2012 Annual Report - ZTE

ANNUAL REPORT 20122. Statement of the Directors of the Company on Internal Control ResponsibilityThe Board of Directors of the Company is of the view that the Company has fundamentally established acomprehensive internal control system in accordance with relevant laws and regulations and regulatory documents.The internal control system of the Company has taken into account five basic elements of internal control: internalenvironment, risk assessment, business controls, information and communications and internal supervision. TheCompany has exercised stringent, adequate and effective internal control in respect of subsidiaries, connectedtransactions, third-party guarantees, significant investments, information disclosure, and all systems have beenadequately and effectively implemented. The operation of the Company’s internal control is effective without anysignificant defects in its mechanism and system as a whole or any significant deviations in implementation. Theoperation of the internal control regime is effective.Therefore, the Board of Directors is of the view that the Company has not identified any significant defects inthe design or implementation of internal control in 2012. The Company’s self-assessment on its internal controlis in line with the actual conditions.3. Opinion of the Supervisors of the Company on the Self-Assessment of Internal Control(1) The Company has established a comprehensive and proper internal control system in accordance withrelevant regulations of the CSRC and the Shenzhen Stock Exchange and taking into account the specificconditions of the Company, effectively ensuring regulated operation and sound development for the Companyand safeguarding the safety and integrity of the Company’s assets.(2) The Company has established and optimised its internal organisational structure in accordance with modernenterprise systems and internal control principles, forming a scientific mechanism for decision-making,implementation and supervision. The Company’s internal audit department is equipped with sufficientmanpower that ensures effective implementation and supervision of its key internal control activities.(3) During the reporting period, the management and decision-making processes of the Company were in strictcompliance with various rules and regulations and no violations of the Guidelines for Internal Control of ListedCompanies published by the Shenzhen Stock Exchange or the Company’s internal control system had beenreported.In view of the above and having reviewed the Company’s internal control self-assessment report, the SupervisoryCommittee is of the view that the self-assessment of the Company’s internal control is a true, objective andcomplete reflection of the status of the Company’s internal control, and has no objection to the assessment reporton internal control of the Company.4. Independent Opinion of the Independent non-executive Directors of the Company on the Self-Assessment of Internal Control of the Company(1) The Company has established a comprehensive internal control regime in compliance with relevant laws,administrative regulations and departmental rules and regulations of the State. In 2012, the Company was incompliance with basic principles in internal control and further improved and developed its internal controland management system and continued to advance its internal control development in an orderly mannertaking into account its specific conditions, business development and management requirements.147