CHINA ERATAT SPORTS FASHION LIMITED ANNuAL REPORT ...

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48 China Eratat Sports Fashion Limited • Annual Report FY2010 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL YEAR ENDED 31 MARCH 2010 14 Investment in Subsidiaries Company 2010 2009 RMB’000 RMB’000 Unquoted equity shares, at cost 49,050 48,504 Details of the subsidiaries are as follows: Name of subsidiaries Held by the Company Eratat (Fujian) Light Industry Development Co., Ltd Fujian Haimingwei Shoes Co., Ltd Jinjiang Wanshida Computer Embroidery Co., Ltd Quanzhou City Quangang Hongli Shoes Co., Ltd Country of incorporation/ principal place of business Principal activities Cost of investment Equity held by the Group 2010 2009 2010 2009 RMB’000 RMB’000 % % PRC Production of shoe materials 10,681 10,135 100 100 PRC Production of sports shoes, travel shoes, soles, apparel and fabric bags PRC Manufacture of all kinds of computer embroidery and dress 20,369 20,369 100 100 3,000 3,000 100 100 PRC Production of shoes 15,000 15,000 100 100 All the subsidiaries are audited by Moore Stephens LLP for FRS consolidation purposes. 49,050 48,504 During the current financial year, the Company increased its investment in the registered and paid-up capital of Eratat (Fujian) Light Industry Development Co., Ltd from HK$10.9 million (approximately equivalent to RMB10,135,000) to HK$11.5 million (approximately equivalent to RMB10,681,000) by its additional capital investment of HK$0.6 million (approximately equivalent to RMB546,000) in cash. 15 Goodwill Group 2010 2009 RMB’000 RMB’000 Balance at beginning of year and at end of the year 1,759 1,759 The goodwill arising on consolidation relates to the excess of the cost of acquisition over the fair value of the Group’s share of the net identifiable assets acquired of Quangang Hongli. The Group assessed the recoverable amount of goodwill based on value in use calculation which uses cash flow projections based on financial budgets of the Group approved by management covering a five-year period. Cash flows beyond the fiveyear period are extrapolated using the estimated growth rate of 5% per annum. The growth rate used is based on historical growth and past experience and does not exceed the currently estimated long-term growth rate of the industries in which the Group operates. The discount rate used was at 8% and has been applied to the cash flows. Management believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount of goodwill to exceed its recoverable amount.
16 Inventories NOTES TO THE FINANCIAL STATEMENTS FINANCIAL YEAR ENDED 31 MARCH 2010 Group 2010 2009 RMB’000 RMB’000 Raw materials 13,928 5,768 Work-in-progress 5,173 2,333 Finished goods 894 2,885 17 Trade Receivables 19,995 10,986 Group 2010 2009 RMB’000 RMB’000 Trade receivables 269,087 167,726 Trade receivables are generally on 90-120 days (2009: 30-90 days) credit terms. 18 Other Receivables and Other Current Assets Group Company 2010 2009 2010 2009 RMB’000 RMB’000 RMB’000 RMB’000 Other receivables 141 264 141 179 Trade deposits to suppliers 25,252 48,479 - - 25,393 48,743 141 179 Other current assets Prepayments 20,586 10,252 - - 45,979 58,995 141 179 Trade deposits to suppliers relate to deposits placed with suppliers and sub-contractors for the purchase of raw materials and production of apparels. 19 Due from/(to) Subsidiaries China Eratat Sports Fashion Limited • Annual Report FY2010 49 The amounts due from/(to) subsidiaries are non-trade in nature, unsecured, interest-free and are repayable on demand and are denominated in Renminbi.
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