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CHAPTER I
Products 1.1
Skin White
Power Cream Powder Power Whitening Face Cream
Power Whitening Lotion
Skin White Milk Soap
Skin Whitening Deodorant
Skinwhite Whitening Bath Soap
Power Whitening Face Solution
Extract
Extract Hand Body Lotion Extract Papaya Calamansi Skin Whitening Deodorant
Dual Conditioning Hair Color Color Recharge Hot Oil Conditioner Shades
Powe Hair Dry
Vitress
Vitress Cuticle Coat Vitress Hair Polish
Vitress Hair Spa Vitress Setting Lotion
Anti- Bacterial
Anti-Bacterial Hand Gel Anti-Bacterial Hand Spray
Ethyl Alcohol
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Customers 1.2
The principal customer of Splash Corporation is by account group:
The National Account Group (NAG) which is served directly by the company; Modern Trade; and General Trade which are serviced through distribution
Historical Background 1.3
Founded on 19885 and grow up from Php12,000 to Php4billion. Founders are Dr. Rolando B. Hortaleza
and Dr. Rosalinda A. Hortaleza. The company’s first product was repackaged acetone and cuticle
remover. In 1987, the company started to sell hair care products and renamed their company from
Hortaleza cosmetics to Splash Corporation. In September 30, 1991, Splash Corporation was incorporated
and registered with the Philippine Stock Exchange (SEC). The Company established the Splash Research
Institute in 1997. In 2002, the Company invested in a Php400 million state-of-the-art manufacturing
complex in Canumay, Valenzuela City. In November 15, 2007 the company listed its stocks with the
Philippine Stock and Exchange (PSE). To date, Splash has established market presence in over 30
countries through its distributors and local exporters. These countries include Algeria, Australia, Bahrain,
Canada, Egypt, Hong Kong, India, Indonesia, Iran, Japan, Jordan, Korea, Kuwait, Lebanon, Malaysia,
Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Singapore, Sudan, United Arab Emirates, Vietnam and the
United States.
Business Location 1.4
MainOffice:Splash Corporation5F W Office Bldg., 11th Avenue cor. 28th Street, Bonifacio Global City, Taguig City 1634 Philippines
Industrial Plant Area:F. Lazaro Street, West Canumay, Valenzuela City
Benchmark 1.5
We choose the Johnson & Johnson Inc., Philippines as benchmark. Their products are categorized by: skin care, hair care, baby care, wound care, oral health care, women’s health, nutritionals and vision care.
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Ownership and Management Profile 1.6
List of top 20 shareholders as of March 31, 2011
NAME NO. OF SHARES HELD % TO TOTAL
OUTSTANDING
1. AngHortaleza Corporation 435,518,054 66.61%
2. PCD Nominee Corp. (Fil) 244,321,717 37.37%
3. PCD Nominee Corp. (Non-Fil.) 7,705,300 00.12%
4. Alfredo M. Yao 599,000 00.09%
5. William T. Enrile 320,000 00.05%
6. BNC Ingredients Corporation 200,000 00.03%
7. Joy O. Go 180,000 00.03%
8. Paul L. Gotianse 100,000 00.02%
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 LimquecoKho 50,000 00.01%
13
.
Nilo C. Zantua 50,000 00.01%
14
.
Melani Dianne T. Chua 50,000 00.01%
15
.
Eric Roel E. Domagas 41,000 00.01%
16
.
Alfonso Iñigo A. Hortaleza 40,000 00.01%
17
.
Benjamin Luzod Angel 29,021 00.00%
18 Margarito R. Miral 27,000 00.00%
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.
19
.
Alexander DeLa Paz & Rosanna C.
Rabang
25,000 00.00%
20
.
Anna Karerina E. Reyes 23,000 00.00%
Members of the Board of Directors as of December 21, 2011.
NAME POSITION
Rolando B. Hortaleza, M.D. Chairman & Chief Executive Officer
Rosalinda A. Hortaleza, M.D. Vice Chairman
Eric Roel E. Domagas Director, President & Chief Operating Officer
AllueKrisanne A. Hortaleza Director
Maurice P. Ligut Director
Rafael C. Lopa Independent Director
Jimmy T. Yaokasin Independent Director
Rizalino Rivera Independent Director
Rolando B. Hortaleza
Mr.Rolando B. Hortaleza a scion of Hortaleza family, served as a director since 1991. He sits as
Chairman of AngHortaleza Corp. and Vice-Chairman of HBC, Inc., World Partners Bank, and World
Partners Finance Corporation. Graduated with a BS degree in Preparatory Medecine from the
University of the East and obtain his degree in Medicine from Our Lady of Fatima University. Also
attended the Owner and Presidents Management Program at the Harvard Business School.
Rosalinda Ang-Hortaleza
The Chairman and CEO of HBC, Inc., AngHortaleza Foundation, World Partners Bank and World
Partners Finance Corporation. Graduated with a BS degree in Medical Technology from University
of Santo Thomas and obtained her degree in medicine from Our Lady of Fatima University.
Maurice P. Ligot
Production Manager, Quality Assurance Manager and Total Quality Manager of Splash Corporation.
Obtained her BS degree in Pharmacy from Centro Escolar University. Currently a trustee of Ninoy
and Cory Aquino Center of Leadership.
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AllueKrisanne A. Hortaleza
Is the eldest daughter of Rolando and Rosalinda Hortaleza. Obtained her BS degree in Management
from Ateneo De Manila University. Currently the Chief-of-Staff of the Chairman/ CEO of HBC, Inc.
Jimmy T. Yaokasin, Jr.
Was elected to the Board of Splash Corporation on October 1, 2007. Former Chairman of the Board
of Trustees of the Development Academy of the Philippines. Obtained his degree in Business
Administration major in Accountancy from University of the Philippines. Obtained his MBA from
Kellogg School of Management of Northwestern University.
Rafael C. Lopa
Currently Executive Director of the Philippine Business for Social Progress. President of Ninoy and
Cory Aquino Foundation. Holds BA degree in Inter-Disciplinary Studies from Ateneo de Manila
University.
Rizalino D. Rivera
He is in charge of Management Planning for Digital Alliance which is a group of companines
involved in ICT and Broadcast. He is the President of Change Consultants Inc. Has a BA degree in
Political Science from the University of the Philippines.
Eric Roel E. Domagas
He was previously the President and Managing Director of Rapp Collins Inc. He was also the Vice-
President and Director of Non-Alcoholic Beverage business of San Miguel Corporation. He is a
graduate of the University of the Philippines with a degree in Business Administration.
SPLASH JOHNSON & JOHNSON2010 2009 2008 2010 2009 2008
Current Ratio 4.58 5.06 4.17 1.38 1.24Acid-test Ratio 3.94 4.58 3.72 1.21 1.09Net Working Capital 2.1 B 2.5 B 2.7 B 546.6 M 385.3 M
The Splash liquidity ratios are good enough because its current ratio and acid-test ratio is higher than 1 which means the firm can cover its liabilities with its assets. Therefore, as we can see, it is on 2009 when Splash achieved high current and acid-test ratio. This was due to the decrease of current assets as a result of: purchase of hygienix brand; expenditures from IPO and cash dividends. Liabilities from 2008 to 2009 also decrease due to reduction in trade payables.But then, current and acid-test ratiowent back down in 2010 due to decrease again in current assets as results of decrease in cash and cash equivalents and improvement in
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receivables collection. Another thing, net working capital of Splash is higher than its benchmark with is good because this means that the firm has more opportunities to expand. Overall analysis, Splash is considered as more liquid than Johnson & Johnson.
ACTIVITY RATIOS:
SPLASH JOHNSON & JOHNSON2010 2009 2008 2010 2009 2008
These three ratios are the commonly used to measure how efficient the firm is in using its assets. In inventory turnover of splash, it means that the average of their inventory is 102, 73 and 93 (365/IT) days respectively. Compare to its benchmark, Johnson & Johnson has faster inventory turnover which is better. When it comes to average collection period, Splash also has longer periods to collect their receivables. It takes 3 to 4 months to collect unlike in J&J it takes just 1 month. Moving forward, total asset turnover of splash is below 1 compare to J&J which is higher than one is better. This only means that he Splash only earns 0.73, 0.66 and 0.72 cents for every one peso of their assets. Overall, in measuring activity ratios, J&J is better in managing its assets than Splash.
FINANCIAL LEVERAGE RATIOS:
SPLASH JOHNSON & JOHNSON2010 2009 2008 2010 2009 2008
Debt Ratio 35% 37% 39% 60% 69%Time Interest Earned Ratio 2.40 0.04 2.68 52.27 49.69Fixed-Payment Ratio 3.36 1.26 4.09 53.46 51.27
Debt ratio of Splash means that 35%, 37% and 39% of the firm’s assets is comes from debt.J&J seems to be highly leveraged than Splash that can result to higher ROE but may be risky in being unable to pay its debt. The time interest earned ratio of Splash means that it has 2.40, 0.04 and 2.68 pesos in EBIT for every one peso interest obligation they have. The reason behind low TIR in 2009 was due to low operating profit. The fixed coverage ratio of Splash means that it earns 3.36, 1.26 and 4.09 times its fixed charges. The greater the ratio, the lower the risk and the better the debt position of a firm.
PROFITABILITY RATIOS:
SPLASH JOHNSON & JOHNSON2010 2009 2008 2010 2009 2008
The GPM of Splash means that for every one peso that the firm earns, there are 0.55, 0.46 and 0.52 cents left after it pays for goods. For the past three years, it is on 2009 when Splash has a low GPM which is due to low introductory prices of new products. The higher ratio, the better it becomes. Therefore, Splash is better than J&J.The OPM of Splash means that for every one peso that firm earns, there are 0.05, 0.0011 and 0.08 cents left after all the operating expenses are deducted. The lowest OPM is on 2009 also which is due to low gross profit margin.The NPM of Splash means that a company has 0.05, 0.01 and 0.09 cents of net income for every peso of sales. In 2009, Splash has a very low profit margin which due to low net sales during the year. Low net sales are the result of: a) performance of new product launches supported by marketing initiatives in 2008 was affected by the economic conditions; b) and the distributors were not able to support the Company in delivering these products to the market. Moreover, the NPM increase in 2010 from 2009 due to 10% increase in sales from direct selling mainly came from skin exfoliant and hair categories.The ROA of Splash means that the firm earned 0.04, 0.01 and 0.07 cents on each peso of asset investment. Since the Splash has lower asset turnover and net profit margin than J&J, the ROA results are the same. In return on equity, being highly leverage of J&J resulted to high ROE. Overall, J&J still seems better than Splash because of its higher ROA, ROE and even net profit margin.
MARKET RATIOS:
SPLASH2010 2009 2008
Price/Eranings Ratio 11.53 79.92Market book Ratio 0.60 0.75Book value per share 4.03 3.66 4.24
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CHAPTER III
Industry Profile 3.1
Personal care or toiletries is the industry which manufactures consumer products used for beautification and in personal hygiene. Personal care products are categorized into:
Hair Care
Skin Care
Deodorants
Color Cosmetics
Bath and Shower
Sun Care
Manufacturers expand consumer bases
After struggling amidst the economic slowdown which hit the Philippines hard during 2009,
beauty and personal care rebounded strongly in 2010. The improved economic performance
and higher consumer and business optimism in the country brought about by the establishment
of a new political administration engendered a conducive environment for more vibrant growth
in beauty and personal care. Although per capita consumption failed to increase significantly,
the number of Philippine consumers using beauty and personal care products increased slightly
as manufacturers pursued new strategies aimed at developing market penetration.
Beauty and personal care sees robust growth in 2010
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In a quest to improve their footholds in the Philippines, beauty and personal care companies
are enthusiastically expanding their consumer bases by offering a wider array of products
aimed at boosting demand among both current and prospective consumers. The trend of young
Philippine men adhering to the so-called ‘metrosexual’ lifestyle is encouraging players to launch
new lines of men’s grooming products, while the increasing influence of teens and pre-teens in
buying decisions is capturing the interest of key manufacturers. Furthermore, increasing
demand for products with anti-aging properties across many beauty and personal care
categories is enabling companies to offer something new to current consumers, thereby
improving revenue per customer.
Grocery retailers remain the most important distribution channel
The dominance of mass market beauty and personal care brands and the increasing share of
total beauty and personal care volume sales accounted for by products in small packaging sizes
was instrumental in grocery retailers maintaining its position as the leading distribution channel
for beauty and personal care products during 2010. The opening up of more convenience
stores, neighbourhood supermarkets and sari-sari stores further increased the size of grocery
retailers’ dominant distribution value share. Meanwhile, smaller packaging sizes in skin care,
oral care and bath and shower improved the position of traditional sari-sari stores, categorised
under small independent grocers.
Market Share 3.2
Philippine market shares of the Splash major brands and product line:
Moisturizes the skin as a Cream and magically transforms itself into a powder.Light and non-sticky coverage is as good as face powder as it instantly hides blemishes and dark spots.Combines Vitamins B5, B3, B6, C & E to nourish & moisturize skin.It has SPF10 that protects you from harmful rays of the sun.Available in 20g and 8g
SkinWhite Power Whitening Soap
Brings you skinwhite powerwhitening bath soap. It’s exclusive and advances Tripower technology gives you the power of whitening.Whitens in as fast as 7 days.Vitanourish formula that combines Vitamins B5, B3 and E.In 65g, 90g and 135g sizes.
Power Whitening Face Cream
Incredibly lightens dark spots. Provides skin clarity.Gives skin a moisture-surge.Can be used as a make-up base.In 10ml, 25g and 40g.
Power Whitening Lotion
Promotes fairer, whiter, more vibrant, healthy glowing skin in as early as 2 weeks.SPF protects skin from sun-damage caused by prolonged sun exposure.In 50ml, 100ml, 200ml and 350ml bottle.
Skin White Milk Soap
Each bar of Skinwhite Milk Bath Soap supplements the nourishment that your skin needs for a whiter and healthier look and feel. Its Milk proteins and Vitamin E lathers into a rich cream that moisturizes and softens skin.Available in 65g and 90g.
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SkinWhite Whitening Deodorant
Antiperspirant and deodorant for beautiful and dry underarms.Promotes smoother and whiter underarm in as early as 2 weeks.With refreshing scents that last all day.In stick and roll-on formats.
SkinWhite Whitening Bath Soap
Thoroughly cleanses skin, leaving it soft and smooth.Enriched with vitamins and natural moisturizers to nourish skin.With delicate scent that exudes vibrant freshness after every use.In 65g, 90g and 135g sizes
Power Whitening Face Solution
Gently removes deep-seated dirt, clears and refines pores.Helps regulate pimples, blackheads and whiteheads formationFormulated with moisturizers to nourish your skin.In 30ml and 60ml bottle.
EXTRACTExtract Hand Body Lotion
Quick absorbing and deeply penetrates to naturally whiten skin.SPF 8 sunscreen protects skin from harmful UVA and UVB that damages and darkens skin.In 45ml, 90ml and 180ml bottles
Extract Papaya Calamansi Skin Whitening Deodorant
Antiperspirant and deodorant.Gives all day protection from sweat and body odor.Helps smoothen underarms
Extract Facial Cleanser
Gently removes deep-seated dirt, clears and refines pores.Refreshes and rejuvenates tired skin to reveal its natural glow.Infused with natural moisturizers.
Extract Soap Gently cleanses for softer and smoother skin.With natural moisturizers to replenish skin's moisture.Non-drying.In 90g and 125g sizes/ In 100ml bottle
EXFOLIATION
MAXI-PEEL DESCRIPTIONMaxi-Peel Facial Cleanser
Cleans and lifts away deep-seated dirt.Helps dry up pimples & acne and remove blemishes, blackheads and whiteheads.Removes dead skin cells.Whiter skin in 2 weeks.Nourishes skin with Vitamins B3, B5, B6, C and E.
Maxi-Peel ExfoliantMaxi-Peel MoisturizerMaxi-Peel Sun BlockMaxi-Peel Exfoliant SoapMaxi-Peel Neck and Body Exfoliant SoapConcealing
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Cream Whitening
HAIR
KOLOURS DESCRIPTIONColor Recharge Conditioner
Helps protect color-treated hair.Penetrates deeply to moisturize each hair strand.Available in Silky Black, Brilliant Brown, Radiant Red
Color Recharge Shampoo
Thoroughly cleanses and gently dissolves impurities.Special hydrating system makes hair soft and manageablewith exceptional richness and shine.Available in Silky Black, Brilliant Brown, Radiant Red
Dual Conditioning Hair Color
Specifically formulated for the unique color and texture of Asian hair.Deeply penetrates hair's cortex, giving superb color coverage from root to tip.Infused with Vitamins E and B5 that gives you a more vibrant and healthy hair.
Color Recharge Hot Oil Conditioner
Hot oil benefits with the convenience of conditioner use. No heat, No wait.With color deposition properties that extends the color vibrancy of your black/brown hair, without changing its original color.Special hydrating system keeps hair soft, smooth, shiny and smelling fresh all day.With UV sunscreens that protect colored hair from sun damage and fading.Available in 2 variants: 12ml & 100ml
SHADESPower Hair Dye Non-metallic formula that does not cause brittleness and dryness.
Vitamin enriched for stronger, softer and shinier hair.Does not stain hands, scalp, and hair line heavily.NO ammonia and NO harsh odors.ONLY SRP 56.00.Available in: Black, Brown Black & Medium Brown [9g].
VITRESSVitress Cuticle Coat
Smoothens dry, dull and hard-to-manage hair.Gives hair glossy shine.Enriched with moisturizers to nourish hair.Style straight or curly.
Vitress Hair Polish
Light, non-greasy hairstyling cream.Tame frizz and smoothens down fly-away hair without the sticky feelingDeeply penetrates each layer of hair strand for intense moisturizationLeaves a glossy, silky shine hairIn 50ml and 100ml tubes.
Vitress Hair Spa Home-use hair spa treatment cream infused with aromatic scents.Revitalizes hair making it soft and smooth.Deeply penetrates to intensely moisturize each strand of hair.Nourishes scalp.In 30ml, 60ml and 120ml tubes.
Vitress Setting Lotion
Non-sticky & non-flaking.Formulated with D-Panthenol that lock-in moisture to hair.
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In 125g, 250g and 500g bottles.CONTROLStyling Gels Strong hold gels that keep any hairstyle in place.
Non-sticky, Non-flaking.Setting Lotions Tames hair with a sleek and wet finish.
Prevents tangles and keeps hair silky soft, smooth and manageable.Tames frizz and smoothens fly-away hair without sticky feeling.In 50g tube [PHP 21.00],100g tube [ PHP 35.00], and 150g jar [PHP 50.00].
ANTIBACTERIAL
DESCRIPTIONHYGIENIXAnti-Bacterial Hand Gel
Effectively sanitizes hands while keeping it nourished and refreshed.It has a preferred scent and feel on skin.Available in 55ml and 100ml.
Anti-Bacterial Hand Spray
Is packed in a unique handy spray bottle formulated with moisturizers to keep hands soft and smooth.It has dual-scent technology that is cool and refreshing.Available in 20ml and 55ml.
Ethyl Alcohol Effectively kills germs and disinfects while soothing the skin.It has a non-drying formula and mild fragrance.Available in 60ml
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ANNEX 2
DUPONT ANALYSIS (2010)
Splash Corporation
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Return on Common
Equity (ROE)6%
Return On Tota l As sets
(ROA)4%
Net Profi t Margin4.84%
Earnings Avai lab le for Common
Stockholder ' s144 ,654,140
Sales2,988,298,426
Tota l As sets Turnover
0.73
Sales2,988,298,426
Tota l As sets4,082,153,525
F inanc ia l Leverage
Multi pl ier (FL M)1.54
Tota l As sets4,082,153,525
Tota l L iab i l iti es
1,446,499,271
Stockholder ' s Equity
2,635,654,254
Common Stock Equi ty
2,635,654,254
÷ +
÷X
X
Splash low Return on Equity (ROE) is primarily because of high Total Assets resulted from high other current assets such as advances to suppliers, supplies inventory, and prepaid expenses, etc. High Total Assets slowed the Total Asset Turnover (ATO) that makes the ROA low as well as ROE. To improve ATO, Splash needs to increase production efficiency or price levels or reduce current or noncurrent assets.
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ANNEX 4
News Article
Splash to go into Food Business
by Doris C. Dumlao
August 5th, 2011
Personal care product manufacturer Splash Corp. is diversifying into food manufacturing with a
deal to acquire 80 percent of Barrio Fiesta Manufacturing Corp. for P472 million.
Splash plans to launch various food products in the next one to two years as part of its plan for
the company to be a major player in the food industry.
Splash net profits down in 3 quarter
By: Paolo G. Montecillo
November 17th, 2011
Splash Corp. has reported that its third-quarter profits went down, due to intense market
competition.
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Splash posted a net income of P10.7 million in the third quarter of the year, down from P11.9
million a year ago. “Domestic operations posted a drop in operating income for the first nine
months amid strong competition but this was offset by the increase in income from the
international operations and direct selling business,” the company said.
Splash raising P1.12B to repay debt, fund food expansion
By: Doris C. Dumlao
December 12th, 2011
Personal care products manufacturer Splash Corp. is raising P1.12 billion from the issuance of
debt notes to selected institutional investors to boost its diversification into the food business
and refinance maturing debts.
In a disclosure to the Philippine Stock Exchange on Friday, Splash said it has signed an
agreement on a corporate notes facility with Security Bank Corp., Robinsons Bank and Security
Bank Corp. trust division. The arranger of the facility is SB Capital Investment Corp.
The company, which bought an 80-percent stake in the food manufacturing unit of Barrio Fiesta
last September, is upbeat on its foray into the food business.
By next year, Hortaleza said the company would spend about P500 million for capital outlay,
P200 million would go to the renovation and upgrade of its existing plant in Valenzuela and P300
million for advertising and promotion.
Splash Corp. gears for major expansion
By: Krista Angela Montealegre
March 20, 2012
The distribution unit of Splash Corp. will increase its capitalization as it gears up for a major
expansion drive this year.
In a disclosure to the Philippine Stock Exchange, the homegrown personal care manufacturer
said that it has obtained board approval to hike the authorized capital stock of wholly owned
subsidiary Prime Global Distribution Corp. to P100 million.
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Splash will subscribe to 25 percent of the increase in authorized capital stock. Formerly
Acceleron Distribution Corp., Prime Global distributes certain Splash brands to large-scale
supermarkets in the Philippines.
“This is in preparation for its expansion as a full blown distribution service provider starting this
year,” Splash said.
In the first nine months, Splash’s earnings rose by 9 percent year-on-year to P66.63 million from
P60.66 million on improved sales from its international and direct selling operations, as well as
the recognition of additional revenues from its newly established food business Barrio Fiesta
Manufacturing Corp.
The company has increased its capital expenditure budget to P426 million this year to finance
the expansion of plant capacity, improvement of facilities and enhancement of management
information systems for international and direct selling operations.
Splash shares finished at P1.91 each on Monday, up 2 centavos or 1.1 percent from its previous