ZTE : ● 2020 THIRD QUARTERLY REPORT

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ZTE CORPORATION

中 興 通 訊 股 份 有 限 公 司

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 763)

2020 THIRD QUARTERLY REPORT

This announcement is published simultaneously in the Mainland in accordance with the Rules Governing Listing of Stocks on The Shenzhen Stock Exchange and in Hong Kong in accordance with the disclosure obligations under Rule 13.09(2) and Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the inside information provisions set out in Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

§1 IMPORTANT

1. The Board of Directors, Supervisory Committee and the Directors, Supervisors and senior management of ZTE Corporation ("ZTE" or the "Company") warrant that the contents of this quarterly report are true, accurate and complete without false information, misleading statements or material omissions, and collectively and individually accept responsibility therefor.
2. There are no Directors, Supervisors and senior management who do not warrant or who dispute the truthfulness, accuracy and completeness of the contents of this quarterly report.
3. This quarterly report has been considered and approved at the Twenty-sixth Meeting of the Eighth Session of the Board of Directors of the Company.
4. The financial statements contained in this quarterly report are unaudited. The financial information contained in this quarterly report has been prepared in accordance with PRC Accounting Standards for Business Enterprises ("PRC ASBEs").

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1. 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 statements contained in this quarterly report.
2. China Securities Journal, Securities Times, Shanghai Securities News and http://www.cninfo.com.cn are designated media for the Company's information disclosure. Investors are asked to be aware of the investment risks.

§2 CORPORATE INFORMATION

2.1 Major Accounting Data and Financial Indicators

2.1.1 Major Accounting Data and Financial Indicators of the Company and its subsidiaries (the "Group")

			Change as at
			the end of the
	As at the end of the	As at the end of	reporting period
	reporting period	last year	compared with the
Item	(30 September 2020)	(31 December 2019)	end of last year
Total assets
(RMB in thousands)	165,268,109	141,202,135	17.04%
Owners' equity
attributable to holders of
ordinary shares of the
listed company
(RMB in thousands)	41,905,884	28,826,868	45.37%
Total share capital
(thousand shares) Note 1	4,613,435	4,227,530	9.13%
Net assets per share
attributable to holders of
ordinary shares of the
listed company
(RMB/share)	9.08	6.82	33.14%

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	Three		Nine
	months ended	Change compared	months ended	Change compared
	30 September	with the same	30 September	with the same
Item	2020	period last year	2020	period last year
Operating revenue (RMB in thousands)	26,930,051	37.18%	74,129,424	15.39%
Net profit attributable to holders of
ordinary shares of the listed company
(RMB in thousands)	854,760	(67.83%)	2,712,049	(34.30%)
Net profit after extraordinary items
attributable to holders of ordinary
shares of the listed company
(RMB in thousands)	543,744	454.66%	1,445,859	103.59%
Net cash flows from operating activities
(RMB in thousands)	1,828,128	11.57%	3,868,898	33.17%
Net cash flows from operating activities
per share (RMB/share)	0.40	2.56%	0.84	21.74%
Basic earnings per share
(RMB/share) Note 2	0.19	(69.84%)	0.59	(39.80%)
Diluted earnings per share
(RMB/share) Note 3	0.19	(69.84%)	0.59	(39.80%)
Weighted average return on net assets (%)		Decreased by 7.76		Decreased by 8.68
	2.34%	percentage points	7.62%	percentage points
Weighted average return on net assets after		Increased by 1.28		Increased by 1.26
extraordinary items (%)	1.50%	percentage points	4.06%	percentage points

Note 1: The total share capital of the Company had increased from 4,227,529,869 shares to 4,613,434,898 shares following the addition of 381,098,968 new shares as the result of the non-public issue of A shares and the exercise of 4,806,061 A share options by scheme participants under the 2017 Share Option Incentive Scheme during the nine months ended 30 September 2020;

Note 2: Basic earnings per share for the nine months ended 30 September 2020, three months ended 30 September 2020, nine months ended 30 September 2019 and three months ended 30 September 2019 have been calculated on the basis of the weighted average number of ordinary shares in issue as at the end of the respective periods;

Note 3: As the 2017 share options granted by the Company have given rise to 21,780,000 and 19,140,000 potentially dilutive ordinary shares for the nine months ended 30 September 2020 and nine months ended 30 September 2019, respectively, dilutive earnings per share for the nine months and three months ended 30 September 2020 and the same periods last year have been calculated on the basis of basic earnings per share taking into account the said factor.

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Extraordinary item

Unit: RMB in thousands

	Amount
	Three	Nine
	months ended	months ended
	30 September	30 September
Extraordinary item	2020		2020
Non-operating income, other income and others	452,723		1,725,390
Gains/(Losses) from fair value change	42,335		(79,099)
Investment income	(75,832)	(18,481)
Less: Losses on disposal of non-current assets	10,218		36,836
Less: Other non-operating expenses	18,474		47,144
Less: Asset impairment loss	-	7,165
Less: Effect of income tax	58,580		230,500
Less: Effect of non-controlling interests (after taxation)	20,938		39,975
Total	311,016		1,266,190

2.1.2 The amounts of net profit and shareholders' equity of the Group for the nine months ended 30 September 2020 and as at 30 September 2020 calculated in accordance with PRC ASBEs are fully consistent with those calculated under Hong Kong Financial Reporting Standards.

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