VOIR brand was established in the late 1970s by the Seow family. On 14 April 1988, VOIR Group Executive Chairman and his mother founded Kumpulan Voir Sdn Bhd to undertake the expansion of the VOIR brands business. Its have 6 operating subsidiaries, own brands such as VOIR, Applemints, SODA, South China Sea, G&H, and NOIR. It also holds the exclusive license to distribute 2 international sports, leisure and lifestyle brands, Diadora from Italy and Chiemsee from Germany. VOIR, Applemints and South China serve only the ladies market, ranging from fashion & occasion wear, career wear to denim & casual wear complemented by shoes, accessories and inner wear. But the SODA, G&H and NOIR expend its product offerings to cover the men's market with SODA Kids serving the children wears market. The wide variety of VOIR Groups product offerings and market coverage provides the Group with a competitive edge over its competitors.
The VOIR Company also has own vision and mission. Their vision is to be a premier global fashion and retail enterprise, distinguished by the creativity, variety and quality of their product offerings. And the mission is to increase and enhance values to all their stakeholders by continuously delivering quality affordable and stylish ready to wear clothing and accessories to value their customer and supported by promoting a strong customer centric culture, developing a productive and vibrant environment to grow, investing in talent and human asset development, actively pursue marketing insights to fulfill customers' needs and striving to achieve excellence to differentiate and stand apart from the competition.
The VOIR Company also has own brand ambassadors. In 2007, Dylon Kuo and Yumiko Cheng appointed as SODA brand ambassadors. VOIR Holdings Bhd listed on Second Board of Bursa Securities Malaysia Bhd. In 2008, Bernice Liu appointed as VOIR brand ambassador (VOIR 2008).
2.0 Sources of finance
2.1 Borrowings
One of the sources of finance of VOIR Holdings Bhd is using borrowings. Borrowings from banks are an important source of finance to VOIR Holdings Bhd. Bank lending is still mainly short term, although medium-term lending is quite common these days.
Short term lending may be in the two forms which is an overdraft, which a company should keep within a limit set the bank. Interest is charged (at a variable rate) on the amount by which the company is overdrawn from day to day. Overdraft financing is provided when business make payments from their business current account exceeding the available cash balance. An overdraft facility enables VOIR Holdings Bhd businesses to short-term funding, although in theory the amount loaned is repayable on deemed by the bank. Another form is a short-term loan which can be used up to the three years.
Medium-term loans are loans for a period of from three to ten years. The rate of interest charged on medium-term bank lending to large companies will be a set margin, with the size of the margin depending on the credit standing and riskiness of the borrower. A loan may have a fixed rate of interest or a variable interest rate, so that the rate of interest charged will be adjusted every three, six, nine or twelve months in line with recent movements in the Base Lending Rate.
Lending to smaller companies will be at a margin above the bank's base rate and at either a variable or fixed rate of interest. Lending on overdraft is always at a variable rate. A loan at a variable rate of interest is sometimes referred to as a floating rate loan. Longer-term bank loans will sometimes be available, usually for the purchase of property, where the loan takes the form of a mortgage (FAO 1997).
2.2 Leasing
Leasing is similar to rent agreements, for the use of property for examples, buildings, cars, office equipment and other items. This is in return for payments to the owner. The lessee agrees to pay a number of fixed or flexible instalments over an agreed period to the lessor, who remains the owner of the asset throughout the period of the lease. Leasing also is found by medium-term sources of finance.
There are two main types of lease. The first one is financial leases; the lessor effectively transfers all risks and benefits attached to ownership of the leased property, whereas this is not the case with an operating lease. Some attractions of leasing, from the lessee's point of view, are that it can provide tax advantages such as, lease payments are usually tax-deductible and free up cash that would otherwise be used for outright purchases.
The second one is operating leases. It does not affect a company's gearing because they are not shown in the balance sheet. At the end of a lease period, the lessee can re-lease for a further period, upgrade the lease to cover a newer or different item, or offer to buy the leased property from the lessor, usually at a "residual value" agreed at the start of the lease. Traditional sources of lease financing are banks, merchant banks, specialist leasing companies, finance companies and leasing division which are offshoots of major equipment suppliers (Edna Carew 1996).
2.3 Share Capital
The VOIR Corporation is using the Share Capital as one of their corporate source of finance.
Share Capital is a Long Term Source of Finance and they are those that needed over long period of time which generally over a year. The Long term finance is needed to fund for expansion projects. This type of financing will generally be quite complex and can involve billions of money (Bized 1996).
Share capital is a kind of fund raised by issuing shares in return for cash or other consideration. The amount of share capital a company has can change from time to time because the business will sell new shares to the public from time to time in exchange for the cash. Thus, the amount of share capital will increase. Share capital can be composed of both common and preferred shares. Share capital also known as equity financing (Answers 2000).
2.4 Trade payables
Trade payables are be simply defined as monies owed by a business to its suppliers. When a business operates, it must spend money to provide the goods or services it sells. To purchase the necessary raw materials, the business opens credit lines with its suppliers that are usually due at the end of the business cycle, or 30 days. These debts are also known as accounts payable (eHow 2009).
About the features of this type of source of finance is supplier accounts generally get paid first, because without raw materials, the business fails. If the accounts payable line is greater than or equal to than the cash-on-hand line in the assets section of the balance sheet, the company will not able to pay its other obligations.
Trade payables are a necessary evil for most businesses. During a normal business cycle, income is not generated until the end, forcing the business to obtain the raw materials with either a personal investment by the principals or on credit. Most choose credit in order to preserve capital. This improves the cash line and frees cash for other costs associated with producing the goods.
2.6 Sales of Assets
Business balance sheets usually have several fixed assets on them. A fixed asset is anything that is not used up in the production of the good or service concerned such as land, buildings, fixtures and fittings, machinery, vehicles and so on. At times, one or more of these fixed assets may be surplus to requirements and can be sold. Alternatively, a business may desperately need to find some cash so it decides to stop offering certain products or services and because of that can sell some of its fixed assets. Hence, by selling fixed assets, business can use them as source finance (Bized 1996).
It is an internal source of finance and it is often used as a short term source of finance but could provide more longer term finance if the assets being sold are very valuable for example land or buildings.
VOIR Holdings Berhad's fixed assets increased from RM 26,622,938 to RM 28,318,237. This shows that there are sufficient and may be excess fixed assets. So, this company can sell some of its fixed assets to finance the business.
3.0 Appropriateness of the sources of finance
3.1 Approriateness of the borrowing which VOIR Company is using
There are several important factors to consider when the appropriateness of bank overdraft as a source of funding for VOIR Holdings Bhd which the amount borrowed should not exceed the agreed limit or facility. The amount of the facility made available is a matter for negotiation with the bank. Interest is charged on the amount overdrawn at a rate is above the Bank Base Rate. The Bank may also charge an overdraft facility fee. Overdrafts are generally meant to cover short-term financing requirements- they are not generally meant to provide a permanent source of finance. Depending on the size of the overdraft facility, the bank may require the VOIR Holdings Bhd to provide more security for example by securing the overdraft against tangible fixed assets, or against personal guarantees provided by the directors. The amount of an overdraft at any one time will depend on the cash flows of the business, the timing of receipts and payments, seasonal trends in the sales and so on (tutor2u 2009).
In the Balance Sheet of VOIR Holdings Bhd as at 31 December 2009, the amount of short term of borrowing has showing decreased compared from 2008 to 2009, is a good sign for company because company ability to overcome financial problems. The company is making profit and able to paid trade payables, so the company can reduce the borrowing from external parties. Whereas the amount of long-term borrowings increase from 2008 to 2009, VOIR Holdings Bhd prefer more the bank loan because it is more safety and more convenience than borrowings from external parties.
Advantages of Bank Loan
Speed
A bank loan can be secured quickly which in less than an hour, a qualified borrower can complete a bank loan transaction.So that it given convience of VOIR Holdings Bhd to using borrowings from the bank.It is better than borrow from loan sharp, more safety to borrow.
Uses
A bank loan can be used in a number of ways, which money can be borrowed for many large-ticket items, such as furniture, vehicles or home renovations.The company can be used for investment in business transaction. For example, VOIR Holdings Bhd can be buy more machines to produce more productivity of products.
3.2 Appropriates of the leasing which VOIR Company is using
Prepaid lease rental is under medium-term sources of finance and this source is good for VOIR Holdings Bhd. Prepaid lease rentals are shown in balance sheet and under non-current assets of company VOIR Holdings Bhd. And this is good for the company is because of the statement shown year of 2008 is paid RM 1,146,305 and year of 2009 is paid RM 1,132,961. Compared with these two years, company should pay less the lease rentals and use up less debt capital.
Advantages of the leasing
Leasing can run anywhere from one to five years. Most equipment necessary in commercial businesses today, including technical equipment, can be leased. Some leases provide an option to then purchase the equipment at substantially less money when at the end of the term of the lease. By leasing equipment, if structured properly, you can maintain your credit availability, as the lease debt does not have to be considered a direct liability on your financial statements. This is advantageous, as it does not limit your ability to borrow from lending sources.
The advantages are it is offer fixed rate financing and you pay at the same rate monthly. Leasing is inflation friendly. As the costs go up over five years, you still pay the same rate as when you began the lease, therefore making your dollar stretch farther. Besides that, there is less upfront cash outlay and you do not need to make large cash payments for the purchase of needed equipment. Leasing also better in utilizes equipment and lease pay for equipment only for the time you need it.
Otherwise there is typically an option to buy equipment at end of lease term. Even though you also can keep upgrading as new equipment becomes available you can upgrade to the latest models each time your lease ends.
Leasing can also help you enhance your status to the lending community by improving your debt-to-equity and earnings-to-fixed assets ratios. There are a variety of ways in which a lease can be structured. This provides greater flexibility so that lease is structured to best accommodate the individual cash flow requirements of a specific business. For example, you may have balloon payments, step up or step down payments, deferred payments or even seasonal payments (Allbusiness 2005).
3.3 Appropriates of the Share Capital which VOIR Company is using
Share Capital is a type of source of finance that requires investors to invest their money to the selected company. Thus, the investor will evaluate the companies account condition and evaluate whether the companies is worth to invest or not.
In my opinion, the VOIR Corporation is not using the right source of finance by using Share Capital. From the latest balance sheet as at 31 December 2009, it has shown that the amount of capital is remain constant compared to year 2008. Although the amount of capital still remains constant, the investors may have less confidence to continue invest in VOIR Corporate.
Disadvantages of Share Capital
The disadvantage of this Share Capital is there are legal fees to be paid in formation. On the other hand, there is several of regulation that they have to follow and the owners may not control the organization even if they don't like the management's decisions. Lastly, both the organization and the owners are taxed for the money that they have raised.
3.4 Appropriates of the Trade payables which VOIR Company is using
Trade payables are also known as accounts payable and refers to money owed to creditors, lenders, vendors or suppliers for products or services rendered. Payables also considered short-term if due within 12 months whereas payables die longer than 12 months are considered long-term (Toolbox 2008).
Trade payables are shown in Balance Sheet and under Current Liabilities of VOIR Holdings Bhd. From the latest balance sheet as at 31 December 2009, it has shown that the amount year of 2008 is RM 21,537,028 and compare with year of 2009 is RM 19,790,174.
Advantage of Trade payables
The amounts of trade payables are decreased and that it good for VOIR Holdings Bhd this is because of the company is paying back period had shortened. However, it is also brings the impacts that VOIR Holdings Bhd might lack of liquidity.
Types of investment
VOIR Holdings Berhad is a Malaysia-based investment holding company. The Company is engaged in designing, branding, and retailing of ladies' and men's apparels, accessories, home furnishing and decoration, tableware, bed and bath products and provision of related consultancy services. To provide further growth opportunities for VOIR Company, they also ventured into Food & Beverage business through its subsidiary, Graceful Hall Sdn Bhd, under the brand name "Garden Lifestyle Store and Cafe" (Corporation Information 2009).
VOIR Holding Berhad was invested RM1 million to launch their first Garden Cafe, which is located next to the VOIR gallery in a shopping mall in Petaling Jaya, at late January of 2009. The first Garden Cafe was successfully generated profit, and the next two outlets will be open in major shopping malls in Klang Valley.
VOIR Company principally involved in fashion retailing business, so the possible investment risk for investing in food and beverage business may cause failure because of the expertise they have maybe is good enough to manage their fashion retailing business but not in food and beverage industrial. Furthermore, their cafe may not have big differences compared to other competitors such as Delicious, Zouk Cafe and so on.
On the other way, the possible return is that food and beverage business can bring other opportunities for VOIR Holdings Berhad to expand their business in this field besides fashion retailing business, and earn more profits to increase the shareholders' wealth.
VOIR Holdings Berhad had listed on the Bursa Malaysia, so they intend to focus on overseas expansion to internationalise their brands because the government believe that there are potential markets for them to introduce the local brands in Malaysia such as Soda, Noir, G&H, Applemints and South China Sea (The star online 2007).
VOIR Holdings Berhad had operates 37 fashion mono-brands, 7 galleries (multi-brands), 375 consignment counters and 2 cafes. They had managed to withstand the competition and also internationalise its brands because of the rising competition in the apparel industry due to more international brands coming to Malaysia.
Currently, VOIR Holdings Berhad has made it to expand business in India, Vietnam, Mauritius, Brunei, Saudi Arabia, and Reunion Island. Besides, VOIR Holdings Berhad had intended to penetrate into Indonesia, Thailand, Dubai, Kuwait and some of the other countries in the Middle East by this year and next year (the star 2007).
The possible investment risks are that overseas has been a lot of companies that have stable market for their brands. So, VOIR Holdings Berhad is difficult to positioning and competing in overseas. Besides that, after the expansion to overseas, if the country faces economic downturn, the investment in the process of expansion may be affected.
The possible return is that VOIR Holdings Berhad can increase their brand name reputation at overseas because of the product quality, strong brand, and wide distribution network at strategic locations, competitive pricing and skilled management team.
