Osim FR 050407.indd

Notes to the Financial Statements - 31 December 2006 (cont’d)35. Taxation (cont’d)OSIM International Trading (Shanghai) Co. Ltd and OSIM (China) Co., LtdAs a wholly foreign-owned enterprise registered in the Zone, Pudong New Area, the companies are subject to PRC income tax at therate of 15%.OSIM (Taiwan) Co., LtdPursuant to the Income Tax Law (“ITL”), beginning with 1998, annual distributable net earnings as determined under the ITL that arenot distributed to shareholders in the following year are subject to additional income tax at a rate of 10%. The 25% income tax andadditional 10% tax paid by the Company for 1998 and onwards may be used by individual resident shareholders of the Companyas individual income tax credits. Pursuant to the ITL, the additional 10% income tax paid may be used by the shareholders, otherthan domestic corporate shareholders as tax credits when the undistributed earnings are ultimately distributed.36. Earnings per shareBasic earnings per share amounts are calculated by dividing profi t for the year that is attributable to ordinary equity holders of theCompany by the weighted average number of ordinary shares outstanding during the year.Diluted earnings per share amounts are calculated by dividing profi t for the year that is attributable to ordinary equity holders of theCompany by the weighted average number of ordinary shares outstanding during the year plus the weighted average number ofordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.Notes to the Financial Statements 151Annual Report 2006