2012 Annual Report - ZTE

ZTE CORPORATIONMaterial Matters(5) Except for the above, the Company had no other substantial connected transaction during the year2. Continuing connected transactions under the Hong Kong Listing RulesIn accordance with Chapter 14A of the Hong Kong Listing Rules, the following connected transactions are requiredto be disclosed in this report. Connected transactions that also constitute connected transactions under HKFRSsare set out in Note 52 to the financial statements prepared under HKFRSs.The Group has entered into connected transaction framework agreements with the following connected parties,and has fulfilled the requirements of reporting, announcement and/or shareholders’ approval under Chapter 14Aof the Hong Kong Listing Rules based on the estimated annual cap of each connected transaction. For details,please refer to the “Announcement on Continuing Connected Transactions”, “Announcement on the Resolutionsof the Second Extraordinary General Meeting of 2009”, “Announcement on Continuing Connected Transactions”,“Announcement on Continuing Connected Transactions”, “Continuing Connected Transactions Tenancy AgreementsVoluntary Announcement” and “Announcement on Continuing Connected Transactions — Provision of FinancialServices” published on 27 October 2009, 29 December 2009, 27 October 2011, 27 April 2010, 13 December 2011and 26 June 2012, respectively.(1) Purchases of handset batteries by the Group from Ruide• Description of the connected relationship between the parties to the transaction:The Company owned Ruide, a non-wholly owned subsidiary of the Company established on 27 April 2004, throughChangfei under the laws of the PRC with limited liability. The other substantial shareholder of Ruide is ZhongxingXindi with an approximately 23% interest. Zhongxing Xindi is a company established under the laws of the PRCwith limited liability and is a non-wholly owned subsidiary of Zhongxingxin and is an associate (within the meaningof the Hong Kong Listing Rules) of Zhongxingxin. As Zhongxingxin is the controlling shareholder of the Company,Zhongxing Xindi constitutes a connected person of the Company as an associate of Zhongxingxin. Ruide is theCompany’s connected person pursuant to Rule 14A.11(5) of the Hong Kong Listing Rules.Changfei holds 57.47% equity interests in Ruide. As considered and approved at the Thirty-sixth Meeting of the FifthSession of the Board of Directors of the Company held on 16 November 2012, the Company disposed of its 81%equity interests in Changfei to Guangdong All Access and CCBI. Registration of changes with the administrationof industry and commerce was completed on 26 December 2012, with effect from which the Company ceased tohold any equity interests in Changfei and Ruide was no longer a non-wholly owned subsidiary nor a connectedperson of the Company.• Total transaction amount in 2012:Approximately RMB604,175,000• Pricing and other terms:At the Twenty-third Meeting of the Fifth Session of the Board of Directors of the Company held on 27 October2011, the Directors approved the 2012 connected transaction framework agreement between the Group and Ruidein respect of the continuing purchase of handset batteries from Ruide by the Group. The purchase frameworkagreement shall be effective until 31 December 2012.The purchase cap for 2012 was RMB1,200 million (before VAT).82