CEO's Statement

Dear Fellow Shareholders

On behalf of the Board of Directors, I am pleased to present to you the Group’s annual report for the financial year ended December 2008.

OSIM POSTS BETTER RESULTS
WRITES OFF US INVESTMENT

We have achieved a credible performance in a challenging year. In FY 2008, Group revenue was $457 million.

I am pleased to report healthy growth in operating profit and positive cash flow. Our operating profit before tax was $20 million +87% while our EBITDA was $39 million +10&.

Our renewal process which started in early 2007 is progressing well. This has resulted in a better and leaner cost structure. We have achieved healthy cash flow due to better product innovation and better operating effectiveness.

Profit after tax (excluding our US investment Brookstone) was $15 million +18%.

In light of the US financial crisis, we have decided to write off our US investment in Brookstone. This resulted in loss after tax of $99 million for the full year ended 31 December 2008 compared with profit after tax of $3 million in FY 2007.

We have shown our resourcefulness and we have been resilient in weathering the many storms. Our renewal is progressing well and we are now in an excellent position to rebuild for the future.

RESOURCEFUL, RESILIENT, REBUILD

Resourceful: we are continuously looking and finding growth opportunities.

Our investment in brand management and product research & development in good times enables us to continue to produce high quality, safe & cutting edge products in times of need. The strength of our brand is now showing its value in these troubled times.

Our restructuring which started in 2007 now enables us to produce effective results with less resources. We will continue to be resourceful whatever the conditions.

Resilient: we are always adapting positively to the adverse environments.

OSIM has a range of new innovative products including uDream, uMedia, uSqueez Warm, uGallop, uCrown which will cater to a good cross section of customers. Our extensive retail network across over 30 countries enables us to build a wide range of loyal customers. In addition, Massage chair sales in China continue to maintain good growth with easy-to-buy payment schemes.

Rebuild: we are remodeling & restructuring to consolidate our No. 1 brand.

We have rationalised our network of outlets in 2007 & 2008 to focus on growing profitability. We have placed increased focus on sales per man per store.

We are also growing new brands. In China, we have developed the RichLife nutrition brand and plan to build more outlets in 2009.

The crisis has provided more opportunities for us to consolidate and build on our Asia No. 1 brand position while weaker players exit.

BROOKSTONE - OUR INVESTMENT AND FINANCIAL IMPACT

Following 3 years of EBITDA growth from US$32 million in 2005 to US$55 million in 2007, Brookstone sales was impacted by the US financial crisis in 2008. Conservative prudent accounting dictates that we make a non-cash impairment for our investment in Brookstone, writing its value in our books to zero.

Our US investment in Brookstone was "ring fenced" and so there is no recourse to OSIM. There is, therefore, no cash impact on OSIM, no consolidation of Brookstone losses in the future and there is no obligation for OSIM to put in further money. Notwithstanding that, I am happy to report that Brookstone ended 2008 with US$22.5 million in cash and it has no plans currently for any cash injection in 2009. Writing off this investment has no impact on OSIM's cash flow and with the full impairment, there will be no need to account for any future share of loss.

It is important to note that we continue to hold a 55% investment in Brookstone and are te largest ordinary shareholder of Brookstone. OSIM healthy lifestyle products continue to contribute positively to Brookstone's growth. With the write-off, there is now "no downside only upside" and there will be less volatility in our quarterly results.

2009 - A YEAR TO REBUILD

Due to the challenging global market conditions, we should be mindful of the environment but focus on our core competence and strengths to build on our FY 2008 EBITDA and operating profit through growth in China and leaner cost structure across the group.

We have an exciting range of new OSIM products to sustain sales in 2009. Global Active will grow its GNC stores in the region and RichLife outlets in China and target higher profitability for the year.

OSIM core business has been profitable and cash positive for the last 20 years and I am confident our people will rise to the occasion and overcome the challenges ahead.

BUILDING A TALENT-BASED COMPANY

As it has been from the very start, our corporate culture is strong and we are a company about people. Indeed, our people are strategic and competitive and have the positive attitude to make every touch point a unique OSIM brand experience for our customers.

We will continue to strengthen and groom future talent with the goal of achieving "Inspiring Life".

EXPRESSING OUR GRATITUDE

On behalf of the Board of Directors, I am grateful for the dedication and hard work of each and every staff and their effective contribution in 2008.

I would also like to express my sincere thanks to all our customers, suppliers, bankers, business associates and shareholders for their steadfast support. In 2009, I am confident we can build on the results in 2008 towards a better OSIM.

Mr. Ron Sim
Founder, Chairman and CEO