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)XI.OTHER SIGNIFICANT MATTERS (continued)4. Financial instruments and risk analysis (continued)Classification of financial instruments (continued)Financial liabilitiesFinancialliabilities dealtwith at fairvalue throughcurrent profitor lossOtherfinancialliabilitiesDerivativesdesignatedas effectivehedginginstrumentsTrading financial liabilities 2,433 — 2,872 5,305Bank loans — 18,817,150 — 18,817,150Bills payables — 11,149,367 — 11,149,367Trade payables — 21,542,885 — 21,542,885Bank advances on factored tradereceivables and long-term tradereceivables — 7,945,814 — 7,945,814Other payables (excluding accruals) — 6,779,229 — 6,779,229Bonds cum Warrants — 3,884,198 — 3,884,198Other non-current liabilities (noncurrentportion of hedginginstruments) — 380,748 1,248 381,9962,433 70,499,391 4,120 70,505,944TotalCredit riskCredit risk is the risk of financial losses arising from default of the counterparty.The Group only trades with recognised and creditworthy third parties. It is the Group’s policy that allcustomers who wish to trade on credit terms are subject to credit verification procedures. In addition,receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is notsignificant.The Group’s other financial assets, which comprise cash, available- for-sale financial assets, otherreceivables and certain derivatives. The Group’s credit risk of financial assets and financial guaranteecontract arises from default of the counterparty, with a maximum exposure equal to the carryingamounts of these instruments.Although the top five accounts accounted for 31.84% of the total trade receivables, their risk profileswere relatively low and did not give rise to significant concentration of credit risk for the Group.284