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)XIII. EXPLANATORY NOTES TO MAJOR ITEMS IN THE FINANCIAL STATEMENTS (continued)4. Long-term receivables2012 2011Loans granted to subsidiaries (Note 1) 2,484,940 2,863,839Installment payments for the provision of telecommunication systemconstruction projects 1,251,208 821,686Less: Bad debt provision for long-term receivables 51,647 51,7743,684,501 3,633,751Note 1 Loans granted to subsidiaries set out above were interest-free, unsecured and planned for recovery in the foreseeable future.The Directors are of the view that the advances effectively constituted net investments ini overseas business operations.Movements in bad debt provision for long-term receivables during the year are as follows:OpeningbalanceDecrease during the yearProvision forthe year Write-back Write-offClosingbalance2012 51,774 — (127) — 51,6472011 57,529 — (5,755) — 51,774Transfer of trade receivables that did not qualify for derecognition was separately classified as “Factoredlong-term trade receivables” and “Bank advances on factored long-term trade receivables” amountingto RMB3,582,669,000 (31 December 2011: RMB4,059,772,000).5. Long-term equity investmentsEquity method2012 2011Joint ventures (1) 44,559 43,940Associates (2) 349,193 321,562Cost methodSubsidiaries (3) 6,191,055 4,481,184Less: Provision for impairment in long-term equityInvestments (4) 92,315 96,2156,492,492 4,750,471298