2012 Annual Report - ZTE

ANNUAL REPORT 2012Notes to Financial Statements (continued)(Prepared in accordance with PRC ASBEs)(All amounts in RMB’000 unless otherwise stated)(English translation for reference only)V. EXPLANATORY NOTES TO MAJOR ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS(continued)3. Bills receivable2012 2011Commercial acceptance bills 1,577,628 391,943Bank acceptance bills 2,704,592 2,831,5864,282,220 3,223,529As at 31 December 2012, there was no bill which had been transferred to trade receivables as a resultof the issuers’ default (31 December 2011: Nil).As at 31 December 2012, there were no trade receivables included amounts due from shareholders orrelated parties holding 5% or more in the voting shares (31 December 2011: RMB3,260,000, accountingfor 0.1% of the total amount of trade receivables). Please refer to Note VI “The relationships andtransactions with related parties”.At 31 December 2012, there were no bills receivable that were endorsed but outstanding. (31 December2011: Nil).During the year, the Group was engaged in certain discounting business with a number of PRC domesticbanks. The Group was of the view that substantially all risks and rewards relating to bills receivablewith a carrying amount of RMB1,965,274,000 had been transferred and therefore the conditionsfor derecognising financial assets had been fulfilled. Accordingly, the relevant bills receivable werederecognised in full at their carrying value on the date of discounting. The maximum exposure to lossfrom the Group’s continuing involvement in the endorsed bills and the undiscounted cash flows torepurchase these bills equal to their carrying amounts. The Group is of the view that the fair valuesof the Group’s continuing involvement in the bills receivable are not significant. During the RelevantPeriods, the Group has not recognized any gain or loss on the date of transfer of the discounted billsreceivable. No gains or losses were recognized from the continuing involvement, both during the yearor cumulatively. Moreover, not substantially all risks and rewards relating to certain bills receivablewere transferred upon discounting and therefore the conditions for derecognizing financial assets werenot fulfilled. As at 31 December 2012, the carrying value of discounted bills receivable not qualifiedfor derecognition of financial assets amounted to RMB603,051,000. Out of this amount, commercialacceptances with a carrying value of RMB500,000,000 (31 December 2011: RMB78,804,000) and bankacceptances with a carrying value of RMB103,051,000 (31 December 2011: RMB932,165,000) werediscounted to secure short term loans.As at 31 December 2012, bank acceptances with a carrying value of RMB14,178,000 were pledgedas security for short term loans (31 December 2011: RMB4,410,000).203