2012 Annual Report - ZTE

ZTE CORPORATIONNotes 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)20. Short-term loans (continued)Note 1: ZTE (H.K.) Limited (“ZTE HK”), a subsidiary of the Company, entered into a syndicated loan agreement (“Loan Agreement”)with an aggregate amount of USD900 million with 10 international banks, including Bank of China (Hong Kong) Limited(the “Syndicate”), in 2011. The loans were guaranteed by the Company. Balances and outstanding terms of the loans asat the end of the current year are set out as follows:Drawdowndate Due date CurrencyInterest rate(%)Balance at the end of2012ForeigncurrencyRMBequivalentBalance at the end of2011ForeigncurrencyRMBequivalentThe Syndicate 2011.8.15 2016.8.15 USD Approx. 3% 444,829 2,795,973 438,418 2,762,428The Syndicate 2011.7.20 2014.7.20 USD Approx. 2% 350,327 2,201,980 345,467 2,176,751The Syndicate 2011.8.15 2014.8.15 USD Approx. 2% 100,051 628,871 98,663 621,6665,626,824 5,560,845As at the end of the reporting period, the Group did not comply with the requirement of the Loan Agreement in respect ofone financial benchmark, so the balance of long-term bank borrowing was reclassified to short-term. ZTE HK has appliedto the lending bank for exemption from early loan repayment, and such application for exemption will take effect whenthe approval of no less than 2/3 of the amount of syndicate loan facility is granted. As at 27 March 2013, approval hasbeen obtained in respect of 58% of the loan facility amount. The Company is of the view that the matter will not haveany significant impact of the Group’s operations.Note 2 Bill discounted loans were loans discounted by bank acceptance bills and commercial acceptance bills.Note 3 Pledged loans were loans secured by trade receivables and bills.21. Derivative financial liability2012 2011Derivative financial liability 99,630 2,433Hedging instruments—current portion 6,109 2,872105,739 5,305Descriptions of hedging instruments and related hedging:2012 2011Interest rate swap agreement 16,856 4,120Non-current portion 10,747 1,248Current portion 6,109 2,872232