Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)3. Share capital (cont’d)The Company has one employee share option scheme (Note 28) under which options to subscribe for the Company’s ordinaryshares have been granted to employees.On 30 January 2006, in accordance with the Companies (Amendment) Act 2005, the concepts of “par value” and “authorisedcapital” were abolished and on that date, the shares of the Company ceased to have a par value. The amount standing to the creditof the Company’s share premium reserve became part of the Company’s share capital.4. Enterprise expansion fundsUp to fi nancial year ended 31 December 2002, in accordance with the relevant laws and regulations of the People’s Republic ofChina (“PRC”), OSIM International Trading (Shanghai) Co., Ltd (“the subsidiary”) appropriated tax refunds from accumulated profitsto enterprise expansion fund. The enterprise expansion fund may be used to increase the registered capital of the subsidiary, subjectto approval from the PRC authorities. The enterprise expansion fund is not available for dividend distribution to the shareholders.5. Capital reservesa) China statutory reserveIn accordance with the relevant laws and regulations of the People’s Republic of China (“PRC”), OSIM International Trading(Shanghai) Co., Ltd and OSIM (China) Co., Ltd (“the subsidiaries”) are required to set up a statutory reserve by way ofappropriations from its statutory net profi t. The subsidiaries are required to allocate at least 10% of its net profi t to thestatutory reserve until the balance of the statutory reserve reaches 50% of its registered capital. The statutory reserve maybe used to offset accumulated losses or increase the registered capital of the subsidiary, subject to approval from the PRCauthorities. The statutory reserve is not available for dividend distribution to the shareholders.GroupCompany2006 2005 2006 2005$’000 $’000 $’000 $’000At beginning 282 282 – –Appropriation of profi ts during the year 354 – – –At end of year 636 282 – –Notes to the Financial Statements 108Annual Report 2006