03 – 4041 3959 AUDITORS
Email : [email protected] BDO PLT
Chartered Accountants
PRINCIPAL PLACE OF BUSINESS
No. 19, Jalan Jurunilai U1/20
Hicom Glenmarie Industrial Park
40150 Shah Alam
Selangor Darul Ehsan
Tel : 03 – 5021 0500
Fax : 03 – 7805 1066

10 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» WHO WE ARE

CORPORATE
STRUCTURE

PADINI HOLDINGS BERHAD

197901005918 (50202-A)

100% MIKIHOUSE CHILDREN’S WEAR SDN. BHD.

198701005814 (164485-U)

100% PADINI CORPORATION SDN. BHD.

197501000569 (22519-H)

100% SEED CORPORATION SDN. BHD.

199001002825 (194391-K)

100% YEE FONG HUNG (MALAYSIA) SDN. BHD.

197301001498 (15011-U)

PADINI DOT COM SDN. BHD.

100% 200001007952 (510558-H)

100% VINCCI LADIES’ SPECIALTIES CENTRE SDN. BHD.

198101007288 (73404-H)

100% VINCCI HOLDINGS SDN. BHD.

198301002408 (97644-K)

THE NEW WORLD GARMENT MANUFACTURERS

100% SDN. BHD. 198201000746 (80490-U)

100% PADINI INTERNATIONAL LTD., HONG KONG

(896012)

PADINI (CAMBODIA) CO., LTD

100% (00026592)

PADINI (THAILAND) CO., LTD

100% (0105561096612)

INTEGRATED ANNUAL REPORT 2023 11

 »»»» WHO WE ARE

AWARD AND
RECOGNITION

2004 (PADINI) & 2005 (VINCCI) Anugerah Nasional Kreativiti 2019 MRCA Billion Dollar Club Award by Malaysia Retail
& Inovasi by Malaysia Design & Innovation Centre Chain Association

(For outstanding brand building endeavours that have helped to

build Malaysia’s international image and reputation for quality)

2016 (Padini Concept Store Sunway Putra Mall) & 2022

(Padini Concept Store Mid Valley) Fair Price Shop by
Kementerian Perdagangan Dalam Negeri, Koperasi dan
2007, 2008 & 2009 (PADINI) Malaysia Most Valuable Brands Kepenggunaan
by Association of Accredited Advertising Agents Malaysia

(Top 30 of Malaysia’s most valuable brands)

Rewards recognised by Business Partner:

2010 (PADINI), 2011 (Vincci and PADINI), 2012 (Vincci) 1. 2000 & 2001 Retail Awards of Excellence by Suria KLCC
and 2019 (PADINI) Putra Brand Awards by Association of 2. 2007 (Padini Authentics Aeon Cheras Selatan) Retailer
Accredited Advertising Agents Malaysia
of the Year Award by AEON
(2010, 2011, 2012 - Most promising brand of the year) 3. 2008 (Seed) THE CLEO fashion award
(2019 – Putra brand personality of the year) 4. 2010 (Padini Concept Store) Outstanding Business
Partner by Sunway Pyramid
5. 2011 Best Decorated Store by Capital Malls
6. 2013 (Padini Concept Store) Hot Shop Awards by
Queensbay Malls
7. 2015 (PDI) Highest Sales Growth Award by AEON
8. 2017 (Vincci) Outstanding Performance Award by 11street
9. 2017 (Padini Concept Store) Highest Sales Growth by
2013, 2017 and 2018 The Edge Billion Ringgit Club by The Palm Mall
Edge Malaysia
10. 2018 (Brands Outlet) Best Performance by Palm Mall
(Highest returns to shareholders over three years) 11. 2022 (PADINI) Green Tenant Awards by IPC Shopping
Centre

12 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» WHO WE ARE

OUR
PRESENCE

Since establishment in 1971, Padini has expanded its reach and evolved into a global brand with an international
presence across multiple countries. In total, we have one hundred thirty-five (135) stores in Malaysia and various
overseas markets including Cambodia, Thailand, Bahrain, Brunei, Myanmar, Oman, Qatar and the United Arab
Emirates.

As of 30 June 2023

2 stores 1 store

4 stores 3 stores

7 stores
15 stores
6 stores

135 stores 1 store

As our initiative is to build our online presence, we are also available online via our e-commerce site Padini.com.
Beside our own website, we have Live Sales on social media – Facebook live, Lazada and Shopee. These online
platforms are not restricted to only locals, but also expanded to Singapore. In response to the prevailing endemic
situation and with the aim of achieving greater cost efficiency, we have opted to cease our Shopee and Facebook
live sales in financial year 2023. We launched Padini mobile application to provide frictionless e-shopping experience
to our customers in financial year 2021 and continuous improvement on the application is made from time to time.

While we may have grown in size we have and will always strive to give the best fashion, quality and value to our
customers. Providing fashion with value, we always endeavour to exceed our customers’ expectations.

INTEGRATED ANNUAL REPORT 2023 13

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

FIVE YEARS GROUP

FINANCIAL HIGHLIGHTS

2023 2022 2021 2020 2019

Amounts in RM thousand (RM’000) unless otherwise stated

Revenue 1,822,129 1,319,097 1,029,387 1,354,679 1,783,022

Increase/(Decrease) in revenue 503,032 289,710 (325,292) (428,343) 104,232
Increase/(Decrease) in revenue (%) 38.1% 28.1% (24.0%) (24.0%) 6.2%

Profit before tax 295,891 205,110 74,146 107,321 219,265

Increase/(Decrease) in profit before tax 90,781 130,964 (33,175) (111,944) (20,431)
Increase/(Decrease) in profit before tax
44.3% 176.6% (30.9%) (51.1%) (8.5%)
(%)

Profit attributable to equity holders of the 222,691 154,103 54,057 75,174 160,166
Company
Increase/(Decrease) in profit attributable 68,588 100,046 (21,117) (84,992) (18,008)
to equity holders
Increase/(Decrease) in profit attributable 44.5% 185.1% (28.1%) (53.1%) (10.1%)
to equity holders (%)

Net assets 1,040,088 891,050 801,786 765,780 740,344

Changes in net assets 149,038 89,264 36,006 25,436 87,144
Changes in net assets (%) 16.7% 11.1% 4.7% 3.4% 13.3%

Deposits, cash and bank balances 605,315 808,853 523,758 441,474 472,031
Interest bearing borrowings 3,994 379 653 2,546 23,903

Net assets per share (sen) 158.1 135.4 121.9 116.4 112.5
Changes in net assets per share (sen) 22.7 13.5 5.5 3.9 13.2
Changes in net assets per share (%) 16.7% 11.1% 4.7% 3.4% 13.3%

Basic earnings per share (sen) 33.85 23.42 8.22 11.43 24.34
Changes in basic earnings per share 10.4 15.2 (3.2) (12.9) (2.7)
(sen)
Changes in basic earnings per share 44.5% 185.1% (28.1%) (53.1%) (10.1%)
(%)

Dividend per share (sen) 11.5 10.0 2.5 7.5 11.5

Changes in dividend per share (sen) 1.5 7.5 (5.0) (4.0) –
Changes in dividend per share (%) 15.0% 300.0% (66.7%) (34.8%) –

Gross Profit Margin (%) 39.4% 38.5% 37.8% 39.7% 39.1%

Net Profit Margin (%) 12.2% 11.7% 5.3% 5.5% 9.0%
Dividend payout ratio (%) 34.0% 42.7% 30.4% 65.6% 47.2%

14 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

five years group financial highlights

(Cont’d)

REVENUE (RM‘000) Profit before tax (RM‘000)

1,783,022 1,354,679 1,029,387 1,319,097 1,822,129 219,265 107,321 74,146 205,110 295,891

2019 2020 2021 2022 2023 2019 2020 2021 2022 2023

Net assets (RM‘000) Net assets per share (sen)

740,344 765,780 801,786 891,050 1,040,088 112.5 116.4 121.9 135.4 158.1

2019 2020 2021 2022 2023 2019 2020 2021 2022 2023

EARNINGS per share (sen) DIVIDEND PER SHARE (sen)

24.3 11.4 8.2 23.4 33.8 11.5 7.5 2.5 10.0 11.5

2019 2020 2021 2022 2023 2019 2020 2021 2022 2023

INTEGRATED ANNUAL REPORT 2023 15

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

BUSINESS
HIGHLIGHTS

2023 2022 2021 2020 2019

(Square (Square (Square (Square (Square
feet) feet) feet) feet) feet)
Floor area operated (Malaysia) *^ 1,362,000 1,387,000 1,350,000 1,477,000 1,477,000
Floor area operated (Thailand) *^ 12,000 12,000 12,000 11,000 10,000
Floor area operated (Cambodia) *^ 65,000 41,000 41,000 41,000 35,000
* As at 30 June
^ Rounded in thousand

August 2022 November 2022 March 2023

The Mall Ngamwongwan (Thailand)

Vincci Ampang Point New Opening Vincci Shah Alam New Opening
New Opening

April 2023

Jungceylon (Thailand) Reopening Vincci Bukit Indah New Opening Vincci Mid Valley New Opening

June 2023

Vincci Station 18 Ipoh New Opening Brands Outlet Aeon Mall Mean Chey Padini Concept Store Aeon Mall Mean Chey
(Cambodia) New Opening (Cambodia) New Opening

16 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

NON-FINANCIAL
HIGHLIGHTS

A total of approximately LED lighting solutions Nearly 148 hours spent by

395,700 eco-friendly footwear offering a reduction in energy employees on volunteering
and apparel units were consumption of 49% wattage
procured in lighting of each store

Approximately RM485,000 100% Employees participated Approximately RM651,000

allocated for training in training focused on The (cash and in kind) has been
programmes encompassing all Whistleblowing Policy and donated which included
employees Anti-Bribery And Anti-Corruption approximately 1,200 cartons
Policy or 28,000 pieces of clothing
given as donations.

Employee Wages & Benefits Payment To Governments Total of 13 NGOs

approximately RM185 million (Direct Tax) approximately Benefited
Employee discounts ranging RM70 million
from 20% to 40% of
Padini products

Biodegradable Plastics Bags at Approximately 1,900 of Total 1.1 gWh Clean Energy
All Stores. Covid-19 tests kit donated Produced from Solar
Recycled and sustainable Installation
Paper Bags, hand tags and
shoe boxes at Vincci Stores

(The information presented is derived from the period of 1 July 2022 to 30 June 2023)

INTEGRATED ANNUAL REPORT 2023 17

 »»»» WHO WE ARE

CHAIRMAN'S
STATEMENT
On behalf of the Board of Directors, it is my pleasure to present the Integrated Annual
Report and the Audited Financial Statements of Padini Holdings Berhad and its
subsidiaries (“Padini” or “the Group”) for the financial year ended 30 June 2023.

GROUP PERFORMANCE OVERVIEW

The Group achieved a commendable performance in the financial
year 2023 despite the challenging business climate. For the financial Revenue
year under review, the Group achieved a consolidated revenue of
RM1.82 billion, marking a 38.1% growth compared to the previous RM1.82 billion
year’s revenue of RM1.32 billion. This growth was attributed to the FY2022: RM1.32 billion
normalisation of domestic economic activities with a recovery to pre-
pandemic levels of activity. In tandem with the top line growth, the Profit before tax
Group’s profit before tax surged by 44.3% to RM295.9 million from
RM205.1 million in the previous financial year.
RM295.9 million
FY2022: RM205.1 million
Throughout the past year, most countries worldwide transitioned
Earnings per share
towards COVID-19 endemicity, a defining milestone that brought
an end to the era of highly uncertain and disruptive activities. This RM33.9 per share
shift towards endemicity paved the way for the gradual reopening of FY2022: RM23.4 per share
economies, the easing of travel restrictions and the revival of social
interactions. This shift towards endemicity also brought about certain
challenges. One notable consequence has been an unprecedented
surge in consumer goods demand which surpasses available supply. Supply chain and logistics issues have continued
to adversely affect market players. Guided by capable leadership, Padini has been able to mitigate some of these
effects with the sustained efforts of dedicated staff and long term relationships built with customers, suppliers and
other stakeholders. Overall, the Group’s performance reflects its resilience and ability to thrive amidst challenging
circumstances, showcasing its effective strategies and adaptability in an ever-changing economic landscape.

The eruption of the Russian-Ukraine war was a jolt to the then recovering world economy. Resultant effects with
significant increases in commodity prices, especially crude oil, gas, metals and food grains and oils, has spurred
inflation globally. Malaysia’s Gross Domestic Product (“GDP”) has benefited significantly from the increases in
commodity exports but inflationary effects have adversely affected disposable incomes and consumer sentiment
and spending, especially on discretionary goods and services. Padini, to a large extent, operates in a segment of
the consumer market that is less susceptible to the impact of these developments. Nevertheless, Padini will continue
to develop and fine-tune operational strategies that facilitates adaptability to the changing economic conditions to
manage potential challenges arising from the global economic situation to ensure sustained growth and profitability.

The following section in the Management Discussion and Analysis provides a more comprehensive view on Padini’s
performance, as well as the risks and challenges the Group is exposed to.

FUTURE OUTLOOK

Continuing geopolitical tensions amongst the global powers have significant adverse effects on global economic
growth, trade flows, supply chain disruptions, inflation, interest rates and currency volatility. The central banks of the
major G7 countries have clearly demonstrated their resolve to stem inflation with significant interest rate increases
to curtail demand for goods and services. Coupled with sustained high energy costs, especially in Europe, it is a
major concern that weak, and possibly recessionary, economic conditions are triggered in many countries.

China, the second largest economy in the world, is the latest country to be significantly impacted by the geopolitical-
economic tensions. The significant slowdown in their economy will have far reaching impact on its trading partners,
especially Asia.

18 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» WHO WE ARE

Looking inward, the Group’s domestic operations continue to be the main driver of revenue and profits. Notwithstanding
that the Government is anticipated to continue to implement the necessary measures to support the domestic economy,
given the adverse global environment, high interest rates, inflation and rising prices, which affects consumers’
purchasing power and lifestyle, the Group expects the outlook for the Malaysian economy for 2024 to be challenging.

The Group will remain vigilant and continue to implement measures to protect the health and safety of our employees
and customers, control cost, optimising working capital, preserving cash and streamlining its operations to minimise
the adverse impact. A good understanding of consumer needs, ability to deliver value and speed-to-market will
continue to be critical success factors. These components have been ingrained into all areas of the marketing,
merchandising and supply chain of the Group.

The Group is cautiously optimistic in successfully navigating through the challenging business environment and
delivering long term value to shareholders.

Strengthening the Board

As part of the Board renewal process, Padini has brought in two (2) new independent non-executive directors, Datuk
Lee Say Tshin and Mr Timothy Tan Heng Han, who we are confident, will be able to positively contribute their skills,
experience and views to further strengthen the bench strength in dealing with the future needs and sustainability of
the Group. The Board of Directors wishes to extend a very warm welcome to Datuk Lee and Mr Tan.

In addition, we take this opportunity to warmly welcome our newly appointed executive director, Mr. Christopher Yong
Tze-Yao who has been with the Group for the last fourteen (14) years, starting as a junior staff and working his way
up, gaining the relevant operational and business experience.

We look forward to working collaboratively and achieving new milestones together.

Appreciation

On behalf of the Board of Directors, I wish to express my deepest appreciation to all our customers, shareholders,
suppliers, professional service providers, bankers and all other business associates for their continuous support
and trust.

I would also like to express my gratitude to my fellow Board members for their invaluable guidance and unwavering
support to the Management. The Board extends sincere appreciation and thanks to Ms. Chong Chin Lin and Mr Foo
Kee Fatt, who have stepped down from their positions on the Board after years of devoted service, acknowledging
their significant past contributions to the Group.

Last but not least, I also want to acknowledge the hard work, dedication and commitment of employees across the
Group, ranging from stores staff to those working in our office and overseas operations. Their continued contributions
are key to our future success.

The Padini Group looks forward to being able to create more value for all the various stakeholders. May we continue
to work together and forge ahead to achieve sustainable growth and success.

Mr Chia Swee Yuen

»»»»
Chairman
»»»»

INTEGRATED ANNUAL REPORT 2023 19

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

»»»»
MESSAGE FROM
MANAGING DIRECTOR

“We see it as our responsibility to work with

integrity, transparency and honesty.

Our journey is not finite. It will continue on as

an ever-changing quest for improvement and
reduced impact.”

We are honoured to present the first Integrated Annual Report of Padini Holdings Berhad Group for the financial
year 2023. As Managing Director and Chairman of Sustainability Committee, I work closely with my team to provide
dedicated focus to manage sustainability strategically, including the integration of sustainability considerations in
the operations of the Group.

With the gradual declaration of endemic conditions, Padini is presently recovering from the repercussions of the
Covid-19 pandemic. We believe that with continuous sustainable journey ahead, we will sustain through global
changes and challenges.

ETHICAL AND RESPONSIBLE BUSINESS ETHICS

We believe that Padini not only upholds responsibility in accomplishment in business activities, but we are also mindful
in focusing on communication with stakeholders in ethical and sustainable ways. With that, we have revisited the fifteen
(15) identified sustainability material matters in the previous year which are vital to our business and stakeholders.

As we move forward, we intend to institutionalise our sustainability governance and embed into our day-to-day
lives’ good sustainability practices within the Group. With this, the Board of Directors have endorsed the Group’s
sustainability agenda as one of the key priorities and will strive to promote environmental, social and governance
(“ESG”) practices in our strategies. We ensure that the Group complies to applicable laws and regulations, and we
promote open and transparent discussions, as well as constructive challenge in the Board and across the Group.
We continually strive to ensure best practices are being maintained and that governance is integral to our strategy
and decision-making processes for the benefit of our shareholders and other stakeholders.

CARING FROM THE HEART

Padini places great emphasis on being a key part of prosperous communities in which we operate. This includes
hiring locally and empowering our talent and sharing happiness and helping vulnerable members of our communities,
wherever we can, to make a difference. At the same time, we are glad to share that there are no salary reductions
or employee retrenchment conducted to date despite the big challenges that we faced from closure of outlets arising
from the lock down in previous years.

20 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

I am also pleased to share that we have improved the diversity of our overall company. In the financial year 2020,
‘Live to Contribute’ was launched as our company’s initiative for an Inclusive Society. We continue this meaningful
initiative by working closely with Non-Governmental Organisations and government agency such as National Blood
Bank and Department for the Development of Persons with Disabilities, we have provided employment opportunities
to the Person with Disabilities to demonstrate their full potential, a platform to better display their abilities and thereby
encouraging and inspiring others in the society. This certainly would not work without the support of our internal
team members, and such trainings were conducted to ensure smooth transition working with our new members. We
also continue to encourage our employees to volunteer and contribute to our community through our philanthropy
programmes.

During past year, we have contributed RM651,000 in cash and in kind which included up to one thousand two hundred
(1,200) cartons (Equivalent to approximately 28,000 pieces) of clothing to charitable organisations. It is reassuring
to witness the enthusiasm for Padini’s sustainability journey from employees at all levels. Padini’s success is built
from our own financial performance and long-term profitability is only possible when we protect it through our actions
on the environment and society.

CARING FOR NATURE

During the financial year 2023, Padini has launched eco-friendly products as one of our efforts and step towards
mitigating climate change and preserving natural resources. By incorporating eco-friendly products into our brand’s
portfolio, we strive to inspire and encourage our customers to join us on the journey towards a more sustainable future.
We believe that every small step matters, and together, we can make a significant contribution to the preservation
of our planet for future generations.

APPRECIATION

On behalf of the Board of Directors, I would like to thank all of those who form part of the Padini family for their
work and effort. Your involvement and commitment are essential in keeping our challenges and dreams alive and in
moving forward successfully. We will continue to pursue the sustainable development of society and our company
through dialogue and proactive information disclosure to our stakeholders.

The Sustainability Statement section is our invitation to you to learn more about what we have done and what we
are striving to do going forward, to bring our philosophy to life. We hope that you will find this Report informative, as
we aim to provide a better understanding on how we operate and share information about our long-term impact on
society, and how they are fundamental to the creation of our long-term business.

Mr Yong Pang Chaun

Managing Director

INTEGRATED ANNUAL REPORT 2023 21

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE
OF DIRECTORS

MR CHIA SWEE YUEN MR YONG PANG CHAUN

66 years of age I Malaysian I Male 72 years of age I Malaysian I Male
• Chairman of the Board • Managing Director
• Independent Non-Executive Director • Key Senior Management

Mr Chia was appointed to the Board on 2 May 2014. Mr Yong was appointed to the Board on 26 March 1992.

He graduated from the University of Malaya with a An entrepreneur with extensive hands–on experience in
Bachelor of Accounting (1st Class Hons). He is a member the textiles and apparel industry, he has been and still is
of the Malaysian Institute of Accountants (“MIA”). He primarily responsible for the achievements of the Group.
was formerly a member of the Examination Committee
of the Certified Credit Professional (Business) of the After completing his secondary education, he joined
Asian Institute of Chartered Bankers (“AICB”) (formerly a textile merchant in Singapore where he gained
known as Institut Bank-Bank Malaysia). In recognition of considerable experience in the textile trade. Returning to
his contributions and services rendered to AICB and the Malaysia several years later, he set up the Company’s first
banking Industry, he was elected by the Council as an subsidiary in 1971 to manufacture ladies fashion. From
Associate Fellow of AICB. there, other businesses were set up and since then he
has always set the strategies for the development of the
He started his career in 1980 with SGV-Kassim Chan Group. The recent success of the Group’s brands and
Sdn Bhd, a management consultancy firm, conducting the presence that the brands command in the domestic
financial feasibility and marketing studies, review of market today are attestations to his entrepreneurial skills.
operational processes and financial training. His ability to analyse fashion trends and to react quickly
to take advantage of changes in market conditions and
From 1984 to 1987, he was with Malaysian Resources consumers’ preferences, has resulted in the Group being
Corporation Berhad, a diversified listed group with provided with tremendous opportunities for continued
businesses in the manufacturing, trading, credit & leasing, growth. Today, he continues to manage the strategies
credit card, construction and property development areas, and plans for the Group’s future.
in charge of the corporate planning, accounting and tax,
information technology and general administration areas. Other than his directorship with Padini Holdings Berhad,
he is not serving as a director in any other public
Since 1988 up to his retirement in the financial year 2015, companies.
he has been with the banking sector, heading varied areas
of marketing, branch management, credit evaluation, For the financial year under review, he has attended all
credit operations and risk management with Overseas five (5) meetings of the Board of Directors.
Union Bank (M) Bhd and Ambank (M) Bhd. Customer
segment handled is mainly in business banking.

Other than his directorship with Padini Holdings Berhad,

he is also an independent non-executive director of New
Hoong Fatt Holdings Berhad.

For the financial year under review, he has attended all

five (5) meetings of the Board of Directors.

22 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE OF DIRECTORS
(Cont’d)

MR LEE PENG KHOON MR ANDREW YONG TZE HOW

70 years of age I Malaysian I Male 42 years of age I Malaysian I Male
• Chairman of Nominating and Remuneration • Executive Director
Committee • Key Senior Management
• Member of the Audit and Risk Committee
• Senior Independent Non-Executive Director

Mr Lee was appointed to the Board on 6 January 2014. Mr Andrew Yong was appointed to the Board on 3
December 2015.
He qualified as a Chartered Accountant in 1978 in a
London firm of chartered accountants. He is a member He graduated from the California State University,
of the Malaysian Institute of Accountants and the Institute Northridge, Los Angeles, California with a Bachelor’s
of Chartered Accountants in England & Wales. Degree in Computer Science. From April 2006 to May
2008, he worked as a AS400 programmer contracted
On his return to Malaysia in 1981, he joined a big four to Patimas PSG and a system operator in Prudential
auditing firm as an audit senior and later audit manager. services.
He then held senior management positions in private
and public companies that were involved in plantation, He joined Padini in June 2008 as IT manager in Padini
property development, credit financing, manufacturing Dot Com Sdn Bhd managing all IT operations, system
& trading, countertrade and trade financing, investment implementations and IT assets for the Group. He was
holding and chartering & engineering in the oil and gas promoted to General Manager – Operations in August
sector. 2015 and oversees, manage and direct overall operations
of support departments of the Group.
He is presently a self-employed general consultant.
Other than his directorship with Padini Holdings Berhad,
Other than his directorship with Padini Holdings Berhad, he is not serving as a director in any other public
he is not serving as a director in any other public companies.
companies.
For the financial year under review, he has attended all
For the financial year under review, he has attended all five (5) meetings of the Board of Directors.
five (5) meetings of the Board of Directors.

INTEGRATED ANNUAL REPORT 2023 23

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE OF DIRECTORS
(Cont’d)

MR BENJAMIN YONG TZE JET MS CHEW VOON CHYN

39 years of age I Malaysian I Male 41 years of age I Malaysian I Female
• Executive Director • Executive Director
• Key Senior Management • Key Senior Management

Mr Benjamin Yong was appointed to the Board on 15 Ms Chew was appointed to the Board on 20 February
July 2016. 2017.

After graduating with a Bachelor’s Degree in Arts, Media & She graduated from Parsons School of Design, New York
Communication from the University of Melbourne, Victoria, with a Bachelor’s Degree in Business Administration,
Australia in 2005, Mr Benjamin Yong started his career majoring in Design & Management. She worked as a
as a Merchandising Assistant with Padini Merchandising merchandising assistant in Calvin Klein Jeans, New York
department in September of the same year. He was in year 2005.
promoted to the position of Merchandiser in 2007 and
appointed as the Brand Manager for Padini Workwear She joined Vincci in August 2005 as Design &
in 2009. He is now the Head of Design, Merchandising Merchandising Executive till July 2007. From August 2007
and Retail of the Group and is responsible for the overall till June 2009, she was redesignated as Trend Developer
management, development and organisation of the cum Merchandiser, who managed the Research &
design, merchandising, retail and branding activities for Development department. She was promoted to Brand
the brands assigned to him. Manager for Vincci Accessories & Vincci + in July 2009
till December 2013. From January 2014 till present, she
Other than his directorship with Padini Holdings Berhad, is the Brand Manager for the entire Vincci group.
he is not serving as a director in any other public
companies. Other than her directorship with Padini Holdings Berhad,
she is not serving as a director in any other public
For the financial year under review, he has attended all companies.
five (5) meetings of the Board of Directors.
For the financial year under review, she has attended all
five (5) meetings of the Board of Directors.

24 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE OF DIRECTORS
(Cont’d)

MS SUNG FONG FUI MR CHRISTOPHER YONG

49 years of age I Malaysian I Female TZE-YAO
• Executive Director 37 years of age I Malaysian I Male
• Key Senior Management • Executive Director
• Key Senior Management

Ms Sung was appointed to the Board on 23 May 2018. Mr Christopher Yong was appointed to the Board on 1
September 2023.
She is currently holding the position of Group Chief
Financial Officer in Padini Holdings Berhad. She is a He graduated from Monash University, Victoria Australia
member of the Malaysian Institute of Accountants and in 2009, Mr Christopher Yong started his career in Brands
Fellow of Chartered Certified Accountant, UK. Outlet as an Assistant Merchandiser. He was promoted
as a Merchandiser in 2010 and subsequently a Senior
She has more than eighteen (18) years of experience Merchandiser in 2011. Mr Christopher Yong took a
in audit and assurance, listing and corporate advisory Managerial role in 2014 in Brands Outlet as an Assistant
work. Prior joining Padini in May 2017, she was an audit Merchandising Manager and was then promoted to
partner in a large international accounting firm and was a Brand Manager for Brands Outlet in 2015. His role
also the technical partner of the firm. Apart from audit, as a Brand Manager includes merchandise planning,
she has wide range of experience covering due diligence marketing strategies, outlet operations, outlet design,
review, business advisory work and technical support to stock distribution, leasing, advertising and promotions,
corporate exercises engagements varying from reverse social media and overall strategic planning.
takeover, initial public offerings and others. Her client
portfolio includes local and international companies Other than his directorship with Padini Holdings Berhad,
covering a broad spectrum of industries. She is currently he is not serving as a director in any other public
a member of the ACCA Malaysian Advisory Committee companies.
since February 2022.

Other than her directorship with Padini Holdings Berhad,

she was also an Independent non-executive director
of Supermax Corporation Berhad and resigned on 30
June 2023.

For the financial year under review, she has attended all
five (5) meetings of the Board of Directors.

INTEGRATED ANNUAL REPORT 2023 25

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE OF DIRECTORS
(Cont’d)

MS TAN SHI WEN MS TAN POH LING

36 years of age I Malaysian I Female 53 years of age I Malaysian I Female
• Member of the Audit and Risk Committee • Chairman of Audit and Risk Committee
• Member of Nominating and Remuneration • Member of Nominating and Remuneration
Committee Committee
• Independent Non-Executive Director • Independent Non-Executive Director

Ms Tan was appointed to the Board on 21 September Ms Tan was appointed to the Board on 1 July 2022.
2021.
She is a member of Malaysian Institute of Certified
She holds a LL.B. (Hons) from the University of Public Accountants, Malaysian Institute of Accountants,
Manchester. She also holds a Postgraduate Diploma Chartered Tax Institute of Malaysia, ASEAN Federation
in EU Competition Law and LL.M (Master of Laws) in of Accountants and Financial Planning Association of
International Commercial Law. Malaysia.

She is a practising corporate lawyer at Messrs Skrine, She joined one of the Big Four accounting firm in Malaysia
where she commenced legal practice after her admission in 1990 and obtained her professional qualification there.
to both English and Malaysian Bar. She has been a
partner of Messrs Skrine since 2018 and has been in Ms Tan has over thirty (30) years in the area of auditing,
practice for over ten (10) years. Throughout her practice, corporate advisory, accounting, taxation, financial due
she has been involved in advising on numerous exercises diligence and mergers and acquisitions. She is currently
for international and local companies ranging from the Managing Partner of Total International Associates,
mergers and acquisitions, to business reorganisations, an audit firm based at Kuala Lumpur. She also serves
corporate governance and regulatory compliance. She on the board of Euro Holdings Berhad as Independent
is also the Co-Head of Skrine’s Competition Practice Non-Executive Director.
and has in-depth knowledge and experience in this area.
For the financial year under review, she has attended all
In addition to her legal career, she is also the founder and five (5) meetings of the Board of Directors.
currently a director of SESO Berhad, a public company
(a non-profit enterprise which aims to combat food waste
and food poverty).

For the financial year under review, she has attended all
five (5) meetings of the Board of Directors.

26 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE OF DIRECTORS
(Cont’d)

DATUK LEE SAY TSHIN MR TIMOTHY TAN HENG HAN

70 years of age I Malaysian I Male 42 years of age I Malaysian I Male
• Member of Audit and Risk Committee • Member of Audit and Risk Committee
• Member of Nominating and Remuneration • Member of Nominating and Remuneration
Committee Committee
• Independent Non-Executive Director • Independent Non-Executive Director

Datuk Lee was appointed to the Board on 1 July 2023. Mr Timothy Tan was appointed to the Board on 1 July
2023.
Datuk Lee graduated from the University of Malaya with
a Bachelor of Economics (Honours) in 1975. He is a He holds a Bachelor of Business from University of
Council Member of the Malaysia-China Business Council. Technology Sydney, Australia. He also holds Diploma in
Marketing Communication from International Advertising
He is an accomplished banker with over forty-eight Association and Diploma in Marketing Research from
(48) years of experience in banking industry, having Marketing Research Society of Australia.
held various positions in HSBC Bank Malaysia Berhad,
including Managing Director of Strategic Business Mr Timothy Tan started his career as a Worksite Marketing
Development prior to his retirement in 2013. He is Executive with Allianz Life Insurance (M) Berhad from
currently the Vice Chairman, Strategic Initiatives for 2003 – 2004. In 2004, he Joined Kawan Food Berhad as
HSBC Bank Malaysia Berhad. Datuk Lee also a Council the Head of Export and he was promoted to the position
Member of the Malaysia-China Business Council. of Director of International Business of Kawan Food
Berhad. In 2015, Mr Timothy was further promoted to
Other than his directorship with Padini Holdings Berhad, the position of the Group Managing Director and he held
he is also the Independent Non-Executive Chairman of this position until 2020. He is currently a consultant for
CJ Century Logistics Holdings Berhad and Independent International Business.
Non-Executive Director of Alpha IVF Group Sdn. Bhd.
Other than his directorship with Padini Holdings Berhad,
he is not serving as a director in any other public
companies.

INTEGRATED ANNUAL REPORT 2023 27

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE OF DIRECTORS
(Cont’d)

MS CHONG CHIN LIN MR FOO KEE FATT

(Resigned from Board on 31 August 2023) (Resigned from Board on 31 May 2023)

70 years of age I Malaysian I Female 57 years of age I Malaysian I Male

• Executive Director • Chairman of the Audit and Risk Committee,
• Key Senior Management re-designated as Member on 1 February 2023
• Member of Nominating and Remuneration
Committee
• Independent Non-Executive Director

Ms Chong was appointed to the Board on 29 March 1995. Mr Foo was appointed to the Board on 2 January 2009.

While still in the second year of her sixth form education, He is a member of Malaysian Institute of Certified
she was called upon to help in the family business which Public Accountants, Malaysian Institute of Accountants
dealt in the wholesale and retail of fashion accessories and Chartered Tax Institute of Malaysia. He is also
and costume jewellery. After three years and gaining an approved company auditor under the Malaysian
considerable experience in the trade, she left and joined Companies Act 2016.
a boutique retailing ladies fashion. After Vincci Ladies’
Specialities Centre Sdn Bhd got incorporated in 1981, she In 1987, he joined and served his articleship with one
joined the company as a merchandiser for ladies fashion of the reputable international accounting firms. From
wear and accessories. Since then she has been with the 1993 to 2006, he was with a local accounting firm with
Group and has contributed much to the development of international affiliation. He is currently in public practice.
the Group’s major brands like Seed, Padini Authentics
and Miki. Other than his directorship with Padini Holdings Berhad,
he is also an independent non-executive director of
When she was merchandiser for ladies fashion, she got MMS Ventures Berhad, Can One Berhad and Box-Pak
involved in garment manufacturing operations and was (Malaysia) Berhad.
able to later use this experience to oversee the Group’s
garment manufacturing operations. For the financial year under review, he has attended all
five (5) meetings of the Board of Directors.
Other than her directorship with Padini Holdings Berhad,
she is not serving as a director in any other public
companies.

For the financial year under review, she has attended all
five (5) meetings of the Board of Directors.

28 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

PROFILE OF DIRECTORS
(Cont’d)

Other Information

i. Family Relationship
Mr Yong Pang Chaun is the spouse of Ms Chong Chin Lin. Mr Andrew Yong Tze How, Mr Benjamin Yong Tze
Jet and Mr Christopher Yong Tze-Yao are sons of Mr Yong Pang Chaun and Ms Chong Chin Lin. Ms Chew
Voon Chyn is the niece of Mr Yong Pang Chaun as well as cousin to Mr Andrew Yong Tze How, Mr Benjamin
Yong Tze Jet and Mr Christopher Yong Tze-Yao. None of the other Directors above have any family relationship
with one another. Mr Yong Pang Chaun and Ms Chong Chin Lin are the major shareholders in the company
by virtue of their interest in Yong Pang Chaun Holdings Sdn Bhd which owns a 43.74% interest in the shares
in the Company as at 30 June 2023.

ii. Conflict of Interest

None of the Directors have any conflict of interest or potential conflict of interests with the Group.

iii. Convictions for offences

None of the Directors have been convicted for offences within the past ten (10) years other than for traffic
offences, if any.

iv. Material Contracts

No material contracts had been entered into for the financial year under review between the Group and the
Directors and/or Major Shareholders.

v. No. of board meetings held

Five (5) Board meetings were held during the financial year ended 30 June 2023.

vi. Non-audit fee

There was a non-audit fee of RM6,500 paid to BDO PLT during the financial year.

vii. Key senior management

The key senior management are also the Executive Directors of the Company and their particulars are disclosed
in the Director’s Profile.

viii. Employee Share Option Scheme

On 26 August 2022, the Company proposed to establish an Employees’ Share Option Scheme (“Proposed
ESOS”) involving up to 15% of the total number of Issued Shares of Padini (excluding Treasury Shares, if
any) for eligible Executive Directors and Employees of Padini and its subsidiaries (“Padini Group” or “the
Group”). The Proposed ESOS involves the granting of ESOS options to Executive Directors and Employees
of the Group who meet the criteria of eligibility. The Proposed ESOS, when implemented, shall be in force for
a period of five (5) years from the effective date, with an option to extend another five (5) years.

The proposed Employees’ Share Option Scheme (“Proposed ESOS”) had been approved at the Annual General
Meeting (41st AGM) on 25 November 2022. However, some of the other resolutions relating to the proposed
allocations thereto were not carried.

Pursuant to Paragraph 6.42 of the Main Market Listing Requirements of Bursa Securities, the implementation
of the ESOS is effective from 3 March 2023.

As of the reporting date, no ESOS has been offered to eligible Executive Directors and employees of the
Company and its subsidiaries.

INTEGRATED ANNUAL REPORT 2023 29

 »»»» FY2023 HIGHLIGHTS & LEADERSHIP

DIRECTORS’ RESPONSIBILITY
STATEMENT IN RESPECT OF THE ANNUAL
AUDITED FINANCIAL STATEMENTS

Pursuant to paragraph 15.26 (a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad
and as required by Companies Act 2016 in Malaysia, the Directors are responsible for the preparation of financial
statements which give a true and fair view of the financial position of the Company and its subsidiaries as at the end
of the financial year, and of the financial performance and cash flows for the financial year ended.

In ensuring the preparation of these financial statements of Padini Holdings Berhad, the Directors have ensured
the following:-

• Adopted suitable accounting policies and apply them consistently;

• Made judgments and estimates that are reasonable and prudent; and
• Making of judgments and estimates that are appropriate, reasonable and prudent.

The Directors are responsible for ensuring that proper accounting and other records are kept which disclose with
reasonable accuracy the financial position of the Company and ensuring that the financial statements comply with
the provisions of the Companies Act 2016.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group, and to prevent
and detect fraud and other such irregularities.

30 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT
DISCUSSION & ANALYSIS

The following management discussion & analysis is a review of the business

and operation, discussion of the financial results and condition, performance
of operating segments, risk and uncertainties and future outlook of Padini.
This management discussion & analysis should be read in conjunction with the
company’s audited financial statements and the accompanying notes for the
financial year ended 30 June 2023.

1. OVERVIEW OF THE GROUP’S BUSINESS AND OPERATION

Padini’s vision is to be the best fashion company ever in Malaysia and the region. Our mission is to exceed
customers’ expectation and our brands’ promise. Forward planning, creativity, innovation, teamwork, resources
and infrastructure development and consistent execution of strategies are required to achieve the aforesaid
vision and mission. With the key enablers progressively put in place, the Group has continued to forge ahead
notwithstanding the challenging economic environment.

Retail has always been and will continue to be ever changing and evolving. Attaining new customers is a good
way to grow and getting existing customer to return is the lifeblood of any business. Consumers always have high
expectations and have their pick when it comes to buying a product. We need to be ever iridescent in the eyes
of consumers, to attract and retain their interest and increase the traffic to our retail stores and e-Commerce.
As always, a good understanding of consumers’ needs, and speed of delivery are the utmost importance. The
latest fashion trends need to be made available in store in the shortest time possible, at the right price, before
it loses its appeal. Apart from that, post-purchase customer experience is also important to a business, how
we treat our customers after their purchases determine the customers’ satisfaction completion. The question
lies in who can execute this and execute it well, every time. Padini is learning every day to improve the lead
time in every step by improving the efficiency and processes.

While we are confident on the longer term outlook, the immediate focus is on adapting to the changes of the
market conditions, including challenges from cost inflationary pressure, volatile market sentiment, shopping
behavior and meeting the customers’ needs; prudent cost management at all operational levels and provide
products that are good in value by increasing the efficiency throughout our value and supply chain.

While the Covid-19 pandemic in previous years undoubtedly brought significant challenges and disruption
to business, it has also created new opportunities on acceleration of the digital transformation. In the post
pandemic era, retailers need to continue to leverage the right technology to offer value-for-money products
and services that can be purchased conveniently through multiple channels. Moving to digital and finding the
right model for the online channel and distribution in the retail industry is a key success factor in digital retailing.
However, we believe our customers appreciate the touch-n-feel and brick and mortar is an important platform
to create wonderful experience which cannot happen in the digital world. We believe in working towards the
direction where the brick and mortar model and online retail model complement each other to provide a richer
shopping experience for our customers.

We have expanded to Singapore via the digital retailing platform in the financial year 2021. Although the
contribution is relatively small during the year, we are still positive to the long term contribution from Singapore.

Process automation is another by-product arising from digitisation. We are taking steps to improve automation
in the warehouse processing. This is one of the key developments for financial years 2023, 2024 and 2025.
We have spent approximately RM6.9 million in the financial year 2023 and are expecting to spend a further
approximately RM12.5 million in the financial years 2024 and 2025.

In addition, Padini is investing in Radio Frequency Identification (“RFID”) for inventory tracking and management
system. We are expecting for the project to go live in the financial year 2024. We believe that this investment
of approximately RM10.2 million will lead to better efficiency in inventory management, eliminate limitation
arising from shortage of workers, reduce human error and inventory losses.

Padini will continue to leverage technology on our business growth and setting business strategy in all aspects.

INTEGRATED ANNUAL REPORT 2023 31

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

2. FINANCIAL RESULTS AND BUSINESS REVIEW

Revenue and gross profit

For the financial year under review, the Group has performed well, despite the challenging business environment.
The Group achieved a commendable profit, recorded consolidated revenue of RM1.82 billion, representing an
increase of 38.1% over the previous financial year’s amount of RM1.32 billion. Gross profit margin increased
by 0.9% in the current year under review. In line with the growth in revenue and gross profit, profit before
tax increased by approximately RM90.8 million or 44.3% from the previous financial year’s RM205.1 million.
Total comprehensive income for the financial year attributable to the owners of the Company increased by
approximately 44.9% or RM69.6 million when compared to the amount of RM155.1 million achieved in the
previous financial year.

Gross profit margin for the financial year has shown improvement and falls within the acceptable range. The
margin fluctuates due to various factors, including sales mix, type of promotion, type of product offer for sales,
varied purchase cost and other related influences.

Other income

The primary factor contributing other income stems from interest income obtained from local financial institutions,
constituting RM16.8 million or 63.3% of the total other income during the financial year 2023.

Other income of the Group decreased by RM11.8 million or 30.7% from RM38.4 million to RM26.6 million as
compared to financial year 2022, this mainly attribute to the economy recovery along with the transition to
Covid-19 endemic phase, rental rebates received has reduced by RM11.7 million during the financial year
under review.

Operating expenses

Operating expenses before finance cost for the financial year under review amounted to RM426.7 million
(2022: RM321.5 million) which is increased by RM105.2 million or 32.7% as compared to last financial year.

The increase is primarily a result of a RM60.4 million rise in salaries and employee incidental expenses due
to salary increments and adjustments in the financial year 2023. Furthermore, in contrast to the financial
year 2022, where business operations were closed for approximately two (2) months, the financial year 2023
experienced a full resumption of business operations. As a result, rental expenses based on sales increased
by RM14.5 million, utilities expenses increased by RM2.1 million, security expenses rose by RM3.7 million
and other similar expenses increases were observed.

Finance costs

The Group’s finance costs increased to RM21.7 million from RM19.3 million mainly attributable to the increase
in interest expense on lease liabilities resulting from the increase in borrowing rate. In addition, increase in
interest expense on lease liabilities also due to total eight (8) stores that were opened during the financial year
2023 as compared to six (6) stores in the financial year 2022.

Tax expense

Tax expense of the Group increased from RM51.0 million to RM73.2 million which is in line with the increase in
profit reported in 2023. The Group’s effective tax rate in 2023 was 25% which is higher compared to statutory
income tax rate of 24% mainly due to adjustments on certain non-deductible expenses.

32 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

2. FINANCIAL RESULTS AND BUSINESS REVIEW (CONT’D)

Retailing – Domestic and Abroad

The Group’s domestic operations continued to be the main driver of its revenues and profits, and garments,
shoes and fashion accessories remain the main products of the Group.

In the domestic market, our products are sold through numerous retail stores, consignment counters, as well
as internal and external online portal.

In the multi-brand Padini Concept Stores and single-brand stores, our products are carried under the following
brand names; Vincci, Vincci Accessories, Vincci Mini, Padini Authentics, PDI, Padini, Seed, Miki, and P&Co, all
of which are owned by the Group. All the aforementioned brands are widely known by Malaysian consumers
and are easily available in the major urban shopping malls in Malaysia. In addition to those, the Group also
utilises a number of house brands to market the value-for-money merchandise that it offers for sale in its
Brands Outlet stores.

For the financial year under review, the individual performance of the five (5) trading subsidiaries are indicated
in the table below.

Financial Year Ended

30.6.2023 30.6.2022 30.6.2021 30.6.2020 30.6.2019

Company (RM’million) (RM’million) (RM’million) (RM’million) (RM’million)
Vincci Ladies’ Specialties
Centre SB
Revenue 208.8 120.9 114.0 169.7 272.0
Profit/(Loss) before tax 49.6 19.8 (3.0) 16.1 41.2
Padini Corporation SB
Revenue 608.1 460.2 340.0 440.1 575.5
Profit before tax 96.1 71.9 25.5 41.4 74.3
Seed Corporation SB
Revenue 178.8 117.1 91.1 119.0 145.8
Profit before tax 31.4 15.9 5.1 5.9 13.1
Yee Fong Hung (M) SB
Revenue 740.6 553.0 430.6 558.1 707.5
Profit before tax 95.0 77.2 30.2 32.0 70.0
Mikihouse Children’s Wear SB
Revenue 43.2 28.6 25.9 30.2 43.9
Profit before tax 8.8 6.0 3.3 5.0 7.1

All trading subsidiaries in the domestic market were in profitable position for the financial year 2023.

INTEGRATED ANNUAL REPORT 2023 33

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

2. FINANCIAL RESULTS AND BUSINESS REVIEW (CONT’D)

Retailing – Domestic and Abroad (Cont’d)

The following table provides a summary of the Group’s domestic retail network, broken down according to our
brands, and markets, as at the various dates indicated.

As at As at As at As at As at
Brands – Domestic Market
30.6.2023 30.6.2022 30.6.2021 30.6.2020 30.6.2019
Vincci, Vincci Accessories,
Vincci Mini
Free-standing stores 18 13 12 15 15
Consignment counters 1 1 1 1 1
Seed
Free-standing stores 1 1 1 1 1
Consignment counters 3 3 3 3 3
Padini Authentics
Free-standing stores 2 2 2 2 2
Consignment counters 3 3 3 3 3
PDI
Free-standing stores 8 9 9 9 9
Padini
Free-standing stores 1 1 1 1 1
Consignment counters 2 2 2 2 2
Miki Kids
Consignment counters 1 1 1 1 1
P&Co
_ _ _ _
Consignment counters 1
Brands Outlet 50 52 49 55 55
Padini Concept Stores
44 45 46 48 48
(Multi-brands)
Total 135 133 130 141 141

In the domestic sector, the Group had as at 30 June 2023, a total of one hundred thirty-five (135) retail stores
divided into thirty (30) single-brand stores, forty-four (44) Padini Concept Stores, fifty (50) Brands Outlet stores
and eleven (11) consignment counters. Except for six (6) Padini Concept Stores and six (6) Brands Outlet stores
which are located in Sabah and Sarawak, the rest of the stores are located throughout Peninsular Malaysia.

The Group had in the financial year of 2023, opened one (1) Consignment counter and five (5) Free-standing
stores. There were one (1) Padini Concept Stores, two (2) Brands Outlet stores and one (1) Free-standing
stores closed during the financial year as part of the strategy to maximise return on equity and streamline
operation.

During the financial year, five (5) stores were temporarily closed for renovation and relocation for the purpose
to optimise the store layout and enhance customers’ shopping experience. These five (5) stores have been
reopened during the financial year. Additionally, another five (5) stores were temporarily closed as of year-end
for renovation, with plans to reopen them in the first quarter of the financial year 2024.

34 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

2. FINANCIAL RESULTS AND BUSINESS REVIEW (CONT’D)

Retailing – Domestic and Abroad (Cont’d)

As at 30 June 2023, the total gross floor area operated by the Group in Malaysia was about 1,362,000 square
feet (2022: 1,387,000 square feet), of which 697,000 square feet (2022: 708,000 square feet) and 610,000
square feet (2022: 632,000 square feet) respectively were for the Padini Concept Stores and Brands Outlet
stores, whilst the balance reflected the area covered by our single-brand stores.

For the overseas market, our presence is established through either managed by our own management or
licensees (Franchise stores) arrangements.

For own-managed overseas stores, products are sold through retail stores and external online portal such as
Shopee and Facebook live. The following are own-managed overseas stores:-

As at As at As at As at As at
30.6.2023 30.6.2022 30.6.2021 30.6.2020 30.6.2019
Cambodia
Brands Outlet 3 2 2 2 1
Padini Concept Stores 3 2 2 2 2
Total 6 4 4 4 3
Thailand
VNC 7 7 7 7 7

Revenue generated from own-managed overseas outlets accounted for 2.4% (2022: 2.8%) of the Group’s
consolidated revenue, which is increased by RM5.9 million from RM37.1 million to RM43.0 million as compared
to the financial year 2022.

As at 30 June 2023, the total gross floor area operated by the own-managed overseas was about 77,000
square feet (2022: 53,000 square feet). In the financial year, there were one (1) Padini Concept Store and
one (1) Brands Outlet store opened in Cambodia. Additionally. In Thailand, one (1) Free-standing store was
opened, while another one (1) Free-standing store was closed during the same financial year under review.

Domestic operations accounted for about 96.8% of the Group’s consolidated revenue in the financial year
2023, compared to 96.0% in the financial year 2022. Group revenue had increased by 38.1% or approximately
RM503.0 million. In absolute value terms, sales generated from overseas markets had increased by
approximately RM4.9 million from that recorded in the financial year 2022, mainly due to the increase in sales
of own-managed oversea business.

The Group’s consolidated revenue derived from licensees amounted to 0.8% (2022: 1.2%). The following are
retail stores managed by licensees (Franchise stores), all these stores are selling shoes and fashion accessories
carried under the Vincci (or VNC) label.

As at As at As at As at As at
Locations
30.6.2023 30.6.2022 30.6.2021 30.6.2020 30.6.2019
ASEAN:
Brunei 1 1 1 1 1
Myanmar 3 3 3 3 3
Indonesia _ _ _ 8 14

UAE 15 15 14 15 16
Oman 4 4 3 3 3
Qatar 1 1 2 2 2
Bahrain 2 1 1 1 1
Total 26 25 24 33 40

INTEGRATED ANNUAL REPORT 2023 35

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

2. FINANCIAL RESULTS AND BUSINESS REVIEW (CONT’D)

Digital platform

We have embarked on the e-Commerce journey since end of 2015 and building from zero base with the
objective to have a marketing channel ready to meet our customers’ needs at the appropriate time. We initiated
this journey with the development of a user-friendly online shopping website called Padini.com, offering a
convenient platform for customers to browse and purchase fashion products.

Lockdown restriction resulted from the catastrophic pandemic has had a profound impact on how customers
behave which shaped the business platform to a new era. In the financial year 2020 and 2021, the Group
had started selling its products via Facebook live, Lazada and Shopee platform for both domestic and own-
managed overseas business. With the aim of achieving greater cost efficiency, we have made the decision to
discontinue our Shopee and Facebook live sales for Malaysia operation during the financial year 2023. Online
shopping has experienced a growth, but technology or digital is more than just shopping online, it is important
to find a balance between reaching out to existing customers and attaining new customers by creating brand
awareness. The introduction of Padini Mobile App helps the Group to continue to deliver better in-person
shopping experience while maintaining social distancing of customers. In addition, the Group had been involved
in different social media channels for brand awareness such as Facebook, TikTok and Instagram.

We will continue to explore more online portals to sell our products. While the sales contribution to the Group
revenue is minimal, this is an essential progression for regional expansion and bringing Padini into another
level.

Social media followers: (Number of followers as at 16 August 2023, unless otherwise stated)

Malaysia Cambodia Thailand

N/A N/A 53,800

162,682 N/A N/A

975,686 47,620 104,571

504,387 N/A 4,346

N/A N/A 6,401

101,919 N/A 1,816

703,874# N/A N/A

#
as at 30 June 2023

36 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

2. FINANCIAL RESULTS AND BUSINESS REVIEW (CONT’D)

Financial Position Review

Total assets and liabilities of the Group stood at RM1.7 billion (2022: RM1.5 billion) and RM0.6 billion (2022:
RM0.6 billion) respectively. The increase in total assets is primarily driven by the rise in inventories levels to
meet the growing demand resulting from higher sales with the aim of maintaining a balance between supply
and demand. Total liabilities showed a marginal increase, primarily because of higher provisions made for
restoration costs due to the rise in dismantling expenses caused by inflation.

Liquidity Indicators

As at As at As at As at As at
30.6.2023 30.6.2022 30.6.2021 30.6.2020 30.6.2019
Liquidity ratio 4.47 3.62 5.40 4.01 3.92
Acid test ratio 2.72 3.13 3.92 2.58 2.58
Interest bearing borrowings
4.0 0.4 0.7 2.5 23.9
(RM million)
Shareholders’ funds (RM million) 1,040 891 802 766 740
Gearing ratio (%) 0.38 0.04 0.08 0.33 3.23

The Group’s capital expenditure and working capital are mainly financed by cash generated from its operation.
Liquidity ratio attempts to measure Group’s ability to pay off its short-term debt obligations. This is done by
comparing Group’s current assets with its short-term liabilities. For a healthy and financially sound company,
its acid test should exceed one (1). It means that the current assets are not highly dependent on inventories
and the Group has the ability to pay its current liabilities as and when needed.

The Group has healthy liquidity indicators for both the financial years under review. Both liquidity ratios and
acid test ratios indicate healthy cash reserve position and have improved over the year. The Group has been
keeping relatively low level of liabilities for both the financial years under review. The gearing ratio has risen
from 0.04% to 0.38% primarily attributed to the inclusion of hire purchase borrowings in Malaysia and bank
overdraft utilisation in Cambodia operation during the financial year under review.

Capital Management

There was no change in the share capital of the Company during the financial year. There was no major capital
investment during the financial year, other than disclosed in Note 5 to the financial statements for the capital
expenditure incurred during the financial year.

3. RISKS AND UNCERTAINTIES

The Group’s business activities, operations, financial results and growth prospects are subject to the risks and
uncertainties in the market place that it operates. There are inherent risks arising from unfavorable changes
in general economic and business condition and rising costs that could result in outcomes differing from the
planned result.

The following risks are not exhaustive and there may be other risks which are not known to the Group. The
risks and uncertainties that could potentially have an impact on the information disclosed are difficult to predict.

INTEGRATED ANNUAL REPORT 2023 37

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

3. RISKS AND UNCERTAINTIES (CONT’D)

Economy uncertainty Fashion industry is also evolving into an important

phase of digital adoption by the consumer, the
The outlook for the domestic economy is projected continuous growth of e-commerce leading to
to be challenging in 2023 and 2024. The impact changes in consumer consumption patterns.
on consumer spending will very much depend on Incorporating technology into a brand can be a
the delicate balancing act of the Government in powerful marketing tool in driving consumer habits.
supporting the people via financial aids, tax system, The availability of technology and the myriad
aside to control the budget deficit versus the aim to of choices and information at the consumers’
put more disposable income into the hands of the disposal have made it even more challenging for
rakyat in the face of global uncertainties. Market retailers to stay relevant to their customers. With
confidence and sentiment and employment are the the ease of reaching out information at consumers’
fingertips, consumers are becoming less brand
important elements in spending level and spending
loyal. Consumers will switch brands when there
pattern.
are offers with better price and better value.
Trading condition is expected to remain uncertain The country’s competitive retail landscape is also
and challenging for retailers for the second half of witnessing signs of consolidation while at the
2023 and 2024. Downside risks include inflation, same time, addition of new retail space as well
political stability, tighter global financial conditions as continuous transformation and modernisation
and uncertainty over the government‘s fiscal of retail formats happen. Shopping landscape
situation. There will be lingering concerns over has changed from heavily on traditional business
unemployment, recession, rising cost of living and model, to a complex journey across online
its impact on consumer sentiment as consumers and offline touchpoints. Spending habit and
remain cautious and selective in their spending. purchase decision of consumer have also been
greatly affected by new communication channels,
The Group seeks to limit these risks through, among especially social media, video streaming and peer
others, prudent management policies, continuous reviews.
review and evaluation of the Group’s operation
and strategies, close working relationships with Supply Chain Capabilities and Performance
the stakeholders, continuous quality customer
services, human resource development and It is very important to have a robust supply chain
technology upgrades. for the Group to ensure good product varieties,
good quality of products and speedy supply. Poor
The direction of our business will continue to management in this area is a big risk to the survival
focus on offering more value for money clothing of the Group.
and accessories to all levels of income group. We
believe affordable clothing will continue to be a Beside keeping good relationship with existing
necessity. good suppliers, sourcing new suppliers that are
capable of meeting our requirements is also one
of the important key performance indicators for our
Competition
Sourcing department. Basic factors to consider
while sourcing new suppliers include pricing,
Other than local economic and social developments,
quality, lead time, quality workmanship, production
apparel players in Malaysia are also impacted by capacity and suppliers’ ethical operation. The
penetration of international players, which is the Group also further evaluate the environment, social
trend of borderless trading that promotes free and governance footprint of the supplier, such as
trade among countries. International players may ethical labour practices, sustainability of material
have greater resources and business models that used and production line.
provide a better shopping experience. Competition
emerges in many ways; such as product quality, Poor supply chain performance can lead to many
price comparison, product variety and speed of problems that deteriorate profit and detrimental
delivery of trendy apparel to market and product to the reputation of the Group. This includes
life cycle and distribution channels. This is the insufficiency and discontinuity of bestselling
era that consumer has higher expectation on products, keeping excessive inventory, inefficient
what a company is able to deliver, quality, value logistics arrangement and poor sourcing choices.
proposition, convenience, newness and innovation. This is a continuous effort and the performance is
reviewed on a regular basis.

38 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS

(Cont’d)

4. DIVIDENDS 5. FORWARD- LOOKING STATEMENT

In respect of the financial year under review, the Due to the difficulties in predicting the financial
following dividends were declared and paid: impacts of the risks and uncertainties on the
business, the Group undertakes no obligation
to publicly update any of the forward-looking
• a first interim dividend of 2.5 sen per statements in the event that any unforeseen
ordinary share (single tier) amounting to circumstances arise which might affect them.
RM16,447,737.05 for the financial year
ended 30 June 2023 that was declared on 26 In tandem with the global environment, the year
August 2022 and was paid on 30 September ahead will be an arduous journey riddled with
2022. uncertainties in all aspects, as the direction of
• a second interim dividend of 2.5 sen per global economy is uncertain and unpredictable.
ordinary share (single tier) amounting to
Locally, business in Malaysia is expected to be
RM16,447,736.98 for the financial year challenging because of the inflation affecting
ended 30 June 2023 that was declared on consumer purchasing power. The Group remains
29 November 2022 and was paid on 30 optimistic on the long-term sustainability of the
December 2022. business and are focusing our effort to further
• a third interim dividend of 2.5 sen per rationalise the retail business by optimising the
ordinary share (single tier) amounting to working capital and measures to control the
RM16,447,736.97 for the financial year operating costs while extending and exploring
various sales channels.
ended 30 June 2023 that was declared on
24 February 2023 and was paid on 31 March For the forthcoming financial year, we have not
2023. finalised the number of stores to be opened or
• a fourth interim dividend of 2.5 sen per closed in Malaysia, Cambodia and Thailand. As
ordinary share (single tier) amounting to for current plan, we will be having eleven (11)
RM16,447,736.81 for the financial year stores to be refurbished and nine (9) new stores
ended 30 June 2023 that was declared on to be opened in Malaysia. For overseas market,
we are planning to open a new store in Thailand.
29 May 2022 and was paid on 30 June 2023.
We will actively monitor the market condition and
• a special dividend of 1.5 sen per ordinary share evaluate our business strategy on a regular basis
(single tier) amounting to RM9,868,642.09 for to maximise the returns.
the financial year ended 30 June 2023 that
was declared on 29 May 2023 and was paid To maintain, if not be better than we are now, our
on 30 June 2023. merchandising, pricing and promotional strategies
will continue to focus on being relevant to our
The Board does not intend to establish a fixed customers; concentration will still be on design,
quality and affordability, where we strive to bring the
dividend policy at this point of time. The Board best value to our customers in the shortest time-to-
strives to provide consistent dividend streams to market possible. The latest fashion trends need to be
shareholders whilst ensuring to retain flexibility of made available in store in the shortest time possible,
cash flows to meet its business operation needs at the right price, before it loses its appeal.
as well as its expansion plan.
Whilst we are still very much centered on the brick
and mortar business, a lot of effort has been put
in to grow our online business by increasing the
awareness of our products in our online channels
and improve the infrastructure for e-commerce.
Developing new online shopping experience and
enhance shopping convenience to our consumer is
a continuous effort of the e-commerce division. We
believe digital retailing of the Group will bring positive
impact to the Group both as a complementary
business channel and for future growth.

While we are not expecting major contributions

from the stores and online platforms in Cambodia
and Thailand, online sales to Singapore and our
mobile app in the financial year 2024, we envisage
the Group will continue to grow with improving
our product quality and enhancing the buying
experience of our customers.

INTEGRATED ANNUAL REPORT 2023 39

 »»»» OUR VALUE CREATION

OUR
BUSINESS MODEL

We operate within the buy and

sell business model, wherein we
engage in designing and purchase
a diverse range of our own brand
p ro d u c t s i n c l u d i n g a p p a re l ,
accessories, and footwear from our
various suppliers or manufacturers.
A t p re s e n t , o u r t h i rd - p a r t y
manufacturers are based in China,
India, Malaysia, Thailand and
Bangladesh. Subsequently, we sell
these products through our retail
channels, including physical stores
and online platforms. Our business
strategically offers our products Key Activities Key Partner Value Customer Customer
to cater to diverse customer proposition relationship segment
preferences and market demands, Design and Suppliers Product Social media End customers
while continuously monitoring Merchandising (3rd party assortment
trends to stay relevant in the Manufacturer, Exchange of
Sourcing and warehouse, Fast trend goods
fashion industry. Quality Control logistic products at
partner) ideal location Loyalty
As a buy and sell retailer, we take Logistics, programme
Warehouse, Shopping Shopping
charge of designing and managing and Inventory malls conveniences Feedback
inventory, supply chain logistics, as Management (Landlord)
well as retail operations to ensure Key
People
Channels
Marketing development
a seamless shopping experience Resources
for our customers. By sourcing Sales and Brands Corporate Retail stores
products from different suppliers, Operations social
Human responsibilities Consignment
we can maintain a diverse product e-Commerce
portfolio, providing customers with Natural e-Commerce
ample choices in terms of styles, Customer resources
designs, ages, gender at affordable Service and Mobile app
Relationship
price points. Export

PLANNING
1. Design and Merchandising

Our Design and Merchandising department plays a crucial role in the success and growth of the Group by
aligning products with market demands, enhancing customer satisfaction, and ensuring a competitive edge
in the industry. They are responsible for researching and designing products. They conduct market research
and analyse current market and demand trends for top-selling products. This helps them understand market
conditions and customer preferences.

2. Sourcing

The Sourcing department team sources product and material suppliers, negotiates pricing, and request products
samples. They procure materials from an approved list of vendors, negotiates the best price and terms, and
present recommendations to the Management for new products planning. The Sourcing department is important
because it is responsible for finding reliable suppliers, negotiating favorable terms, and securing cost-effective
materials, which directly impact product quality, availability and overall business profitability.

40 PADINI HOLDINGS BERHAD 197901005918 (50202-A)

 »»»» OUR VALUE CREATION

OUR BUSINESS MODEL

(Cont’d)

PRODUCTION
3. Quality Control (“QC”)

QC team works with suppliers to ensure the products meet the quality standards and conducts inspection on
manufactured products before delivering them to the customers.

SALES
4. Logistic and Warehouse Management

Our Logistic department collaborates closely with the Design and Merchandising department, Sales and
Operations department, Sourcing department and third-party logistic companies. They coordinate stock
purchase, stock keeping, returns and collection from stores as well as packing and preparing shipments for
timely delivery to Padini stores. They play a vital role in streamlining operations, reducing costs, meeting
customer demand, and seeks third-party transportation services providers to deliver goods from warehouse
to stores, all of which are essential for the success and growth of Padini.

The warehouse department of Padini Group manages stock movement and oversees third-party warehouses.
They inspect incoming goods to ensure they match the purchase order. Warehouse department efficient
management of stock movement, quality control and collaboration with other departments play an important
role in optimising costs.

5. Marketing

Our Marketing and Advertising & Promotion teams are responsible for executing advertising, promotion and
publicity plans for products and services. This includes organising campaigns, product price promotions,
discounts, and customer engagement programme in shopping malls. Furthermore, the Marketing department
ensures the corporate image
of Padini Group is consistent
through corporate identity
guidelines. This involves
maintaining uniformity in brand
logos, signboards, fonts, and
displays across all retail outlets
to project a cohesive brand
image.

6. Sales and Operations

Our Sales and Operations team ensures the efficient operation of Padini stores. They manage staffing, sales,
cost control and order placement. They work to align the Company’s budget to individual stores and region
based on historical sales and market demand. In addition, the Team also collaborates closely with Design and
Merchandising to set sales targets and plan product volumes. Regular store visits are conducted to monitor
efficiency of stores and provide recommendations for improvements. Furthermore, the department conducts
quality checks on garment, footwear and accessories to ensure they meet the required standards. They also
handle customer complaints and provide feedback.

INTEGRATED ANNUAL REPORT 2023 41

 »»»» OUR VALUE CREATION

OUR BUSINESS MODEL

(Cont’d)

SALES (CONT’D)

7. e-Commerce

Our e-Commerce started since 2015 and manages the Group’s online
shopping website. They upload website content, process sales orders
and handle customer queries. The Department collaborates with the
Merchandising department to obtain products sample for online sales
and conduct product photoshoots for display on the webpage. This
department is important to maintain the Group’s online presence
and is one of the business component to thrive in the digital age.
Our sales from e-Commerce contributed approximately 1% of total
Group’s revenue in the financial year 2023.

8. Customer Service and Relationship

Our customer relationship team handles customers complaints and

queries to ensure customers’ needs are addressed. This department
plays an important role for building strong customer relationships,
enhancing brand reputation by keeping customers satisfied and
engaged.

Furthermore, our loyalty programme membership was established with

the goal of enhancing customer satisfaction and encourage continued
engagement with our valued customers.

42 PADINI HOLDINGS BERHAD 197901005918 (50202-A)