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COVER SHEET

A S 0 9 1 9 6 2 0 6
SEC Registration Number

S P L A S H C O R P O R A T I O N A N D

S U B S I D I A R I E S

(Company’s Full Name)

H B C C o r p o r a t e C e n t r e

5 4 8 M i n d a n a o A v e n u e c o r n e r

Q u i r i n o H i g h w a y , Q u e z o n C i t y

(Business Address: No. Street City/Town/Province)

Ms. Veneranda M. Tomas 984-5555


(Contact Person) (Company Telephone Number)

1 2 3 1 1 7 - A 0 6 1 9
Month Day (Form Type) Month Day
(Calendar Year) (Annual Meeting)

Not Applicable
(Secondary License Type, If Applicable)

CFD
Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings


64 P
=894,003,397 -0-
Total No. of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

File Number LCU

Document ID Cashier

STAMPS
Remarks: Please use BLACK ink for scanning purposes.
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-A
ANNUAL REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE AND SECTION 141
OF THE CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended December 31, 2009

2. SEC Identification Number AS09196206 3. BIR Tax Identification No. 001-096-221

4. Exact name of issuer as specified in its charter SPLASH CORPORATION

5. PHILIPPINES 6. (SEC Use Only)


Province, Country or other jurisdiction of Industry Classification Code:
incorporation or organization

7. HBC Corporate Centre, 548 Mindanao Avenue corner


Quirino Highway, Quezon City 1116
Address of principal office Postal Code

8. (02) 984-5555
Issuer's telephone number, including area code
9. Not applicable
Former name, former address, and former fiscal year, if changed since last report.
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA
Title of Each Class Number of Shares of Common Stock
Outstanding and Amount of Debt Outstanding
Common Shares, P1.00 Par value 710,290,326 shares
11. Are any or all of these securities listed on a Stock Exchange.

Yes [ x ] No [ ]
If yes, state the name of such stock exchange and the classes of securities listed therein:
PHILIPPINE STOCK EXCHANGE Common Shares
12. Check whether the issuer:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1
thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and
141 of The Corporation Code of the Philippines during the preceding twelve (12) months (or
for such shorter period that the registrant was required to file such reports);
Yes [ x ] No [ ]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [x ] No [ ]
13. State the aggregate market value of the voting stock held by non-affiliates of the registrant.

P
=600,132,800 (218,230,109 shares @ P
=2.75 per share as of April 30, 2010)
TABLE OF CONTENTS

Page No.
PART I – BUSINESS AND GENERAL INFORMATION
Item 1 Business 1
Item 2 Properties. 2
Item 3 Legal Proceedings 2
Item 4 Submission of Matters to a Vote of Security Holders 2

PART II – OPERATIONAL AND FINANCIAL INFORMATION


Item 5 Market for Registrant’s Shares and Related Shareholder Matters 8
Item 6 Management’s Discussion and Analysis of Financial Condition and 9
Results of Operations
Item 7 Financial Statements and Supplementary Schedules 11
Item 8 Information on Independent Auditors and Other Related Matters 11

PART III – CONTROL AND COMPENSATION INFORMATION


Item 9 Directors and Executive Officers 11
Item 10 Executive Compensation 15
Item 11 Security Ownership of Certain Beneficial Owners, Directors and Officers 16
Item 12 Certain Relationships and Related Party Transactions 16

PART IV – CORPORATE GOVERNANCE


Item 13 Corporate Governance 17

PART V – EXHIBITS AND SCHEDULES


Item 14 Exhibits and Reports on SEC Form 17-C 17
Exhibits
Reports on SEC Form 17-C (Current Reports) 18

INDEX TO EXHIBITS 19
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES 21
ANNEX A – SUBSIDIARY FINANCIAL STATEMENTS
SIGNATURES
-1-

PART I - BUSINESS AND GENERAL INFORMATION

Item 1. Business

General

In this Annual Report unless otherwise indicated by the context,”Company” or “SC” means the
parent company. Splash Corporation, “Group” or “Splash” represents Splash Corporation and its
consolidated subsidiaries.

Splash Corporation was incorporated and registered with the Philippine Securities and Exchange
Commission (SEC) on September 30, 1991. On November 15, 2007, the Company’s shares of stock
were listed and traded in the Philippine Stock Exchange (PSE). Its registered address is HBC
Corporate Centre, 548 Mindanao Avenue corner Quirino Highway, Quezon City.

Since the Company’s incorporation in 1991, it has developed or acquired new technologies and
services that have broadened and changed considerably the scope of its activities. On August 5, 2009
P.T. Splash Cahaya was incorporated in Indonesia as part of the Company’s move to expand
internationally. In December 2009, the Company established Acceleron Distribution Corp. to engage
in the distribution of certain brands to large scale supermarkets.

The Company decided to expand its distribution channel by going into the direct selling business.
Direct selling is a very personal and intimate way of reaching the target market. First Business Center
was launched in November 2009.

Splash Corporation and its subsidiaries have 302 employees in the Philippines and abroad engaged in
the research and development, manufacture and sale of a broad range of health and beauty products.
The Group consolidated revenues were = P2,719 million in 2009, compared with P
=3,165 million in 2008
and =P3,010 million in 2007. For additional information about the Company’s geographical operation
results, see Segments of Business section below.

The consolidated financial statements as of December 31, 2008 and each of the two years in the period
ended December 31, 2008 presented for comparative purposes pertain only to the financial statements
of the Parent Company.

There are no material reclassifications, merger, consolidation, or purchase or sale of a significant


amount of assets that are not in the ordinary course of business during the period.

Segments of Business

Segment revenue and profit information and additional financial data and commentary are provided in
the Segment Operations section in Part II, Item 6. “Management’s Discussion and Analysis or Plan of
Operation, and the consolidated financial statements and related notes in Part II, Item 7. “ Financial
Statements and Supplemental Schedules” of this Form 17-A.

The Group markets and sells its products and brands in the Philippines and abroad.
-2-

The percentage distribution of the revenues for each of the three years in the period ended
December 31, 2009, 2008 and 2007 by each of the Group’s business segment is as follows:

2009 2008 2007


Philippines 91% 92% 92%
International 9% 8% 8%
100% 100% 100%

The Group has a strong equity in the whitening and exfoliant category in the country. Its product
portfolio is continuously created and supported through product innovation, purposive marketing and
experienced management. These factors are key to the Group’s success in achieving leading market
shares in the different categories where it competes.

The Group’s products are categorized as follows, with their percentage contribution to total revenue
for each of the three years in the period ended December 31, 2009, 2008 and 2007:

2009 2008 2007


Skin Whitening 45.67% 42.04% 30.49%
Skin Exfoliants 33.37% 29.87% 27.83%
Hair Care 17.58% 16.48% 18.71%
Food Supplements 2.38% 1.44% 0.66%
New Markets 1.00% 10.17% 22.31%
100.00% 100.00% 100.00%

In 2009, the Group renamed its product categories from Skin Care into Skin Whitening and Skin
Exfoliants; from Naturals into New Markets and from Health and Wellness into Food Supplements.
The Group reclassified the prior years’ presentation to conform to the current year’s presentation.

Skin White brand leads the Group’s Skin Whitening category contributing revenues of P =1,066 million.
These are products scientifically formulated to deliver safe and effective whitening.

Maxipeel is the Philippine’s leading skin care brand in the Skin Exfoliant category. The proven
effective formulation helps remove dead skin cells to reveal a younger looking skin. The brand has
contributed P
=930 million in 2009.

The Group has Hair Care brands and products that cater to various range of hair care needs. Kolours
brand is a market leader in the Premium Hair Dye category. Vitress brand led by the hair cuticle coat
line launched in 2009 contributed P =239 million and has opportunities for continued growth. A stable
brand in the hair dressing line is Control which contributed P
=115 million in revenues

Food supplements consist of products with naturally-derived ingredients which promote health and
general well-being. Revenues are generated by Theraherb VCO.

New Markets category consists of new product innovations that may range from baby care, personal
hygiene, cosmetics, and other personal, pharmaceutical and household products.
-3-

Summarized below are the Philippine market shares of the Group’s major brands and product lines:

Brand/Product Line Market Share Market Standing


Skin Exfoliants
Maxi-peel Exfoliant Solution 85% Market Leader
Skin Whitening
Skinwhite Lotion 28% Market Leader
Extract Lotion 6%
Total Whitening Lotion 34%
Skinwhite Soap 47% Market Leader
Extract Soap 6%
Biolink GP Soap 3%
Total Whitening Soap 56%
Extract Facial Cleanser 7% Market Leader
Biolink GP Facial Cleanser 1%
Skinwhite Toner/Facial Cleanser 2%
Total Whitening Facial Cleanser 10%
Hair Care
Kolours Hair Dye 50% Market Leader

Distribution Channels

The Group primarily sells its products to major supermarkets and drugstore, top wholesalers, large
convenience stores, and regional distributors. The regional distributors handle two other major trade
groups namely Modern Trade and General Trade. Modern Trade consists of all large accounts outside
of the top supermarkets. General Trade is composed of small retail trade outlets including groceries,
drugstores, sari-sari stores and market stalls. With the launch of the direct selling business in
November 2009, the Company increased its distribution through the independent dealers.

Competition

All of the Group’s product lines compete with both large and small companies in the country and
abroad. In order to succeed, the Group competes by differentiating its product offerings through
innovation. It therefore avoids head-to-head competition with large global companies by targeting
market niches that it can profitably develop.

The Company considers as its principal competitors the following global cosmetic and personal care
companies:

• Unilever Philippines, Inc.


• Colgate Palmolive Phils., Inc.
• Procter & Gamble Phils. Inc.
• L’Oreal Philippines, Inc.
• Beiersdorf AG
• Johnson & Johnson, Phils. Inc.
• Avon Cosmetics, Inc.

Euromonitor data through 2007 shows the Company as seventh (7th), in the list of companies selling
cosmetics and toiletries in the country. It is the only Philippine company in the top tier long
dominated by multinationals. Unilever Philippines and Colgate Palmolive Phils. Inc. continues to be
the dominant competitors, followed by the domestic units of Avon Cosmetics, Procter & Gamble,
Johnson & Johnson and Sara Lee.
-4-

In the skin care segment of the industry, Euromonitor ranked the Company fifth (5th), behind
Unilever, Sara Lee, Beiersdorf and Avon. This ranking, however, excludes exfoliant products which is
one of the Group’s Company’s principal revenue sources.

Sourcing and Access to Raw Materials

The Company sources its raw materials (primarily chemicals and fragrances) and packaging materials
from accredited local suppliers. The supplier accreditation process considers the following as critical
performance criteria: quality, pricing, and timely delivery.

Splash Corporation uses raw materials that are commonly and readily available. Value creation comes
from the mixture and synergy of the chosen materials. To safeguard the confidentiality of product
formulations, these materials are coded and known only to senior research and development officers.
The Company purchases its raw material requirements locally to ensure short delivery lead times.
Imported raw materials are procured through the representatives or local affiliates of foreign suppliers.
Purchases are paid in pesos so that currency risks are not taken.

Furthermore, the Company normally has two (2) or more accredited suppliers for each type of raw and
packaging material, ensuring uninterrupted availability. The Company avails of 60 to 90 day payment
terms provided by suppliers. There is no existing major supply contract.

Customer

The Company’s principal customer grouping is by account group. The National Account Group
(NAG) which is served directly by the Company; and the Modern Trade and General Trade groups
which are serviced through distributors (please refer to preceding section, Distribution Channels). The
table below summarizes their percent contribution to sales, indicating relative balance of revenue
sources:

% Contribution to Sales
Account Group Served By
2009 2008 2009
National Accounts 32% 28% 32% SC
Modern Trade 31% 31% 31%
Distributors
General Trade 37% 41% 37%
Totals 100% 100% 100%

In 2009, no single customer accounted for 20% or more of the Company’s sales.

Sales to the NAG are initiated by Purchase Orders. Distribution arrangements for modern trade and
general trade are covered by individual distributorship agreements. These agreements provide for
discounts as well as marketing and other support.

Transactions with Related Parties

Significant related party transactions are shown in Note 18 “Related Party Transactions” under “Notes to
Consolidated Financial Statements” of the audited consolidated financial statements of the Company
and its subsidiaries.
-5-

Patents and Trademarks

Splash Corporation owns over 100 trademarks and it protects these trademarks by registering in the
markets where it sells or intends to sell the products. The trademarks of the Company’s core brands
(Maxipeel, Extraderm, Skin White, Biolink, Theraherb) are registered in more than 50 countries
including the ASEAN group, the European Union, USA, Canada, China/Hongkong, Japan, South
Korea, Taiwan, India, Iran, Jordan, Kuwait, Qatar, Saudi Arabia and the UAE.

The Group utilizes formulations covered by Utility Model Patents registered with the Intellectual Property
Office of the Philippines.

Government Regulation

The Group believes that it complies with all the relevant regulatory requirements of the Bureau of
Foods and Drugs (BFAD) and equivalent regulatory agencies in every country where its products are
sold.

The Group regularly monitors the regulatory environment and participates actively in industry
associations. This participation enables the Company to proactively prepare for changes in the
regulatory environment.

As part of regulatory controls for the Cosmetics Industry, the Department of Health (DOH) adopted
the ASEAN Harmonized Cosmetic Scheme and ASEAN Technical Documents as long as these do not
conflict with Philippine laws. This scheme aims for the mutual recognition of product registration
approvals for cosmetics in the member states. The Group sees this as an advantage in terms of being
able to compete with the ASEAN countries.

Cost and Effects of Compliance with Environmental Laws

The Company has consistently complied with all environmental laws and regulations and invests
appropriately to ensure compliance.

Research and Development

The Company established the Splash Research Institute (SRI) to continuously develop, by employing
cutting-edge technology, new products that will meet the growing needs of the personal care market.
It adopted the “open innovation” concept whereby the Company collaborates with its suppliers to
come up with new and better product formulations in a cost effective manner. The Company has also
developed a flexible brand and product creation process that allows it to quickly respond to changes in
consumer preferences. The Company ensures that there is a ready stream of new products that it can
launch at any given time based on a rolling eight-quarter plan.

SRI’s departments (Product Research and Development, Packaging Innovations, Product Testing and
Documentation, and Skin Research) work interdependently towards creating innovative products
which address the felt and latent needs of consumers.

The amounts incurred on research activities relating to the development of new products and the
improvement of existing products such as but not limited to packaging design, product safety, clinical
tests and consumer research were P5.1 million in 2009, P3.4 million in 2008 and P11.0 million in
2007.
-6-

Employees and Labor

As of December 31, 2009, the Group has 302 regular employees, of which 105 is managerial and
administrative staff. The Group also employed 101 contractual employees mostly deployed at the
plant. The Group does not anticipate any substantial increase in the number of its employees in
calendar year 2010.

The Company is non-unionized.

Risk Factors

The following information should be read in conjunction with Part II, Item 6. “Management’s
Discussion and Analysis or Plan of Operation, and the consolidated financial statements and related
notes in Part II, Item 7. “ Financial Statements and Supplemental Schedules” of this Form 17-A.

Splash Corporation and its subsidiaries routinely encounter and address risks which are normal in the
course of the business. Significant risk factors that could cause the Group’s actual results to differ
from the Group’s expectations are as follows:

Risk of economic slowdown


The lingering effects of the global financial crisis are still felt in the consumer confidence and
purchasing power. This, and high inflation may still affect the demand for the Group’s products as
consumers re-allocate spending towards basic or essential goods.

Regulatory risk
The products being manufactured, marketed and sold by the Group are subject to standards and
regulations by government and regulatory agencies, particularly the DOH-BFAD and the DTI which
from time-to-time may introduce new rules and regulatory policies, or promulgate changes in the
interpretation or enforcement of existing laws and regulations. These might directly affect the
operations and profitability of the Group and/or may be costly to comply with.

Constant monitoring of the regulatory environment and membership with active participation in
industry associations and lobby groups mitigate this risk.

Product liability risk


The Group might inadvertently manufacture and market defective or substandard products which
could bring about harmful effects to its customers such as skin irritation and allergies, among others.

To mitigate this risk, the Group through Splash Research Institute, undertakes exhaustive clinical
testing before a product is introduced to the market. It also follows strict manufacturing standards to
prevent the production of defective products.

Intellectual Property Rights infringement


The Group may experience cases of infringement on its products, inventions, processes and
proprietary rights from competitor companies or other groups which may result in reduction in sales
and profitability.

The Group protects and builds its brands by registering its trademarks with the Bureau of Trademarks
of the Philippine Intellectual Property Office.

R&D and marketing capabilities


The Group’s continuous growth largely depends on the ability of its R&D to develop new and
innovative products, and on the ability of its marketing group to create or enhance brand equity.
-7-

Over the years, Splash Corporation has been investing heavily to its R&D capabilities through
investments in new technology, state-of-the-art equipment and development of competent and
seasoned R&D specialists. The Group recruits talented graduates from the country’s top colleges and
universities and develops them into top professionals ready to occupy senior leadership positions in its
marketing and selling organization.

Rising intensity of competition


The personal care business is highly competitive with large multi-national companies aggressively
competing for market shares. Extensive R&D and large investments in brand building serve by these
companies have become barriers to entry, limiting the number of major players to a few multinational
and local companies. Marketing expertise and responsive R&D infrastructures have enabled the
Group to meet the challenges of intensified competition.

Item 2. Properties

Splash Corporation industrial plant area where substantially all of its operations are conducted is
currently situated at F. Lazaro Street, West Canumay, Valenzuela City with an estimated lot area of
29,410 square meters and buildings with a total floor area of 20,910 square meters.

The properties and structures located in the plant include the following: Production Building, Finished
Goods Warehouse, the Splash Research Institute Building, Chemical Storage Building, Soap Plant,
Canteen, Power House, Engineering Building, Substation, Recovery Warehouse, Guard House, Multi-
purpose Hall, Alcohol Storage, and the Waste Water Treatment Plant.

The Company also has a property located at T. Santiago Street, West Canumay, Valenzuela City with
an estimated lot area of 7,243 square meters. The building houses the Ang.Hortaleza Foundation
(formerly Splash Foundation Inc.) and has a floor area of 5,200 square meters.

The foregoing properties have no limitations on their ownership by the Company.

Item 3. Legal Proceedings

Splash Corporation is a party to some cases and assessments which are pending in courts or are under
protest. Management and the Company’s legal counsels strongly believe that the liabilities, if
any, that may result from the final outcome of these cases and assessments will not materially affect
the Company’s financial position and results of operations. The detailed information of these cases is
set forth in Note 29 “Provisions and Contingencies” under “Notes to Consolidated Financial
Statements” of the Group’s consolidated financial statements.

The Company’s subsidiaries are not a party to any material pending legal proceedings that could be
expected to have a material adverse effect on the consolidated financial position or results of
operations.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal
year covered by this report.
-8-

PART II – OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Registrant’s Shares and Related Stockholder Matters

Market Information
Splash Corporation common shares are traded at the Philippine Stock Exchange. The table below
summarizes the high and low sales prices of the Company’s common shares on the PSE for each of the
full quarterly period during 2009 and 2008 and for the first quarter of 2010:

Philippine Stock Exchange


High Low
2010
First Quarter 3.45 2.60
2009
First Quarter 3.10 2.40
Second Quarter 3.30 2.48
Third Quarter 3.90 2.75
Fourth Quarter 3.85 3.05
2008
First Quarter 7.70 5.20
Second Quarter 5.50 4.20
Third Quarter 5.60 3.45
Fourth Quarter 6.10 2.80

The number of shareholders of record as of December 31, 2009 was approximately 64. Common
shares outstanding were 710,290,326 shares.

Shareholders
Total public ownership shares as of December 31, 2009 was 30.72%.

List of Top 20 Shareholders of record


December 31, 2009

Percent
Number of to Total
Name Shares Held Outstanding

1. Splash Holdings, Inc. 492,009,214 69.27%


2. PCD Nominee Corp. (Fil) 122,881,507 17.30%
3. PCD Nominee Corp. (Non-Fil.) 93,526,500 13.17%
4. Alfredo M. Yao 599,000 00.08%
5. William T. Enrile 320,000 00.04%
6. Joy O. Go 180,000 00.02%
7. Johnny Cobankiat 111,000 00.01%
8. Paul L. Gotianse 100,000 00.01%
9. Benjamin S. Geli 60,000 00.01%
10. Winston L. Duy 50,000 00.01%
11. Annika Sherryn Yao 50,000 00.01%
12. David Limqueco Kho 50,000 00.01%
13. Nilo C. Zantua 50,000 00.01%
14. Quality Investments & Securities Corporation 50,000 00.01%

(Forward)
-9-

Percent
Number of to Total
Name Shares Held Outstanding
15. Alexander D. Dela Paz &/Or Rosanna C. Rabang 25,000 00.00%
16. Anna Karenina E. Reyes 23,000 00.00%
17. Federico S. Oliveros Jr. 20,000 00.00%
18. Selene Bernice O. Li 20,000 00.00%
19. Della Louise A. Pablo 15,000 00.00%
20. Benjamin Luzod Angel 14,000 00.00%

Dividends
Dividends declared and paid for the past three years is shown in Note 17.d “Cash dividends” under “Notes to
Consolidated Financial Statements”.

Item 6. Management’s Discussion and Analysis of Financial Condition and Results of


Operations

Effective January 2009, the Company reorganized its product segments to better align its core brands.
Skin care has been further classified into Skin Whitening and Skin Exfoliants. The Group is
committed to attaining sustainable leadership positions in these two new product categories. The
following analysis should be read in conjunction with the consolidated financial statements:

Results of operations
In millions of Pesos
2009 2008 2007
Net sales 2,721 3,165 3,011
Cost of goods sold (1,477) (1,504) (1,475)
Gross profit 1,244 1,661 1,536
Selling and distribution (891) (1,102) (900)
Administrative (350) (301) (311)
Operating profit 3 258 325
Interest and other charges, net 16 39 (44)
Net income 19 297 281
Gross profit rate 45.72% 52.48% 51.01%
Net income to sales 0.69% 9.38% 9.33%

Net Sales
Net sales in 2009 decreased by 14.03% from 2008 mainly due to volume related factors. The Group
operations were weakened by challenging conditions both internal and external. Performance of new
product launches supported by marketing initiatives in 2008 was affected by the economic conditions
and the distributors were not able to support the Company in delivering these products to the market.

The Group changes prices and size of the products when necessary to maintain consumer value with
consideration to changes in costs and profit objectives. In 2009, the Group ventured to sachet and
small packing of certain products to increase market share in General Trade through an exclusive
distribution agreement with a distributor. These products were sold at very low prices in anticipation
of equivalent increase in market demand; however the distributor did not deliver as expected. The
distributor’s operation was affected by the global financial crisis and scaled down its operations in the
Philippines; hence the Company decided to disengage with the distributor resulting to negative impact
on the net sales.
-10-

Cost of Goods Sold and Gross Profit


The Group’s cost to sales ratio was 54.28% in 2009, 47.52% in 2008, and 48.99%. Gross profit rate
dropped by 6.76% points from 2008 mainly due to very low introductory prices of new products.

Expense
The Group’s deliberate effort to rationalize trading terms with its distributors mainly contributed to the
decline in the selling expenses. Administrative cost on the other hand increased by P63 million from
2008 mainly due to personnel costs resulting from (1) an adoption of a policy which provides for a
compensation for the Board of Directors and (2) reorganization of the Company. In addition, the
Group’s transportation and travel also increased mainly due to the Group’s aggressive move to expand
its operations and activities.

Financial Position
In millions of Pesos

2009 2008
Current Assets 3,159 3,548
Noncurrent Assets 43 870
Total Assets 4,102 4,418
Current ratio 0.77 0.80

Current Liabilities 622 850


Noncurrent Liabilities 880 891
Total Liabilities 1,502 1,741
Equity 2,600 2,677
Total Liabilities and Equity 4,102 4,418
Debt to Equity ratio 0.58 0.659

Current Assets
The decrease in current assets was mainly due to the decrease in cash and cash equivalents as a result of
the following:
• The purchase of the Hygienix brand amounting to P100 million, recorded under the Intangible Assets
classified as Noncurrent Assets.
• Expenditures from the IPO proceeds related to the development and introduction of new products.
Advertising and promotion amounted to P80 million, pipelining of inventories was P20 million and
research and development costs P20 million.
• Cash dividends paid.

Current Liabilities
The Group’s initiatives to improve sales forecasting and inventory planning translated to reduction
in trade payables from third parties at year end. Trade payables from third parties as of December 31,
2009 amounted to = P464 million, 27% reduction from 2008 ending balance of P =638 million. VAT
payable also decreased in relation to trade payables.

Advertising and promotion decreased significantly, 54% from 2008, partly due to cost reduction
efforts and shift of marketing strategy from TV advertising to reduction in introductory price.

Equity
Details of changes in the equity are discussed in Note 17 in the Notes to Consolidated Financial
Statements.
-11-

Item 7. Financial Statements and Supplementary Schedules

The consolidated financial statements and schedules listed in the accompanying Index to Financial
Statements and Supplementary Schedules (Page 20) are filed as part of this Form 17-A.

Item 8. Information on Independent Auditors and Other Related Matters

Sycip, Gorres, Velayo (SGV) is the Company’s independent external auditor. There are no
disagreements regarding accounting and financial disclosure.

Fees totaling P3.0 million to be billed by SGV will be for:

a. Audit of the Company’s parent and consolidated financial statements


b. Audit of Acceleron Distribution Corp.

The fees above exclude out-of-pocket expenses incidental to the auditor’s work. No other audit and
non-audit related services were rendered during the year.

PART III – CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers

Members of the Board of Directors (as of 30 April 2010)

Name Citizenship Shareholdings % to Total


Rolando B. Hortaleza, M.D., Chairman Filipino 1 0.0000001%
Rosalinda A. Hortaliza, M.D., Vice-Chairman Filipino 1 0.0000001%
Eric Roel E. Domagas, President & COO Filipino 1,000 0.0001408%
Allue Krisanne A. Hortaleza Filipino 1 0.0000001%
Maurice P. Ligot Filipino 10,000 0.0014079%
Rizalino D. Rivera, Independent Director Filipino 15,000 0.0021118%
Jimmy T. Yaoksin, Independent Director Filipino 25,000 0.0035197%
Total 51,003
Total outstanding shares 710,290,326

The Directors of the Company are elected at the Annual Stockholders’ Meeting to hold office until the
next succeeding Annual Meeting or until their respective successors have been elected and qualified.
None of the members of the Board of Directors and Officers of the Company own more than 10% of
the registrant’s securities.

Directors:

Rolando B. Hortaleza, M.D. Dr. Hortaleza, 51, Filipino, is the Chairman of the Board and Chief
Executive Officer of Splash Corporation which he co-founded with his wife, Rosalinda, also a medical
doctor, in 1985. He is a scion of the Hortaleza family which pioneered the Hortaleza Vaciador and
Beauty Supplies, a trail-blazing chain of stores that sells cosmetic products, nippers, scissors and other
beauty salon supplies. Dr. Hortaleza also sits as Chairman of Splash Holding, Inc. and Vice-Chairman
of the following corporations: HBC, Inc., World Partners Bank and World Partners Finance
Corporation. He is also Vice-Chairman of Ang.Hortaleza Foundation.
-12-

Dr. Hortaleza graduated with a Bachelor of Science degree in Preparatory Medicine (Pre-Med) from
the University of the East and obtained his degree in Medicine from Our Lady of Fatima University in
1984.

Dr. Hortaleza also attended the Owners and Presidents Management Program at the Harvard Business
School in Boston, Massachusetts from 1997 to 1998.

Rosalinda Ang-Hortaleza, M.D. Dr. Ang-Hortaleza, 52, Filipino, is the Vice-Chairman of Splash
Corporation. She also sits as Vice Chairman of Splash Holdings, Inc., and is the Chairman and Chief
Executive Officer of HBC, Inc., Ang.Hortaleza Foundation, World Partners Bank, and World Partners
Finance Corporation.

She graduated with a Bachelor of Science degree in Medical Technology from the University of Santo
Tomas in 1980. She obtained her degree in Medicine from Our Lady of Fatima University in 1984.
She attended the Advanced Management Program at the Harvard Business School in Boston,
Massachusetts in 2000.

Maurice P. Ligot. Ms. Ligot, 59, Filipino, has been a Director of Splash Corporation since 2002 and
President and Chief Operating Officer of Ang.Hortaleza Foundation since 1997. Ms. Ligot is also a
member of the Board of Directors of World Partners Finance Corporation and HBC, Inc. Prior to her
present positions; she was with Splash Corporation as Production Manager, Quality Assurance
Manager and then Total Quality Manager.

Ms. Ligot obtained her Bachelor of Science degree in Pharmacy from the Centro Escolar CEU
University where she was Outstanding Alumna of the School of Pharmacy in 2000 and Centennial
Awardee in 2007. She earned units in Master of Science in Pharmacy from the University of the
Philippines. She also obtained diplomas in Creating Value in CSR from the Asian Institute of
Management in Indonesia; Triple Bottomline: Operationalizing The Doing Good from Asian Institute
of Management, Philippines; and Corporate Governance from the University of the Philippines.

Ms. Ligot was Trustee and Treasurer of the League of Corporate Foundations in 2003 – 2007 and
currently, a trustee of Ninoy and Cory Aquino Center for Leadership.

Allue Krisanne A. Hortaleza. Ms. Hortaleza, 25, Filipino, is the eldest daughter of Drs. Rolando and
Rosalinda Hortaleza and was elected to the Board in 2007. She obtained her Bachelor of Science
degree in Management from the Ateneo de Manila University in March 2007. She is currently the
Chief-of-staff of the Chairman/CEO of HBC, Inc.

Jimmy T. Yaokasin. Mr. Yaokasin, 41, Filipino, was elected to the Board of Splash Corporation on
October 1, 2007. He is currently the Chairman of the Board of Trustees of the Development Academy
of the Philippines in his capacity as the representative of the Office of the President. He is also a
member of the Board of Directors of MRC Allied, Inc., Menlo Capital, Leyte Cable TV Network, Inc.
and the YKS Group of Companies. Mr. Yaokasin is an active member of civic and community
organizations – Paul Harris Fellow of Rotary International, Gideons International and former National
President of the Philippine Jaycees.

Mr. Yaokasin obtained his degree in Business Administration major in Accountancy (Magna cum
Laude) from the University of the Philippines. He obtained his Master in Business Administration
(MBA) under the joint Executive MBA program of the Kellogg School of Management of
Northwestern University, Chicago and the Hongkong University of Science and Technology. Mr.
Yaokasin is a Certified Public Accountant.
-13-

Rizalino D. Rivera. Mr. Rivera, 48, Filipino, was elected to the Board of Splash Corporation on 1
October 2007. He is in charge of Management Planning for Digital Alliance which is a group of
companies involved in ICT and Broadcast. He is the President of Change Consultants, Inc. which
offers consultancy services to top business corporations as well as government organizations, the
academe, and development work. Mr. Rivera is the Faculty Chair for the Human Resource Cluster of
the Ateneo Graduate School of Business. He is also involved with the Institute of People Power and
Development of the Benigno S. Aquino, Jr. Foundation and is a member of the advisory team to
former President Corazon C. Aquino. Mr. Rivera has been a senior consultant on human resource
management and organizational development for several companies which include Nestle Philippines,
Kraft Foods, Jollibee Foods Corporation, Wyeth Philippines, Pfizer, La Farge Cement, HBC, Inc. and
the Asian Development Bank.

Mr. Rivera has a Bachelor of Arts degree in Political Science from the University of the Philippines.
He is a candidate for the Master of Arts in Counseling Psychology program of the Ateneo de Manila
University as well as the Master of Science in Organization Development program of the Pepperdine
University, U.S.A.

Eric Roel E. Domagas. Mr. Domagas, 52, Filipino, was previously the President and Managing
Director of Rapp Collins Inc., a full service advertising agency. Prior to this stint, he was the Vice
President and Director of the Non Alcoholic Beverage business of San Miguel Corporation. One of
the highlights of his role in San Miguel Corporation was to lead and manage the US$ 800 million
growth initiatives for the Non Alcoholic Beverage business in seven (7) Asian countries. He also held
senior executive positions for Home Cable Television and Vintage Television.

Mr. Domagas is a graduate of the University of the Philippines with a degree in Business
Administration and has also attended the Management Development Program of the Asian Institute of
Management

Independent Directors:

Among the seven (7) Directors, Messrs. Jimmy Tiu Yaokasin, Jr. and Rizalino D. Rivera are the
independent directors of the Company, having been as such pursuant to Article III, Section 1(a) of the
By-Laws of the Corporation.

Executive Officers (as of 30 April 2010)

Name Position
Rolando B. Hortaleza, M.D. Chief Executive Officer
Eric Roel E. Domagas President and Chief Operating Officer
Veneranda M. Tomas EVP and Chief Financial Officer
Jose G. Vega SVP and GM for Philippine Operations
Pedro G. Picornell VP for Research and Supply Chain Management
Lynneth P. Malabanan VP for Corporate Services
Ace Vincent V. Villareal AVP and Head of International Division
Garyzalde O. Morales AVP and Head of Direct Selling

Ms. Veneranda M. Tomas. Ms. Tomas, 55, Filipino, joined the Company in September 2009. She
was Senior Vice President & Director of Group Audit at San Miguel Corporation and is currently a
member of the Board of Directors of Seaoil Philippines, Inc. She is also the current President of the
Institute of Internal Auditors – Philippines, a Fellow of the Institute of Corporate Directors of the
Philippines and a member of the faculty of the University of Asia and the Pacific.
-14-

Ms. Tomas holds a Bachelors Degree in Business Administration Major in Accounting from the
University of the East. She ranked 2nd place in the CPA Board Examinations. She also completed the
academic requirements for Masters Degree in Business Administration in Ateneo de Manila
University. She also finished the Strategic Finance and Control course in IMD Switzerland.

Mr. Jose G. Vega. Mr. Vega, 45, Filipino, joined Splash Corporation in February 2010. Prior to
joining the Company, he was SVP for Sales & Distribution of Digitel Mobile Philippines Inc.

He started his career with San Miguel Corporation in 1987 and has held key sales management
positions in the conglomerate until his retirement as AVP and Area Sales Manager in 2002. He was
also Head of Prepaid Sales, Trade Marketing, National Accounts, International Sales and International
Licensing of Globe Telecom from 2003 to 2007.

Mr. Vega graduated in 1986 with a degree of Bachelor of Science in Management and Industrial
Engineering from the Mapua Institute of Technology, Manila.

Mr. Pedro G. Picornell. Mr. Picornell, 56, Spanish, started with the Company on June 15, 2009. He
brings with him an extensive experience in supply chain management and general management. He
was the former Senior Vice President for Operations of Senbel Fine Chemicals. Prior to this, he was
the Managing Director for PT Belfoods Indonesia where he was responsible for all aspects of the
business to include Sales, Distribution, Finance and Operational facilities. He also spent 3 years as
Manufacturing Manager for Pepsi Cola Indo-beverages covering management of the Manufacturing
Facilities, Quality Control, Product Development/Registration and Halal Certification. Prior to this, he
handled various management posts in San Miguel Corporation for 23 years covering all fields of Beer
Production, Finance Management and Product Development. Mr. Picornell holds a Masters Degree in
Business Administration from the University of San Francisco, USA and got his Bachelor’s Degree in
Chemical Engineering from De La Salle College, Manila.

Ms. Lynneth P. Malabanan. Ms. Malabanan, 38, Filipino, rejoined the Company last
April 1, 2010 bringing with her more than 15 years of experience in information Technology,
Enterprise Resource Planning, Systems Integration, SAP, Quality Assurance and Business Process
Reengineering. She previously held key positions in Logica Philippines, Ayala Land, Inc., Splash
Corporation and TPG Corporation.

Mr. Ace Vincent V. Villa-real. Mr. Villa-real, 43, Filipino, started his stint with Splash Corporation
on April 15, 2009 as Assistant Vice President for Business Development under the same Division.
Before joining the Company, Mr. Villa-real held key positions such as Commercial Unit Manager of
CPAC Monier Philippines, Inc. and National Sales and Marketing Manager of Taisho Pharmaceuticals
(Phils.) Inc. Mr. Villa-real has 18 years of solid experience in Sales and Marketing.

Aside from his Bachelor’s Degree in Business Administration, Mr. Villa-real holds a Masters Degree
in Business Administration from the University of the Philippines Graduate School of Business.

Garyzalde O. Morales. Mr. Morales, 39, Filipino, began his career at Splash Corporation as member
of the Finance group where he was an inventory staff in 1995 and materials analyst in 1996. He
moved to Marketing in 1997 and became Marketing Manager. In 2007, he was appointed as the first
head of Brand Activation Group.

Mr. Morales obtained his Bachelor of Science degree in Commerce, major in Accounting, from the
Sacred Heart College in Lucena City, Quezon. He has a Master in Management degree from the
Technological University of the Philippines, and Master in Business Administration degree from
University of Sto. Tomas.
-15-

Significant Employees

While the Company acknowledges that each employee has a role and contribution to make, it also
believes that no one is indispensable in the organization. Thus, the loss of an employee or officer will
not cause any serious dislocation or disruption in the business of the Company. Nonetheless, the
Company endeavors to retain competent and dedicated employees.

As a matter of policy, the Company ensures that the maintenance of good relations with a customer or
any third party is the responsibility of more than one person. Hence, the success of a transaction,
undertaking, or project does not depend on any one employee. Consequently, the Company does not
have significant or indispensible employees.

Family Relationship

With the exception of spouses Dr. Rolando B. Hortaleza and Dr. Rosalinda Ang-Hortaleza and their
eldest daughter Allue Krisanne A. Hortaleza who are the Chairman, Vice-Chairman, and Director,
respectively, of the Company, there are no family relationships either by consanguinity or affinity up
to the fourth (4th) civil degree among the directors, executive officers and nominees for election as
directors as of December 31, 2009.

Item 10. Executive Compensation

Compensation of Directors and Executive Officers:


Total Board of Directors remunerations paid in 2009 amounted to P12.5 million. All the members of
the Board of Directors are entitled to P20, 000 per diem for attendance in any regular or special
meeting.

For the year 2009, total salaries, allowances and bonuses for the last two fiscal years and estimated to
be paid for the ensuing year to the principal executive, operating and financial officers are summarized
in the following compensation table.

Other Variable
Name Year Salary (P Mil) Pay (P Mil)
Rolando B. Hortaleza, M.D.
Eric Roel E. Domagas
Veneranda M. Tomas
Pedro G. Picornell
Teodulo L. Manlubatan
Ma. Regina Gavino
Ace Vincent V. Villa-Real
Garyzalde O. Morales
Actual 2008 60.028 13.170
CEO and most highly compensated
Actual 2009 55.902 12.161
executive officers
Estimated 2010 57.256 12.425
Actual 2008 31.727 6.948
Actual 2009 40.541 8.834
All other officers* as a Estimated 2010
group unnamed 47.372 10.280
* Senior managers and up

There are no other cash compensation granted to officers and directors in addition to the above
summary of compensation.
-16-

Item 11. Security Ownership of Certain Beneficial Owners, Directors and Key Officers

All shares of SC's common stock have one vote per share. Major Shareholders do not have voting
rights that are different from other holders of shares of SC’s common stock.

Based on the latest quarterly information as at March 31, 2010, SC knows no one who beneficially
owns 5% or more of SC’s shares of common stock, or collectively Major Shareholder, except as set
forth in the following table:
Name and Address of Record Owner Citizenship Name of Beneficial No. of shares held % to Total
and relationship with the Corporation Owner and Relationship Outstanding
with Record Owner

Splash Holdings, Inc. Filipino Same as owner 492,009,214 69.27%


548 Mindanao Avenue corner Quirino
Highway Novaliches Quezon City
(Major Stockholder)

PCD Nominee Corp. (Fil) Filipino See Footnote (1) 122,882,507 17.30%
G/F Makati Stock Exchange Bldg.
6767 Ayala Ave., Makati City
(Stockholder)

PCD Nominee Corp. (Non Fil) Non-Filipino See Footnote (1) 93,525,500 13.17%
G/F Makati Stock Exchange Bldg.
6767 Ayala Ave., Makati City
(Stockholder)

(1) PCD Nominee Corporation, a wholly owned subsidiary of Philippine Central Depository, Inc. (“PCD”), is the registered owner of the
shares in the books of the Corporation’s transfer agent in the Philippines. PCD is the registered owner of shares held by participants
in the Philippine Depository and Trust Co., or PDTC, a private company organized to implement an automated book entry system of
handling securities transactions in the Philippines. The securities are voted by the trustee’s designated officers who are not known to
the Corporation. None of the PCD Nominee Corporation (Foreign account) beneficially owns 5% or more of the Corporation’s
common shares.

None of the Company’s directors or officer directly holds 5% or more of the registrant’s outstanding
stock as of March 31, 2010. Approximately 86.83% of the outstanding capital stock of SC was
registered in the names of Philippine persons.

Item 12. Certain Relationships and Related Transactions

The Group’s related party relationships and transactions are discussed in detail in Note 18 in the Notes
to consolidated financial statements.
-17-

PART IV – CORPORATE GOVERNANCE

Item 13. Corporate Governance

The Group strives to adopt measures which will improve its corporate governance. Monitoring of
regulatory rules on governance is undertaken to conform, where applicable, to leading practices and
principles. This is to assure the Company’s shareholders and other stakeholders that the Company
conducts its business with the highest level of integrity, transparency and accountability.

The Company complied with the Philippine SEC requirement to submit the revised Manual of
Corporate Governance in March 2010. Also, the Company participated in the 2009 Corporate
Governance Scorecard for Publicly Listed companies prepared by the Institute of Corporate Directors
in collaboration with the Philippine Stock Exchange and the Securities and Exchange Commission
which serve as the bases of an evaluation system established by the Company to measure or determine
the level of compliance of the Board of Directors and top-level management with good governance
practices.

PART V – EXHIBITS AND SCHEDULES

Item 14. Exhibits and Reports on SEC Form 17-C

(a) Exhibits – See accompanying Index to Exhibits (page 19).

The following exhibit is filed as a separate section of this report.

(2) Subsidiaries of the Registrant

The other exhibits, as indicated in the Index to Exhibits are either not applicable to the
Company or require no answer.

(b) Reports on SEC Form 17-C

Reports on SEC Form 17-C (Current Report) have been filed during the last six
months period covered by this report.
-18-

SPLASH CORPORATION AND SUBSIDIARIES


LIST OF CORPORATE DISCLOSURES/
REPLIES TO SEC LETTERS UNDER SEC FORM 17-C
JULY 1, 2009 TO DECEMBER 31, 2009

We reported the following items on SEC Form 17-C during the last two quarters of 2009:

Items Reported Date Filed


1. Assumption of Officer July 1, 2009
2. Results of Board of Directors' Meeting July 10, 2009
3. Statement of Changes in Beneficial Ownership of Securities (Circular No. 4896-2009) July 15, 2009
4. Update on disbursements of proceeds from initial public offering July 16, 2009
5. Payment of penalties assessed by SEC July 20, 2009
6. Resignation of officer July 24, 2009
7. Statement of Changes in Beneficial Ownership of Securities (Circular No. 5353-2009) August 7, 2009
8. Press Release: "Splash Corporation strengthens its overall competitive position
in the Personal Care Market" August 13, 2009
9. Organizational movement/assumption of officers August 26, 2009
10. Press Release: "Splash fortifies market position in Malaysia through
Carepro Marketing" August 28, 2009
11. Statement of Changes in Beneficial Ownership of Securities (Circular No. 6088-2009) September 11, 2009
12. Statement of Changes in Beneficial Ownership of Securities
(Circular No. 6507- 2009) October 7, 2009
13. Assumption of officer October 15, 2009
14. Update on disbursements of proceeds from initial public offering October 16, 2009
15. Resignation of officer November 12, 2009
16. Resignation of director November 12, 2009
17. Results of Special Board of Directors' Meeting: resale of treasury shares November 16, 2009
18. Results of Special Meeting of Board of Directors: appointment of officers and
acquisition of trademark November 19, 2009
19. Sale of treasury shares as of December 3, 2009 December 3, 2009
20. Reply to letter of PSE requesting additional information on sale of treasury shares December 4, 2009
21. Sale of treasury shares on December 7, 2009 December 8, 2009
-19-

INDEX TO EXHIBITS

FORM 17-A

No. Page No.

(3) Plan of Acquisition, Reorganization, Arrangement, Liquidation, or Succession *

(5) Instruments Defining the Rights of Security Holders, Including Indentures *

(8) Voting Trust Agreement *

(10) Annual Report to Security Holders, Form 11-Q or Quarterly Report to Security *
Holders

(13) Letter re Change in Certifying Accountant *

(15) Letter re Change in Accounting Principles *

(16) Report Furnished to Security Holders *

(18) Subsidiaries of the Registrant ANNEX


A

(19) Published Report Regarding Matters Submitted to Vote of Security Holders *

(20) Consent of Experts and Independent Counsel *

(21) Power of Attorney *

(29) Additional Exhibits *

___________

* These Exhibits are either not applicable to the Company or require no answer
-20-

EXHIBIT 18 - SUBSIDIARIES OF THE REGISTRANT

Please refer to Note 2 of the accompanying Consolidated Financial Statements for details.
-21-

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES

FORM 17-A, ITEM 7

Consolidated Financial Statements Page No.

Statement of Management’s Responsibility for Financial Statements F-22


Independent Auditor’s Report F-25
Consolidated Balance Sheets as of December 31, 2009 and 2008 F-27
Consolidated Statements of Income
For the years ended December 31, 2009, 2008 and 2007 F-28
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2009, 2008 and 2007 F-29
Consolidated Statements of Changes in Stockholders’ Equity
For the years ended December 31, 2009, 2008 and 2007 F-30
Consolidated Statements of Cash Flows
For the years ended December 31, 2009, 2008 and 2007 F-31
Notes to Consolidated Financial Statements F-32

Supplementary Schedules

Independent Auditor’s Report on Supplementary Schedules


A. Marketable Securities – (Current Marketable Equity Securities and Other
Short Cash Investments) S-1
B. Amounts Receivable from Directors, Officers, Employees, Related Parties
And Principal Stockholders (Other than Affiliates) S-2
C. Noncurrent Marketable Equity Securities, Other Long-term Investments
in Shares of Stock and Other Long-term Investments S-3
D. Indebtedness to Unconsolidated Subsidiaries and Affiliates *
E. Property, Plant and Equipment *
F. Accumulated Depreciation *
G. Intangible Assets S-4
H. Long-term Debt S-5
I. Indebtedness to Affiliates and Related Parties (Long-term Loans from
Related Companies *
J. Guarantees of Securities of Other Issuers *
K. Capital Stock S-6
L. Reconciliation of Retained Earnings for Dividend Declaration *

___________

* These schedules, which are required by SRC Rule 68.1, have been omitted because they are either not
required, not applicable or the information required to be presented is included in the Group’s consolidated
financial statements or the notes to consolidated financial statements.
S-1

SPLASH CORPORATION AND SUBSIDIARIES


SCHEDULE A

Marketable Securities (Other Short-term Cash Investments)


December 31, 2009

Name of issuing entity and Principal amount Amount shown in Income received
description of each issue of bonds and notes the balance sheet and accrued
World Partners Bank 652,805,993 677,001,201 24,195,208
Philippine Bank of Communication 279,025,587 291,667,675 12,642,088
Philippine National Bank 230,091,809 238,439,127 8,347,318
Security Bank 95,210,317 97,390,892 2,180,575
Metrobank 45,636,799 48,481,067 2,844,268
Bank of Commerce 5,112,917 5,291,732 178,815
Totals 1,307,883,422 1,358,271,694 50,388,272
S-2

SPLASH CORPORATION AND SUBSIDIARIES


SCHEDULE B

Amounts Receivable from Directors, Officers, Employees,


Related Parties and Principal Stockholders
December 31, 2009

Balance at Balance at End of Period


Beginning of Amounts
Name and designation of Debtor Period Additions Collections/ Written-Off Current Not Current Total
Withdrawal
SHI, Ultimate parent P137,370,246 P- P1,551,129 P- P135,819,117 P- P135,819,117
Total Advances to ultimate Parent
Company 137,370,246 - 1,551,129 - 135,819,117 - 135,819,117
Fellow subsidiaries through SHI:
WPB 715,866,106 - 38,864,905 - 677,001,201 - 677,001,201
Total Cash Equivalents 715,866,106 - 38,864,905 - 677,001,201 - 677,001,201
Fellow subsidiaries through SHI:
HBC 136,456,921 112,146,118 34,563,987 - 214,039,052 - 214,039,052
PTSI 1,121,532 3,810,657 - - 4,932,189 - 4,932,189
Close family members:
Hantrade Phils. - 5,447,227 1,605,820 - 3,841,407 - 3,841,407
Individuals - 5,131,632 4,939,814 - 191,818 - 191,818
Total Trade Receivable 137,578,453 126,535,634 41,109,621 - 223,004,466 - 223,004,466
Dr. Rolando B. Hortaleza - 18,112,221 - - 18,112,221 - 18,112,221
Total Other Advances - 18,112,221 - - 18,112,221 - 18,112,221
Fellow subsidiaries through SHI:
PTSI
Principal 204,306,921 - 21,538,847 - 82,707,070 100,061,004 182,768,074
Interest receivable - 22,062,599 13,461,153 - 8,601,446 - 8,601,446
Total Note Receivable 204,306,921 22,062,599 35,000,000 - 91,308,516 100,061,004 191,369,520
Fellow subsidiaries through SHI:
WPB 2,113,969 - 919,887 - 1,194,082 1,194,082
SII 1,287,234 901,449 - - 2,188,683 2,188,683
WPFC 2,787,536 - 7,249 - 2,780,287 2,780,287
Total Due from Related Parties 6,188,739 901,449 927,136 - 6,163,052 - 6,163,052
Total P1,201,310,465 P167,611,903 P117,452,791 P- P1,151,408,573 P100,061,004 P1,251,469,577
S-3

SPLASH CORPORATION AND SUBSIDIARIES


SCHEDULE C

Non-Current Marketable Non-Equity Securities,


Other Long Term Investments in Stocks and Other Investments

December 31, 2009


Beginning Balance Additions Deductions Ending Balance Dividends
Name of issuing Number of Amount Number Amount Equity in Others – Distribution Others – Number of Amount In received from
entity and shares of in Pesos of shares o f in Pesos Earnings/ unrealized of earnings unrealized shares of Pesos investments not
description of principal principal Losses of valuation by investees valuation principal accounted for
investment amount of amount of investees gain (loss) gain (loss) amount of
bonds and bonds and bonds and
by equity
notes notes notes method
Available for sale investments
Wack Wack
Golf and
Country Club 2 P15,600,000 – – – P3,400,000 -- -- 2 P19,000,000 P-
GMA 7 100,000 345,000 – – – 435,000 -- -- 100,000 780,000 35,000
Professional
Services, Inc. 50,000 200,000,000 – – – - -- -- 50,000 200,000,000 5,500,000
Total P215,945,000 – P– P– P 3,835,000 P -- P -- P 219,780,000 P 5,535,000
S-4

SPLASH CORPORATION AND SUBSIDIARIES


SCHEDULE G

Intangibles Assets – Other Assets


December 31, 2009

Description Beginning Additions at Charged to Charged to Other Ending


Balance Cost Cost and other changes Balance**
Expenses* accounts additions
(deductions)
Intangible Assets
Trademark P- P100,254,464 P- P- P- P100,254,464
Software costs 12,870,511 5,423,839 4,450,173 - - 13,844,177
P12,870,511 P105,678,303 P4,450,173 P- P- P114,098,641
*Represents amortization of intangible assets
**See Note 12 – Intangible Assets to the accompanying consolidated financial statements in Item 7
S-5

SPLASH CORPORATION AND SUBSIDIARIES


SCHEDULE H

Long-Term Debt
December 31, 2009

Title of issue or Amount of Amount Amount Debt issuance


type of authorized by shown as shown as costs – net of
obligation indenture current long-term amortization
“offset against
FRN in related
balance sheet” Terms
Floating Rate P1,000,000,000 P50,000,000 P850,000,000 P8,496,603 Issued on August 31, 2007
Note (FRN) payable in 5 annual
installments. Interest
payable quarterly based on
the Interest Rate Setting
Date by reference to the 3-
month PDS Treasury Rate
plus a spread of 1.65% (see
Note 13 to the consolidated
financial statements)
S-6

SPLASH CORPORATION AND SUBSIDIARIES


SCHEDULE K

Capital Stock
December 31, 2009

Title of Number of Number of Number of Number of Directors Others


Issue Shares Shares issued shares shares held officers and
Authorized and reserved for by affiliates Employees
outstanding options,
warrants,
conversion
and other
rights
Common 1,000,000,000 710,290,326 - 492,009,214 51,003 218,230,109
ANNEX A

SUBSIDIARY FINANCIAL
STATEMENTS
Financial Statements and
Independent Auditors’ Report
PT Splash Cahaya
December 31, 2009
CONTENTS

Independent Auditors’ Report


Page
Financial Statements

Balance Sheet 1

Statement of Income 3

Statement of Changes in Equity 4

Statement of Cash Flows 5

Notes to Financial Statements 6


PT SPLASH CAHAYA
BALANCE SHEET
December 31, 2009

ASSETS

Notes 2009

Rp

CURRENT ASSETS
Cash 2b,3 1,268,435,163
Trade receivables 2c,4 3,573,098,820
Other receivables 5 2,695,498
Inventories 2d,6 1,205,412,291
Prepaid taxes 2j,12a 67,357,082

Total current assets 6,116,998,854

NON-CURRENT ASSETS
Property and equipment 2e,f,7 375,164,521
Deferred tax assets 2j,12d 1,229,167

Total non-current assets 376,393,688

TOTAL ASSETS 6,493,392,542

The accompanying notes to financial statements


are an integral part of these financial statements

1
PT SPLASH CAHAYA
BALANCE SHEET (Continued)
December 31, 2009

LIABILITIES AND EQUITY

Notes 2009

Rp

CURRENT LIABILITIES
Trade payables 8 1,650,839,553
Other payables 9 502,148,299
Due to related party 10 1,880,000,000
Taxes payable 2j,12b 68,479,212
Accrued expenses 11 123,128,202

Total current liabilities 4,224,595,266

NON-CURRENT LIABILITIES
Provision for employees’ entitlement 2g,20 −

Total non-current liabilities −

EQUITY
Capital stock
Authorized, issued and fully paid-up 2,000 shares
at Rp 1,022,500 (US$ 100) par value each 13 2,045,000,000
Paid in capital from exchange differences 14 (176,400,000)
Retained earnings 400,197,276

Total equity 2,268,797,276

TOTAL LIABILITIES AND EQUITY 6,493,392,542

The accompanying notes to financial statements


are an integral part of these financial statements

2
PT SPLASH CAHAYA
STATEMENT OF INCOME
For the period from inception (August 27, 2009) up to December 31, 2009

Notes 2009

Rp

Net sales 2h,15 3,248,271,654


Cost of sales 2h,16 (2,471,723,015)

Gross profit 776,548,639

OPERATING EXPENSES
Salaries and allowances 2h,17 (56,345,918)
Selling expenses 2h,18 (177,779,097)
General and administrative expenses 2h,19 (69,598,212)

Total operating expenses (303,723,227)

Profit from operations 472,825,412

OTHER INCOME (CHARGES)


Loss on foreign exchange, net 2i (5,511,183)
Miscellaneous expense, net (1,079,000)

Total other charges, net (6,590,183)

Profit before income tax 466,235,229

Tax income (expense) 2j


Current income tax 12c (67,267,120)
Deferred tax income 12d 1,229,167

Total tax expense (66,037,953)

Net profit for the period 400,197,276

The accompanying notes to financial statements


are an integral part of these financial statements

3
PT SPLASH CAHAYA
STATEMENT OF CHANGES IN EQUITY
For the period from inception (August 27, 2009) up to December 31, 2009

Paid in
capital from
exchange Retained
Notes Capital stock differences earnings Total
Rp Rp Rp Rp

Balance as of August 27, 2009 – – – –

Share capital payments 13,14 2,045,000,000 (176,400,000) – 1,868,600,000

Net profit for the period – – 400,197,276 400,197,276

Balance as of December 31, 2009 2,045,000,000 (176,400,000) 400,197,276 2,268,797,276

The accompanying notes to financial statements


are an integral part of these financial statements

4
PT SPLASH CAHAYA
STATEMENT OF CASH FLOWS
For the period from inception (August 27, 2009) up to December 31, 2009

2009
Rp
Cash flows from operating activities
Profit before income tax 466,235,229
Adjustments to reconcile profit before income tax to
net cash provided by operating activities :
Depreciation expense of property and equipment 13,014,534
Unrealized loss on foreign exchange, net 11,400,000
Operating profit before working capital changes 490,649,763
Increase in trade receivables (3,573,098,820)
Increase in other receivables (2,695,498)
Increase in inventories (1,205,412,291)
Increase in prepaid taxes (67,357,082)
Increase in trade payables 1,650,839,553
Increase in other payables 502,148,299
Increase in due to related party 1,868,600,000
Increase in taxes payable 1,212,092
Increase in accrued expenses 123,128,202
Cash used in operating activities (211,985,782)
Payments of corporate income tax −
Net cash used in operating activities (211,985,782)
Cash flows from investing activities
Payments to acquire property and equipment (388,179,055)
Net cash used in investing activities (388,179,055)
Cash flows from financing activities
Receipt from issuance of capital stock 1,868,600,000
Net cash provided by financing activities 1,868,600,000

Net increase in Cash 1,268,435,163


Cash at beginning of period −
Cash at end of period 1,268,435,163

Additional schedule of non-cash investing and financing activities


Purchasing of property and equipment through other payables 350,000,000

The accompanying notes to financial statements


are an integral part of these financial statements

5
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS
December 31, 2009

1. GENERAL

PT Splash Cahaya (the Company) was established within the framework of the Foreign Capital
Investment Law No. 1 year 1967, as amended by Law No. 11 year 1970 based on the notarial deed of
Syaeful Huda, SH, Mkn No. 02 dated August 5, 2009. It has complied with the Limited Liability
Company Law of the Republic of Indonesia No. 40 year 2007 dated August 16, 2007. The
Company’s Articles of Association were approved by the Minister of Justice and Human Rights in his
decision letter No. AHU–41878.AH.01.01.Tahun 2009 dated August 27, 2009. The publication in
State Gazette is still in process.

The Company is mainly engaged in business of import, export of beauty merchandise, and
manufacturing of soap in accordance with the Article 3 of the Company’s Article of Association and
approval from the Capital Investment Coordination Board (“BKPM”) No. 781/I/PMA/2009 dated
July 1, 2009. The Company is domiciled at Hero Building II, Jalan Jendral Gatot Subroto, Jakarta
Selatan. The Company commenced its commercial operation in November 1, 2009. The Company
has 3 employees as of December 31, 2009.

The members of the Company’s board of commissioners and directors as of December 31, 2009 is as
follows :

Board of Commissioners :

President Commissioner : Rolando Bonifacio Hortaleza, M.D.


Commissioner : Rosalinda Ang Hortaleza, M.D.

Board of Directors :

President Director : Ms. Marie Sharon B. Rimonte


Directors : Mr. Eric Roel Espiritu Domagas
Mr. Ramon Gaba Trajano
Mr. Vincent Ace Vargas Villa-Real

2. ACCOUNTING POLICIES

A summary of significant accounting policies adopted by the Company, which affect the
determination of its financial position and results of its operations are presented below.

a. Presentation of Financial Statements

The Company’s financial statements are prepared on the historical cost basis of accounting and in
conformity with Statement of Financial Accounting Standard established by the Indonesian
Institute of Accountants. The statement of cash flows is prepared using indirect method.

6
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

2. ACCOUNTING POLICIES (Continued)

a. Presentation of Financial Statements (Continued)

The Company’s financial statements covered for the period from inception (August 27, 2009) up
to December 31, 2009.

b. Cash

Cash and banks comprise of cash on hand, and amounts repayable on demand with banks which
are readily convertible into known amounts of cash without notice.

c. Trade Receivables

Trade receivables are recorded net of an allowance for doubtful accounts. Allowance for doubtful
accounts is set-up based on a review of the collectibility of outstanding amounts. Amounts are
written-off as bad debts during the period in which they are determined to be not collectible.

d. Inventories

Raw materials and merchandise inventories are stated at cost or net realizable value whichever is
lower. Costs of the Company’s inventories are carried on the weighted average method. Cost
includes all expenditures directly attributable to the manufacturing process as well as suitable
portions of related production overheads, based on normal operating activity. Net realizable value
is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.

A provision for obsolete and slow moving inventory is determined on the basis of estimated
future usage or sale of individual inventory items. The amount of any write-down of inventories
to net realizable value and all losses of inventories are recognized as an expense in the period the
write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising
from an increase in net realizable value, is recognized as a reduction in the amount of inventories
recognized as an expense in the period in which the reversal occurs.

PSAK No. 14 (Revised 2008), “Inventories” was applied by the Company effective January 1,
2009.

7
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

2. ACCOUNTING POLICIES (Continued)

e. Property and Equipment

Initially, an item of property and equipment is measured at its cost, which comprises its purchase
price and any cost directly attributable to bringing the assets to the location and condition
necessary for it to be capable of operating in the manner intended by management, and also
include the initial estimate of the costs of dismantling and removing the item and restoring the
site on which it is located. The cost of self-constructed assets is determined using the same
principles as for an acquired asset.

Subsequent expenditures such as replacement and major inspection are added to the carrying
amount of the asset when it is probable that future economic benefits will flow to the Company
and the cost of the item can be measured reliably. The carrying amount of those parts that are
replaced or any remaining carrying amounts of the cost of the previous inspection is
derecognized. The costs of day-to-day servicing of an asset are recognized as an expense in the
period in which they are incurred.

Depreciation is recognized on straight-line basis to write down the depreciable amount of


property and equipment.

The estimated useful lives of the assets are as follows :

Years

Motor vehicle 5
Furniture and fixture 4
Tool and equipment 5
Computer 4

The residual values, useful lives and depreciation method are reviewed at each balance sheet date
to ensure that such residual values, useful lives and depreciation method are consistent with the
expected pattern of economic benefits from those assets.

When an asset is disposed of or when no future economic benefits are expected from its use or
disposal, the cost and accumulated depreciation and impairment losses, if any, are removed from
the accounts. Any resulting gain or loss from derecognition of an item of property and equipment
is included in the statements of income.

The Company applied PSAK No. 16 on Property, Plant and Equipment (Revised 2007), which
supersedes PSAK No. 16 on Fixed Assets and Other Assets (1994), and PSAK No. 17 on
Accounting for Depreciation (1994). Based on the revised PSAK, an entity shall choose either the
cost model or revaluation model as its accounting policy and shall apply that policy to an entire
class of property and equipment.

8
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

2. ACCOUNTING POLICIES (Continued)

e. Property and Equipment (Continued)

The Company chose to adopt the cost model; accordingly, the Company’s property and
equipments, are carried at cost less accumulated depreciation and accumulated impairment losses,
if any.

f. Impairment of property and equipment

At each balance sheets date, the Company reviews whether there is any indication that an asset
may be impaired.

Property and equipment are reviewed for impairment losses whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognized for the amount by which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of an asset’s net selling price and value in use. For the purpose of
assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows.

g. Employee Entitlements

Employee entitlements to service and compensation payments relating to the employees’


separation, gratuity and compensation are recognized. A provision is made for the estimated
liability as a result of past services rendered by employees up to the balance sheet date and is
calculated based on the Manpower Law No. 13/2003 issued by the Government of Republic
Indonesia in April 2003.

h. Revenue and Expenses Recognition

Revenue from sale is recognized when the goods are delivered to the customers. Expenses are
recognized when these are incurred.

i. Foreign Currency Transaction and Balances

The Company's books and records are maintained in Indonesian Rupiah. Transactions
denominated in foreign currencies are converted into Rupiah at the exchange rate prevailing at the
date of the transactions. At the balance sheet date, monetary assets and liabilities denominated in
foreign currencies are translated into Rupiah at the middle rate of Bank Indonesia ruling at that
date (US$ 1 = Rp 9,400 as of December 31, 2009). Gains or losses arising from foreign exchange
transactions are credited or charged to the statement of income in the current period.

9
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

2. ACCOUNTING POLICIES (Continued)

j. Income Tax

Income tax is computed on the basis of taxable income for the period. Deferred income tax is
provided for the timing differences in the recognition of income and expenses for financial
reporting and income tax purposes. The accounting treatment is in conformity with the Statement
of Financial Accounting Standard (PSAK) No. 46 about Accounting for income taxes.

Deferred tax is accounted for using the current tax tariff or tariff substantially applicable at the
balance sheet date. Deferred tax is charged or credited to the statement of income in the current
period.

k. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting


principles in Indonesia requires management to make estimates and assumptions that affect :

− The reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements.

− The reported amounts of revenues and expenses during the reporting period.

Although these estimates are based on management’s best knowledge of current events and
activities, actual results may differ from those estimates.

3. CASH
2009
Rp

Cash on hand 6,000,000

Cash in bank :

The Hongkong and Shanghai Banking


Corporation Limited, Jakarta Branch
Rupiah account 328,241,167
US Dollar account 934,193,996

1,262,435,163

Total 1,268,435,163

10
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

4. TRADE RECEIVABLES

The balance as of December 31, 2009 of Rp 3,573,098,820 represents receivables from third party
(PT Parit Padang).

Based on the review of the status of individual trade receivable accounts at the end of the period, the
Company’s management do not provide an allowance for doubtful accounts, because the
management believes that the receivables are fully collectible

5. OTHER RECEIVABLES
2009
Rp

Third party :
Employees 2,695,498

6. INVENTORIES
2009
Rp

Raw materials 599,516,988


Merchandise inventories 605,895,303

Total 1,205,412,291

7. PROPERTY AND EQUIPMENTS

The details of property and equipments are as follows :

2009
Furniture
Motor and Tool and
Vehicle Fixture Equipment Computer Total
Rp Rp Rp Rp
Gross carrying amount :
Balance August 27, 2009 – – – – –
Addition 210,000,000 14,368,245 100,000,000 63,810,810 388,179,055
Disposal – – – – –

Balance December 31, 2009 210,000,000 14,368,245 100,000,000 63,810,810 388,179,055

11
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

7. PROPERTY AND EQUIPMENTS (Continued)


2009
Furniture
Motor and Tool and
Vehicle Fixture Equipment Computer Total
Rp Rp Rp Rp
Accumulated depreciation and
impairment :
Balance August 27, 2009 – – – – –
Depreciation 7,000,000 598,677 3,333,334 2,082,523 13,014,534
Disposal – – – – –
Balance December 31, 2009 7,000,000 598,677 3,333,334 2,082,523 13,014,534

Net carrying amount,


December 31, 2009 203,000,000 13,769,568 96,666,666 61,728,287 375,164,521

2009
Rp
Depreciation expenses are allocated to :
General and administrative expenses 13,014,534

All property and equipments totaling Rp 388,179,055 are purchased from related party (PT Splash
Indonesia).

As of December 31, 2009, property and equipment were not covered by insurance against losses from
fire and other risk due to the insurance are still covered by PT Splash Indonesia (in liquidation)
insurance which is still in force as of December 31, 2009.

8. TRADE PAYABLES
2009
Rp
Third parties :
PT Interact Corporation 156,686,605
PT Mane Indonesia 90,515,733
PT Cahaya Subur Prima 88,893,624
PT Indocare Citra Pacific 62,280,000
398,375,962
Related party :
PT Splash Indonesia 1,252,463,591
Total 1,650,839,553

12
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

8. TRADE PAYABLES (Continued)

Payable to PT Cahaya Subur Prima represents payable to third party toll manufacturer.

9. OTHER PAYABLES
2009
Rp

Third parties :
PT Parit Padang 64,097,064
PT Citra Mandiri Aryatunggal 17,916,195
PT Alfa Surya Expressindo 8,100,000
Others (individual below Rp 8,000,000) 27,035,040

117,148,299

Related party :
PT Splash Indonesia 385,000,000

Total 502,148,299

Net payables to related party (PT Splash Indonesia) represent payable on purchasing of property
and equipments.

10. DUE TO RELATED PARTY


2009
Rp

Related party :
Splash Corporation, Philippines
(US$ 200,000) 1,880,000,000

Represents advances from Splash Corporation, Philippines for working capital, interest free, no
fixed repayment schedule, and no formal written agreement.

13
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

11. ACCRUED EXPENSES


2009
Rp

Advertising and promotion 86,541,906


Professional fee 27,000,000
Employees’ benefit 6,566,668
Others 3,019,628

Total 123,128,202

12. TAXATIONS

a. Prepaid taxes
2009
Rp

Value added tax 67,357,082

b. Taxes payable
2009
Rp

Income tax article 21 24,775


Income tax article 23 1,187,317
Estimated corporate income tax payable 67,267,120

Total 68,479,212

c. Corporate Income Tax

A reconciliation between profit before income tax as shown in the statement of income and
estimated taxable profit which were calculated by the Company for the period from inception
(August 27, 2009) up to December 31, 2009 is as follows :
2009
Rp

Profit before income tax as per statement of income 466,235,229

14
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

12. TAXATIONS (Continued)

c. Corporate Income Tax (Continued)

2009
Rp

Fiscal adjustments consisted of :


Permanent differences :
Non-deductible expenses 9,327,534

Timing differences :
Depreciation expense of property and equipment 4,916,667

Estimated taxable profit for the period 480,479,430

Estimated corporate income tax at tax rate 14% 67,267,120

Prepaid taxes :
Income tax article 25 –

Estimated corporate income tax payable 67,267,120

d. Deferred Tax Assets (Liabilities)

The calculation of deferred tax assets and deferred tax liabilities with the maximum tax tariff of
25% in 2009 is as follows :
2009
Credited
(charged) to the
As of statement of As of
August 27, income for the Valuation December 31,
2009 year Correction 2009
Rp Rp Rp
Deferred tax assets (liabilities) :
Depreciation expense of property
and equipment − 1,376,667 (147,500 ) 1,229,167

• A reconciliation between the total tax expense and the amounts computed by applying the
effective tax rate to profit before income tax is as follows :
2009
Rp
Profit before income tax as per statement of income 466,235,229

15
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

12. TAXATIONS (Continued)

d. Deferred Tax Assets (Liabilities) (Continued)


2009
Rp
Tax loss (benefit) at tax rate 28% 130,693,363
Tax facility portion (50% tax tariff) for turnover
up to Rp 4,800,000,000 (67,267,120)
Tax effect of non-deductible expense/(non taxable income) :
Non-deductible expenses 2,611,710
Total tax expense 66,037,953

e. Administration

• Under the taxation laws of Indonesia, the Company submits tax returns on the basis of self
assessment. The tax authorities may assess or amend taxes within 5 years after the date of the
tax become payable.

• On September 23, 2008, the Government of Republic Indonesia approved the new revised
Income Tax law effective January 1, 2009. The revision includes among others, changes the
effective rate from 30% to 28% in 2009, and to 25% in 2010. In addition to the impact on the
current income tax for 2009, the revision will also impact the deferred income tax previously
set up to reflect the reduction in effective tax rate.

13. CAPITAL STOCK

Pursuant to the notarial deed No. 02 dated August 5, 2009 of Syaeful Huda, SH, Mkn, the
Company’s authorized capital amounted to Rp 2,045,000,000 (equivalent to US$ 200,000),
consisting of 2,000 shares with a par value per share of Rp 1,022,500 (equivalent to US$ 100).
Issued and fully paid up capital were 2,000 shares.

The composition of shareholders as of December 31, 2009 is as follows :


Number of Percentage of
Shareholders shares ownership Par value
% US$ Rp
Splash Corporation, Philippines 1,980 99.00 198,000 2,024,550,000
Splash Holdings Inc, Philippines 20 1.00 2,000 20,450,000
Total 2,000 100.00 200,000 2,045,000,000

16
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

14. PAID-IN CAPITAL FROM EXCHANGE DIFFERENCES

The capital of the Company is stated in the articles of incorporation in both Indonesian Rupiah and
United States Dollar currencies. Paid-in Capital from exchange differences represents the exchange
differences between Rupiah equivalent to the United States dollar as stated in the articles of
incorporation and the prevailing exchange rates at the dates when the capitals were paid in.

15. NET SALES


2009
Rp
Net sales derived from :
Gross sales 3,821,496,064
Sales discount (573,224,410)

Total 3,248,271,654

16. COST OF SALES


2009
Rp

Merchandise inventory
Beginning balance –
Purchases 2,323,326,585
Available for use 2,323,326,585
Ending balance (605,895,303)
Cost of sales – merchandise 1,717,431,282

Soap
Raw materials :
Beginning balance –
Purchases 1,267,478,037
Available for use 1,267,478,037
Ending balance (599,516,988)
Raw material used 667,961,049
Toll manufacturing expense 86,330,684
Cost of sales – soap 754,291,733

Total cost of sales 2,471,723,015

17
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

17. SALARIES AND ALLOWANCES


2009
Rp

Salaries 47,797,500
Other allowances 8,322,424
Overtime 225,994

Total 56,345,918

18. SELLING EXPENSES


2009
Rp

Promotion 164,909,333
Freight and delivery 10,564,362
Representation 2,305,402

Total 177,779,097

19. GENERAL AND ADMINISTRATIVE EXPENSES


2009
Rp

Professional fee 25,000,000


Depreciation expense of property and equipment 13,014,534
Traveling and accommodation 7,250,542
Repair and maintenance 6,889,628
License 5,750,000
Communication 5,672,263
Supplies and photocopy 4,425,400
Others 1,595,845

Total 69,598,212

18
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

20. PROVISION FOR EMPLOYEES’ ENTITLEMENTS

On June 20, 2000, the Ministry of Manpower issued Decree No. Kep-150/Men/2000, amending the
Decree of Ministry of Manpower No. 03/Men/1996, regarding the Settlement of Work Dismissal and
Determination of Separation, Appreciation and Compensation Payments in Companies. This decree
requires companies to pay their employees termination, appreciation and compensation benefits in
case of employment dismissal based on the employees’ number of years of services provided the
conditions set forth in the Decree are met. Further, in April 2003 the Government of Republic
Indonesia issued Labor Law No. 13/2003 replacing the Kep-150/Men/2000.

The Company is required to provide for employees’ benefits in accordance with the Labor Law,
however such provision is not deemed necessary as the Company is considered a start-up.

21. RELATED PARTY TRANSACTIONS AND BALANCES

a. Nature of Relationships
Name of related parties Nature of relationships
Splash Holdings Inc., Philippines Shareholder
Splash Corporation, Philippines Shareholder
PT Splash Indonesia Affiliated company

b. Related parties transactions


In conducting its business, the Company entered into certain business and financial transactions
with the related parties. These transactions are normally made at normal price and conditions as
of they were done with non-related parties. These transactions are as follows :
1. Purchase of raw materials and merchandise inventories from related party (PT Splash
Indonesia) for the period from inception (August 27, 2009) up to December 31, 2009 was
Rp 3,117,001,230.
2. Purchase of property and equipments from related party (PT Splash Indonesia) for the period
from inception (August 27, 2009) up to December 31, 2009 was Rp 388,179,055.
3. Trade payables to related party (PT Splash Indonesia) as of December 31, 2009 was
Rp 1,252,463,591.
4. Other payables to related party (PT Splash Indonesia) as of December 31, 2009 was
Rp 385,000,000.
5. Due to related party (Splash Corporation, Philippines) as of December 31, 2009 was
Rp 1,880,000,000.

19
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

22. SIGNIFICANT AGREEMENTS

• Independent Contractor Agreement

On November 2, 2009, the Company entered into Memorandum of Understanding (MOU) with
PT Cahaya Subur Prima as the contractor for the processing and packaging of the Company’s
soap products in accordance with the product specifications and packaging design provided by
the Company.

The MOU will be for a period of six months and will be automatically terminated upon the
occurrence of the following events, whichever comes earlier:

a. If six months have lapsed and the parties failed to sign and execute a Toll Manufacturing
Agreement; or

b. The parties have signed and executed a Toll Manufacturing Agreement.

• Distribution Agreement

1. On November 2, 2009 the Company entered into a MOU with PT Parit Padang engaging PT
Parit Padang as its distributor to sell and distribute products produced by the Company in the
areas and territories within Indonesia as will be determined or agreed by both parties.

The Company will extend to the distributor certain discounts based on the billing price / list
price for goods purchased with a 45-day payment term and to be covered with Post Dated
Check. Additional discounts are given for early payment or cash with order discounts based
on agreed rates in the contract.

The MOU will be for a period of six months and will be automatically terminated upon the
occurrence of the following events, whichever comes earlier:

a. If six months have lapsed and the parties failed to sign and execute a Distribution
Agreement; or

b. The parties have signed and executed a Distribution Agreement.

2. On November 25, 2009, the Company entered into a distribution agreement with PT
Tigaraksa Satria Tbk (TRS) with no definite termination or renewal date. Under the
agreement, the Company engages TRS as its distributor to sell and distribute products
produced by the Company in the areas and territories within Indonesia as will be determined
or agreed by both parties.

The Company will extend to the distributor certain discounts based on the billing price / list
price for goods purchased with a 60-day payment term and to be covered with Post Dated
Check. Additional discounts are given for early payment or cash with order discounts based
on agreed rates in the contract.

20
PT SPLASH CAHAYA
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2009

23. ECONOMIC CONDITION

The year 2009 is dubbed as an extremely difficult moment following the global economic crisis in
2008 and 2007. In Indonesia, the economic situation started showing some uncertainty in mid-2008,
persisting onto the first half of 2009 as the global financial crisis continued to threaten the national
economy.

In the first quarter of 2009, Indonesia felt the negative impact of the crisis, affecting its real property
sector, export performance, financial market and Rupiah exchange rate. The second quarter of 2009
saw a reversal in these indicators’ trends. The rising trend in Indonesia’s Gross Domestic Product
(GDP) growth started in the third quarter of 2009 indicating the start of economic recovery. Further
more, inflation in 2009 has been relatively low, exerting less pressure on the tightening monetary
policy. These factors have proven that the Indonesia economy is quite resistant to the effects of the
global economic crisis. The government is also helping the business community in preparing
facilities and infrastructure in anticipation of the global economy recovery.

In view of the more optimistic economic outlook for Indonesia, the Company will aim to ride the
tide of a more vibrant Indonesian consumer market. In 2009, the economy has initiated a distribution
drive that serves as a foundation for its long-term business strategy. In 2010, the Company will
solidify this foundation though its brand building initiatives that would propel demand for its
products in the personal care industry.

24. PREPARATION AND COMPLETION OF THE FINANCIAL STATEMENTS

The Company’s directors are responsible for the preparation of the financial statements. The
financial statements are completed on April 8, 2010.

21