2012 Annual Report - ZTE

ANNUAL REPORT 2012Notes to Financial Statements(Prepared under Hong Kong Financial Reporting Standards)31 December 201234. INTEREST-BEARING BANK BORROWINGS (continued)The Group’s and the Company’s secured bank loans and banking facilities are secured by:GroupCompany2012 2011 2012 2011RMB’000 RMB’000 RMB’000 RMB’000Real estate properties — 6,800 — —Machinery equipment 225,208 91,395 — —Land use right 24,171 3,681 — —Construction in progress 683,394 — — —Pledged bank deposits 4,132,521 1,630,080 — 1,248,110Trade receivables 950,000 1,105,174 — —Bill receivable 617,229 1,015,380 —6,632,523 3,852,510 — 1,248,110Certain of the Group’s bank loans are guaranteed by:Group2012 2011RMB’000 RMB’000Entities within the Group 5,583,110 5,567,145The carrying amounts of the Group’s and the Company’s borrowings approximate to their fair values whichhave been calculated by discounting the expected future cash flows at the prevailing interest rates.ZTE (H.K.) Limited (“ZTE HK”), a subsidiary of the Company, entered into a syndicated loan agreement (“LoanAgreement”) with an aggregate amount of USD900 million with 10 international banks, including Bank ofChina (Hong Kong) Limited, in 2011. The loans were guaranteed by the Company. Balances and outstandingterms of the loans as at the end of the current year are set out as follows:Drawdowndate Due date Currency Interest rate 31 December 2012 31 December 2011(%)ForeigncurrencyRMBequivalentForeigncurrencyRMBequivalentBank of China 2011.8.15 2016.8.15 USD Approx. 3% 444,829 2,795,973 438,418 2,762,428Bank of China 2011.7.20 2014.7.20 USD Approx. 2% 350,327 2,201,980 345,467 2,176,751Bank of China 2011.8.15 2014.8.15 USD Approx. 2% 100,051 628,871 98,663 621,665As at the end of the reporting period, the Group did not comply with the requirement of the Loan Agreementin respect of one financial benchmark, so the balance of long-term bank borrowing was reclassified to shortterm.ZTE HK has applied to the lending bank for exemption from early loan repayment, and such applicationfor exemption will take effect when the approval of no less than 2/3 of the amount of syndicate loan facilityis granted. As at 27 March 2013, approval has been obtained in respect of 58% of the loan facility amount.The Company is of the view that the matter will not have any significant impact of the Group’s operations.397