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)35. Capital reserves2012OpeningbalanceIncreaseduring theyearDecreaseduring theyearClosingbalanceShare premium (Note 1) 8,410,165 32,680 — 8,442,845Changes in shareholders’ equityand other capital reserves ofinvestees under equity methodother than net profit and loss 41,260 — — 41,260Changes in the fair value ofavailable-for-sale financial assets — 12,625 — 12,625Appreciation of fixed assets,construction in progress and landuse rights upon valuation (Note 2) — 792,769 — 792,769Change in fair value of hedginginstruments (4,120) — (12,736) (16,856)Equity settled transaction (Note 3) 12,502 6,722 (19,224) —Capital injection from government 80,000 — — 80,0008,539,807 844,796 (31,960) 9,352,6432011OpeningbalanceIncreaseduring theyearDecreaseduring theyearClosingbalanceShare premium 8,487,495 496,016 (573,346) 8,410,165Changes in shareholders’ equityand other capital reserves ofinvestees under equity methodother than net profit and loss 41,260 — — 41,260Change in fair value of hedginginstruments — — (4,120) (4,120)Equity settled transaction 462,220 41,821 (491,539) 12,502Capital injection from government 80,000 — — 80,0009,070,975 537,837 (1,069,005) 8,539,807Note 1 As at 24 December 2012, 735 Scheme Participants under the Second Award had fulfilled the conditions for the ThirdUnlocking of the Subjects Shares under the Phase I Share Incentive Scheme. The total number of Subject Shares to beunlocked was 6,589,151 A shares. An corresponding amount of RMB19,224,000, previously accounted for in Capital Reserve— Share-based Payments, was transferred to Capital Reserve — Capital Premium. In June 2011, due to the increase incapital of the Company’s subsidiary ZTEsoft Technology Company Limited, capital reserve — share capital premium wasincreased by RMB13,456,000.242