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)37. Surplus reserves2012OpeningbalanceIncreaseduring theyearDecreaseduring theyearClosingbalanceStatutory surplus reserves 1,587,891 — (461) 1,587,4302011OpeningbalanceIncreaseduring theyearDecreaseduring theyearClosingbalanceStatutory surplus reserves 1,537,512 50,379 — 1,587,891In accordance with the Company Law of the PRC and the articles of associations, the Company isrequired to allocate 10% of their profit after tax to the statutory surplus reserve, until the accumulatedstatutory surplus reserve has reached 50% of the registered capitals of the Company.The Company may further allocate to the discretionary surplus reserve after the statutory surplusreserves allocation. The discretionary surplus reserve can be applied towards making up losses of theprevious years, or capitalized as the Company’s share capital.38. Retained profits2012 2011Retained profits at the beginning of the year 10,545,984 9,222,387Net profit/(loss) (2,840,962) 2,060,166Less: Statutory surplus reserves — 50,379Proposed final dividend — 686,190Retained profits at the end of the year 7,705,022 10,545,984In accordance with the Articles of Association of the Company, profit available for distribution shallbe the lower of profit available for distribution as calculated in accordance with PRC ASBEs and thatcalculated in accordance with HKFRSs.244