Osim FR 050407.indd

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Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.3 Significant accounting estimates and judgmentsEstimates, assumptions concerning the future and judgments are made in the preparation of the fi nancial statements. Theyaffect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, anddisclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, includingexpectations of future events that are believed to be reasonable under the circumstances.a) Key sources of estimation uncertaintyThe key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheetdate, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilitieswithin the next fi nancial year are discussed below:i) Impairment of goodwillThe Group determines whether goodwill is impaired at least on an annual basis. This requires an estimationof the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in userequires the Group to make an estimate of the expected future cash fl ows from the cash-generating unit andalso to choose a suitable discount rate in order to calculate the present value of those cash fl ows. The carryingamount of the Group’s goodwill at 31 December 2006 was $22,073,000 (2005: $21,055,000). More detailsare given in Note 13.ii)Income taxesThe Group has exposure to income taxes in numerous jurisdictions. Signifi cant judgement is involved indetermining the group-wide provision for income taxes. There are certain transactions and computationsfor which the ultimate tax determination is uncertain during the ordinary course of business. The Grouprecognises liabilities for expected tax issues based on estimates of whether additional taxes will be due.Where the fi nal tax outcome of these matters is different from the amounts that were initially recognised, suchdifferences will impact the income tax and deferred tax provisions in the period in which such determinationis made.In addition, the Company was awarded the Development and Expansion Incentive (“DEI”) under theInternational Headquarters (“IHQ”) Award on 8 September 2004. The commencement date is 1 January2005 and is for a period of 5 years. The qualifying income from IHQ activities during the 5-year period willenjoy a concessionary tax rate, subject to fulfi llment of the criteria as stipulated in the Economic DevelopmentBoard’s offer letter. As at 31 December 2006, the Company has met the fi rst criteria and is currently on trackto achieving the remaining two criteria. The management believes that they will meet all the DEI criteria withinthe qualifying period by 31 December 2008.Notes to the Financial Statements 85Annual Report 2006
Notes to the Financial Statements - 31 December 2006 (cont’d)2. Summary of significant accounting policies (cont’d)2.3 Significant accounting estimates and judgments (cont’d)a) Key sources of estimation uncertainty (cont’d)ii)Income taxes (cont’d)The carrying amount of the Group’s tax payables, deferred tax liabilities, deferred tax assets and income taxrecoverable as at 31 December 2006 were summarised as follows:Provision for income tax : $9,933,000 (2005: $7,383,000)Deferred tax liabilities : $4,254,000 (2005: $4,084,000)Deferred tax assets : $4,910,000 (2005: $3,281,000)Income tax recoverable : $1,188,000 (2005: $2,452,000)iii)iv)Depreciation of fixed assetsFixed assets are depreciated on a straight-line basis over their estimated useful lives. Management estimatesthe useful lives of these fi xed assets, except for freehold and leasehold buildings, to be within 1 to 10 years.The carrying amount of the Group’s fi xed assets at 31 December 2006 was $49,038,000 (2005: $42,136,000).Changes in the expected level of usage and technological developments could impact the economic usefullives and the residual values of these assets, therefore future depreciation charges could be revised.Provision for warrantiesProvision for warranties is accrued based on the estimated costs of fulfi lling the total obligation, includinghandling and transportation costs. The amount of the provision for warranty is estimated based on salesvolumes and past experience of the level of repairs and return. The estimation basis is reviewed on an ongoingbasis and revised where appropriate. The provision for warranties at 31 December 2006 was $1,716,000(2005: $1,383,000).v) Provision for redemption of customers’ reward pointsProvision for redemption of customers’ reward points is accrued based on the estimated value of thereward points given to customer upon purchase, which approximates the cost of the products to the Group.The provision for redemption of customers’ reward point at 31 December 2006 was $1,028,000 (2005:$679,000).vi)Provision for restoration costsProvision for restoration costs is accrued based on the expected cost of restoring the leasehold premises,retails outlets and warehouse to their state and condition as at the commencement of the lease and to thesatisfaction of the landlord. The provision for restoration costs at 31 December 2006 was $3,783,000 (2005:$3,735,000).Notes to the Financial Statements 86Annual Report 2006
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Process and Performanceas the growt
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Customer Service Department“I put
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Sales Department“I look forward t
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Research & Development“Every prod
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Contents17 CEO’s Message22 The Ro
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... ensuring that as we grow,they g
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previous year. Q4 2006 revenue rose
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The Role ModelsThe Role Models 22 A
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Ms Teo Sway HeongNon-Executive Dire
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Mr Peter Lee Hwai KiatMs Celine Cha
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Result of our Growth StrategyThe Gr
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Performance ReviewIn building a glo
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ProfitabilityIn FY2006, buoyant rev
Page 35 and 36: An Environment of GrowthMarch 2006
Page 38 and 39: Financial HighlightsOur goal is to
Page 40 and 41: Number of OutletsOSIM OutletsNorth
Page 42 and 43: Capital ExpenditureCapexS$’000 Le
Page 44 and 45: Corporate Structure as at 21 Februa
Page 46 and 47: OSIM Global NetworkSINGAPORECHINATA
Page 48 and 49: Corporate InformationBoard of Direc
Page 50 and 51: Non Executive DirectorMs Teo Sway H
Page 52 and 53: Corporate Governance Report 51 Annu
Page 54 and 55: The Company worked closely with a p
Page 56 and 57: New directors are at present appoin
Page 58 and 59: In 2006, the Audit & Risk Managemen
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Page 63 and 64: Financial Contents64 Directors’ R
Page 65 and 66: Directors’ ReportFor the Year end
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Page 71 and 72: Directors’ Report (cont’d)Audit
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Page 75 and 76: Balance Sheetsas at 31 December 200
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Notes to the Financial Statements -
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Major PropertiesUnexpiredterm ofDes
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Shareholdings Statistics as at 8 Ma
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Notice of Annual General Meeting (c
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Notice of Annual General Meeting (c
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Appendix (cont’d)DEFINITIONSIn th
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Appendix (cont’d)PROPOSED RENEWAL
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Appendix (cont’d)3.1.3 The Direct
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Appendix (cont’d)4. Rationale and
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Appendix (cont’d)11. ACTION TO BE
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OSIM INTERNATIONAL LTDCompany Regis
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SINGAPOREOSIM International Ltd65 U
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Osim FR 050407.indd

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