ZTE : ● 2019 Interim Report

Interim Report 2019

Important

The Board of Directors, Supervisory Committee and the Directors, Supervisors and senior management of the Company confirm that the contents of this report are true, accurate and complete without any false information, misleading statements or material omissions, and accept individual and collective legal responsibility.

There are no Directors, Supervisors or senior management who do not warrant or who dispute the truthfulness, accuracy and completeness of the contents of this report.

This report has been considered and approved at the Eighth Meeting of the Eighth Session of the Board of Directors of the Company. Mr. Gu Junying, Director, was unable to attend the Meeting due to work reasons and has authorised Mr. Li Zixue, Chairman, to vote on his behalf. Mr. Zhu Weimin, Director, was unable to attend the Meeting due to work reasons and has authorised Ms. Fang Rong, Director, to vote on his behalf.

The interim financial reports of the Group for the six months ended 30 June 2019 were unaudited.

Mr. Li Zixue, Chairman of the Company, Ms. Li Ying, Chief Financial Officer of the Company and Mr. Xu Jianrui, Head of Finance Division of the Company, hereby declare that they warrant the truthfulness, accuracy and completeness of the financial reports contained in this report.

No profit distribution will be implemented in respect of the interim period of 2019.

This report contains forward-looking statements in relation to subjects such as future plans, which do not constitute any specific undertakings to investors by the Company. Investors should beware of investment risks. The attention of investors is drawn to the potential risks inherent in the operations of the Company described in the section headed "Report of the Board of Directors (VI) Business outlook for the second half of 2019 and risk exposures" in this report.

This report has been prepared in Chinese and English respectively. In case of discrepancy in the interpretation of this report, the Chinese version shall prevail, except for the financial statements prepared in accordance with Hong Kong Finance Reporting Standards, of which the English version shall prevail.

China Securities Journal, Securities Times, Shanghai Securities News and http://www.cninfo.com.cn are designated media for the Company's information disclosure. Investors should beware of investment risks.

Contents

DEFINITIONS	2
GLOSSARY	4
I.	CORPORATE INFORMATION	7
II.	HIGHLIGHTS OF ACCOUNTING DATA AND FINANCIAL INDICATORS	8
III.	SUMMARY OF THE COMPANY'S BUSINESS	11
IV.	REPORT OF THE BOARD OF DIRECTORS	14
V.	MATERIAL MATTERS	35
VI.	CHANGES IN SHAREHOLDINGS AND INFORMATION OF SHAREHOLDERS	54
VII.	DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT	60
VIII. FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH PRC ASBEs (UNAUDITED)
	AND NOTES THERETO	65
IX.	FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH HONG KONG
	ACCOUNTING STANDARD 34 (UNAUDITED) AND NOTES THERETO	216
X.	DOCUMENTS AVAILABLE FOR INSPECTION	252

ZTE CORPORATION INTERIM REPORT 2019

Definitions

In this report, unless the context otherwise requires, the following terms shall have the meanings set out below. Certain other terms are explained in the section headed "Glossary."

Company or ZTE	ZTE Corporation, a limited company incorporated in China, the shares of
	which are listed on the Shenzhen Stock Exchange and the Hong Kong Stock
	Exchange, respectively
Articles of Association	The Articles of Association of ZTE Corporation
Company Law	Company Law of the People's Republic of China
Securities Law	Securities Law of the People's Republic of China
Group	ZTE and one or more of its subsidiaries
Board of Directors	The board of directors of the Company
Directors	Members of the board of directors of the Company
Supervisory Committee	The supervisory committee of the Company
Supervisors	Members of the supervisory committee of the Company
China or PRC	The People's Republic of China
MOF	PRC Ministry of Finance
CSRC	China Securities Regulatory Commission
Shenzhen CSRC	The CSRC Shenzhen Bureau
Shenzhen Stock Exchange	The Shenzhen Stock Exchange
Shenzhen Listing Rules	Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange
Hong Kong Stock Exchange	The Stock Exchange of Hong Kong Limited
Hong Kong Listing Rules	Rules Governing the Listing of Securities on The Stock Exchange of Hong
	Kong Limited
SFO	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
PRC ASBEs	PRC Accounting Standards for Business Enterprise (Generally accepted
	accounting principles in China)
HKFRSs	Hong Kong Financial Reporting Standards (including Hong Kong Accounting
	Standards ("HKASs") and Interpretations)
ZTE HK	ZTE (H.K.) Limited
Zhongxing Software	Shenzhen Zhongxing Software Company Limited
Great Power	Guangzhou Great Power Energy & Technology Co., Ltd.
Eoptolink	Eoptolink Technology Inc., Ltd.
Giga Device	Giga Device Semiconductor (Beijing) Inc.

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ZTE CORPORATION INTERIM REPORT 2019

Laimu	Shanghai Laimu Electronics Co., Ltd.
Olympic Circuit Technology	Olympic Circuit Technology Co., Ltd.
Mentech Optical	Dongguan Mentech Optical & Magnetic Co., Ltd
Lianchuang Electronic	Lianchuang Electronic Technology Co., Ltd.
Union Optech	Union Optech Co., Ltd.
Shijia Science & Technology	Suzhou Shijia Science & Technology Inc.
Beken	Beken Corporation
Enablence Technologies	Enablence Technologies Inc.
ZTE Capital	Shenzhen ZTE Capital Management Company Limited
Zhonghe Chunsheng Fund I	Shenzhen Zhonghe Chunsheng Partnership Private Equity Fund I (Limited
	Partnership)
Jiaxing Fund	Jiaxing Xinghe Equity Investment Partnership (Limited Partnership)
Zhonghe Chunsheng Fund III	Suzhou Zhonghe Chunsheng Partnership Investment Fund III (Limited
	Partnership)
Zhongxingxin	Zhongxingxin Telecom Company Limited
Zhongxing Hetai	Shenzhen Zhongxing Hetai Hotel Investment and Management Company
	Limited
航天歐華	深圳市航天歐華科技發展有限責任公司
Xi'an Microelectronics	Xi'an Microelectronics Technology Research Institute
Aerospace Guangyu	Shenzhen Aerospace Guangyu Industrial Company Limited
Zhongxing WXT	Shenzhen Zhongxing WXT Equipment Company Limited
Guoxing Ruike	Zhuhai Guoxing Ruike Capital Management Centre (Limited Partnership)
ZTE Group Finance	ZTE Group Finance Co., Ltd.
ZTE Microelectronics	ZTE Microelectronics Technology Company Limited
2017 Share Option Incentive	the share option incentive scheme considered and approved at the 2016
Scheme	Annual General Meeting, the First A Shareholders' Class Meeting of 2017
	and the First H Shareholders' Class Meeting of 2017 of the Company

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