2012 Annual Report - ZTE

ZTE CORPORATIONNotes to Financial Statements(Prepared under Hong Kong Financial Reporting Standards)31 December 201252. RELATED PARTY TRANSACTIONS (continued)(I)Transactions with related parties (continued)In the opinion of the directors, the above transactions were conducted in the ordinary course ofbusiness.Notes:(a)The purchases of raw materials were made in accordance with published prices and conditions similar to those offered bythe suppliers to their major customers.(b)The sales of finished goods were made in accordance with published prices and conditions offered to major customers ofthe Group.(c)The rental expense was charged at rates of RMB40 per square metre and RMB200 per car parking space.(d)The rental expense was charged at rates ranging from RMB12 to RMB115 per square metre.(e)The rental income was earned from RMB75 to RMB102 per square metre.(f)The interest rates for deposits, loans and bills discounting were determined with reference to the interest rates adopted byfinancial institutions as regulated by the Peoples’ Bank of China.(II)Commitments with related parties(i)The Group leases certain of its office premises from related parties under non-cancellableoperating lease arrangements. The Group expected the lease payments to related parties undernon-cancellable operating leases falling due as follows:Within oneyearIn the secondyearIn the thirdyearRMB’000 RMB’000 RMB’000The controlling shareholder 2,942 — —Entities significantly influenced by keymanagement personnel of the Group 62,648 62,200 14,817(ii)A subsidiary of the Group entered into a series of agreements with related parties to purchaseraw materials for the Group’s future production. The maximum amount of total purchases fromrelated parties in the following year was expected as follows:Withinone yearIn the secondyearIn the thirdyearRMB’000 RMB’000 RMB’000The controlling shareholder 900,000 1,000,000 1,100,000Associates 78,000 — —An entity significantly influenced by keymanagement personnel of the Group 678,000 800,000 900,000418