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Taking RM42m dividend despite Fashion Valet losing RM83m?
KUALA LUMPUR, Nov 10, 2024: Fashion Valet founder is reported to have helped himself to RM42 million annual dividend when the company was losing RM83 million.
Does that make any business or management sense?
The Malaysian Anti-Corruption Commission (MACC) is now investigating how Malaysia’s Sovereign Wealth Fund (SWF), Khazanah Nasional Bhd, and Permodalan Nasional Bhd (PNB), lost RM43.9 million in selling their stakes in Fashion Valet Sdn Bhd.
No News Is Bad News reproduces below a news report detailing Fashion Valet’s RM42 million annual dividend payment:
FashionValet Founder Took RM4.2 Million Yearly Dividen When Company Was Losing RM 83 Million?
10 November, 2024
Aliff’s screenshots about the RM4.2 million dividends corroborated what we found
According to Vulcan Post , In Aliff’s Facebook post, he made multiple mentions that the founders of 30 Maple Sdn Bhd (the initial parent company behind dUCk, but more on this later) took RM4.2 million in dividends.
Along with the written post, he uploaded a screenshot that supposedly showed how the company had given out RM4.2 million worth of dividends in 2017.
According to the annual reports of 30 Maple that we purchased, the figures reported corroborated Aliff’s claims.
Another thing that Aliff posted that we found proof of as well was the RM2.283 million web development write-off in FashionValet’s 2017 annual report.
Editor’s Update: We’ve updated this point and its following argument to be factually accurate, as we had mistakenly pointed out that Aliff’s claim about the RM4.2 million dividends did not line up with our own findings. However, he was referring to 30 Maple’s documents, and not FashionValet’s, which we had originally compared his claims to.
In the most recent annual report, directors’ remuneration actually went down, and there were no added bonuses
In Aliff’s post, he mentioned that the directors’ allowance was increasing. However, if we look at the latest financial statement ending December 31, 2020, the directors’ remuneration went down. In 2019, it had been RM2,152,416, while in 2020 it was RM1,453,866.
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The 2020 annual report also states that no director of the company has received nor become entitled to receive any benefit other than the remuneration “by reason of a contract made by the company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest”.
30 Maple was bought in 2018 for RM95 million
Aliff had pointed out in his post that Vivy Yusof’s popular brand, dUCk was in fact separate from FashionValet itself despite being seen as an inhouse brand by some.
So, in a recent article by SAYS, why did Vivy share that FashionValet now fully owns dUCk? Well, it’s true now, but that wasn’t always the case.
With a bit of digging around, we found that dUCk was actually under 30 Maple Sdn Bhd. But in FashionValet’s 2018 annual report, it was shown that 30 Maple (and subsequently, dUCk), was purchased by Fashion Valet Sdn Bhd in December 2018 for RM95 million by issuance of 851,686 new ordinary shares.
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Offline sales plummeted in 2020, though online sales only differed slightly
In the article with SAYS, Vivy said FashionValet has been able to survive the pandemic for the past two years thanks to its decision to focus on dUCk and LILIT.
Indeed, looking at FashionValet’s revenue in 2020, we noticed it had decreased mostly in offline sales.
In 2019, the group’s offline sales were RM34,222,203, but that number went down to RM17,725,405 in 2020.
However, the group’s online sales remained mostly the same, with less than RM1 million difference between the two year’s online sales.
FashionValet has an accumulated loss of RM83 million as of the latest financial statements
According to the financial statements and reports for the financial year ending December 31, 2020, the company had made a loss of (RM12,371,305).
Furthermore, the company’s retained earnings were -RM83,442,646. A company with a negative retained earnings balance would signal “poor financial health”, according to Investopedia.
Khazanah and PNB’s involvement did improve the company’s profit margins
On August 5, 2022, Vivy Yusof made a statement to Malay Mail, saying: “Since Khazanah and PNB invested, the business has more than doubled in revenue, improved our profit margins and expanded to offline retail.”
We looked at FashionValet’s revenue over the years to ascertain whether this was true, keeping in mind that Khazanah and PNB were reported to have invested in the company around March 2018.
In 2017, before the two government-linked companies invested in FashionValet, the revenue was RM57,909,265. If Vivy is comparing that figure to the 2019 revenue of RM101,755,629, it would be slightly less than two times the profit.
However, it’s important to note that in 2020, the revenue went back down to RM84,495,919.
But we also have to consider the profit margin. We calculated the net profit by finding the profit as a percentage of the revenue, using FashionValet’s financial statements as the source.
In 2017, before PNB and Khazanah invested in the company, the profit margin we calculated was roughly -18.5%.
The next financial year (i.e. ending December 31, 2018) recorded a profit margin of -32.2%. PNB and Khazanah had invested earlier that year in March.
In 2019, though, the company improved its profit margin, which was around -15.7% at this point. In the financial year ending December 31, 2020, the company’s profit margin was around -14.6%.
If these are the figures Vivy was referring to in her statements to Malay Mail, then it seems that the figures align with what she said.
Source : Vulcan Post
MACC searches Fashion Valet founders’ home, related premises in probe
The Malaysian Anti-Corruption Commission (MACC) today searched several premises around the Klang Valley, including the home of Fashion Valet Sdn Bhd founders Vivy Yusof and Fadzarudin Anuar.
MACC chief commissioner Azam Baki said his officers had accompanied the duo to their home and other related premises as part of its probe into the business.
“My officers are searching the premises owned by the couple to collect documents and other relevant materials, so the investigation is still ongoing,” he said.
He added that the search was also aimed at gathering more information on the assets owned by the couple.
A source later said 11 luxury handbags and a luxury watch worth a total of around RM200,000 were among the items seized in the raid.
On Sunday, it was reported that MACC had launched an investigation into the RM43.9 million investment loss suffered by Khazanah Nasional Bhd and Permodalan Nasional Bhd (PNB) in e-commerce platform Fashion Valet.
The couple was summoned by MACC to provide their statement at its headquarters in Putrajaya for about three hours this afternoon, after having been quizzed by the anti-graft agency for over seven hours yesterday.
Vivy and Fadzarudin are among six individuals whose statements were recorded following raids conducted by investigators at four locations, including the finance ministry, two days ago.
Azam said three other individuals have had their statements recorded to assist in the investigation, but did not specify if these individuals were associated with Fashion Valet, Khazanah, or PNB.
“With the statements from these three individuals, we have now recorded a total of nine statements altogether,” he said.
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