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)46. Financial expenses2012 2011Interest expenses 1,888,481 1,374,163Less: Interest income 149,409 283,618Loss on foreign currency exchange 136,113 836,993Cash discounts and interest subsidy 127,956 95,962Bank charges 328,023 332,8192,331,164 2,356,31947. Impairment Losses2012 2011Bad debt provisions 330,484 576,537Inventories provisions 134,007 370,150Impairment losses on fixed assets 2,559 —467,050 946,68748. Non-operating income/Non-operating expensesNon-operating income2012 2011The amountin thenon-recurringprofit/loss ofthe periodRefund of VAT on software products (Note 1) 2,108,253 1,596,681 —Others (Note 2) 973,000 772,029 559,6053,081,253 2,368,710 559,605Note 1 Refund of VAT on software products represents the refund upon payment of VAT according to the portion of any effectiveVAT rate in excess of 3% in respect of software product sales by some subsidiaries of the Company, pursuant to theprinciples of the State Council document entitled “Certain Policies to Further Encourage the Development of SoftwareEnterprise and the IC Industry” and the approval reply of the state taxation authorities.Note 2 Others include government grant, gains from contract penalties and other gains.248