IRIS Accounts Production v24.3.2.46 04269408 Board of Directors 1.1.24 31.12.24 31.12.24 Medium entities true false true true false false true true false These accounts have been prepared in accordance with the provisions applicable to companies subject to the medium-sized companies regime. Ordinary 1.00000 iso4217:GBPiso4217:USDiso4217:EURxbrli:sharesxbrli:pureutr:tonnesutr:kWh042694082023-12-31042694082024-12-31042694082024-01-012024-12-31042694082022-12-31042694082023-01-012023-12-31042694082023-12-3104269408ns15:EnglandWales2024-01-012024-12-3104269408ns14:PoundSterling2024-01-012024-12-3104269408ns10:Director12024-01-012024-12-3104269408ns10:PrivateLimitedCompanyLtd2024-01-012024-12-3104269408ns10:MediumEntities2024-01-012024-12-3104269408ns10:Audited2024-01-012024-12-3104269408ns10:Medium-sizedCompaniesRegimeForDirectorsReport2024-01-012024-12-3104269408ns10:Medium-sizedCompaniesRegimeForAccounts2024-01-012024-12-3104269408ns10:FullAccounts2024-01-012024-12-3104269408ns10:OrdinaryShareClass12024-01-012024-12-3104269408ns10:Director32024-01-012024-12-3104269408ns10:Director42024-01-012024-12-3104269408ns10:RegisteredOffice2024-01-012024-12-3104269408ns10:Director22024-01-012024-12-3104269408ns10:Director52024-01-012024-12-3104269408ns5:CurrentFinancialInstruments2024-12-3104269408ns5:CurrentFinancialInstruments2023-12-3104269408ns5:ShareCapital2024-12-3104269408ns5:ShareCapital2023-12-3104269408ns5:RetainedEarningsAccumulatedLosses2024-12-3104269408ns5:RetainedEarningsAccumulatedLosses2023-12-3104269408ns5:ShareCapital2022-12-3104269408ns5:RetainedEarningsAccumulatedLossesns5:PreviouslyStatedAmount2022-12-3104269408ns5:PreviouslyStatedAmount2022-12-3104269408ns5:RetainedEarningsAccumulatedLossesns5:PriorPeriodIncreaseDecrease2023-01-012023-12-3104269408ns5:PriorPeriodIncreaseDecrease2023-01-012023-12-3104269408ns5:RetainedEarningsAccumulatedLosses2022-12-3104269408ns5:RetainedEarningsAccumulatedLosses2023-01-012023-12-3104269408ns5:RetainedEarningsAccumulatedLosses2024-01-012024-12-310426940812024-01-012024-12-3104269408ns5:ReportableOperatingSegment12024-01-012024-12-3104269408ns5:ReportableOperatingSegment12023-01-012023-12-3104269408ns5:ReportableOperatingSegment22024-01-012024-12-3104269408ns5:ReportableOperatingSegment22023-01-012023-12-3104269408ns5:TotalReportableOperatingSegmentsIncludingAnyUnallocatedAmount2024-01-012024-12-3104269408ns5:TotalReportableOperatingSegmentsIncludingAnyUnallocatedAmount2023-01-012023-12-3104269408ns15:UnitedKingdom2024-01-012024-12-3104269408ns15:UnitedKingdom2023-01-012023-12-3104269408ns15:Europe2024-01-012024-12-3104269408ns15:Europe2023-01-012023-12-3104269408ns15:Asia2024-01-012024-12-3104269408ns15:Asia2023-01-012023-12-3104269408ns5:TotalGeographicSegmentsIncludingAnyUnallocatedAmount2024-01-012024-12-3104269408ns5:TotalGeographicSegmentsIncludingAnyUnallocatedAmount2023-01-012023-12-3104269408ns5:OwnedAssets2024-01-012024-12-3104269408ns5:OwnedAssets2023-01-012023-12-3104269408132024-01-012024-12-3104269408132023-01-012023-12-3104269408ns5:LeaseholdImprovements2023-12-3104269408ns5:FurnitureFittings2023-12-3104269408ns5:ComputerEquipment2023-12-3104269408ns5:LeaseholdImprovements2024-01-012024-12-3104269408ns5:FurnitureFittings2024-01-012024-12-3104269408ns5:ComputerEquipment2024-01-012024-12-3104269408ns5:LeaseholdImprovements2024-12-3104269408ns5:FurnitureFittings2024-12-3104269408ns5:ComputerEquipment2024-12-3104269408ns5:LeaseholdImprovements2023-12-3104269408ns5:FurnitureFittings2023-12-3104269408ns5:ComputerEquipment2023-12-3104269408ns5:WithinOneYearns5:CurrentFinancialInstruments2024-12-3104269408ns5:WithinOneYearns5:CurrentFinancialInstruments2023-12-3104269408ns5:CurrentFinancialInstruments2024-01-012024-12-3104269408ns5:WithinOneYear2024-12-3104269408ns5:WithinOneYear2023-12-3104269408ns5:BetweenOneFiveYears2024-12-3104269408ns5:BetweenOneFiveYears2023-12-3104269408ns5:AllPeriods2024-12-3104269408ns5:AllPeriods2023-12-3104269408ns5:AcceleratedTaxDepreciationDeferredTax2024-12-3104269408ns5:AcceleratedTaxDepreciationDeferredTax2023-12-3104269408ns5:DeferredTaxation2023-12-3104269408ns5:OtherProvisionsContingentLiabilities2023-12-3104269408ns5:DeferredTaxation2024-01-012024-12-3104269408ns5:OtherProvisionsContingentLiabilities2024-01-012024-12-3104269408ns5:DeferredTaxation2024-12-3104269408ns5:OtherProvisionsContingentLiabilities2024-12-3104269408ns10:OrdinaryShareClass12024-12-31
REGISTERED NUMBER: 04269408 (England and Wales)















Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2024

for

ZTE (UK) Limited

ZTE (UK) Limited (Registered number: 04269408)






Contents of the Financial Statements
for the Year Ended 31 December 2024




Page

Company Information 1

Strategic Report 2

Report of the Directors 4

Statement of Directors' Responsibilities 6

Report of the Independent Auditors 7

Statement of Comprehensive Income 11

Statement of Financial Position 12

Statement of Changes in Equity 13

Notes to the Financial Statements 14


ZTE (UK) Limited

Company Information
for the Year Ended 31 December 2024







DIRECTORS: W Tang
Y Hou
Y Jia





REGISTERED OFFICE: 252 Bath Road
Slough
SL1 4DX





REGISTERED NUMBER: 04269408 (England and Wales)





AUDITORS: Shinewing Wilson Accountancy Limited
Chartered Certified Accountants
and Statutory Auditors
9 St Clare Street
London
EC3N 1LQ

ZTE (UK) Limited (Registered number: 04269408)

Strategic Report
for the Year Ended 31 December 2024

The directors present their strategic report for the year ended 31 December 2024.

REVIEW OF BUSINESS
ZTE (UK) Limited ("the Company" or "ZTE UK") is dedicated to the provision of telecommunication equipment and services to UK market clients, including telecom system products and terminal products. Due to the impact of the restrictions on the telecommunication products in the UK market, the performance of the Company was poor especially during FY 2019 and FY 2020. Starting from FY2021, the Company has shifted its focus on the terminal products especially for mobile broadband ("MBB") products in the UK market due to a strong market demand. For year 2023 and 2024, the sales of terminal products accounted for over 70% of the overall turnover of the Company.

The Company reported £23.7m in operating revenue representing decline of 21.6% compared with the same period last year, the decrease is mainly attributed by the price reduction caused by market competition incentives. Operating profit excluding exceptional item arrived at £0.81m which decreased by 6% compared to prior year mainly due to revenue decrease.

PRINCIPAL RISKS AND UNCERTAINTIES
The UK telecommunication market is undergoing significant changes, driven by several factors such as the complex nature of international economic and political conditions, strong market competition in the field of technological innovation etc. ZTE is well positioned to offer innovative and affordable products and solutions to market, while it is expected a slow growth in our telecom system products` revenues as a result of the restrictions on the telecommunication products in the UK market.

Despite the changes in the market, the sales of the terminal products have significantly increased over the years due to a strong market demand. The Company looks forward to a sustained growth in the terminal products market.

FINANCIAL RISKS

Credit Risk
Trade debtors are managed by regular monitoring of amounts outstanding for both time and credit limits.

Liquidity Risk
Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.

Cash Flow Risk
Cash flow risk is reviewed monthly, the company manages intra-group and related party loans to ensure the company's cash flow as a whole operates effectively and efficiently.


ZTE (UK) Limited (Registered number: 04269408)

Strategic Report
for the Year Ended 31 December 2024

KEY PERFORMANCE INDICATORS
The directors consider the key KPI of the Company as follows:

2024 (£) 2023 (£) % change
Turnover 23,708,044 30,117,904 -21%
EBITDA excluding exceptional item 784,838 759,530 3%
Gross assets 6,080,862 7,946,615 -23%
Net assets 390,725 1,240,950 -69%

During the year, turnover decreased by 21%, primarily due to a reduction in selling prices. However, EBITDA (excluding exceptional items) increased by 4%, driven by lower staff costs, particularly a reduction in the average number of employees from 26 to 18. Net assets significantly declined due to the settlement of historical PAYE and NIC liabilities arising from the tax investigation.

ON BEHALF OF THE BOARD:





Y Jia - Director


21 March 2025

ZTE (UK) Limited (Registered number: 04269408)

Report of the Directors
for the Year Ended 31 December 2024

The directors present their report with the financial statements of the company for the year ended 31 December 2024.

PRINCIPAL ACTIVITY
The principal activity of the company in the year under review was that of supplying telecommunication system and telecoms equipment, setting up telecommunication network to operators and providing terminal productions to the UK market.

DIVIDENDS
No dividends will be distributed for the year ended 31 December 2024 (2023: nil).

FUTURE DEVELOPMENTS
Communications Technology is rapidly undergoing a process of change, with many new innovations being shaped and driven by what was seen as third world markets. At ZTE we believe that we are entering a golden era of technology, with new solutions being developed to help countries to deal with the demands of climate change, geo-political market changes and in leading and developing the technology for tomorrow.

ZTE believes that there is huge potential for growth, innovation and trade between China and the United Kingdom. ZTE is committed to the UK market and will ensure that the Company evolves as required by the market, to ensure that our UK customers are able to access the market leading technology and solutions as enjoyed by other global customers.

The main terminal products sold by ZTE UK were MBB products for which ZTE ranked first globally in 2024. Compared to other competitors, ZTE's MBB products are known for competitive pricing, high level of functionality and stable supply.

From FY2021, the sales of the terminal products have significantly increased over the years. The Company has kept to promoting the products to the UK clients. Given the fast expansion of the terminal product sales, there are more people (both technical and commercial) joining ZTE UK to support the development of the business. In the future, the Company will keep to developing new channel vendors and operator customers.

As a result, with the development of new jobs and qualified apprentices, the Company establishes itself as a valuable UK based corporation.

DIRECTORS
W Tang has held office during the whole of the period from 1 January 2024 to the date of this report.

Other changes in directors holding office are as follows:

H Cao - resigned 17 October 2024
Y Hou - appointed 18 October 2024
L Hu - resigned 17 October 2024
Y Jia - appointed 18 October 2024

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

ZTE (UK) Limited (Registered number: 04269408)

Report of the Directors
for the Year Ended 31 December 2024


AUDITORS
The auditors, Shinewing Wilson Accountancy Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:





Y Jia - Director


21 March 2025

ZTE (UK) Limited (Registered number: 04269408)

Statement of Directors' Responsibilities
for the Year Ended 31 December 2024

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-select suitable accounting policies and then apply them consistently;
-make judgements and accounting estimates that are reasonable and prudent;
-prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Report of the Independent Auditors to the Members of
ZTE (UK) Limited

Opinion
We have audited the financial statements of ZTE (UK) Limited (the 'company') for the year ended 31 December 2024 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:
-give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its loss for the year then ended;
-have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusion relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information
The directors are responsible for the other information. The other information comprises the information in the Strategic Report, the Report of the Directors and the Statement of Directors' Responsibilities, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Report of the Independent Auditors to the Members of
ZTE (UK) Limited


Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.

Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page six, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Report of the Independent Auditors to the Members of
ZTE (UK) Limited


Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.

The following laws and regulations were identified as being of significance to the entity:

- Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, distributable profits legislation.

- There are no laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements.

Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.

No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Report of the Independent Auditors to the Members of
ZTE (UK) Limited


Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.




Nijendra Dhungana FCCA (Senior Statutory Auditor)
for and on behalf of Shinewing Wilson Accountancy Limited
Chartered Certified Accountants
and Statutory Auditors
9 St Clare Street
London
EC3N 1LQ

21 March 2025

ZTE (UK) Limited (Registered number: 04269408)

Statement of Comprehensive Income
for the Year Ended 31 December 2024

31.12.24 31.12.23
Notes £    £   

TURNOVER 4 23,708,044 30,117,904

Cost of sales 19,912,725 25,363,951
GROSS PROFIT 3,795,319 4,753,953

Administrative expenses 4,379,365 4,202,246
OPERATING (LOSS)/PROFIT 6 (584,046 ) 551,707

Interest receivable and similar income 4,318 11,482
(579,728 ) 563,189

Interest payable and similar expenses 8 122,356 115,375
(LOSS)/PROFIT BEFORE TAXATION (702,084 ) 447,814

Tax on (loss)/profit 9 148,141 171,722
(LOSS)/PROFIT FOR THE FINANCIAL
YEAR

(850,225

)

276,092

OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

(850,225

)

276,092

ZTE (UK) Limited (Registered number: 04269408)

Statement of Financial Position
31 December 2024

31.12.24 31.12.23
Notes £    £    £    £   
FIXED ASSETS
Tangible assets 10 97,817 131,291

CURRENT ASSETS
Debtors 11 5,127,413 7,029,775
Cash at bank 855,632 785,549
5,983,045 7,815,324
CREDITORS
Amounts falling due within one year 12 4,770,017 5,207,211
NET CURRENT ASSETS 1,213,028 2,608,113
TOTAL ASSETS LESS CURRENT
LIABILITIES

1,310,845

2,739,404

PROVISIONS FOR LIABILITIES 14 920,120 1,498,454
NET ASSETS 390,725 1,240,950

CAPITAL AND RESERVES
Called up share capital 15 23,768,444 23,768,444
Retained earnings (23,377,719 ) (22,527,494 )
SHAREHOLDERS' FUNDS 390,725 1,240,950

The financial statements were approved by the Board of Directors and authorised for issue on 21 March 2025 and were signed on its behalf by:





Y Jia - Director


ZTE (UK) Limited (Registered number: 04269408)

Statement of Changes in Equity
for the Year Ended 31 December 2024

Called up
share Retained Total
capital earnings equity
£    £    £   
Balance at 1 January 2023 23,768,444 (21,507,059 ) 2,261,385
Prior year adjustment - (1,296,527 ) (1,296,527 )
As restated 23,768,444 (22,803,586 ) 964,858

Changes in equity
Profit for the year - 276,092 276,092
Total comprehensive income - 276,092 276,092
Balance at 31 December 2023 23,768,444 (22,527,494 ) 1,240,950

Changes in equity
Deficit for the year - (850,225 ) (850,225 )
Total comprehensive income - (850,225 ) (850,225 )
Balance at 31 December 2024 23,768,444 (23,377,719 ) 390,725

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements
for the Year Ended 31 December 2024

1. STATUTORY INFORMATION

ZTE (UK) Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).


2. ACCOUNTING POLICIES

Basis of preparing the financial statements
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going Concern
The company meets its day-to-day working capital requirements through cash generated from operations, cash resource and, if required, intercompany financing. The directors, after making enquiries and having regard to the company's financial position, trading prospects and financing available to the company, have a reasonable expectation that the company had adequate resources to continue operating for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.

Financial Reporting Standard 102 - reduced disclosure exemptions
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

the requirements of Section 7 Statement of Cash Flows;
the requirement of paragraph 33.7.

Exemption from preparing cash flow statements
The company is qualified for exemption from preparing cash flow statements as a member of a group, where the ultimate parent ZTE Corporation prepares consolidated financial statements, which are intended to give a true and fair view and the company is included in the consolidation. The consolidated statements are publicly available from website www.zte.com.cn.

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

2. ACCOUNTING POLICIES - continued

Turnover
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
-the Company has transferred the significant risks and rewards of ownership to the buyer;
-the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
-the amount of turnover can be measured reliably;
-it is probable that the Company will receive the consideration due under the transaction; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

The company typically recognises its revenue at the time of delivery and acceptance upon inspection taking into account the following factors: the acquisition of the current right to receive payments for the products, the transfer of major risks and rewards of ownership, the transfer of the legal title of the products, the transfer of the physical assets of the products, and customers’ acceptance of the products.

Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
-the amount of turnover can be measured reliably;
-it is probable that the Company will receive the consideration due under the contract;
-the stage of completion of the contract at the end of the reporting period can be measured reliably; and the costs incurred and the costs to complete the contract can be measured reliably.

Turnover on the service provided to group companies is based on transfer pricing policy, total amount of £1.55 million (2023: £1.92 million) was recognised in revenue for these services.

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

2. ACCOUNTING POLICIES - continued

Financial instruments
The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' of FRS 102 to all of its financial instruments.

Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the financial asset is measured at the present value of the future receipts discounted at a market rate of interest.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including trade and other payables, and loans from group undertakings, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest method.

Share capital

Financial instruments issued by the company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

The company's ordinary shares are classified as equity instruments.

Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.


ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

2. ACCOUNTING POLICIES - continued
Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Operating leases-company as lessee
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Borrowing costs
All borrowing costs are recognised in profit or loss in the period in which they are incurred.

Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the company. They are items that are material either because of their size or their nature, and are considered non-recurring. These items are presented within the line items to which they best relate and reported separately as exceptional items.

Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method:

Fixture and fitting - 25% on cost
Computer equipment- 25% on cost
Improvement to the leasehold - over the period of lease

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In order to prepare these financial statements in accordance with the accounting policies set out in Note 2, management has used estimates and judgements to establish the amounts at which certain items are recorded. Critical accounting estimates and judgements are those that have the greatest impact on the financial statements and require the most difficult, subjective and complex judgements about matters that are inherently uncertain. Estimates are based on factors including historical experience and expectations of future events that management believe to be reasonable. However, given the judgemental nature of such estimates, actual results could be different from the assumptions used. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected.

HMRC investigation
The Company is currently subject to an ongoing HMRC investigation regarding additional PAYE and NIC obligations that should have been withheld from UK-based employees at the time their salaries were originally paid. The Company's professional advisors have calculated the outstanding amounts for the ten years ended 31 March 2023, and this information has been submitted to HMRC. During the year ended 31 December 2024, the Company settled the additional PAYE and NIC liabilities. The estimated late payment interest and penalties have been determined based on an analysis conducted by the Company's professional advisors.

Exceptional costs
For the year ended 31 December 2024, the amounts charged relate to late payment interest and penalties arising from the tax investigation. In the prior year, these amounts were classified as exceptional costs, as they would ordinarily have been borne by the employees concerned, as detailed in Note 7.

Contingent liability
As at 31 December 2024, the Company has no contingent liabilities, as all historical PAYE and NIC obligations for overseas staff have been settled during the year. The remaining amounts, consisting of late payment interest and penalties, have been fully provided for. Management considers that all liabilities have been reliably measured and appropriately accounted for.

4. TURNOVER

The turnover and loss (2023 - profit) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

31.12.24 31.12.23
£    £   
Goods 21,286,817 27,082,516
Services 2,421,227 3,035,388
23,708,044 30,117,904

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

4. TURNOVER - continued

An analysis of turnover by geographical market is given below:

31.12.24 31.12.23
£    £   
United Kingdom 15,232,580 22,879,047
Europe 6,042,368 4,477,488
Asia 1,553,189 1,920,776
Others 879,907 840,593
23,708,044 30,117,904

5. EMPLOYEES AND DIRECTORS
31.12.24 31.12.23
£    £   
Wages and salaries 1,360,955 2,371,606
Social security costs 159,416 272,981
Other pension costs 127,234 136,270
1,647,605 2,780,857

The average number of employees during the year was as follows:
31.12.24 31.12.23

Administration 18 26

31.12.24 31.12.23
£    £   
Directors' remuneration 122,869 100,000

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 2 1

6. OPERATING (LOSS)/PROFIT

The operating loss (2023 - operating profit) is stated after charging:

31.12.24 31.12.23
£    £   
Other operating leases 410,012 286,692
Depreciation - owned assets 35,466 33,759
Auditors' remuneration 20,000 20,000
Foreign exchange differences 15,463 58,806

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

7. EXCEPTIONAL ITEMS
31.12.24 31.12.23
£    £   
Exceptional items (1,333,418 ) (174,065 )

The exceptional item represents late payment interest and penalties related to the ongoing tax investigation during the year, whereas in the prior year, it related to PAYE liability.

8. INTEREST PAYABLE AND SIMILAR EXPENSES
31.12.24 31.12.23
£    £   
Factoring interest 122,356 115,375

9. TAXATION

Analysis of the tax charge
The tax charge on the loss for the year was as follows:
31.12.24 31.12.23
£    £   
Current tax:
UK corporation tax 156,025 182,713

Deferred tax (7,884 ) (10,991 )
Tax on (loss)/profit 148,141 171,722

UK corporation tax has been charged at 25% (2023 - 23.50%).

Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

31.12.24 31.12.23
£    £   
(Loss)/profit before tax (702,084 ) 447,814
(Loss)/profit multiplied by the standard rate of corporation tax in the UK of
25% (2023 - 23.500%)

(175,521

)

105,236

Effects of:
Expenses not deductible for tax purposes 341,269 71,188
Capital allowances in excess of depreciation - (4,862 )
temporary differences
Tax effect of changes in tax rate - 160
Overprovision in prior year (17,607 ) -
Total tax charge 148,141 171,722

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

9. TAXATION - continued

In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021. For the financial year ended 31 December 2024, the current weighted averaged tax rate was 25%.

OECD Pillar Two model rules
The company is within the scope of the OECD Pillar Two model rules. Pillar Two legislation has been enacted in the UK, the jurisdiction in which the entity is incorporated, and is effective in 2024. As part of a global group, the company's effective tax rate in the UK will be assessed to determined whether additional tax under the UK Multinational Top-up Tax applies.

The entity applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to Section 29 issued in July 2023.

10. TANGIBLE FIXED ASSETS
Improvements Fixtures
to and Computer
property fittings equipment Totals
£    £    £    £   
COST
At 1 January 2024 294,055 116,737 57,852 468,644
Additions - - 1,992 1,992
Disposals - - (2,645 ) (2,645 )
At 31 December 2024 294,055 116,737 57,199 467,991
DEPRECIATION
At 1 January 2024 176,433 116,685 44,235 337,353
Charge for year 29,406 52 6,008 35,466
Eliminated on disposal - - (2,645 ) (2,645 )
At 31 December 2024 205,839 116,737 47,598 370,174
NET BOOK VALUE
At 31 December 2024 88,216 - 9,601 97,817
At 31 December 2023 117,622 52 13,617 131,291

11. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
31.12.24 31.12.23
£    £   
Trade debtors 3,287,861 960,406
Amounts owed by group undertakings 1,553,189 1,927,084
Other debtors 161,086 172,579
Accrued income - 3,677,967
Prepayments 125,277 291,739
5,127,413 7,029,775

Amount owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
31.12.24 31.12.23
£    £   
Amounts owed to group undertakings 2,974,340 3,355,016
Tax 173,632 182,798
Social security and other taxes 309,612 234,993
VAT 790,781 935,658
Other creditors 65,299 3,914
Deferred income 317,748 350,276
Accrued expenses 138,605 144,556
4,770,017 5,207,211

Amount owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

13. LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:
31.12.24 31.12.23
£    £   
Within one year 369,006 518,646
Between one and five years 943,014 1,327,101
1,312,020 1,845,747

14. PROVISIONS FOR LIABILITIES
31.12.24 31.12.23
£    £   
Deferred tax
Accelerated capital allowances 19,979 27,863
Other provisions 900,141 1,470,591
920,120 1,498,454

Deferred Other
tax provisions
£    £   
Balance at 1 January 2024 27,863 1,470,591
Provided during year - 900,141
Credit to Statement of Comprehensive Income during year (7,884 ) -
Repayment during year - (1,470,591 )
Balance at 31 December 2024 19,979 900,141

Other provisions represent a penalty arising from the ongoing investigation this year, whereas last year's provisions were related to PAYE and NIC liabilities.

ZTE (UK) Limited (Registered number: 04269408)

Notes to the Financial Statements - continued
for the Year Ended 31 December 2024

15. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 31.12.24 31.12.23
value: £    £   
23,768,444 Ordinary £1 23,768,444 23,768,444

There is a single class of ordinary shares. There are no restrictions on the distribution of dividends and the repayment of capital.

16. CONTINGENT LIABILITIES

A claim has been made against the company in relation to patent license dispute in December 2024, The case is still ongoing and under current situation the obligation can not be reliably estimated, accordingly no provision has been made.

17. RELATED PARTY DISCLOSURES

The company has taken advantage of exemption available in Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' para 33.1A whereby it has not disclosed related party transactions with wholly owned subsidiaries within the group.

18. ULTIMATE CONTROLLING PARTY

The immediate parent company is ZTE Cooperatief U.A., a company registered in Netherlands.

The intermediate parent company is ZTE HK Limited, a company registered in Hong Kong and the ultimate parent company is ZTE Corporation, a company registered in China.

The smallest undertaking for which the company is a member and for which group financial statements are prepared is ZTE Corporation, copies of the group financial statements can be obtained from its website www.zte.com.cn.

There is no one ultimate controlling party.