2012 Annual Report - ZTE

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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)30. Long-term non-current liabilities due within one year (continued)On 30 January 2008, the Company issued 40,000,000 bonds with warrants with a nominal value ofRMB100 each and a total amount of RMB4 billion. The bonds and the warrants are listed on The StockExchange of Shenzhen. The bonds with warrants are guaranteed by China Development Bank, and arefully redeemable within 5 years from the date of issue. Holders of the bonds have also been issued 1.63warrants at nil consideration for every bond issued and therefore a total of 65,200,000 warrants havebeen issued. The warrants are valid for 24 months from the date of listing. Holders of the Warrantsare entitled to subscribe for one A Share for every two warrants held at an initial exercise price ofRMB78.13 per share. In the event of any ex-rights or ex-dividend netting of share prices during theeffective period for the warrants, the exercise price and exercise ratio of the warrants will be adjustedaccordingly. As the Company distributed share dividend and issued bonus shares during 2008 and2009, the exercise price of the warrants was adjusted to RMB42.394 per share and the exercise ratiowas adjusted to the subscription of 0.922 A share for every one warrant held.As at the close of trading on 12 February 2010, a total of 23,348,590 “ 中興 ZXCI” warrants wereexercised and 21,523,411 new shares were issued as a result.The coupon interest rate of the bonds cum warrants is 0.8% per annum payable on 30 January ofeach year. At the issue of the bonds, interest rates of similar bond issues (without warrants) in themarket were higher than the interest rate of the bond cum warrants.The fair value of the liability component of the bonds cum warrants was assessed by reference tointerest rates of similar bond issues (without warrants) in the market at the issue date.The net book value of the liability component of the bonds cum warrants at the issue date was setout as follows:Coupon value of Bonds cum Warrants 4,000,000Equity component (580,210)Direct transaction costs attributable to the liability component (38,556)Liability component at issue date 3,381,234The convertible bonds were due and fully paid on 30 January 2013.238
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)31. Long-term loansOriginalcurrency2012 2011RMBequivalentOriginalcurrencyRMBequivalentCredit loans RMB 2,000 2,000 500,000 500,000USD — — 100,000 630,090Guaranteedloans USD — — 883,548 5,567,145Secured loans RMB 281,215 281,215 — — Note 1USD 28,704 180,419 38,640 243,467 Note 1Pledged loan RMB 513,785 513,785 — — Note 2USD 2,000 12,571 — — Note 2989,990 6,940,702Note 1: Out of the secured loans, an amount of RMB281,215,000 was secured by land use rights with a carrying value ofRMB24,171,000 and plant under construction with a carrying value of RMB683,394,000 provided by Xi’an ZhongxingNew Software Company Limited; RMB180,419,000 was secured by existing network equipment with a carrying value ofRMB225,208,000 and future assets to be formed under loan agreements provided by Closed Joint Stock Company TKMobile.Note 2: Out of the pledged loans, an amount of RMB513,785,000 was pledged against trade receivables with a carrying value ofRMB750,000,000 by Xi’an Zhongxing New Software Company Limited and an amount of RMB12,571,000 was pledgedagainst time deposit bills with a carrying value of RMB15,000,000 by Netex Cayman Holdings Co., Ltd.As at 31 December 2012, the top five long-term loans were as follows:LoanDrawdowndateLoan DuedateCurrencyInterest rate(%)Balance at the endof 2012ForeigncurrencyRMBequivalentBalance at the endof 2011ForeigncurrencyRMBequivalentBank of China 2012.4.25 2015.4.25 RMB Approx. 7% 513,785 513,785 — —Bank of China 2012.4.25 2015.4.25 RMB Approx. 7% 281,215 281,215 — —China Development Bank 2006.10.15 2016.10.15 USD Approx. 2% 28,704 180,419 38,640 243,467Shanghai PudongDevelopment Bank 2012.11.27 2014.11.27 USD Approx. 3% 2,000 12,571 — —China International Trust andInvestment Corporation 2012.11.15 2015.11.14 RMB 0% 2,000 2,000 — —239
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ImportantThe Board of Directors, Su
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ANNUAL REPORT 2012DefinitionsIn thi
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ANNUAL REPORT 2012GlossaryThis glos
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ANNUAL REPORT 2012Bearer networkCor
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ANNUAL REPORT 2012Corporate Informa
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ANNUAL REPORT 201210 AuditorsPRCErn
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ZTE CORPORATIONMajor Events of the
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ZTE CORPORATIONHighlights of accoun
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ZTE CORPORATIONHighlights of accoun
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ZTE CORPORATIONReport of the Board
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ANNUAL REPORT 20125. Breakdown of t
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ANNUAL REPORT 2012(3) Assets and li
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ANNUAL REPORT 2012In 2012, the Grou
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ANNUAL REPORT 2012Details in invest
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ANNUAL REPORT 20122. Liquidity risk
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ANNUAL REPORT 20123Change in the us
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ANNUAL REPORT 2012Nature Location T
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ANNUAL REPORT 2012(4) Interest rate
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ZTE CORPORATIONManagement Discussio
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ANNUAL REPORT 2012CAPITAL EXPENDITU
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ZTE CORPORATIONMaterial Matters(I)M
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ANNUAL REPORT 2012Huawei’s litiga
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ANNUAL REPORT 2012(11) In May 2012,
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ANNUAL REPORT 2012(IV)ASSET TRANSAC
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ANNUAL REPORT 2012(3) Progress of t
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ANNUAL REPORT 20125. Updates on the
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ANNUAL REPORT 20125. Status of liab
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ANNUAL REPORT 2012(VIII) PASSING OF
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ANNUAL REPORT 2012(XIV) SIGNIFICANT
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ANNUAL REPORT 2012At the Thirtieth
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ANNUAL REPORT 2012(4) Creditors and
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ANNUAL REPORT 2012Ruide will still
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ANNUAL REPORT 2012A potential suppl
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ANNUAL REPORT 2012• Pricing and o
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ANNUAL REPORT 2012Guaranteed partyD
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ANNUAL REPORT 2012Note 5:It was app
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ANNUAL REPORT 2012(XVI) UNDERTAKING
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ANNUAL REPORT 2012Changes in Shareh
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ANNUAL REPORT 2012(III)ISSUE AND LI
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ANNUAL REPORT 2012Shareholdings of
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ANNUAL REPORT 2012Aerospace Guangyu
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ANNUAL REPORT 2012Directors, Superv
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ANNUAL REPORT 2012Ms. Qu Xiaohui, b
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ANNUAL REPORT 2012Ms. Xu Weiyan, bo
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ANNUAL REPORT 2012Mr. Pang Shengqin
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ANNUAL REPORT 2012(II)CHANGES IN TH
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ANNUAL REPORT 2012Name Name of othe
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ANNUAL REPORT 2012Note 7: Ms. Qu Xi
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ZTE CORPORATIONDirectors, Superviso
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ZTE CORPORATIONCorporate Governance
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ANNUAL REPORT 2012III.Information o
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ANNUAL REPORT 2012Finally, the Audi
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ANNUAL REPORT 2012With respect to a
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ANNUAL REPORT 2012(I)Functions of t
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ANNUAL REPORT 2012regular Board of
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ANNUAL REPORT 20124. In respect of
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ANNUAL REPORT 2012e) consider the r
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ANNUAL REPORT 2012(III)The Audit Co
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ANNUAL REPORT 2012r) consider the r
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ANNUAL REPORT 2012(IV)Corporate gov
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ANNUAL REPORT 2012VIII. Accountabil
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ANNUAL REPORT 20123. Internal contr
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ANNUAL REPORT 20122. Statement of t
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ANNUAL REPORT 2012Report of the PRC
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ANNUAL REPORT 2012Consolidated Bala
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ANNUAL REPORT 2012Consolidated Inco
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ANNUAL REPORT 2012Consolidated Cash
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ANNUAL REPORT 2012Balance Sheet (co
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ANNUAL REPORT 2012Statement of Chan
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ANNUAL REPORT 2012Notes to Financia
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ANNUAL REPORT 2012Supplementary Inf
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ANNUAL REPORT 2012Supplementary Inf
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ANNUAL REPORT 2012Independent Audit
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ANNUAL REPORT 2012Consolidated Stat
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ANNUAL REPORT 2012Statement of Fina
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2012 Annual Report - ZTE

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