2012 Annual Report - ZTE

ZTE CORPORATIONNotes to Financial Statements(Prepared under Hong Kong Financial Reporting Standards)31 December 201226. TRADE AND BILLS RECEIVABLES/LONG-TERM TRADE RECEIVABLES (continued)Progress payment for telecommunications system contracts is normally made in accordance with the agreedpayment schedule. The Group’s trading terms with its major customers are mainly on credit, except for newcustomers, where payment in advance is normally required. The credit period is generally 90 days and isextendable up to one year depending on customers’ creditworthiness except for certain overseas customers.The credit terms for major customers are reviewed regularly by senior management. The Group seeks tomaintain strict control over its outstanding receivables and has a credit control department to minimise creditrisk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned, thereis no significant concentration of credit risk.An aged analysis of the trade and bills receivables as at the end of the reporting period, based on theinvoice date and net of provision, is as follows:GroupCompany2012 2011 2012 2011RMB’000 RMB’000 RMB’000 RMB’000Within 6 months 23,293,955 24,390,814 30,668,406 25,667,6987 to 12 months 3,147,913 2,296,520 2,035,926 4,292,6981 to 2 years 1,007,925 1,174,085 3,658,347 3,188,6892 to 3 years 107,245 99,809 1,009,775 1,281,835Over 3 years — — 2,559,994 2,467,15127,557,038 27,961,228 39,932,448 36,898,071Current portion of trade andbills receivables (26,350,396) (27,096,954) (38,732,887) (36,128,157)Long-term portion 1,206,642 864,274 1,199,561 769,914The movements in the provision for impairment of trade and bills receivables are as follows:GroupCompany2012 2011 2012 2011RMB’000 RMB’000 RMB’000 RMB’000At 1 January 2,682,078 2,182,947 2,079,511 1,709,965Impairment losses recognised (note 6) 378,295 618,479 37,529 388,701Amount write off as uncollectible (33,150) (77,406) (6,565) (13,400)Impairment losses reversed (note 6) (47,811) (41,942) (24,644) (5,755)At 31 December 2,979,412 2,682,078 2,085,831 2,079,511Included in the above provision for impairment of trade and bills receivables is a provision for individuallyimpaired trade receivables of RMB639,662,000 (2011: RMB673,371,000) with a carrying amount beforeprovision of RMB639,662,000 (2011: RMB673,371,000). The individually impaired trade receivables relate tocustomers that were in financial difficulties and are not expected to be recovered. The Group does not holdany collateral or other credit enhancements over these balances. Trade receivables are non-interest-bearing.388