2012 Annual Report - ZTE

ZTE CORPORATIONMaterial MattersThe said equity transfer did not constitute a connected transaction or a significant asset reorganisation of theCompany and was considered and approved at the Thirty-sixth Meeting of the Fifth Session of the Board ofDirectors of the Company held on 16 November 2012. The said equity transfer will result in an investment gain forthe Company in the region of RMB450 million to RMB850 million, which will provide additional working capital forthe Company to support the development of its principal businesses. For details please refer to the “DiscloseableTransaction — Disposal of Equity Interest in Shenzhen Changfei Investment Company Limited” published on 16November 2012.(3) Progress of the event since the publication of the announcement of asset disposal and the impact on theoperating results for and financial conditions of the reporting periodThe two parties to the transaction have been working on the settlement of and related payments for the equityinterests in accordance with the “Equity Transfer Agreement for the Transfer of 30% Equity Interests in ShenzhenChangfei Investment Company Limited” and “Equity Transfer Agreement for the Transfer of 51% Equity Interestsin Shenzhen Changfei Investment Company Limited” and the investment gains of approximately RMB760 millionwas recognised by the Company during the year.ZTE HK, a wholly-owned subsidiary of the Company, subscribed to 112,000,000 subscription shares allottedand issued by China All Access on 15 January 2013 for a total cash consideration of HK$201.5 million, aswell as convertible bonds issued by China All Access with a principal amount of HK$201.5 million for a totalcash consideration of HK$201.5 million. For details please refer to the announcement “Completion of Issue ofSubscription Shares and Convertible Bonds” published by China All Access on the website of Hong Kong StockExchange and its corporate website on 15 January 2013.4. Disposal of 81% equity interests in ZNV by the Company and ZTE HK in aggregateTo meet the requirements of the Company’s strategic development and to facilitate the development of theCompany’s principal business, the Company and ZTE HK (a wholly-owned subsidiary of the Company) respectivelyentered into the “Equity Transfer Agreement for the Transfer of 65% Equity Interests in the Target Company” and“Equity Transfer Agreement for the Transfer of 16% Equity Interests in the Target Company” with Ocean Delighton 28 December 2012. The Company and ZTE HK disposed of an aggregate of 81% equity interests in ZNV helddirectly or indirectly by the Company to Ocean Delight.The said equity transfer did not constitute a connected transaction or a significant asset reorganisation of theCompany and was considered and approved at the Thirty-eighth Meeting of the Fifth Session of the Board ofDirectors of the Company held on 28 December 2012. The said equity transfer will result in an investment gain forthe Company in the region of RMB820 million to RMB880 million in 2013, which will provide additional workingcapital for the Company to support the development of its principal businesses. For details please refer to the“Discloseable Transaction — Disposal of 81% Equity Interest in Shenzhen ZNV Technology Co., Ltd.” publishedby the Company on 28 December 2012.The two parties to the transaction have been working on the settlement of and related payments for the equityinterests in accordance with the “Equity Transfer Agreement for the Transfer of 65% Equity Interests in the TargetCompany” and “Equity Transfer Agreement for the Transfer of 16% Equity Interests in the Target Company.”70