Zhejiang Dahua Technology Co., Ltd.
2023 Annual Report
Stock Code: 002236Stock Abbreviation: DAHUADate of Disclosure: April 2024
Section I Important Notes, Contents and DefinitionsThe Board of Directors, Board of Supervisors, Directors, Supervisors and SeniorManagement hereby guarantee that the information presented in this report are true,accurate, and complete without any false records, misleading statements or materialomissions, and they will bear joint and several liability for such information.
Fu Liquan, the Company's legal representative, Xu Qiaofen, chief accountant, andZhu Zhuling, person in charge of accounting institution (Accounting Officer) herebydeclare and warrant that the financial statements in the annual report are authentic,accurate, and complete. All directors attended the meeting of the Board of Directors fordeliberation of this annual report.
During the reporting period, there was no significant change in the risks faced bythe Company. The Company has been trying to identify all kinds of risks and activelytake counter-measures to avoid and reduce the risks.
(1) Risk of technology upgrading: The smart IoT industry is a typicaltechnology-intensive industry, featuring extremely fast upgrading. If the Company isunable to keep up with development trends of industrial technologies, to pay fullattention to customers' diversified needs, and to devote sufficient R&D investments, itmay still face the risk of losing market competitiveness due to discontinuous innovation.By increasing R&D investment, the Company continues to strengthen research onsuch core technologies as multidimensional awareness, AI large model, video cloud,big data, network communication, cyber security, machine vision, and reserves product,technology, management talent resources for a broader market in the future, so as toachieve sustainable and steady business development.
(2) Risk of business model change: With the development of IoT, artificialintelligence, big data, cloud computing, network communications, among othertechnologies, as well as the upgrades of smart device applications, the business modelin the IoT era may have an impact on the traditional industry development. If anenterprise fails to grasp opportunities brought about by the business modeltransformation in a timely manner, it may face the risk that the original market patternbecomes broken. The Company continues to focus on and study the major changes inglobal economy, industry and technology, analyze the industry development logic, andpredict the evolution of smart IoT industry, the continuous integration of video,information communication and digital technologies, and the diversification anduncertainty of customer demands. While consolidating its current advantageousmarket, the Company is also actively exploring and piloting new businesses and newcommercial modes, with business and technical layout.
(3) Risk of declined local fiscal payment capacity: At present, local fiscal debtis relatively high. If the local fiscal payment capacity declines, it may slow down thegrowth of industry demand, prolong the construction period of projects, extend thecollection of capital, and delay customers' payments. The Company continues toimprove the internal control system and optimize the project review methods, selectlocal projects carefully and assess project risks systematically with prudentassessment of the market logic and cash flow balance logic, and reasonable control ofrisks. In addition, it formulates plans to deal with potential risks such as cash flowshortage, project delay, and payment delay.
(4) Exchange rate risk: The Company's export transactions have been mostlysettled in U.S. dollars. As our overseas business is in continuous growth, the
fluctuation of exchange rate may affect our profitability. The Company hedges andavoids exchange rate risks by centralized management of foreign exchange funds andhedging of purchase payments in line with its main use of U.S. dollars as thesettlement currency.
(5) Risk of product safety: The Company attaches great importance to andcontinuously strengthens resource investment to ensure safe and reliable systemoperations so as to respond to product security risks on the Internet. However, hackersattacks, computer viruses, physical security vulnerabilities, natural disasters, accidents,power interruptions, telecommunications failures, terrorism, and warfare events maystill occur from time to time, resulting in security vulnerabilities, system failures, orservice interruptions. The Company has founded a cyber security committee, and setup a professional security team to develop company-level product safety plans,ensuring product safety in the whole process from demands, design, to coding andtesting. At the same time, the Company actively carries out technical exchanges andcooperation with mainstream safety enterprises, safety evaluation agencies andcorresponding industry associations to provide customers with safe products andsolutions.
(6) Intellectual property risk: The promotion of the Company's globalizationstrategy and its own brand strategy may expose the Company to intellectual propertyrights risks and patent infringement, as well as such risks as business relations,fluctuations in the public opinion environment, increased legal proceedings and risingcosts. With a high priority on technological innovation, the Company has established amechanism for the protection and management of intangible assets such as innovationachievements, own brands and trade secrets, so as to continuously gather
advantageous intellectual property assets; with the establishment of an intellectualproperty compliance and risk control system, the Company continuously strengthensits ability to understand and master intellectual property laws and regulations as wellas the administrative and judicial environment in the regions where it operates.
(7) Risks of international operations: The Company's products and solutionsare available in over 100 countries and regions worldwide. As a result, the Company'sinternational operations may face risks such as trade protectionism, local politicalconflicts, increasingly complex legal compliance requirements, and a sustainedslowdown in global economic growth. The Company actively guards against andresponds to risks of international operations by establishing an overseas compliancerisk control system. It continuously strengthens the understanding and adaptability ofthe laws and regulations as well as the political and economic environment of theregions where its business is involved, and formulates differentiated businessstrategies in accordance with the changes in politics and economy of different regionsto reduce operational risks.
(8) Supply chain security risks: The Company pays attention to the operatingrisks of suppliers. By establishing an operating risk data management platform, itmonitors the operating conditions of suppliers in real time to avoid potential risks; itpromotes diversified supply sources to ensure supply delivery.The profit distribution proposal approved by the board of directors is: Based on theshare capital of 3,274,649,389 shares after deducting the Company's repurchasedshares (19,819,601 shares) as of December 31, 2023, RMB 3.82 (tax included) ofcash dividend and 0 bonus share (tax included) for every 10 shares will be distributedto all shareholders, instead of common reserve capitalizing.
Table of Contents
Section I Important Notes, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Indicators ...... 12
Section III Management Discussion and Analysis ...... 17
Section IV Corporate Governance ...... 143
Section V Environmental and Social Responsibilities ...... 170
Section VI Significant Events ...... 171
Section VII Changes in Shares and Information about Shareholders ...... 197
Section VIII Information of Preferred Shares ...... 210
Section IX Situation on Corporate Bonds ...... 211
Section X Financial Report ...... 212
Documents Available for ReferenceI. Financial statements signed and sealed by the Company's person in charge, thechief accountant, and the person in charge of accounting department (accountingofficer).II. The original copy of the Audit Report with the seal of the Accounting Firm andsigned and stamped by Certified Public Accountants.III. The said documents are prepared and placed at the Company's SecuritiesInvestment Department for reference by investors.
Definitions
| Item of definition | Refers To | Definitions |
| Reporting Period | Refers To | From January 1, 2023 to December 31, 2023 |
| Dahua, company, the company | Refers To | Zhejiang Dahua Technology Co., Ltd. |
| Dahua System Engineering, System Engineering Company | Refers To | Zhejiang Dahua System Engineering Co., Ltd. |
| Dahua Vision Technology | Refers To | Zhejiang Dahua Vision Technology Co., Ltd. |
| Dahua Security Network, Operation Company | Refers To | Zhejiang Dahua Security Network Operation Service Co., Ltd. |
| Dahua Ju'an | Refers To | Zhejiang Dahua Ju'an Technology Co., Ltd. |
| Guangxi Dahua Information | Refers To | Guangxi Dahua Information Technology Co., Ltd. |
| Guangxi Yunlian | Refers To | Guangxi Dahua Yunlian Information Technology Co., Ltd. |
| Xiaohua Technology, Hangzhou Xiaohua | Refers To | Hangzhou Xiaohua Technology CO., LTD. |
| Dahua Zhilian | Refers To | Zhejiang Dahua Zhilian Co., Ltd. |
| Dahua Investment, Dahua Investment Management | Refers To | Zhejiang Dahua Investment Management Co., Ltd. |
| Guangxi Zhicheng, Dahua Zhicheng | Refers To | Guangxi Dahua Zhicheng Co., Ltd. |
| Hangzhou Huacheng, Huacheng Network | Refers To | Hangzhou Huacheng Network Technology Co., Ltd. |
| Xinjiang Information | Refers To | Xinjiang Dahua Zhixin Information Technology Co., Ltd. |
| HuaRay Technology | Refers To | Zhejiang HuaRay Technology Co., Ltd. |
| Fuyang Hua'ao | Refers To | Hangzhou Fuyang Hua'ao Technology Co., Ltd. |
| Huafei Intelligent | Refers To | Zhejiang Huafei Intelligent Technology CO., LTD. |
| Huachuang Vision | Refers To | Zhejiang Huachuang Vision Technology Co., Ltd. |
| Guizhou Huayi | Refers To | Guizhou Huayi Shixin Technology Co., Ltd. |
| Xinjiang Zhihe | Refers To | Xinjiang Dahua Zhihe Information Technology Co., Ltd. |
| Guangxi Huacheng | Refers To | Guangxi Huacheng Technology Co., Ltd. |
| Meitan Dahua Technology | Refers To | Guizhou Meitan Dahua Information Technology Co., Ltd. |
| Inner Mongolia Zhimeng | Refers To | Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. |
| Xinjiang Zhitian | Refers To | Xinjiang Dahua Zhitian Information Technology Co., Ltd. |
| Xinjiang Xinzhi | Refers To | Xinjiang Dahua Xinzhi Information Technology Co., Ltd. |
| Xinjiang Huayue | Refers To | Xinjiang Dahua Huayue Information Technology Co., Ltd. |
| Leapmotor Technology | Refers To | Zhejiang Leapmotor Technology Co., Ltd. |
| Leapmotor | Refers To | Leapmotor Automobile Co., Ltd. |
| Tianjin Dahua Information, Tianjin Dahua | Refers To | Tianjin Dahua Information Technology Co., Ltd. |
| Hunan Dahua Zhilong, Dahua Zhilong | Refers To | Hunan Dahua Zhilong Information Technology Co., Ltd. |
| Huaxiao Technology | Refers To | Zhejiang Huaxiao Technology Co., Ltd. |
| Vision Technology | Refers To | Zhejiang Fengshi Technology Co., Ltd. |
| Xi'an Dahua Zhilian, Xi'an Dahua | Refers To | Xi'an Dahua Zhilian Technology Co., Ltd. |
| Huaruipin | Refers To | Jiangsu Huaruipin Technology Co. Ltd. |
| Beijing Huayue | Refers To | Beijing Huayue Shangcheng Information Technology Service Co., Ltd. |
| Shanghai Huashang | Refers To | Shanghai Huashang Chengyue Information Technology Service Co., Ltd. |
| Dahua Jinzhi | Refers To | Zhejiang Dahua Jinzhi Technology Co., Ltd. |
| Dahua Hong Kong, Dahua (HK) Limited | Refers To | Dahua Technology (HK) Limited |
| Zhoushan Operation | Refers To | Zhejiang Zhoushan Digital Development Operation Co. Ltd. |
| Yunnan Zhili | Refers To | Yunnan Zhili Technology Co., Ltd |
| Guangxi Dahua Technology | Refers To | Guangxi Dahua Technology Co., Ltd. |
| Huayixin | Refers To | Zhejiang Huayixin Technology Co., Ltd. |
| Huaruijie | Refers To | Zhejiang Huaruijie Technology Co., Ltd. |
| Chengdu Zhilian | Refers To | Chengdu Dahua Zhilian Information Technology Co., Ltd. |
| Chengdu Zhian | Refers To | Chengdu Dahua Zhian Information Technology Service Co., Ltd. |
| Chengdu Zhishu | Refers To | Chengdu Dahua Zhishu Information Technology Service Co., Ltd. |
| Chengdu Zhichuang | Refers To | Chengdu Zhichuang Yunshu Technology Co., Ltd. |
| Chengdu Smart Network | Refers To | Chengdu Huishan Smart Network Technology Co., Ltd. |
| Huakong Software | Refers To | Zhejiang Huakong Software Co., Ltd. |
| Huacheng Software | Refers To | Hangzhou Huacheng Software Co., Ltd. |
| Guizhou Dahua | Refers To | Guizhou Dahua Information Technology Co., Ltd. |
| Henan Dahua | Refers To | Henan Dahua Zhilian Information Technology Co., Ltd. |
| Huajian | Refers To | Zhejiang Huajian Technology Co., Ltd. |
| Zhengzhou Dahua Zhian | Refers To | Zhengzhou Dahua Zhian Information Technology Co., Ltd. |
| Dahua International | Refers To | Dahua Technology International Co., Ltd. |
| Anhui Zhilian | Refers To | Anhui Dahua Zhilian Information Technology Co., Ltd. |
| Anhui Zhishu | Refers To | Anhui Dahua Zhishu Information Technology Co., Ltd. |
| Changsha Dahua | Refers To | Changsha Dahua Technology Co., Ltd. |
| Tianjin Huajian | Refers To | Tianjin Huajian Technology Co., Ltd. |
| Wuhu Huajian | Refers To | Wuhu Huajian Technology Co., Ltd. |
| Zhejiang Pixfra | Refers To | Zhejiang Pixfra Technology Co., Ltd. |
| Yiwu Huaxi | Refers To | Yiwu Huaxi Technology Co., Ltd. |
| Dahua Operation | Refers To | Zhejiang Dahua Intelligent IoT Operation Service Co., Ltd. |
| Nanyang Intelligent | Refers To | Nanyang Dahua Intelligent Information Technology Co., Ltd. |
| Yibin Huahui | Refers To | Yibin Huahui Information Technology Co., Ltd. |
| Chengdu Huazhiwei | Refers To | Chengdu Huazhiwei Technology Co., Ltd. |
| IMOU Xi'an | Refers To | Xi'an IMOU Zhilian Technology Co., Ltd. |
| Luoyang Zhiyu | Refers To | Luoyang Dahua Zhiyu Information Technology Co., Ltd. |
| Huaqi Intelligence | Refers To | Zhejiang Huaqi Intelligent Technology Co., Ltd. |
| Chengdu Information | Refers To | Chengdu Dahua Wisdom Information Technology Co., Ltd. |
| Huajian Technology | Refers To | Zhejiang Huajian Technology Co., Ltd. |
| Huaxiyue | Refers To | Guangdong Huaxiyue Intelligent Technology Co., Ltd. |
| Huajie Operation | Refers To | Zhejiang Huajie New Energy Operation Service Co., Ltd. |
| Shuhang Intelligent | Refers To | Zhejiang Shuhang Intelligent Technology Co., Ltd. |
| Dahua USA | Refers To | Dahua Technology USA Inc. |
| Dahua Europe | Refers To | Dahua Europe B.V. |
| Dahua Middle East | Refers To | Dahua Technology Middle East FZE |
| Dahua Mexico | Refers To | Dahua Technology Mexico S.A. DE C.V |
| Dahua Chile | Refers To | Dahua Technology Chile SpA |
| Dahua Malaysia | Refers To | Dahua Security Malaysia SDN. BHD. |
| Dahua Korea | Refers To | Dahua Technology Korea Company Limited |
| Dahua Indonesia | Refers To | PT. Dahua Vision Technology Indonesia |
| Dahua Colombia | Refers To | Dahua Technology Colombia S.A.S |
| Dahua Australia | Refers To | Dahua Technology Australia PTY LTD |
| Dahua Singapore | Refers To | Dahua Technology Singapore Pte. Ltd. |
| Dahua South Africa | Refers To | Dahua Technology South Africa Proprietary Limited |
| Dahua Peru | Refers To | Dahua Technology Perú S.A.C |
| Dahua Russia | Refers To | Dahua Technology Rus Limited Liability Company |
| Dahua Brazil | Refers To | DAHUA TECHNOLOGY BRASIL COM?RCIO ESERVI?OS EM SEGURAN?A ELETR?NICA LTDA |
| Dahua Canada | Refers To | Dahua Technology Canada INC. |
| Dahua Panama | Refers To | Dahua Technology Panama S.A. |
| Dahua Hungary | Refers To | Dahua Technology Hungary Kft |
| Dahua Poland | Refers To | Dahua Technology Poland Sp. z o.o. |
| Dahua Italy | Refers To | Dahua Technology Italy S.R.L. |
| Dahua Tunisia | Refers To | Dahua Technology Tunisia Limited Liability Company |
| Dahua Kenya | Refers To | Dahua Technology Kenya Limited |
| Dahua UK | Refers To | Dahua Technology UK Limited |
| Dahua Germany | Refers To | Dahua Technology GmbH |
| Dahua Serbia | Refers To | Dahua Technology SRB d.o.o. |
| Dahua India | Refers To | Dahua Technology India Private Limited |
| Dahua Turkey | Refers To | Dahua Guvenlik Teknolojileri Sanayive Ticaret A.S. |
| Dahua Czech | Refers To | Dahua Technology Czech s.r.o. |
| Dahua Argentina | Refers To | Dahua Argentina S.A. |
| Dahua Spain | Refers To | Dahua Iberia, S.L. |
| Dahua Kazakhstan | Refers To | Dahua Technology Kazakhstan LLP |
| Dahua Denmark | Refers To | Dahua Technology Denmark Aps. |
| Dahua France | Refers To | Dahua Technology France SAS |
| Dahua Technology Holdings | Refers To | Dahua Technology Holdings Limited |
| Dahua New Zealand | Refers To | Dahua Technology New Zealand Limited |
| Dahua Netherlands | Refers To | Dahua Technology Netherlands B.V. |
| Dahua Morocco | Refers To | Dahua Technology Morocco SARL |
| Dahua Romania | Refers To | Dahua Technology S.R.L |
| Dahua Uzbekistan | Refers To | Dahua Vision LLc |
| Dahua Bulgaria | Refers To | Dahua Technology Bulgaria EOOD |
| Dahua Sri Lanka | Refers To | Dahua Technology China (Pvt) LTD |
| Dahua Pakistan | Refers To | Dahua Technology Pakistan (private) Limited |
| Dahua Thailand | Refers To | Dahua Technology (Thailand) Co.,LTD. |
| Dahua Nigeria | Refers To | Dahua Technology Nigeria Representative Ltd |
| Dahua Israel | Refers To | Dahua Technology Israel Ltd. |
| Dahua Mexico Service | Refers To | VISMEXTECH DHM SERVICIOS, S.A. DEC.V. |
| Huacheng Netherlands | Refers To | Imou Network Technology Netherlands B.V. |
| Dahua Japan | Refers To | Dahua Technology Japan LLC |
| Huacheng Hong Kong | Refers To | Huacheng Network (HK) Technology Limited |
| Dahua Qatar | Refers To | Dahua Technology QFZ LLC |
| Dahua Pacific | Refers To | Dahua Technology Pacific S.A |
| INTELBRAS S.A. | Refers To | INTELBRAS S.A. IND?STRIA DE TELECOMUNICA??O ELETR?NICA BRASILEIRA |
| Dahua Saudi Arabia | Refers To | Dahua Technology Middle East for Maintenance Single Person Company |
| Dahua Bengal | Refers To | Dahua Technology Bangladesh Private Limited |
| IMOU Australia | Refers To | IMOU NETWORK TECHNOLOGY AUSTRALIA PTY LTD |
| IMOU Vietnam | Refers To | C?NG TY TNHH C?NG NGH? IMOU NETWORK VI?T NAM |
| HuaRay Singapore | Refers To | HUARAY TECHNOLOGY SINGAPORE PTE. LTD. |
| Dahua Belgium | Refers To | Dahua Technology Belgium BV |
| Dahua Saudi Arabia | Refers To | Dahua Technology Regional Headquarters |
| Dahua Azerbaijan | Refers To | Dahua Technology Azerbaijan LLC |
| Dahua Vietnam | Refers To | Dahua Technology Vietnam Company Limited |
| HuaRay Korea | Refers To | HUARAY TECHNOLOGY KOREA COMPANY LIMITED |
| HuaRay Germany | Refers To | Huaray technology GmbH |
| Dahua Angola | Refers To | Dahua Technology Angola S.U. lda |
Section II Company Profile and Key Financial IndicatorsI. Company Information
| Stock Abbreviation | DAHUA | Stock Code | 002236 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 浙江大华技术股份有限公司 | ||
| Company Abbreviation in Chinese | 大华股份 | ||
| Company Name in Foreign Language (If any) | ZHEJIANG DAHUA TECHNOLOGY CO.,LTD. | ||
| Legal Representative | Fu Liquan | ||
| Registered Address | 1187 Bin'an Road, Binjiang District, Hangzhou City | ||
| Post Code of Registered Address | 310053 | ||
| Change of the Company’s Registered Address | On November 9, 2005, the Company’s registered address changed from the 15th floor of Tianyuan Building, 508 Wensan Road, Hangzhou to the present registered address. | ||
| Office Address | No. 1399 Bixing Road, Binjiang District, Hangzhou City | ||
| Post Code of Office Address | 310053 | ||
| Website | www.dahuatech.com | ||
| zqsw@dahuatech.com | |||
II. Contact Person and Contact Information
| Secretary of the Board | Representative of Securities Affairs | |
| Name | Wu Jian | Li Sirui |
| Contact Address | No. 1399 Bixing Road, Binjiang District, Hangzhou City | No. 1399 Bixing Road, Binjiang District, Hangzhou City |
| Tel. | 0571-28939522 | 0571-28939522 |
| Fax | 0571-28051737 | 0571-28051737 |
| zqsw@dahuatech.com | zqsw@dahuatech.com |
III. Information Disclosure and Location
| The stock exchange website where the Company discloses the annual report | Shenzhen Stock Exchange (http://www.szse.cn) |
| The media outlets and their websites where the Company discloses the annual report | Securities Times and Juchao Information Network http://www.cninfo.com.cn/ |
| Location for Annual Report of the Company | Securities Investment Department |
IV. Registration Change
| Unified Social Credit Code | 91330000727215176K |
| Changes in Main Business Since Listing (If any) | No Change |
| Change of Controlling Shareholders (If any) | No Change |
V. Other Related InformationAccounting Firm Hired by the Company
| Name of the Accounting Firm | BDO China Shu Lun Pan CPAs (special general partnership) |
| Office Address of the Accounting Firm | 4/F, New Huangpu Financial Plaza, No.61, Nanjing East Road, Shanghai |
| Name of Signing Public Accountant | Du Na, Zhang Junhui |
The sponsor institution hired by the company to perform the continuous supervision in the reporting period? Applicable □ Not applicable
| Name of Sponsor Institution | Office Address of Sponsor Institution | Name(s) of Sponsor Representative(s) | Continuous Supervision Period |
| Guosen Securities co., Ltd. | 5th Floor, Kaisiya Building, No. 105 Tiyuchang Road, Hangzhou City, Zhejiang Province | Lou Yu, Sun Yu | April 14, 2023 to December 31, 2024 |
The financial adviser hired by the company to perform the continuous supervision in the reporting period
□ Applicable ? Not applicable
VI. Key Accounting Data and Financial IndicatorsWhether the Company needs retroactive adjustment or restatement of accounting data in prior years or not
□ Yes ? No
| 2023 | 2022 | Increase/Decrease Compared with the Same Period of the Previous Year | 2021 | |
| Operating revenue (RMB) | 32,218,317,636.77 | 30,565,370,012.64 | 5.41% | 32,835,479,336.85 |
| Net profit attributable to shareholders of the listed Company (RMB) | 7,361,892,404.52 | 2,324,356,092.20 | 216.73% | 3,378,410,889.60 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) | 2,961,742,139.01 | 1,580,552,515.57 | 87.39% | 3,103,383,711.14 |
| Net cash flow generated by operational activities | 4,598,778,654.47 | 1,053,587,649.46 | 336.49% | 1,727,560,748.01 |
| (RMB) | ||||
| Basic Earnings per Share (RMB/Share) | 2.31 | 0.79 | 192.41% | 1.15 |
| Diluted Earnings per Share (RMB/Share) | 2.31 | 0.79 | 192.41% | 1.15 |
| Weighted Average ROE | 22.43% | 9.49% | 12.94% | 15.58% |
| End of 2023 | End of 2022 | Increase/Decrease at the End of the Current Year Compared with the End of the Previous Year | End of 2021 | |
| Total assets (RMB) | 52,881,927,214.00 | 46,252,893,804.54 | 14.33% | 44,055,872,021.97 |
| Net assets attributable to shareholders of the listed company (RMB) | 34,719,173,825.42 | 25,836,798,918.61 | 34.38% | 23,617,602,513.55 |
The Company’s net profits before and after deducting non-recurring profits and losses, whichever is lower, arenegative in the last three fiscal years, and the audit report of last year shows that there is uncertainty in theCompany’s ability to continue as a going concern.
□ Yes ? No
The net profits before and after deducting non-recurring profits and losses, whichever is lower, is negative.
□ Yes ? No
Ⅶ. Differences in Accounting Data Under Domestic and Foreign Accounting Standards
(1) Differences of net profits and net assets in the financial reports disclosed according tothe international accounting standards and Chinese accounting standards
□ Applicable ? Not applicable
During the reporting period of the company, there is no difference between the net profits and net assets in thefinancial reports disclosed according to international accounting standards and Chinese accounting standards.
(2) Differences between the net profits and net assets in the financial reports disclosedaccording to the overseas accounting standards and Chinese accounting standards
□ Applicable ? Not applicable
During the reporting period of the company, there is no difference between the net profits and net assets in thefinancial reports disclosed according to overseas accounting standards and Chinese accounting standards.
Ⅷ. Key Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 6,015,629,882.58 | 8,617,917,398.06 | 7,644,936,763.40 | 9,939,833,592.73 |
| Net Profit Attributable to Shareholders of the Listed Company | 495,351,177.84 | 1,480,667,195.29 | 614,113,966.50 | 4,771,760,064.89 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 398,105,107.61 | 1,356,664,722.35 | 647,597,255.16 | 559,375,053.89 |
| Net cash flow generated by operating activities | -1,339,410,329.62 | 1,602,107,075.33 | 1,062,555,492.77 | 3,273,526,415.99 |
Whether the above financial indicators or their totals are significantly different from the financial indicators disclosedin the Company’s quarterly and semi-annual reports
□ Yes ? No
Ⅸ. Non-recurring Gains and Losses Items and Their Amounts
? Applicable □ Not applicable
Unit: RMB
| Item | Amount in 2023 | Amount in 2022 | Amount in 2021 | Note |
| Gains or losses from disposal of non-current assets (including the write-off for the accrued impairment of assets) | 4,778,983,828.56 | 694,299,856.79 | 47,555,142.92 | |
| Government subsidies included in the current profits and losses (except for those that are closely related to the normal business operations of the Company, comply with national policy regulations, are enjoyed according to established standards, and have a continuous impact on the Company's profits and losses) | 199,003,183.46 | 245,885,438.60 | 217,227,114.97 | |
| Gains or losses from changes in the fair value of financial assets and liabilities, and from the disposal of financial assets and liabilities, held by non-financial enterprises, except for effective hedging businesses related to the normal operating business of the Company. | 103,119,981.50 | -14,286,907.57 | 81,148,682.33 | |
| Gains or losses from investment or asset management entrusted to | 1,819,647.72 | -40,735,247.48 | 104,368,534.48 |
| others | ||||
| Reversal of the receivables depreciation reserves for separate impairment test | 4,513.91 | 2,151,340.72 | ||
| Gains or losses from debt restructuring | -16,242,445.24 | -414,996.80 | -56,076.90 | |
| Non-Operating Revenue and expenses other than the above | -18,035,840.08 | 5,535,034.55 | -1,402,020.22 | |
| Other gains and losses items that fit the definition of non-recurring gains and losses | -57,989,909.93 | -134,254,380.85 | -40,319,290.13 | |
| Less: Impact of income tax | 555,973,378.97 | 49,067,502.67 | 78,172,720.73 | |
| Impact of minority equity (after tax) | 34,539,315.42 | -34,690,941.34 | 55,322,188.26 | |
| Total | 4,400,150,265.51 | 743,803,576.63 | 275,027,178.46 | -- |
Other gains or losses that fit the definition of non-recurring gains or losses:
□ Applicable ? Not applicable
The Company has no other gains or losses that fit the definition of non-recurring gains or losses.Note for the definition of non-recurring gains and losses listed in the No. 1 Explanatory Announcement onInformation Disclosure for Companies Issuance Their Securities to the Public - Non-recurring gains and losses, asrecurring gains and losses.
□ Applicable ? Not applicable
The Company did not define any non-recurring gains and losses listed in the No. 1 Explanatory Announcement onInformation Disclosure for Companies Issuance Their Securities to the Public - Non-recurring gains and losses asrecurring gains and losses.
Section III Management Discussion and AnalysisI. Industry Overview during the Reporting PeriodIn 2023, China's economy and society embarked on a path of comprehensive recovery andnormalization. Under the guidance of enhanced macroeconomic regulation, the economydemonstrated positive momentum, with a growing number of bright spots emerging. Overall, theeconomic trend was one of steady upward growth. However, the external environment becameincreasingly complex and challenging, with frequent regional hotspots and growing uncertaintiessurrounding global economic growth. These developments posed new challenges for the Company.The Company forged ahead despite the fluctuations in the macro environment and intensifiedmarket competition, and completed the goal of ''transitioning from stability to growth whileupholding high-quality development'' at the beginning of the year.The world is witnessing an accelerated phase of technological revolution and industrialtransformation, while China's economy is undergoing a critical period of transition towards high-quality development, economic structure optimization, and growth driver transformation. Againstthis backdrop, China is vigorously promoting the digital economy, actively advancing digitalindustrialization and industrial digitalization, fostering the deep integration of digital technologieswith the real economy, and deepening research and application in big data, artificial intelligence,and other fields. Simultaneously, the sound development of data infrastructure, vigorous promotionof data openness and sharing, and utilization are all becoming driving forces for the sustaineddevelopment of the smart IoT industry. With the continuous advancement of AI large modeltechnologies, the smart IoT industry, driven by business needs across a wide range of industries, isleveraging its accumulated experience in algorithm development and scenario applications toeffectively implement visual large models in various application domains. This is leading tosynchronized improvements in generalization, accuracy, and expressiveness, and accelerating thedevelopment of digitalization and intellgentization in the industry, further solidifying the industry'soverall competitiveness. Additionally, the smart IoT industry is continuously advancing businessenablement by collecting data through multidimensional awareness and multi-source connectivity,fully leveraging the "multiplier effect" of data elements, and empowering efficient urban governanceand enterprise digitalization upgrades.Digitalization and intellgentization have become crucial trends in societal development andsignificant drivers of economic growth. The pervasiveness of new technologies like big data andartificial intelligence in the smart IoT industry is fueling the demand for digital upgrades in traditionalsectors. This will inject fresh impetus into China's economic development and open up newavenues for the growth of the smart IoT industry.
II. Main Businesses of the Company during the Reporting Period
1. Business overview
Dahua is a world-leading video-centric smart IoT solutions and service provider. Supported bytwo major technological strategies, AIoT and the IoT digital intelligence platforms, the Companyeffectively integrates technologies such as artificial intelligence, big data and IoT into its productsand solutions to serve the digital innovation of cities and the digital intelligence transformation ofenterprises.In the field of city businesses, we are committed to establishing a new smart city ecosystemthat promotes ''efficient urban governance, autonomous city operations, enhanced securitysystems, and collaborative ecological management''. This ecosystem is built on the principles of''unified architecture, backward compatibility, shared capabilities, and commercial availability''. Weare deeply engaged in city business scenarios across various industries, including transportation,traffic management, ports, public services, and ecological environment. Our cutting-edge smart IoTsolutions empower urban sectors to embrace digital innovation and achieve a harmoniouscoexistence between humans, nature, and society.In the field of enterprise business, by leveraging AI, big data, and other cutting-edgetechnologies, we seamlessly integrate them with industry-specific scenarios to gain deep insightsinto industry transformation trends. We delve into a wide range of industries, uncovering the digitaland intelligent needs of enterprises, and providing each customer with high-quality digital upgradesolutions. We are actively engaged in innovative practices across various industries, includingconstruction, education, manufacturing, petrochemicals, coal, power, steel, agriculture, logistics,cultural tourism, healthcare, finance, and commercial chains. Our focus is on delivering customervalue by ensuring production safety, enhancing production capacity, promoting operationalefficiency, and optimizing service quality. We strive to be a trusted partner for enterprises seekingdigital transformation.In the field of innovative business, by leveraging our deep understanding of diversecustomer needs and years of experience in smart IoT, we are continuously exploring emerging
businesses. These include machine vision and mobile robotics, smart living, thermal imaging,automotive electronics, smart security inspection, smart firefighting, and storage media.
In a relentless pursuit of industry competitiveness, the Company embarked on acomprehensive strategic overhaul in 2023, transitioning from Think#1.0 to Think#2.0. This evolutionseamlessly integrates multimodal, industry-specific large models, graph-based computing, andmulti-source connectivity, propelling us from Intelligence to Integrated Intelligence. By establishinga broader AIoT framework, we have strengthened our intelligent intents-based integration andconnection capabilities, unlocking the value of video-centric data elements.
In the technology field, the Company has continuously strengthened its technologicalcapabilities and entered stage 2.0 for its AIoT and IoT digital intelligence platforms. In the field ofAIoT, we are leveraging large models to build broader AIoT capabilities and integrating diversetechnologies to establish a wider range of connectivity options. By fusing multimodal technologiessuch as image, speech, and text with the Company's industry expertise, we are constructingindustry-specific large models that further enhance video analysis capabilities. Tailored to industry-specific business scenarios, we are developing and continuously refining industry-specific AIsystems, accumulating knowledge from generic large models to enable rapid replication acrossindustries. To drive the convergence of computing and networking for intelligent visual applications,we are building integrated connectivity capabilities that cater to intelligent intent. In the field of IoTdigital intelligence platform, we are committed to unlocking the value of data elements centered onvideo. We will continuously enhance our capabilities in visual data analysis and content description,further elevating the value of sensor data and promoting data resource transformation. We willestablish a visual-centric integration of computing and network, enabling efficient collaborationacross cloud, network, edge, and device layers. Leveraging large visual models and integratingmultimodal capabilities, we will comprehensively enhance data asset's accuracy, effectiveness, andusability, facilitating data asset transformation. We will foster a thriving data element ecosystem byfocusing on enhancing urban governance efficiency and enterprise digitalization. We willcontinuously explore the value of multi-dimensional data integration, empowering partners tounleash the potential of data and promoting data commoditization.
In the field of business, our urban and enterprise solutions have been revamped andupgraded, empowering industry clients to unleash their business potential. In the City Business 2.0stage, we will build a more efficient urban governance system and actively fulfill our socialresponsibility for sustainable development. Our initiatives span a wide range, from improving urbanmanagement to efficient urban governance, from ensuring orderly operations to autonomous cityoperations, from enhancing public safety to upgrading safety systems, and from ecologicalenvironment monitoring to collaborative ecological governance. We are promoting a shift fromcollaborative response to proactive governance and driving the reengineering of digital processesin cities. In the Enterprise Business 2.0 stage, we will continue to assist businesses in all industrieswith their digital transformation and upgrading, enabling the realization of value across allscenarios. Our efforts encompass optimizing security systems, building a comprehensive securitysystem, improving production efficiency, establishing intelligent manufacturing capabilities,supporting business management, and enhancing business decision-making. Our enterprisebusiness is gradually transitioning from peripheral support to the core of production. By deeplyinteracting with core production systems, we can learn about the value of production andmanagement data, reduce management costs, and enhance business management capabilitiesand decision-making levels.
2. Organizational structure
The Company has established five world-class research institutes: the Advanced TechnologyInstitute, the Big Data Institute, the Central Research Institute, the Cybersecurity Institute, and theFuture Communications Institute. These institutes provide the foundation for two major productlines: the AloT and IoT digital intelligence platforms. These platforms, in turn, empower threecomprehensive solutions: City Business Solutions, Enterprise Business Solutions, and OverseasBusiness Solutions. With our headquarters in Hangzhou, we have also established research
centers in Xi'an, Chengdu, Europe, and Latin America. This global network of research centersallows us to meet the ever-evolving needs of our businesses and explore the boundlesspossibilities of technology. With years of dedication, our company has established a national-levelpost-doctoral scientific research workstation, earning recognition as a national enterprisetechnology center, national-level industrial design center, and national innovative pilot enterprise.Driven by an unwavering commitment to innovation, we consistently make groundbreakingcontributions and lead the industry forward.Embracing globalization, the Company has systematically expanded its domestic andinternational marketing and service networks to provide customers with comprehensive lifecycleservices, including product and solution consulting, design, sales, delivery, and after-sales support.As of today, our domestic marketing centers span 100% of provinces, municipalities, andautonomous regions, 100% of prefecture-level cities, and over 70% of districts and counties.Additionally, we have established 69 overseas branches in 180+ countries and regions, with aglobal network of over 1,000 service partners and 170+ spare parts centers and stations.
3. Main products and capabilities
The Company continues to increase investment and construction in the foundation of its "5Full" capabilities that include "full sensing, full intelligence, full connection, full computing, and fullecosystem", to establish an industry-leading video-centric IoT infrastructure R&D and solutionclosed-loop service, which includes "multimodal sensing of video and non-video, full coverage ofsensing cognitive intelligence, diversified connectivity, and synchronization of device, edge, andcloud", based on an integrated technical support system from "basic IoT sensing, intelligentsynchronization, and integration of devices and edge, data intelligent processing, to full linkinformation security protection", thus continuously maintaining the leadership of its technologiesand products in the industry. At the same time, the Company actively creates an open, cooperative,and win-win digital technology ecosystem to make digital infrastructure, industry paradigmapplications, algorithm capabilities and data intelligence available to partners and industrydevelopers.
Full sensing: To establish an industry-leading all-round sensing system through visual, multi-spectrum, time, space and other dimensions to maintain precise adaptation of products andtechnology to scenarios, so as to faithfully present the physical world in the digital way.
Full connection: To construct a data connectivity system that meets the needs of diversescenarios, consolidate the foundation of data value connectivity that integrates IoT sensing andinformation interconnection, and continuously improve the ability of IoT sensing access andintegration;
Full computing: To accumulate resources in image computing power, AI computing power,general computing power, etc., and build a full-network computing architecture featuring unifiedscheduling and collaborative computing power and algorithms of end-user, edge, and cloud.
Full intelligence: To meet industry needs and realize the closed loop from sensing intelligenceto data intelligence and to business Intelligence, the Company has built an autonomous systembased on algorithms, big data, and business platforms to facilitate value identification in client dataand intelligent decision-making, namely full intelligence.
Full ecosystem: To open up the ecology of business, software, algorithms, hardware, etc. forcooperation, build an ecosystem featuring co-construction, win-win outcome and symbiosis, andcreate a smart IoT community.
3.1 Full Sensing
The Company is continuously expanding its multi-dimensional sensing capabilities with videoas its core, applying sensing technologies to a wider range of product forms to adapt to the specificscenarios of various industries. It is also continuously researching visual enhancement, scenerecognition, and multi-dimensional data integration algorithms to improve the adaptability ofsensing products to business goals and scenarios.
3.1.1 Video sensory products
Committed to delivering more realistic images and precise data in the visible spectrum, theCompany has unveiled its second-generation Dahua Zhiqiang depth sensing technology
architecture. This innovative architecture, built upon the Visual Engine and Thinking Engine,significantly enhances the image self-adaptation capabilities of sensing devices in extremeenvironments such as night and backlight conditions. It also improves the target recognition andanalysis capabilities in complex scenarios like mixed pedestrian and vehicle traffic. Furthermore,the deep integration of AI technology into all aspects of the video sensing system accelerates thecomprehensive intellgentization and enhancement of cameras. This ongoing commitment toinnovation has resulted in a rich portfolio of products with sustained market competitiveness,including the full-color ultra-sensitivity, panoramic multi-details, coaxial HD, and universeintelligence series.
(1) Full color ultra sensitivity
The 4K ultra high-definition aurora product can achieve more realistic colors and accuraterestoration of target objects. The Skyscanner PRO Series has better environmental adaptabilityagainst adverse scenarios such as rain, snow, and ultra-low illumination. In 2023, the Companyunveiled its "Glow" series of traffic cameras, ushering in a new era of true-color night vision for thetraffic management industry and paving the way for safer and more enjoyable journeys. TheCompany also introduced its Mini Skyscanner series, offering customers a more cost-effective nightvision solution. Additionally, the Company enhanced its Aura products with improved lighting andoptical systems, ensuring clear, high-aperture imaging throughout the entire zoom range, even inlow-light conditions, providing unwavering safety around the clock.
(2) Panoramic multi details
Driven by evolving application needs and technological advancements, panoramic multi-camera systems have emerged as the prevailing trend in intelligent video products. These systemsenable seamless integration of panoramic views, detailed close-ups, and pan-tilt-zoom functionalitywithin a single device, offering users a broader, clearer, and more comprehensive field of view.Intelligent high-end product forms have evolved from single-direction single-camera to single-
direction multi-camera and multi-direction multi-camera, adapting to various application scenarios,providing a wider and clearer view. Dahua Starship Skyline can expand the functions of radar,multi-code and laser light filling, so as to meet the needs of customers in more dimensions. TheMini Star series has been upgraded with 4K high-definition resolution and a longer focal length lensto meet the needs of wider deployment in urban areas. Aura PRO is designed with full-structureintelligence and high optical zoom to achieve the application of omnidirectional panoramic view,panoramic details, and the linkage of gun camera and ball camera. Enhanced resolution forUniverser Hubble's dual-spectrum camera movement enables sharper close-up images, while thepanoramic upgrade supports 360° single-channel output and arbitrary target stitching, expandingapplication flexibility. Mini Hubble breaks through the technical problems in the industry such asobvious seams and large blind areas of medium-and-low altitude multi-view stitching. It's moresuitable for B end scenario. Universe MAX supports both linked and independent capture modes,achieving both breadth and depth.
(3) Coaxial HD
The Company's HDCVI technology and products are driven by customer business scenariosand are based on years of business understanding and continuous innovation capabilities. Dahuahas launched its full-color products, achieving 7*24 hour color image output. The time-division lightcompensation technology is adopted to effectively alleviate the light pollution problem. LeveragingSmart Dual Light technology, we introduce our dual-light products, providing around-the-clocksurveillance illumination for any environment. Our versatile solutions offer multiple functionalities inone device, reducing customer costs. Our cutting-edge active defense products are continuouslyevolving, incorporating a suite of proprietary technologies such as intelligent dual-light, time-divisionmultiplexing, intelligent voice recognition, two-way intercom, and interference-free alert lights.These innovations address the potential discomfort caused by alert screens and significantlyenhance the user experience.
(4) Universe intelligence
As industry applications continue to evolve, intelligent products need to delve deeper intobusiness processes, providing more specialized and precise intelligent services. For example, wehave continuously iterated on our roadside parking series products, upgrading the vehicle 3Dchassis projection and multi-dimensional target tracking model, significantly improving the accuracyof parking space status recognition. Our 4G solar-powered wireless high-position parking camerafurther advances the intelligent development of urban parking facilities. Our vehicle-roadcollaboration camera propels traffic management into a new era of collaborative intelligenttransportation that is safer and more efficient. Our dual-lens high-rise littering detection camerasemploy intelligent dual-channel monitoring to identify objects being thrown from high places.Utilizing technologies such as lens hoods and adaptive heating, these cameras effectivelycounteract environmental interferences caused by strong light, rain, and snow. Our electric bicycleidentification and blocking products provide real-time monitoring of elevator operating status andupgrade elevator door opening and closing, passenger flow, and other algorithms to meet a widerrange of business applications. We have also launched a series of products for the energy industrysuch as mining, explosion-proof, and low-power transmission lines, loaded with 5G, Wi-Fi6, long-distance transmission technology, and various intelligent applications, to meet the applicationneeds of explosion-proof, anti-corrosion, and high-temperature resistance scenarios.
3.1.2 Integrated Sensing Products
The Company is continuously refining its "Panoramic 6D Perception" product technologyarchitecture, with video as the core, integrating physical sensing layers such as tactility, andcontinuously expanding multidimensional perception data such as vibration, temperature, and gas.By incorporating AI-powered intelligent analysis, we have further enhanced our sensingadaptability, integration, and connectivity. We are continuously launching a series of scenario-defined sensing products to explore the value of the smart IoT industry.
(1) Panoramic 6D Perception
Our Panoramic 6D Perception products go beyond the limitations of visible light, utilizing agroundbreaking combination of spatial, temporal, color, brightness, and multispectral sensingtechnologies to revolutionize sensing adaptability, integration, and connectivity, bringing the digitalworld to life. The Panoramic Hubble Series achieves high-definition panoramic view, long-distancetarget detection and tracking, and can be applied to industries such as forest fire prevention, landand resource protection, river management, and border and coastal defense. The hyperspectralwater quality detector uses a large amount of data to stimulate AI neural network training iterations,and multi-camera and multi-sensor modules to detect and ensure the safety of water quality in thewater area. The products of Radar Vision Series are widely used in business fields such as trafficflow detection, safety warning, traffic event detection, and holographic display. The newly launchedSpotter speed measurement column series solves the speed measurement problems in thescenarios where high-speed vehicles are merging or closely followed in multiple lanes, furtherempowering traffic safety management.
(2) Multi-frequency domain sensing
As smart IoT applications continue to expand, single-stream video data is no longer sufficientto meet the diverse business and scenario needs of various industries. While solidifying ourexpertise in video sensing technology, we are continuously expanding our reach into vibration,temperature, and gas sensing technologies. By integrating and applying passive infrared,microwave, radar, vibration, audio, and video technologies, we are introducing more intelligent,accurate, and multidimensional perception products, empowering digital transformation acrossvarious industries in multifaceted ways.
Our alarm product line continues to break new ground, integrating passive infrared,microwave, vibration, and audio sensing technologies to introduce a range of key products,including the Airshield 2.0 gateway series, glass break detectors, and outdoor PIRCAMs. We havealso released the Converter software product, which has successfully connected multiple alarmoperation centers, helping our products enter professional operation channels. In addition, we arecontinuously improving the interconnection of alarm, building, and CCTV systems, optimizing
cloud-based businesses, and enhancing the overall competitiveness of our solutions. Our wiredintrusion alarm solutions are constantly evolving to provide customers with even greater value. Inthe transportation sector, our dynamic vehicle scales offer high accuracy, strong resistance todeformation, and convenient calibration, enabling precise weighing without stopping vehicles, thussupporting the management of overloaded trucks. Our suite of solutions, including speed detectionradars, traffic flow radars, visibility detection systems, Sentinel sonar, ETC, and RFID, is deeplyintegrated into real-world applications, tailored to meet the specific needs of our industrycustomers, and empowering them to effectively manage road safety.
3.1.3 Audio sensing products
The Company offers a wide range of audio products and mature audio-visual productsolutions. By establishing and implementing enterprise-grade audio development processes, audiosystem design specifications, and audio technology standards, we have continuously improved ourcore technology stack for audio acquisition, transmission, and modulation-demodulationprocessing. This has enhanced our ability to develop, verify, and manufacture a comprehensiverange of audio products and software for various acoustic environments. Leveraging a suite ofaudio solutions, including audio codecs, audio quality processing, audio event detection, andspeech recognition, we meticulously ensure the audio quality and intelligence of our products, fromideation to mass production. In the field of intelligent and interactive audio, we are constantlybreaking new ground in technology and product development, delivering highly competitiveaudiovisual product solutions.
For intelligent audio, we have developed a series of products that encompass front-endcollection, edge analytics, and central business closed-loop control. Our solutions, whichincorporate modules such as video AI, voice recognition AI, and thermal imaging, can be applied toa wide range of business scenarios, including industrial equipment anomaly detection, pipelineleakage monitoring, animal voice recognition, school bullying control, and vehicle horn control.
For interactive audio, we offer a full range of products and solutions, including public addresssystems, professional sound reinforcement, and high-definition sound pickup. The broadcastingsystem can be integrated with the platform and linked with video monitoring to achieve unifiedcontrol. The sensing of events through video monitoring, the analyzing and decision making onbusiness platforms, and the controlling executed by the broadcasting systems form the closed-loopof business. The professional sound reinforcement system can be integrated with the large screendisplay system to be applied in venues such as lecture halls, large, medium and small conferencerooms, opera houses, banquet halls, sports venues, etc., creating audio and video interaction andimmersive experience to meet customers' needs for high-quality audio scenarios.
3.1.4 Intelligent Interactive Products
The world of physics is rich and colorful. In many scenarios, there are rich interactionsbetween people and people, as well as people and things. Multidimensional awareness is appliedto refine the real world, with multivariate connection to collect data and intelligent computing tobuild scenarios of digital intelligence, so as to finally make things an extension of people's touch,improve the interaction between people and things, and bring people closer. The Company haslaunched a variety of intelligent interactive products in various fields and scenarios, including smartoffice, vehicle management, personnel access control, door intercom and alarm, industry, andsafety supervision, empowering the development of these industries.
(1) Residence sector
① Scenario of vehicle management and guidance
The Company has perfectly combined video with display, and mechanical control. To improveentrance and exit scenario solutions, we have released the "Ruijie" all-in-one barrier gate, snap-display all-in-one machine, and entrance and exit self-service device. We have released anintelligent sound-light police parking space detection camera that supports electric micro PTZplatform debugging for more convenient deployment. Our new-generation parking detectorsupports functions such as new energy vehicle parking space management, VIP parking spacemanagement, and non-standard parking alarm, bringing better parking guidance experience andmore standardized parking management. For the quick closed loop of parking business, wereleased a series of products such as entrance and exit management terminals, guidancemanagers, and parking management terminals to help reduce costs and increase efficiency. Ourstop-and-charge integrated solution effectively improves parking operation efficiency and userexperience. By connecting the parking management service to the cloud platform, the pre-paymentand non-contact payment can be realized, and finally vehicles can enter and leave the parking lotwith a non-contact passthrough, bringing the superlative experience to users.
② Scenario of personnel entrance and exit
The Company is constantly optimizing and expanding our range of pedestrian turnstileproducts, including full-height turnstiles, tripod turnstiles, wing turnstiles, and swing turnstiles, tomeet the personalized needs of various scenarios and provide customers with a new experienceand security control. We have recently launched our new intelligent integrated pedestrian turnstile,catering to a wider range of personnel entry and exit applications.
③ Scenario of building access control
This scenario has become deeply integrated into people's daily lives. The Company offers awide range of intelligent products, including access control systems, video intercoms, andemergency alarms.Our smart access control products comprehensively enhance the security of access controlsystems, meeting the fourth-level industry system construction requirements for passwordapplication security evaluation. Additionally, they enable one-click cloud deployment, making devicemobile configuration management more convenient and user-friendly. The devices supportadvertising functions and can be used as electronic door signs or park/community announcementsand commercial advertisements, empowering the value addition of business. Our visual intercomseries products for buildings streamline the business processes among visitors, owners, andproperty management centers. They effectively improve the access efficiency and securitymanagement capabilities of community entrances and exits, bringing more convenience to ownersand enhancing property management efficiency. Our emergency assistance devices canautomatically register with the management platform or management machine, enabling remotevisual intercom assistance. Through intelligent voice recognition, emergency assistance can betriggered, buying time for those seeking assistance, deterring criminals, and safeguarding thesafety of public places.
④ Scenario of smart office
Our "Stargaze" and "Starbright" smart tablets enhance both online and offline educationsolutions, empowering a new era of educational growth. Our Deephub Board and Meeting softwaredeliver an unparalleled audio and video communication experience, redefining the meetinglandscape and expanding the reach of our conferencing solutions.
⑤ Scenario of display control
Our distributed splicing controller and KVM seat management system seamlessly integratelarge-scale displays and operator workstations, meeting the high-efficiency collaboration demandsof command centers in metropolises, core hub dispatch centers, and international sporting events.Our 8K series decoders meet the dual 8K decoding and display needs of control centers. Our all-in-one MLED controller enables a variety of scenarios, including always-on displays and gesturerecognition. Our minimalist assembler and disassembler, deployed to the SMB market, enableefficient and rapid business loop control for customers and users in scenarios such as conferencerooms and control rooms. Our iSee unified display control software seamlessly integrates variousforms of content onto a single display, providing a real-time visual experience and establishing aunified display portal.
(2) Industrial sector
We are revolutionizing smart electricity with our new line of compact, all-in-one AI loadidentification intelligent circuit breakers, significantly enhancing the efficiency and safety of powersystems. Our intelligent energy solution seamlessly integrates with advanced smart lightingsystems, smart IoT meters, and smart HVAC control systems. It enables real-time monitoring ofenergy data across the premises, automatically adjusts energy usage strategies, and achieves fineenergy management. This not only helps buildings save energy and reduce costs but alsopromotes the development of green buildings and contributes to the realization of the "dual carbon"strategy.
(3) Safety supervision sector
In the fields of emergency response, power, and rail transportation safety supervision, wedelve into business scenarios, gain insights into customer needs, and continuously optimizeproduct and business functions. We have created industry-specific products such as integratedenvironmental monitoring machines, integrated data center patrol machines, IoT hosts, and powerand environmental monitoring hosts. These products enable remote monitoring and control of data,helping enterprises achieve energy conservation and emission reduction, automated patrols,production process optimization, and safety supervision. They also greatly improve the operationalefficiency and security of data centers and reduce operation and maintenance costs.
3.2 Full Connection
The Company's "full connection" capabilities evolved to "integrated connection" in 2023. In theera of intelligent video, the deep integration of network products and video systems is becomingincreasingly essential. To address this need, the Company has established the FutureCommunications Institute. Focusing on three key areas – network connection technology, dataexchange technology, and cutting-edge network technology – we are building a "3+N" integratedconnection capability system. This system aims to achieve more reliable, efficient, and intelligentdata processing and decision-making, thereby supporting the upgrade of the IOT to the video IoT.The "3" represents three key technology foundations: 1) ''End user-to-network integration andunified management" to streamline network management; 2) "A new network operating system" todeeply integrate network systems and business systems; 3) "Open visual network integrationprotocols" to enable interconnection across the cloud, network, edge, and end users. The "N"stands for a series of innovative features tailored to specific scenarios, such as wide temperaturerange, lightning protection, long-distance power supply, and port prioritization, making the networkmore user friendly and ensuring smoother business operations.
3.2.1 Wired Transmission
Industrial grade switches provided by Dahua feature high-quality industrial design standards,an excellent fast ring network, and multi-level management functions, provide data accesscapabilities in demanding scenarios, and fulfill the scenario requirements of customers for high-power access and efficient operation and maintenance. At the same time, with the advanceddistributed switch matrix architecture, the high-performance multi-core CPUs and switching chipsare used to build integrated business control. The ultra-high switching capacity and compact bodyprovide more access channels to meet the demands of different scenarios.Our new line of intelligent cloud-managed switches, launched in 2023, empowers customers toachieve topology visualization for all connected and sensing devices in their networks, enablingconvenient delivery, unified management, and remote operation. This network product portfoliointegrates security and data, as well as end user and cloud, accelerating digital transformationacross all industries.
3.2.2 Wireless Transmission
The Company has released UWB, Bluetooth AOA, Bluetooth Beacon, GPS/BD, active/passiveRFID, LoRa, and other gateway products to realize long-distance and low-power IoT coverage, andcooperate with video applications to form a variety of integration solutions, so as to meet diversifiedapplication needs of customers, and support the intelligent upgrading of apps in energy, building,retail, education and other industries.
Our wireless products, such as wireless AP/AC, Wi-Fi 6 wireless routers, industrial-grade4G/5G routers, industrial-grade 5G CPE, and wireless bridges, solve the problem of full wirelesscoverage in the 5G era, and significantly improve the wireless transmission performance under thecondition of constantly improving video resolution and increasing access quantity. We haveupgraded and optimized point-to-point and point-to-multipoint data feedback for wireless bridge
products, separating data and video services and making the services more stable and reliable.AP/AC enterprise wireless coverage has been integrated with routing control to provide full wirelesscoverage with low latency, no wiring, and roaming Internet access for enterprise, office, and otherscenarios.Our newly launched cloud-managed wireless products in 2023, including wireless AP/ACs andwireless routers, enable one-click network access for wireless sensing devices, reducingdeployment costs and greatly facilitating the installation of video devices. Additionally, we offerspecialized 4G/5G router products tailored for professional scenarios such as in-vehicle andindustrial applications.
3.2.3 Industrial Scenario Transmission
For industrial scenarios, we have newly launched a full range of high-quality cloud-managedindustrial switches, which support excellent fast ring network and convenient cloud managementfunctions, provide users with data access capabilities in demanding scenarios, and realize theintegration of industrial Internet data and video data.
3.3 Full Computing
As intelligent computing scenarios become increasingly diverse, a single type of computingpower is no longer able to efficiently meet the ever-changing demands. Therefore, computationaldiversity is becoming an inevitable trend. The Company's intelligent computing and cloudcomputing have made breakthroughs in computing power construction, architecturalcomplementation, and digital intelligence mid-end platforms. Through virtualization,containerization, and other deployment methods, they can quickly achieve full compatibility withhigh-performance computing resources and adapt to various types of CPUs, GPUs, and NPUs,fully realizing resource pooling. Our Company's "full-computing" architecture delivers enhancedcomputing power, accelerated speeds, and robust security across diverse fields. This enables thecreation of sustainable, full-stack innovations that boost efficient urban governance and enterprisedigitalization advancements.
3.3.1 Intelligent Computing
(1) Computing power construction: Server + AI chip is the foundation for building variouscomputing, as well as enabling systems and software. The Company continues to carry outtechnical work related to computing power construction. As domestic and independent controllableopen-source projects become increasingly mature, we have completed the domestic adaptation ofthe entire chain of end user-edge-cloud computing products based on its solid accumulation oftechnical capabilities and have realized the pooling of computing resources, such as imagecomputing, AI computing, general computing, and special computing. Leveraging our extensiveindustry experience, we collaborate with partners to drive technological innovation in areas such asvirtualized computing power slicing of chips and specialized comparison computing, providingpowerful computing support for full-chain domestication. To meet our customers' high demands foralgorithm performance, we are continuously optimizing cross-hardware model quantization andachieving cross-hardware accuracy alignment. This enables the coordinated use of computingpower across end user, edge, and cloud layers, maximizing the value of computing resources.
(2) Complementary architecture: To address the diverse needs of long-tail scenarios, weoffer two computing architectures: a professional algorithm architecture and an open algorithmarchitecture. These architectures cater to the unique requirements of different customers.
? Embedded computing architecture: By improving single chip performance and combined
computing power, the Company attempts to fully unleash the performance and value ofspecified algorithms, and continuously launch leading and professional AI products;
? Video cloud computing architecture: By implementing the intelligent scheduling of pooled
computing power, the unified scheduling of algorithm library end-user, edge, and cloudcomputing power resources across the entire network, and the access of third-partyalgorithms, the Company has achieved high concurrency, high throughput, and highefficiency computing, so as to continuously empower open and win-win AI services.
? Training algorithm service: Our algorithm training service caters to new algorithm needsarising from business operations and incremental algorithm fine-tuning requirementsstemming from scenario differentiation. It seamlessly integrates with end user, edge, andcloud, allowing for the seamless loading of open algorithms and enabling unified trainingand inference.
(3) Digital intelligence mid-end platform: To fully leverage our computing power andarchitecture strengths, the digital intelligence mid-end platform will focus on the capability layer,providing intelligent services for the upper-layer application platform. It will connect variouscapabilities such as professional algorithms, training algorithms, and data computing, enhanceopen capabilities, facilitate the incubation of emerging intelligent businesses, and provide anintelligent foundation for ecosystem partners.
For the processing of massive data in AIoT, we have comprehensively upgraded products in thefield of intelligent computing, including central intelligent products, edge intelligent boxes, storage-intelligence integration machines, and intelligent storage EVS. We continuously enrich industryalgorithms and improve product intelligence performance to promote the implementation of variousindustry businesses.
3.3.1.1 Edge Intelligent Computing
The Company is constantly exploring business norms in various fields and upgrading theperformance of deep learning algorithms. It is committed to the in-depth application of edgecomputing in the industry and the realization of highlight functions such as multi-channel multi-intelligence, intelligent round patrol, tidal intelligence, intelligent clustering, and flexible exchange ofstorage intelligence. At the same time, it effectively solves the problems of massive dataprocessing, real-time response, and data security faced by AI in industry applications. During thereporting period, the company released a series of industry-specific intelligent integrated machines,expanding intelligent applications to various sub-sectors such as energy security, power,emergency management, financial compliance, natural resources, and behavioral analysis.
Edge intelligent box IVD series integrates a variety of intelligent services, adapts to a variety ofapplication environments at the edge, realizes edge intelligent transformation, computing powersupplement and flexible deployment, and achieves the expansion capability of intelligent services.Related products have a built-in high computing power chip, which can load various algorithms todeal with intelligent management in small scenarios, so that AI can better serve as a new driving
force for intelligent transformation.
Our intelligent NVR products continuously deepen the application of artificial intelligence insmall and medium-sized scenarios, and combine IoT to continuously enrich industry intelligence.We are committed to creating a video-centric product solution, with intelligence, interconnection,integration, and management as the core, and playing a role in the fields of AI, IoT, and video dataintelligence. In the field of AI, leveraging the synergy between front-end and back-end intelligence,we are reusing intelligently processed images and feature values, maximizing device performance,and continuously improving the efficiency and accuracy of intelligent retrieval. In the field of IoT, ourNVR products have evolved from mere video access to encompassing the connection, control, andinteraction of a full-frequency domain IoT sensing devices. By integrating IoT sensing data,intelligent computing, and visual presentation, we show industrial data in an intuitive and user-friendly way for easy management. Real-time analysis of videos from production work scenariosenables timely warnings of potential anomalies, ensuring the safety and reliability of the entireindustrial system. In the field of video data intelligence, by fully utilizing the low computing powerdeployment for the edge and end users, we can maximize the value of historical data. Thiscollaborative approach between edge and end users enables a novel approach to feature valueretrieval, achieving fast and precise retrieval of historical data for business needs. Our innovativeAcupick solution significantly enhances retrieval efficiency and reduces TCO costs.
3.3.1.2 Central Intelligent Computing
In order to quickly respond to the current trend of digital intelligence transformation in themarket, the Company has built a unified open intelligence architecture for central intelligentcomputing based on the mature architecture, and improved the layout by building a 2+2+N system,that is, two engines of view intelligence + algorithm training, as well as two directions of awarenessand cognition. In 2023, we embarked on a comprehensive upgrade of our smart view engine,establishing an AI middle-platform framework centered on five core components: training center,algorithm center, parsing center, application center, and operation center. This lays the foundationfor our intelligent advancement, enhances our intelligent open capacity, incubates emergingintelligent businesses, and constructs an intelligent ecosystem. To address diverse business needs,we are building intelligent capabilities from the following two dimensions:
In the field of specialized intelligence of storage, computing, and inspection, theCompany relies on a smart view engine, full-parsing, and full-comparison products to create a
standard solution to optimize the data processing algorithm, provide industry-leading parsingcapabilities through heterogeneous computing, provide second-level comparison capabilities forhundreds of billions of data through feature indexing, and provide extremely fast computingcapabilities for large-scale data processing services, realizing high-precision and high-performanceawareness parsing and retrieval comparison of various elements, and fully serving the big dataapplications in various industries at the city level.In the emerging field of long-tail intelligence, the Company aims to meet the long-tail needsof various industries and output an intelligent hierarchical grading system from L1 to L5. Throughthe combination of algorithm training engine + algorithm center + algorithm package + rule engine,N types of algorithm packages are quickly generated based on the algorithm training engine andincorporated into the algorithm center, realizing the unified management, scheduling, andarrangement of smart view engine. With the configuration of rules, we can realize the fast deliveryand flexible loading of algorithms and achieve the synergy of tasks, algorithms, and computingpower among cloud, end user, and edge, which gives full play to the intelligent value. The standardnorthbound interface allows us to connect with platform providers. The standard southboundinterface allows us to collaborate with algorithm ecosystem partners to create smart ecosystems.
Through in-house R&D and mainstream smart card adaptations, we offer our customers acomprehensive range of smart cards and parsing cards, further enriching and expanding theecosystem compatibility in the cloud computing field. We offer a variety of product solutions to meetthe diverse needs and sales models of our customers, including integrated hardware and softwaresystems, pure hardware devices, and pure algorithms software. Our products fall into two maincategories: all-in-one and distributed products. All-in-one products are equipped with industry-specific algorithms to meet the diverse needs of industries such as transportation and surveillance,enabling closed-loop business control. Distributed products, on the other hand, allow for theintegration and deployment of various algorithms, including face recognition, vehicle detection,structural analysis, and event detection, and support dynamic expansion to meet the requirementsof industries such as social governance.
3.3.1.3 Intelligent Storage
With the advent of the IoT information age, multidimensional perception data such as videos,pictures, audio, and documents are growing explosively, and the diversification and complexity ofstorage requirements have put forward higher requirements for data storage. Traditional storagesolutions are limited by hardware space, storage data access methods, and other factors, makingthem unable to meet the increasing demand for large-scale data storage and high-performanceprocessing. Our intelligent storage solution is built on single-controller and dual-controller hardwarearchitectures and utilizes streaming storage capabilities. It integrates data redundancy, clusteringstrategies, and encryption technologies to mitigate single-point-of-failure risks and ensure datasecurity and reliable storage. Combining technologies such as intelligent analysis, rapid datastructuring, and integration of storage, intelligence, and management, we can achieve rapid retrieval
of target data, long-term storage of valuable data, and closed-loop edge data services, giving newvalue to centralized data storage. Our products cover both standalone and cluster solutions, cateringto the ever-growing demand for data storage and integrated applications.
Our standalone storage series offers a comprehensive range of solutions, including single-controller, dual-controller, dual-channel, and embedded video storage configurations, to meet thelong-term storage needs of diverse users while reducing overall TCO. All these products are nowmade up of domestically produced components. By using a domestically developed operatingsystem, we have achieved independent control over core technologies. Equipped with integratedencryption chips and utilizing domestically developed algorithms and two-way authenticationtechnology, our products can safeguard the confidentiality and integrity of user data. The unifiedcloud cluster series, based on multi-machine cluster management technology, uniformly managesfront-end resources and storage resources. Related products can provide operation andmaintenance management functions, checking cluster recording status, hard disk and otherhardware operation information, and report fault alarms in real time, thus reducing user operationand maintenance costs. We are also continuously optimizing our cluster fault tolerance strategiesto provide a centralized storage solution with high capacity, high performance, high reliability, andhigh security for various video recording systems.
3.3.2 Cloud Computing
Traditional data centers face numerous challenges during cloud transformation, such as siloedconstruction and long construction cycles. To improve resource utilization, simplify management
and operations, and ensure the secure and stable operation of businesses, the Company haslaunched a cloud computing solution that integrates underlying physical resources and provides arich suite of cloud services, including computing, storage, networking, and PaaS. We also providefull lifecycle management of cloud infrastructure to help drive customers' digital transformation.
(1) Cloud platform
Our cloud platforms are next-generation, highly efficient, and agile cloud-native computingplatforms designed for diverse computing scenarios in the smart Internet of Things (IoT) era.Powered by technologies such as Kubernetes, containers, application orchestration, and elasticscheduling, they provide unified management of pooled infrastructure resources, mixed deploymentof big data, intelligent analysis, and application software, and meet the needs of unifiedmanagement, efficient resource utilization, flexible service deployment, and reliable disasterrecovery. Based on our deep understanding of cloud-native technologies and the video industry, weoffer a comprehensive suite of cloud products, including cloud management platforms, containercloud platforms, hyper-converged infrastructure, and general-purpose storage. These productscater to a wide range of needs, from standalone solutions to large-scale clusters, providing ourgovernment and enterprise customers with cost-effective cloud solutions that empower them tobuild next-generation digital infrastructure.
(2) Cloud storage
With over a decade of technological expertise, the Company provides large-scale video cloudstorage services to city-level and enterprise-level customers. We offer a variety of device access,multi-channel large-scale video access and storage, and streaming media distribution capabilities.Based on native distributed file system technology, field-specific optimization, software andhardware integration, and dynamic fault tolerance, we have built an ultra-large-scale four-level(disk-level, node-level, rack-level, and storage pool-level) reliable data storage capability. Ourdiverse product portfolio, including multi-bay, single- and dual-controller, and single- and dual-channel configurations, caters to the varied storage needs of industries such as government,transportation, finance, energy, culture, education, health, and premises. We have successfullydelivered multiple cloud storage projects, and our petabyte-scale clusters have achieved a long-term stable operation.
(3) Cloud database
Based on a decade of experience in real-time access, storage, and retrieval of massive sensordata, as well as the processing demands of complex scenarios, we continue to make long-terminvestments in our cloud database system in areas such as hardware and software integration,dynamic fault tolerance, index optimization, reliability, distributed technology, and data security, andhave provided industry-specific centralized and distributed database services, enabling automaticaccess to data from IoT sensing devices, automatic data balancing, and efficient retrieval services,delivering an out-of-the-box experience that significantly reduces the development, operation, andimplementation costs of integrating databases into business platforms. Dahua Cloud DatabaseSystem is widely applicable to government and enterprise customers. We have successfully
delivered numerous cloud database projects. Our large-scale database clusters have been runningstably, providing real-time, online data protection for our users.
3.4 Full Intelligence
As artificial intelligence and big data technologies are rapidly transforming industries, theCompany is committed to developing scenario-based applications, conducting cutting-edgeresearch, and exploring new technologies such as foundation models and multimodal processing.By strengthening our AI engineering capabilities, we are continuously driving the industrializationand commercial success of AI. We are also delving into the underlying insights of view data tounlock its value and fully support the digital transformation of cities and enterprises. This will enablea closed-loop control from sensing intelligence to data intelligence and finally to businessintelligence, creating business value for our customers through our "full-intelligence" capabilities.
3.4.1 Artificial Intelligence
AI is at the heart of the Company's strategy, and we are committed to being a global leader inAI research and innovation. At present, we own national enterprise technology centers, nationalpost-doctoral scientific research workstations, Zhejiang Enterprise Research Institute, ZhejiangEngineering Research Center, and Zhejiang Key Laboratory, as well as AI R&D teams with morethan 1,000 members. Dahua has won first place in more than 70 AI algorithm competitions andevaluations at home and abroad, published more than 120 papers in core journals, applied formore than 2,400 AI patents, and undertaken 22 national and provincial AI scientific researchprojects. During the reporting period, we filed over 300 AI invention patents. Over 270 of them wereaccepted for processing. We also undertook 6 national and provincial-level AI scientific researchprojects.
3.4.1.1 Development Trend of AI Technology
As the new wave of technological revolution and industrial transformation deepens, data isbecoming a new factor of production, and AI is becoming an important production tool.Digitalization and intelligent transformation has always been required in industry development. AItechnology is continuously being integrated into industry business, empowering all walks of life toimprove quality and efficiency, and driving rapid growth of the AI industry. The emergence of newtechnologies such as foundation models and multimodal processing is driving innovation in AIapplications, accelerating the commercialization and value creation of new AI technologies, andpropelling AI to new heights. In the field of artificial intelligence, the Company insists to make high-intensity investment in R&D to promote the large-scale implementation of the artificial intelligenceindustry and continue to maintain its leading position in the industry.
(1) Rapid advancements in technologies like Transformer have led to significantimprovements in algorithm performance.
Traditional small language model approaches rely heavily on supervised learning, which islimited by the size of the training data, the structure of the network, and other factors. As a result,these models have poor generalization ability and adaptability to new scenarios, and their accuracyfaces challenges in complex situations. Foundation models can learn rich cross-field knowledgefrom vast amounts of diverse data due to their larger network parameters. This enables them todevelop general-purpose capabilities that are applicable across a wide range of scenarios andtasks. Current mainstream foundation models are based on the Transformer architecture, whichexcels at understanding and processing long sequences of text, videos, and other continuousinformation. In the field of visual parsing, Transformers outperform traditional convolutional neuralnetworks in their ability to capture subtle nuances in data. This results in enhanced accuracy andgeneralization performance for visual parsing tasks. In the field of image generation, diffusionmodels solve the instability problem of GAN training and gradually become the mainstream imagegeneration model. Compared with other image generation models, the diffusion model cangenerate better images.
(2) The learning ability of foundation models has greatly improved, greatly improvingproductivity and production efficiency.
Traditional small language model approaches are trained and optimized based on individualbusiness scenarios. Due to the significant variations between different business scenarios, thesame model exhibits poor adaptability when applied across scenarios. This often necessitates thedevelopment of new models tailored to specific scenarios, resulting in a substantial workload.Foundation models have stronger scenario generalization capabilities because they are trained ona massive amount of prior knowledge. Moreover, prompts in various modalities, such as images,voice, and text, can stimulate the emergent intelligence of large models, enabling rapid definition ofnew functionalities to cater to user needs in a personalized and differentiated manner, therebyenhancing productivity. Fine-tuning large foundation models on small datasets for specific businessfields enables rapid capability transfer to new scenarios, effectively addressing diverse andfragmented market demands, and enhancing development efficiency.
(3) Foundation model technology accelerates the diversification of AI applications.The rapid advancement of foundation model technology like Gemini and Sora has propelled AIto new heights, achieving groundbreaking results in areas such as text generation, imagegeneration, and video generation. This is accelerating the diversification of AI applications. Gemini,a multimodal foundation model, showcases exceptional capabilities in understanding images,audio, videos, and text. It is poised to revolutionize natural language processing and multimodaltechnologies, paving the way for groundbreaking advancements in text generation, search engines,intelligent question answering, and more. Sora, a text-to-video model, possesses remarkablecomprehension and generation capabilities. It not only understands what users request in prompts,but also understands how these things exist in the physical world, providing users with a highlyrealistic and detailed visual experience.
From sensing to cognition to generation, foundation models will continuously break throughcapability boundaries, understand and communicate in more modalities, and have stronger parsingand generation capabilities. They will achieve more complex behavior recognition, image and textdata retrieval, intelligent decision-making, and human-computer intelligent interaction functions.This will accelerate the transformation of various industries towards intellgentization andautomation, bringing higher efficiency, better services, and more innovative products. Finally, theywill work together with industry chain partners to collaborate on innovation and embark on the newjourney of AGI.
3.4.1.2 Building A "1+2" AI Capability System
AI has emerged as a crucial productivity tool, and the adoption of visual AI is rapidly gainingmomentum across diverse industries. We remain committed to our core focus on visual technology,continuously building comprehensive and leading AI research and engineering capabilities. We arecentered on industry-specific needs, aiming to make AI accessible to all. Driven by advanced AItechnologies, we are constantly solidifying our AI industrialization capabilities.
Through years of continuous accumulation, we have established a "1+2" AI capability system,which consists of an architectural framework and two supporting aspects: research capabilities andengineering capabilities. Based on this AI capability system, we have enhanced our algorithmdelivery capabilities to address the vast array of fragmented demands, enabling more customers toreap the benefits of AI and enjoy a superior user experience. This "1+2" AI capability system, basedon a four-layer technical architecture, establishes a framework for AI research and engineeringcapabilities. At the scientific research level, we are establishing a comprehensive technicalframework across various algorithm domains, continuously solidifying our foundationaltechnologies, and actively exploring novel algorithms. At the engineering level, we have establisheda research and development system centered on algorithm components, enabling flexiblecustomization of pipeline production and supporting efficient deployment of algorithms to the cloud,edge, and end user. The "1+2" AI capability system has been upgraded from version 1.0, whichsupports small language models, to version 2.0, which supports foundation models.
(1) Continue to improve the four-layer architecture system to efficiently meet scenario-based AI needs.At the same time, a four-layered technical architecture system composed of the Jinn platform,operator components, general algorithm solutions, and industry algorithm solutions decouples fromthe technical side, providing end-to-end efficient scenario-based customization and developmentcapabilities, and accelerating the implementation of industry intelligence.
① Continue to upgrade the Jinn Platform and improve the algorithm solution productionline.
To realize large-scale industrialization of AI, efficient end-to-end solution development anddelivery capabilities are needed. The Company continues to focus on building the Jinn Platform, aone-stop AI development platform. Jinn Platform is a one-stop AI development platform fordevelopers, covering the entire AI development workflow from data processing, model training,optimization and porting, algorithm management, and solution development to algorithm verificationand testing. In 2017, the Company established a high-performance computing center. In 2019, welaunched a full-stack algorithm development platform, enabling closed-loop management of theentire chain from data management to solution delivery. In 2021, we upgraded and released acompositional solution development platform. In 2023, we developed a workflow system forscenario-based algorithm development, which can automatically orchestrate developmentworkflows such as data processing, training, model conversion, and testing. This enables online
and automated development of scenario-based algorithms, protocol-based operators, and a unifiedalgorithm library, providing model-as-a-service capabilities and enabling multimodal fusion analysisand large model language service deployment.
② Standardize algorithm components to enhance algorithm replicability andadaptability to diverse scenarios.Based on our expertise in scenario-based capabilities, we have streamlined algorithmsolutions for different application scenarios and standardized the solutions and their associatedalgorithm components. By shifting the algorithm development model from "solution-centric" to"algorithm component-centric," we have enhanced algorithm reusability. Additionally, we haveupgraded the "algorithm release equals solution release" approach to "model release equalssolution release," further shortening the development cycle for intelligent solutions in scenario-based applications and reducing algorithm development costs.
③ Continuously improve algorithm solutions and enhance scenario-based AIcapabilities
In 2023, we upgraded our scenario-based AI capabilities by delving into customers' productionmanagement processes. We provided a rich array of scenario-based AI applications to helpcustomers enhance quality, improve efficiency, and achieve win-win outcomes. We have enhancedthe functionality of our industry-specific algorithm solutions to address industry applications andneeds. With the multimodal visual analysis capabilities of our Galaxy foundation model, we haveupgraded our visual cognition capabilities, continuously improved visual analysis accuracy,enhanced the ability to meet long-tail demand, and developed industry-specific intelligent solutionsbased on multimodal visual large models. This has further enhanced the level of intelligence inindustry-specific businesses.
(2) Research capabilities in underlying AI technologies
Dahua continues to strengthen its research on underlying AI technologies to ensure thesustained advancement of its algorithms in the industry. By digging deep into the demand andindustry pain points, and combining the development trend of AI technologies, especially thefoundation model technology, we focus on such fields as single-model multi-tasking, small-samplelearning, deep genetic coding technology and trustworthy AI, to build the competitiveness ofintelligent products and solutions, and to accelerate the process of commercializing AI.
① Single-model multi-tasking, to maximize the utilization of computing power
In the field of vision, the technical path of unified inference through single-model multi-taskingremains powerful in the face of high computing power costs. During the reporting period, theCompany continued to delve into single-model multi-tasking technologies. For example, the originalalgorithm scheme consisting of 5 models for detection, key point, pose, attribute analysis and
recognition can now be completed by 1 model, with substantially lower complexity of arithmeticscheduling and task scheduling, and 30% increase in the utilization rate of computing power.
② Small sample learning, to increase the efficiency of algorithm developmentThe size of training samples directly affects the performance of deep learning algorithms.Dahua proposed the RWSC-Fusion technology in 2023, which synthesizes massive samples closeto real scenes through a small number of samples to train algorithms, thus reducing thedependence of partial algorithms on data. This technology has been applied to scenarios such assecurity checks and transmission lines, with 10% improvement in the algorithmic recall rate and30% reduction in the development cost. Related technologies were published in CVPR 2023, oneof the top conferences on computational vision.
③ Deep genetic coding, to enable end-to-end cloud feature synergyDue to the non-interpretability of deep learning, heterogeneous feature embeddings generatedby the encoders of different models are incompatible and unmeasurable, leading to problems suchas incomplete synergy between end-edge clouds in the deployment of small and large modelproducts, and high cost of upgrading product models. To address these issues, Dahua hasdeveloped deep genetic coding techniques to allow the feature representation capability offoundation models to be inherited to sub-family models, and in the process of genetic learning, thesub-family models can be customized for different application scenarios and different computingpower, and feature embeddings generated by models of the same lineage can be metricatedamong themselves, thus realizing feature synergy in end-edge clouds, and lowering the cost ofproduct upgrading and O&M.
④ Trustworthy AI, to ensure system security and stability
Confronted with risky challenges to AI security, Dahua accelerates the research andimplementation of trustworthy AI technologies, such as anti-attack and defense and deep forgerydetection, to achieve AI security and trustworthiness. During the reporting period, Dahua continuedto research on anti-attack and defense technologies based on diffusion models, moving from thedigital domain to the physical domain to enhance the effectiveness of physical attacks. We alsodeveloped robust defense methods to significantly improve system security and stability throughtechnologies such as forgery detection and perturbation purification. Relevant technologies havebeen applied in scenarios such as entrance/exit license plate anti-counterfeiting and door accesscontrol anti-counterfeiting detection.
(3) AI engineering capabilities
In terms of AI engineering capabilities, Dahua has continuously deepened its efforts in areassuch as model compression and scenario-based algorithm engineering implementation, to enhanceproduct performance and competitiveness, and expedite AI implementation.
① Deeply tap into model compression technologies to enhance product performanceand competitiveness.
Currently, there are many chips with wide differences in capabilities; employing different modelcompilers individually causes tremendous engineering investment in algorithm development.Against this background, Dahua has developed its own adaptive model compression and tuningtool. The self-developed hardware-aware adaptive quantization engine technology optimizes thequantization method on the basis of hardware resources and network characteristics, assists inachieving precision tuning with small samples, and optimizes the scale of quantization parameterswith less human involvement. Through hardware-aware adaptive model compilation, it iscompatible with different training frameworks and various chips, thus addressing the problems ofmultiple platforms, multiple frameworks, and high threshold of performance tuning. Meanwhile, theQAT quantization technology is employed to overcome the problem of traditional offlinequantization accuracy degradation, thus guaranteeing the accuracy of the model on low-bithardware to achieve training-as-you-get, i.e., consistent accuracy of the model deployed fromtraining to inference. Moreover, the enabled low-bit quantization compression significantly improvesthe computing power utilization while guaranteeing the accuracy of the commercialized application.
② Enhance the efficiency of scenario-based algorithm implementation by relying onstandardized algorithm application paradigms and technical upgrades.
Continuously improve the delivery capability of three algorithmic application paradigms,namely "rapid customization by the Company", "convenient development by users" and "generalalgorithmic paradigm". In order to improve scenario-based AI response capability, we haveextracted over 10 general algorithm paradigms from fragmented demand development to improvereproducibility and delivery efficiency. For example, based on such paradigms as "WorkwearCompliance", "Changing Event Detection", and "Action Customization", we have undertaken morethan 200 algorithm customization requirements, and realized training-free delivery of algorithms,with the delivery efficiency increased by more than 80%.
Facing the problem of unstable algorithmic effect in complex scenes due to low accuracy oftraditional algorithms for extreme targets (extremely small targets, severely occluded targets, highsimilarity targets, etc.) encountered in the process of intelligent industry transformation, weinvestigate the visual cognition ability based on the Galaxy Foundation Model to enhance theperception in complex scenarios, and deepen the level of intelligent industry transformation.
3.4.1.3 Constructing a 1+1+N Algorithm Training System
Construct a 1+1+N algorithm training system, i.e., algorithm model training + algorithmincremental training + algorithm orchestration. The 1+1+N algorithm training system enriches thealgorithm application scenarios, comes closer to clients' business processes, and greatly shortensthe algorithm delivery cycle. By providing clients with professional, timely and personalized training,we can quickly build up algorithm capabilities for them, support a wide range of governmentbusiness needs, assist in corporate intelligent upgrading, renovation and transformation, andestablish good customer relations and trust.Two core platforms, i.e. the offline training all-in-one machine and the AI training onlineplatform, have been launched to support such capabilities as on-demand application of trainingresources, dynamic allocation, multi-person collaboration, task assignment, online verification,online deployment and upgrade, and provide round-the-clock expert technical support. With thetraining platform, customers can conveniently obtain new algorithms and enjoy professionaltechnical support and services, powering a number of industries such as energy and waterconservancy.
3.4.1.4 Boosting Corporate AI Capabilities with the Galaxy Foundation Model
Dahua released Galaxy Foundation Model in 2023, a vision-based foundation model thatincorporates multimodal capabilities. Foundation models currently released in the industry aremainly generative models, whereby a common model is extended for different industries to handlevarious downstream tasks. In contrast, the Galaxy Foundation Model is oriented to visual parsingtasks; by building several typical industry visual models, a set of computational framework isextracted, on the basis of which more industry visual models can be built.
(1) Advantages of the Galaxy Foundation Model
① Achieve accuracy and generalizability leap, enhance business competitiveness, andaccelerate intelligent market scale expansion.The Galaxy Foundation Model is pre-trained with tons of unlabeled data and fine-tuned on thelabeled data, so that the trained model is stable and reliable under extreme targets and extremescenes. For example, in various situations such as extremely small targets, multi-morphic targets,targets with inconspicuous features, multi-angle targets, blurred images, strong backlight, complexbackgrounds, and multi-source images, the results are still stable and reliable, substantially betterthan those of small models.
② Define new functions through graphic prompts to directly satisfy fragmentedfunctions and efficiently cover new long-tail markets.
The Galaxy Foundation Model realizes the upgrading from generalization of algorithmcomponents to that of algorithm solutions. Originally, for small models, the development of analgorithm requires four steps: data annotation, data training, algorithm deployment, and productdelivery. Now, the Foundation Model turns the four steps into just one step, with no customizationrequired. Simply with image and text prompts, it can quickly realize new functions, thus greatlyshortening the development cycle, and efficiently satisfying the fragmented needs of the long-tailedmarket. For example, foreign objects such as bird's nests, kites, or plastic bags may cause greatpotential danger to electric power safety in the power sector. Previously, customized training wasrequired based on specific scenarios and foreign objects, incurring extremely high developmentcosts. Nowadays, such development can be easily achieved by simply giving the foundation modelcorresponding graphic and textual hints.
③ Break through visual cognition capabilities to understand the entire process of an
event and open up new space in the intelligent market.
Due to technical limitations, small models are unable to realize complex behaviors with manyobjectives and multiple steps that are difficult to dismantle step by step, such as sweeping wasteinto sewers, violently throwing objects, and regulating hand-washing. In contrast, the GalaxyFoundation Model can not only extract image features, but fuse the features of different momentsso that it can better understand the whole process of an event and recognize complex behaviors. Itenables visual intelligence tasks to expand from the previous perceptual parsing and simplecognitive needs to complex cognitive needs, which opens up a new space in the intelligencemarket.
④ Analyze all scenes autonomously, and streamline intelligent configurations forimproved intelligence and usability.
Small models are not capable of understanding the whole scene, so rules need to beconfigured for event analysis, which requires professional support and leads to time-consumingand laborious deployment of algorithms. The Galaxy Foundation Model is capable of understandingthe whole scene, and can realize event analysis without rule configuration. Take the power sectoras an example, for climbing operation compliance business, the Galaxy Foundation Modelautomatically understands the climbing scenario, without the need of configuration, which makes itmore convenient to use. The foundation model makes intelligent configuration no longercumbersome and improves the ease of use of intelligence.
(2) Coordinated small and foundation models to build affordable scenario-based foundationmodels
In the field of vision, foundation models have made great progress in effectiveness, but withrelatively high computing power costs. The input to the visual parsing tasks is visual images, whichinvolve a large amount of data and need to be analyzed 24/7, resulting in high cost for eachexclusive path. The cost of using models with ultra-large-scale parameters is high, so significantlycutting the cost of visual parsing foundation model applications is a prerequisite for successfulcommercialization. Dahua focuses on the large model downsizing techniques and the synergybetween small and foundation models to build affordable scenario-based foundation models.
The large model downsizing techniques are the basis for building affordable scenario-basedlarge models, which can reduce the basic deployment cost of visual parsing foundation models.The technical steps are as follows:
First, control the number of parameters of the basic foundation model, and select theappropriate parameter size based on the task needs, to keep it at the scale of 10 billion throughstructural design, training and verification, and iterative optimization of a 100 billion foundationmodel. Second, with the model downsizing technology, the 10 billion parameters are reduced to thescale of one billion through domain distillation and domain quantization, so that the computing
power demand is reduced to about 10% of that of a mainstream foundation model. Last, due to thestronger comprehension and generalization ability of foundation models, one foundation model isable to substitute dozens of original models, making the overall computing power of the foundationmodel business controllable.
Co-deployment of small and foundation models is the key to building an affordable foundationmodel system, which ensures controllable computing power costs and acceleratescommercialization. The system consists primarily of end-side cloud computing power for computingnetwork fusion and co-deployment of small and large models, whose architecture mainlyencompasses the following: the bottom layer of the system consists of a large number of end-sidecomputing power devices with different computing power sizes on the end-side, mostly for smallmodel inference applications, which can be optimized by combining the hardware characteristics toimprove the utilization rate of the computing power. The middle layer is the cloud-side computingpower pool, mainly for the unified pooling management of heterogeneous computing power, whichsupports the integration of training and promotion, the fine-tuning of foundation models, and thecollaborative optimization of small and foundation models. The top layer is the computing networkintegrated management and scheduling platform, which carries out unified modeling of small andfoundation computing power, constructs system-level computing power network, manages smalland foundation model warehouses, and distributes models according to the computing powercapacity to complete system-level optimization and scheduling.
(3) Foundation model application
With visual parsing as the core, we follow up the development of cutting-edge technologies,and make rapid iteration and optimization centering on real-world requirements, to realize valuerealization from multiple perspectives. We actively promote localized deployment, and realize the
application of foundation model-related technologies in industrial foundation models, developmentefficiency, and small model technology upgrading.
① Pilot of industry foundation models
? Foundation models for urban governanceFoundation models for urban governance help upgrade the AI capabilities of urban governanceby making the data more accurate and richer. Compared with small models, foundation models forurban governance are more than 10% more accurate on average, with a 50% increase in thenumber of functions, enabling the realization of a variety of complex cognitive functions in theindustry. With powerful comprehension capability, foundation models can simplify the deploymentand significantly reduce the deployment cost. A foundation model can replace dozens of smallmodels. With high accuracy of parsed data, such a foundation model is able to reproduce the realtwin of a city, which can be reconstructed in a real way, from the full view of the whole city to thecondition of each road and every passing vehicle at each intersection. Moreover, the foundationmodel enable simulation and evaluation of urban road status, simulation and evaluation of urbanenvironment, simulation and deduction of event process, automatic generation of data report andanalysis report, among others, so as to realize efficient decision-making and analysis of urbangovernance. In addition to these advantages, it also demonstrates its strengths in pointmanagement. Daily urban management is often faced with the need to regulate numerousdecentralized points, which vary widely and thus require different functions to be configured. Toaddress this issue, the foundation model incorporates advanced point governance algorithms.Based on merely one picture, it can automatically analyze and output detailed scene information,and meanwhile intelligently recommends the appropriate function configuration for each point. Thelaunch of this foundation model product not only greatly enhances the functional performance, butalso greatly improves the convenience of user interaction.? Foundation models for powerFoundation models for the power sector can likewise make the data more accurate and richer,thus boosting the upgrading of AI capabilities in the power sector. Compared with small models, theaverage accuracy of foundation models for the power sector increases by more than 20%, with a40% increase in the number of functions, which ensures the implementation of a variety of complexcognitive functions in the power sector. Meanwhile, a foundation model not only realizes more than80 functions of the whole industry, but enables the real twin reproduction of the power scene, fromthe overall view of the entire substation scene to the operational status of transformers and otherinstrumentation equipment. The foundation model can also realize functions such as theconstruction operation drill training, and independent analysis and decision-making of O&M data,so as to realize the efficient decision-making and analysis in the power sector. Moreover, it supportsall kinds of foreign object detection functions, such as birds' nests, plastic bags, and balloons.Rather than having to do repetitive tasks such as collecting materials and re-training the model, thecorresponding foreign object recognition function can be realized simply through the corresponding
graphic prompts.? Foundation models for more industriesIn addition to foundation models for urban governance and power, Dahua is also activelydeploying algorithms in more industries, such as transportation, and advancing their scenario-based deployments and applications.
② Automated annotation for higher development efficiency
The use of foundation models to achieve intelligent pre-annotation, intelligent auxiliaryannotation, and annotation process optimization accelerates annotation speed and saves manualinput. Currently, intelligent annotation covers various types of materials such as pictures, videos,and audios, and supports a variety of annotation tasks such as target, attribute, segmentation, andtracking. It has achieved satisfactory results on hundreds of annotation categories includingmotorized vehicles, non-motorized vehicles, various types of animals and objects, with significantlyimproved annotation efficiency. Meanwhile, intelligent annotation can also substantially improve theannotation quality of difficult cases.
Going forward, the foundation model intelligent annotation technology will be applied to theGenius AI open platform to upgrade the level of data processing intelligence, making dataprocessing more efficient and accurate, which will greatly facilitate the extraction and utilization ofinformation and accelerate the intelligent transformation of business processes.
③ Technical upgrading using Transformer-related technologies
While developing foundation models for industries, Dahua is actively applying Transformer'smultimodal technologies to improve the effectiveness of its algorithms with comparable computingpower. The scene adaptability is dramatically improved for such tasks as scene classification,behavioral analysis, and generic defect detection. In the scene classification task, the multimodalmodel is capable of processing and understanding images and their related descriptions, providingexcellent classification results in a variety of complex settings. This technological breakthroughenhances the accuracy of image retrieval systems. For behavioral analysis, the joint analysis ofvideo frames and audio signals enables more accurate recognition of human and vehiclebehaviors. In terms of generic defect detection, the Transformer technology shows greateradvantages in fault identification by extracting data such as voice, text and images, significantlyimproving production quality and efficiency. Dahua will continue to innovate based on Transformertechnologies and explore more business value from them.
④ Deployment with domestic manufacturing
Dahua actively explores technologies related to the deployment of foundation models indomestically manufactured chips. We have introduced chips from major domestic chip companies,migrated and verified visual and multimodal foundation models, and optimized their performance.On this basis, we have successfully accomplished the localization of foundation models for urban
governance and power.
⑤ Human-computer interaction
While actively promoting the R&D of foundation models for industries with vision as the core,Dahua is also actively exploring the application of these models in human-computer interaction andbig data retrieval. Currently, large language models are not only equipped with generativecapabilities, but also with semantic understanding and reasoning capabilities, which enable them toact as the hub of an intelligent body, and realize task planning, external tool calling, and relevantmemory querying based on external knowledge by understanding voice or text promptinginformation. Based on these capabilities, foundation models can automatically understand andexecute a variety of functions in products, such as knowledge quiz, task scheduling, databaseretrieval, map relationship retrieval, report generation, and tool calling, thus lowering the thresholdof user use and interaction costs, and transforming the product interaction paradigm.
3.4.2 Data Intelligence
Focusing on video IoT scenarios, Dahua is oriented to the digital intelligent transformation ofcities and enterprises, and looks into platform technologies and algorithmic capabilities thatenhance governance efficiency, mine data content, and enable data value. Relying on suchtechnologies as cloud native, big data framework, heterogeneous fusion computing, and datacenter, Dahua provides a one-stop data intelligence base for vision and information fusion,integration, governance, development, and services. Based on technologies such as artificialintelligence, figure-digital fusion, data mining, and knowledge mapping, it digs deeply into theconnotation of view data, and builds figure-digital fusion high-value data warehouses, to unleashthe value of data, facilitate the digital transformation and development of cities and enterprises, andjointly pioneer the new development of the digital society and economy.
In 2023, Dahua continued to dig deep into the value of view data. By integrating productionand business data, it comprehensively stimulated view application innovation. Taking data valuecalculation as an impetus, it consolidated the basic capability of big data platforms, and built upindustry-specific capabilities such as AI+big data fusion calculation frameworks and heterogeneouscalculation of diverse data, thus empowering data application innovation and boosting the digital
and intellectual transformation of government and enterprises.
(1) Continuously build industry-specific capabilities of big data platforms with datavalue calculation as the impetus.
Focusing on data value calculation, Dahua released Big Data Platform 3.0 in 2023, coveringsuch products as Data Calculation Platform, Data Hub, Data Exploration Platform, Data Low-CodePlatform, and Big Data Infrastructure Platform. It provides one-stop data integration, datagovernance, data development, and data service capabilities to support governments' digitalintelligent governance and businesses' digital intelligent transformation. Driven by the strategy offocusing on the value calculation of video data and unleashing the value of view data, the self-access capability of a variety of IoT devices is embedded in data integration, leading to a number ofindustrial data standards. In terms of data governance, the algorithmic capability loaded withintelligent governance automatically achieves data mapping, standardization, and quality detectionto significantly improve governance efficiency. In data development, real-time unified developmentand scheduling of offline tasks, as well as data-oriented applications relying on the self-developedlow-code engine technology enables the rapid configuration of business applications, greatlyimproving the efficiency of delivery in fragmented scenarios. In heterogeneous computing ofdiversified data, Dahua has built the AI + big data fusion computing framework and figure-numberfusion computing framework, which breaks the limitations of traditional big data computingboundaries, making computing more efficient and business innovation more convenient. Dahua'sbig data platform activates data potential with value computing, and drives digital transformationwith technological innovation to continuously serve numerous industries.
(2) Stimulate the potential of view data to drive digital transformation throughtechnological innovation.
Dahua has accumulated extensive hands-on experience during the long-term in-depthinformatization construction process for the digital and intellectual transformation of governmentand enterprise clients. Based on the video IoT data and industry insights, Dahua has thoroughlyexcavated the value of data and constructed data-to-information and to-knowledge systems. As of2023, Dahua has cumulatively developed a variety of data algorithms and industry-specific models,and accumulated extensive data element standards and specifications. Through full-processintelligent tools and technologies, we ensure the high quality and efficiency of technical servicessuch as data governance and development, and achieve high-value refining and summarization ofview data, as well as assetization and asset servicing of view data, thus contributing to theintelligent transformation of government and enterprise clients and driving the vertical developmentof businesses.
Dahua continuously launches series of products and services with technologicalcompetitiveness and product differentiation advantages, and achieves impressive businesspractices and results in the global market by leveraging the digital transformation opportunities of
cities and enterprises.
3.5 Full Ecosystem
Ecological development is one of the most important strategic initiatives of Dahua, as we arecommitted to building a win-win ecosystem and jointly creating value with our partners. Our missionis to enable clients to fulfill their dreams. Adhering to the concept of "Full Ecosystem", we focus onrealizing clients' value, and build comprehensive open capacities from technology, business toservices. Through hardware, software, algorithms to services, business ecosystem to industrialclients, and full openness to developers, we join hands with eco-partners to open up new fields,shape new momentum, and create unlimited possibilities for industrial development, empoweringindustries to realize digital intelligence and achieve co-creation, symbiosis, and win-wincooperation.
3.5.1 Business Opening-up and Ecological Cooperation
3.5.1.1 Integrator Client Business Ecosystem
Dahua continues to advance the construction of and resource investment into the integratorcooperation system. Adhering to a service-oriented approach, Dahua is always committed toproviding partners with better quality industry-wide products and solution services, with greateremphasis on ecological cooperation with partners to achieve win-win results.
A special insight project has been launched to monitor client needs, delve into marketdevelopment trends, and focus on high-quality business, so as to upgrade the fine management ofclients and business opportunities, and enhance frontline operational capabilities. Meanwhile, aspecial group has been set up to analyze and guide the business development of integratorcooperation. Through the fine management of the Company, the focus is placed on valuecustomers, so that resources can be put into use more effectively and the investment-to-outputratio can be strengthened.
Empower and train clients through client eco-conferences, industry eco-salons, special circleactivities, overseas exhibitions, and Partner Day, and enhance the service awareness of Dahua'sbusiness and technical staff, to strengthen all-around eco-cooperation with integrator partners interms of technology, business, and services, thus further enhancing the depth and breadth ofcooperation with clients, and forming stronger client adhesion.
3.5.1.2 SMB Business Ecosystem
Valuing new opportunities in the channel market, Dahua has officially released the channelecological cooperation concept of "Employee+Partner", which serves as the standard and baselinefor cooperation, and establishes a new market order and framework rules with partners to create ahealthy and sustainable ecosystem with win-win results for all parties. Meanwhile, Dahua focuseson innovation in cooperation and management modes, and continues to explore and delegate
distribution business, intensify the layout of special business, innovate e-commerce business,further enhance non-video business, and empower cloud business in both directions. Goingforward, Dahua and its partners will adhere to the concept of "Employee+Partner", andcontinuously pursue the integration and development of "New Opportunity, New Idea, New Order,New Mode, New Management, New Goal, New Responsibility" so as to achieve mutual growth andcreate a prosperous ecosystem featuring co-construction, symbiosis and win-win results.
3.5.1.3 Industry Client Business Ecosystem
Facing the digital transformation of governments, Dahua focuses on industrial scenarios andintegrates the ecological advantages of niche fields, to create "end-to-end closed-loop" solutions,and to enhance their competitiveness and perfection. In intelligent water conservancy, Dahuacarries out product solution innovation and integration in collaboration with the industry ecosystemto enhance the scientific and precise decision-making and management; in urban trafficmanagement, Dahua works with the industry ecosystem to carry out product solution innovationand integration, to enhance the comprehensive management capability under the businessscenarios of urban traffic congestion mitigation, high-speed safety control, and rural safetymanagement, and to further expand the industry's business boundaries.
To upgrade the digital intelligence of enterprises, Dahua centers on the goal of "Building a bigsecurity system, constructing digitally-intelligent productivity, and boosting operational decision-making power", and integrates the advantageous resources of each segment to create full-scene,high-value solutions. In the energy business segment, we have launched product co-creation andsolution integration to enhance our digital intelligence solution capability in energy production safetyand efficiency improvement. In the industrial and commercial enterprise business segment, wejointly craft specialized solutions for enterprise parks, logistics and warehousing, digital workshops,digital stores, and digital marketing to empower corporate governance and enhance operationalefficiency. In the culture, education and healthcare business segment, we work to strengthen ourdigital intelligence in this segment, so as to contribute more digital intelligence to the culture andtourism, education and healthcare industries. In the construction business segment, we aim torealize the closed loop of intelligent construction and operation management. In the financialbusiness segment, we dig deep into applications in financial scenarios, with comprehensivelyimproved services in outlets and enhanced user experience.
3.5.2 Technical Opening-up and Ecological Cooperation
3.5.2.1 Software Open Platform and Ecological Cooperation
As for the technical open system, the Company continues to build up core capabilities basedon the three key domains of IOT awareness, smart view and data intelligence, while expanding thescope of open capabilities for various partners in response to their needs. Meanwhile, we continueto improve the cooperation friendliness for cooperation scenarios and reduce the cost of technical
integration of partners. Based on the technical requirements of partners, we keep optimizing theform of open functions, and continuously enriching the content of eco-products and eco-solutions,to build a flexible multi-level open system of "interface-component-module-product-solution".Through the dual drive of "content+form", we make constant optimization to shape an integratedopen system of view functions for various cooperation scenarios.In terms of market cooperation, we classify and differentiate cooperation for customers'demands by factors such as region, industry and customer nature, and continuously output valuefor partners through various means including business opportunity sharing, product certification forrelease, marketing channel merging and brand cooperation.Regarding the management system, we have set up a two-tier customer managementorganization consisting of the headquarters and provincial districts, mobilizing all kinds of resourcesand optimizing the process system internally, while extracting the value of existing partners andanalyzing and identifying new partners externally, with differentiated resources allocated to partnersof different levels. Moreover, we have made the software ecosystem management a priority for ourCompany, with independent operations.As for empowerment and support, we have launched all kinds of technical services,empowerment support and training and certification programs for our partners to continuouslyreduce their learning costs and ensure that they can efficiently access and digest the variouscompetency values provided by our software open system and continue to profit from them.Through these value co-creation and sharing actions, we aim to continuously enhance the breadthand depth of technical cooperation and ultimately form a highly trustworthy and stable technicalecosystem.In 2023, Dahua held the Eco-Partner Conference "Building an Integrated Ecosystem andCreating a Digitally Intelligent Internet of Things", exploring the development direction and futureopportunities of digital intelligence for industries around the roles and values of such technologiesas AIoT, big data, and AI in urban governance and corporate management, and seeking to deepenthe concept of and cooperation on the concepts of co-construction, win-win results, and symbiosisfor the intelligent IoT. Eco-salon technical exchanges and circle activities were carried out in variousprovinces and districts across China to provide partners with a shared ecological stage. We havebuilt a mechanism of eco-partners' rights and interests, and work closely with them to innovate theirbusinesses.
3.5.2.2 Hardware Open Platform and Ecological Cooperation
It mainly includes the open access to device hardware capabilities (DHOP) and third-partyplatforms (device network SDK, playback SDK, HTTP API).The Dahua Hardware Open Platform (DHOP) supports the decoupling of hardware andsoftware, and provides hardware resource services such as storage and computing power,multimedia function services, AI acceleration engine services, and various basic information
services to meet the diverse business needs of third-party developers, and offers a rich set of toolsfor model conversion, compilation, packaging, debugging, and O&M, thus simplifying third-partydevelopment.
Based on the DHOP, Dahua has self-developed dozens of industrial intelligence APPs, suchas pyrotechnic detection, helmet detection, and fire escape occupancy, to support the flexibility ofedge-side devices for dynamic intelligence loading. As of 2023, we signed cooperation with multiplealgorithmic vendors around the world to develop APPs in a variety of industrial scenarios in amutually beneficial way, thus quickly and effectively meeting the business needs of end-customersand revitalizing the ecological application market of intelligent IoT.
With the opening of third-party platform access capabilities, we have established mutuallybeneficial partnerships with a number of industry platforms and actively integrated into theecosystem of various partners.
The DHOP supports access to hardware functions of edge-side device matrices such as IPC,PTZ, ITC, NVR, and IVSS. For exploring new intelligent scenarios, the supporting training serversand view intelligences are also made open to realize the full-link closed-loop rapid implementationof intelligent new scenarios.
3.5.2.3 Algorithm Opening-up and Ecological Cooperation
Empower partners with the ability to industrialize AI at scale to achieve business success andmutual growth. In the trend of digital transformation, many clients from different industries use AI toimprove production efficiency. As AI industrialization represents a field with considerableopportunities, the Company works together with its partners and clients to build an AI ecosystem.The Company provides targeted empowerment tools for partners with different levels of demand,thus accelerating the process of AI industrialization.
(1) Mature algorithms, ready to use
Through application and practices in industrial businesses, our AI algorithms haveaccumulated plenty of mature algorithm solutions that are ready to use. With the followingadvantages, we can help our partners expand their businesses:
More choices: For different needs of various industries, we have developed specializedalgorithmic solutions that cover specific industries.
Good results: After application and polishing in actual businesses, they not only fit thebusinesses, but have strong scene generalization capabilities; these algorithms have won multiplechampionships in international competitions in such fields as target detection and targetrecognition.
Easy to use: Simply select the corresponding algorithm solution in the algorithm library as perthe business requirements, and then make some basic configurations. That's all you need to do torealize corresponding functions.
Economical to deploy: By means of single-model multi-tasking, end-to-end low-bit, and
synchronization of end-user, edge and cloud, the algorithms have minimized the hardwarerequirements for memory and computing power to the optimal level, greatly reducing the cost ofuse for users.
(2) AI Open Platform to build up partners' AI capabilities for independent developmentIt targets users with no algorithmic ability with low threshold, who can quickly realize algorithmsthrough open platform development and implement them into products for commercial realization.The AI Open Platform provides a one-stop graphical AI algorithm development platform forpartners, featuring the following five major capabilities: flexible platform deployment, zero-codedevelopment, high-efficiency training, online validation, and one-click deployment. Users canefficiently complete the development of desired algorithmic functions with low threshold by inputtingrelevant data on the AI Open Platform, thus effectively enhancing their algorithmic developmentcapabilities for independent development.
(3) AI open tool chain to accelerate the productization of partners' algorithmsIt mainly targets clients with algorithm self-development capabilities but without producthardware capabilities. Users can realize algorithm development through self-development, andthen deploy their completed algorithms into our hardware products by adopting the "Genius AIAlgorithm Deployment Tool"; besides, they can also use the DHOP to realize the development andimplementation of business software productization, so as to rapidly productize their algorithms.
3.5.3 Service Opening-up and Ecological Cooperation
Upholding the service concept of "Empowering Clients", Dahua has gradually built up fourservice systems for the whole market and business, namely, integrated delivery system, technicalsupport system, O&M management system, and training and certification system. We arecommitted to building the world's leading and efficient professional delivery platform, and becomingan outstanding service value creator.Currently, the Company has formed a three-tier service network to provide technical servicesto global customers, with 69 branches worldwide covering more than 180 countries. Meanwhile, itintegrates its resources and brings together the power of ecosystems to provide the market with fulllife-cycle services of products and solutions. In 2023, it debuted the regional authorized servicecenters to enable its partners, speed up customer response, improve service quality, and providecustomers and markets with highly efficient service support, with continued excellent serviceexperience for its customers.
3.6 Software Products and Business
Data, as the fifth major factor of production after land, labor, capital and technology, willcertainly give rise to new industries, new markets and new models. It will also revolutionize theoriginal productivity and production relations.
With the continuous implementation of technologies such as the IoT, big data and foundation
models, and the successive introduction of data industry norms in major countries around theworld, the technical system of data elements is gradually maturing and the circulation systemgradually taking shape. Among these data, unstructured data, mainly video images, arecharacterized by diversity, mobility, scale and privacy. Facing these problems and challenges,Dahua centers on the process of adding value to data elements, and from the aspects of multi-dimensional awareness, multi-connectivity, view intelligence, and open platform, we upgraded theIoT Digital Intelligence Platform 2.0 in 2023, integrating Galaxy Foundation Model and figure-digitalfusion capabilities. On this basis, we developed highly efficient software engineering capabilitiesand released industrial product series for cities and enterprises, boosting efficient urbangovernance and corporate digital intelligence upgrading.Dahua continuously strengthens its "winning" ability by focusing on software products andservices, targeting at business success. In terms of products, the product team actively integratestechnical capabilities such as foundation model, digital twins, low-code, and figure-digital fusion, soas to continuously innovate and improve product competitiveness. As for services, the developmentcenters in each province and region are fully integrated with front-line businesses, servingcustomers closely and bolstering the development of software businesses. To quickly combine withthe industry's emerging technologies for business innovation, Dahua possesses efficient softwareengineering capabilities, and provides powerful tool support in the design field such as the mapdeveloper platform and micro-services architecture platform, based on the Hua Design designsystem. It has accumulated multiple Firefly component malls throughout its operations, and byorganically combining these components, formed a low-code business engine for various scenariossuch as enterprise campus workstations and digital twins, thus making technology reuse andbusiness assembly a breeze. Based on the IoT Digital Intelligence Platform, we have formed threemodes of cooperation: program co-construction, product co-creation, and capability sharing aroundour ecological clients, to jointly propel the upgrading of digital intelligence in industries, strengthenour clients, and realize "co-construction, win-win results, and symbiosis".
3.6.1 Deeply Explore the Data Industry Chain to Boom the Data Market
The upstream, midstream and downstream of the video-based data element industry chainencounters multiple challenges. Firstly, upstream data providers, responsible for data collection andaggregation, are facing the challenges of complex and diverse sensing scenarios, complicated and
heterogeneous protocols of IoT devices, and cross-network interconnection of massive devices.Midstream data processing service providers, offering data governance and data computingservices, are troubled by unsatisfied smart long-tail markets, inefficient synchronization of end-user,edge, cloud, and network, and difficulties in heterogeneous data computation. Downstream players,mainly from governments, finance, and manufacturing industries, whose demand is mainly for datacirculation and application, have been seriously affected by weak scenario-based innovationcapabilities, difficult presentation of data value, and inactive transaction circulation. In view of theseproblems and challenges, focusing on the value realization process of data elements, the Companyactively plays the roles of data resource provider, data asset practitioner, and data commodificationenabler, starting from aspects such as multidimensional perception, multi-source connectivity, viewintelligence, and open platforms. Collaborating with partners and bridging gaps, it leverages the"multiplier effect" of data elements to empower efficient urban governance and enterprisedigitalization upgrades.
3.6.2 Upgrade the IoT Digital Intelligence Platform to Enable Efficient Urban Governance andCorporate Digital Intelligence
Under the Think# strategic framework, Dahua released the IoT Digital Intelligence Platform in2021, comprising an online data network and two intelligent engines of vision and data, so as toempower the digital innovation of cities and the digital transformation of enterprises. With the rapiddevelopment of IoT, foundation model and big data technologies, combined with our profoundthinking and accumulation in urban and enterprise business, we upgraded the IoT DigitalIntelligence Platform in 2023.Dahua digs into data application with its capability, and runs through the whole process of data
as an asset, a resource and a commodity, boosting the release of new power for development.During the data as a resource stage, we rely on the Panoramic 6D multidimensional perception andmulti-source connections for aggregating full-network data; the addition of AI will further enhancethe data collection and content description capabilities. During the data as an asset stage, theSmart View Engine integrates the Galaxy Foundation Model capability, which breaks through theboundary of visual cognition capability and realizes independent analysis of full scenarios withstronger generalization capability and higher accuracy, opening up a new space for industryexpansion and scenario implementation. The Smart Data Engine, a one-stop engine for dataintelligence that consolidates the figure-digital fusion computing system breaks down computationalbarriers between view data and business data, enabling multi-dimensional feature exploration andmulti-modal relationship establishment. Centering on the stage of data as a commodity, we haveimproved the software engineering capability, so that industrial scenario modules can be quicklycombined with technologies such as foundation models and graph-data fusion, to realize freescheduling, and build up the product systems for cities (Tianji) and enterprises (Tianyan). Being anenabler, we work together with our partners to diversify the industrial applications.In terms of urban governance, Dahua is actively involved in urban governance from the fourdimensions of "secure society", "orderly city", "green city for the benefit of people", and "enhancedgovernance efficiency". Coupled with the CV foundation model, computing network self-intelligenceand graph-data fusion technologies, Dahua has launched the Tianji series of products, comprisingfour core products: industry model intelligent computing engine, twin scenario generation engine,data asset management service, and data element operation center. These products enable urbangovernance to realize self-optimization, self-learning and self-evolution, and gradually movetowards a new stage of cognitive intelligence and decision-making intelligence.In terms of enterprise business, Dahua has been expanding its capability boundaries forenterprise customer service, from integrated security, intelligent IoT to business innovation in digitalintelligence. We have launched the Tianyan series of products, designed to provide enterpriseswith four engines: data operation and management, intelligent computing and decision-making,scenario application building, and digital twin interaction. Based on over ten thousand industryprojects every year, the Tianyan series carries massive business paradigms of business operationactivities and efficiency enhancement, and combined with the Galaxy Foundation Model duringbusiness innovation, it allows enterprises to release manpower for high-risk and high-intensitytasks, guards safe production, and supports decision-making for managers.
3.6.3 Software Engineering Capability, a Multiplier for Data Commoditization
In terms of data commercialization, since the launch of the very first industry software platformproduct in 2010, Dahua has persisted in customer value guidance, business orientation, andtechnology driving over the past 10 years, building up its understanding in industry paradigms. Toquickly integrate emerging technologies in industries to realize business innovation and buildefficient software engineering capabilities: In terms of design, we provide guidance and resourcesfor all design aspects based on the Hua Design design platform, which can effectively improve thecollaboration efficiency between designers and developers and reduce production costs. As fordevelopment, we equip developers with powerful tools such as the Deepsea Microware SharingPlatform, Map Developer Platform, and Microservice Architecture Platform, so as to build up agileproduct development capabilities.
To accumulate services, Dahua has built a four-layer componentized system of "G, B, F, M",which has accumulated multiple components layer by layer. Through the organic combination ofthese components, a core value engine based on perceptual, numerical and intellectualcapabilities, a highly resilient distributed operation architecture adaptable to a variety ofheterogeneous computing requirements, an end-to-end highly available and highly secure digitalimmune system, an integrated and highly sensitive R&D service performance platform, and ascenario-based business enablement engine for sustainable empowerment have been shaped,making technology reuse and business assembly a breeze. In the process of empoweringthousands of industries, it is found that the accumulation of business modules and developmentefficiency is a "Musashi curve". At the initial stage, with the increase of modules, business reusebecomes simple with rapid improvement in efficiency; when components reach a certain scale, themarginal benefit decreases, as no developer can master several thousand technical componentsand business modules. Therefore, Dahua has developed a development suite oriented to data,capabilities and scenarios, which forms a low-code platform with AI-assisted developmentcapabilities and business knowledge association. This can greatly reduce the mental burden ofdevelopers, and support the further enhancement of the efficiency of business software
development and the sustained and healthy business growth.Relying on the above software engineering capabilities, industry scenario modules can bequickly loaded with emerging technologies, including the CV foundation model and graph-datafusion; combined with knowledge of industry experts, these modules can be freely orchestrated tobuild richer scenarios for industry applications, forming a "multiplier effect" and amplifying the valueof innovative business in the value chain of cities and enterprises in various industries. Based onthis, Dahua has released the Tianji series for cities and Tianyan series for enterprises, boosting theefficient urban governance and digital intelligence upgrade of enterprises.
3.6.4 Dahua Public Cloud, Making Management More Efficient and Operations MoreIntelligent
Based on the capabilities of the cloud mid-end platform, our public cloud business providesrich SaaS services for various industries, forging a comprehensive and open system of cloud mid-end platform capabilities. The cloud mid-end platform integrates six core capabilities, namely,business, IoT, AI, data, O&M, and operation, which makes it simpler for cloud access and moreefficient for business development. Based on the cloud mid-end platform, Dahua offers public cloudSaaS products such as Yunrui, Cloud-Link, and DoLynk. Leveraging the advantages of low-cost,highly flexible, scalable, and configurable SaaS services, Dahua delivers a new operating model forenterprises, upgrading and transforming from manual to "data + intelligence", and empowering thetransformation of enterprises' digital and intelligent management.For domestic clients, Yunrui assists enterprises in optimizing management efficiency, boostingbusiness efficiency and avoiding operational risks through leading cloud-based intelligentapplications and open AI algorithm ecosystem. Focusing on the rapid development of variousindustries, Yunrui is continuously deepening its SaaS business in chain, parking, education, and
community scenarios to provide holistic intelligent IoT solutions. In view of the fragmentation ofintelligent IoT scenarios and demands, Yunrui further optimizes its open platform, strengthens itslow-code development capability, optimizes its cloud intelligence, and makes every effort to developits partners to jointly expand businesses for win-win results.For overseas clients, Dahua offers the DoLynk overseas cloud service, dedicated to providingan accurate, intelligent and convenient platform. From the perspective of connecting devices,solutions and business partners, we provide clients with scenario-based application solutions suchas cloud-based video management, equipment O&M, digital networks, wireless alarms, visualintercom, access control and attendance, and chaining, to establish connections with partners,build marketing links directly to terminals, and enable digital transformation so as to helpenterprises cut costs and increase efficiency. Meanwhile, we offer streamlined IoT integrationcapabilities to help developers quickly build their own IoT cloud platforms and realize an ecologicalplatform for business co-construction. Our goal is to create a world of AIoT applications forresidential operations, business management, and consumers.
3.7 Security and Privacy Protection
Dahua attaches great importance to cyber security and privacy protection. As the highestdecision-making organization, the Cyber Security Committee has been established tocomprehensively plan, coordinate, guide, supervise and review the development andimplementation of cyber security efforts from the Company's strategic level. As one of our fivemajor research institutes, the Cyber Security Research Institute is an independent internal organfor cyber security supervision and capacity enhancement. With a focus on areas such as securityengineering capacity building, research and application of key security and privacy technologies,and security incident response services, the Institute ensures the safety and reliability of its fullrange of products, platforms and services through the combination of technological innovationand engineering capabilities.
3.7.1 Security Products and Solutions
The company has launched products such as security database, video security convergencegateway, security data border, video protection system, video encryption server and video security
certificate, integrating such security protection service capabilities as terminal security access,video stream integrity verification, video stream encryption, user and data security keymanagement, digital certificates and security authentication.
Dahua provides and implements security solutions such as level protection, confidentialityassessment, video watermarking, and 35114. Based on the principle of "whoever collects encryptsand whoever uses decrypts", we design and realize the end-to-end protection of user datathroughout the life cycle of data collection, transmission, storage, sharing and use, and meanwhileachieve the security requirements for information systems in accordance with the confidentialityevaluation standard.
3.7.2 Security Technologies and Engineering
Dahua continuously steps up its research investment in key technologies such as trustworthy
computing, end-to-end encryption and privacy protection, with related technological achievementsalready integrated into its products to further enhance their security capabilities and enable users toenjoy better security protection.During the product development stage, Dahua keeps improving the life cycle of securitysoftware development, strengthening the security control requirements and capabilities duringsoftware development, and improving and optimizing the security software development processsuitable for Dahua by carrying out in-depth maturity assessment of security activities. Meanwhile, itoptimizes and improves the correspondence between various security activities and furtherdeepens the automation capability of the security tool chain to ensure that security control activitiesare implemented in a more refined manner.
Within the product life cycle, PSIRT, the company's product security incident response team,provides users with 24/7 security emergency response services to optimally safeguard users'security rights and interests. In the meantime, PSIRT is actively involved in industry and publicactivities, and has joined multiple authoritative vulnerability management and technicalorganizations, including the China National Vulnerability Database (CNVD), China NationalVulnerability Database of Information Security (CNNVD), and China National Industrial CyberSecurity Vulnerability Database (CICSVD). By fully leveraging the role as a member within theorganizations, Dahua has established a collaborative mechanism for sharing information on cybersecurity threats.
3.7.3 Data Security and Privacy Protection
With the promulgation of the Cybersecurity Law of the People's Republic of China, the DataSecurity Law of the People's Republic of China, the Personal Information Protection Law of thePeople's Republic of China, and the General Data Protection Regulation of the European Union,the regulatory and compliance requirements for cyber security, data security, and privacy protectionare becoming increasingly stringent globally. In response to these requirements, Dahua takes apragmatic attitude and strategy, and upholds a "positive, open, cooperative and responsible"philosophy, to develop comprehensive security and privacy management systems. Relying on itsmature security engineering capabilities, Dahua strictly implements these systems during productplanning, design, development, and delivery stages, to ensure product security and privacycompliance.
In addition, Dahua actively cooperates with third-party authorities, with external assessmentsand certifications introduced. We have passed the ISO27001 Information Security ManagementSystem Certification, ISO27701 Privacy Information Management System Certification, ISO27017Security Management System Certification for Cloud Services, ISO27018 Security ManagementSystem Certification for Personal Privacy Information in Public Clouds, ETSI EN 303645Certification, CC EAL3+ Certification, and Commercial Cryptography Certification.
4、Main businesses
4.1 Domestic Businesses
4.1.1 City-level Businesses
4.1.1.1 Business Overview
With the official operation of the National Data Administration and the successiveestablishment of local data administrations, the construction of Digital China has entered a phaseof rapid development. As a vital component of Digital China, Digital Government provides strongsupport for digital economy and digital society in terms of institutional rule innovation and digitalcapacity building. Following a period of intensive development, the digital transformation ofgovernments has shown such trends as "scientific and unified management mechanisms,intelligent and integrated digital platforms, upgrading government governance capacity driven bythe value of data elements, and demand-driven innovations in business and operation modes".Under the major trend of digital transformation of governments for quality and efficiencyenhancement, Dahua closely follows the pace of industrial development in digital infrastructureconstruction, data as resources, and digital application implementation, and focuses on the foururban business sectors of secure society, orderly city, enhanced governance efficiency, andenvironmental protection for the benefit of people with video IoT sensing technology as the core.Through digital intelligence integration and application innovation, Dahua safeguards thedeployment of urban businesses, and contributes to the realization of the beautiful vision of"harmonious coexistence of man and city, man and society, and man and nature".
4.1.1.2 Core Strategy
Dedicated to implementing digital intelligence capabilities into various urban scenarios, Dahuafocuses on the main course of the IoT business, and continues to explore the scenarios of digitalintelligence-enabled digital innovation in cities. With the focus on new opportunities in suchindustries as comprehensive transportation, natural resources, intelligent water conservancy, urbanparking, and emergency management, we have deep insight into the needs of industry scenarios,and concentrated on implementing numerical intelligence capabilities to continuously build industry-leading products and solutions, and empower city development and governance model innovationwith digital intelligence. Besides, the Company continues to deepen its ecological cooperationstrategy, and continuously strengthens technical co-creation and business sharing with its corecustomers, industry experts, and outstanding vendors in urban governance, so as to jointlyempower the efficient urban governance, and create an intelligent IoT eco-community featuring co-construction, win-win results, and symbiosis.
(1) Building an urban digital intelligence base
Based on the AIoT 2.0 and the IoT Digital Intelligence Platform 2.0, the city platform has beenupgraded to a unified City Tianji base that focuses on the four core capabilities of the SmartComputing Engine for Industry Models, the Twin Scenario Generation Engine, the Data AssetManagement Service, and the Data Element Operation Center to help users build urban dataassets and chain-wide assessment of data elements around a number of urban scenarios and torapidly build digital twin application scenarios with comprehensive management decision-makingcapabilities coupled with the best business practice paradigms of various industry domains. In thisway, we aim to contribute to the realization of self-optimization, self-learning and self-evolution ofurban governance, and gradually move towards a new stage of cognitive intelligence and decision-making intelligence.
(2) Deepening Scenario-based Implementation
Based on the unified City Tianji base, combined with years of in-depth experience in digitalgovernment, intelligent transportation, social governance, intelligent emergency response,intelligent water conservancy, and natural resources, among other business areas, we havedeveloped scenario-based solutions for different fields in various industries, to continuouslyadvance the urban digital intelligence process, and empower the efficient urban governance, thusendeavoring to realize a new picture of urban governance for secure society, orderly city, enhancedgovernance efficiency, and environmental protection for the benefit of people.
4.1.1.3 Practice of Values in All Industries
Dahua adheres to the social mission of "making the society safer, cities more orderly,governance more efficient, and life better", It has been deepening its digital intelligence practices inbusiness areas such as social security, urban order, governance efficiency, and green benefits to thepeople, and activating the value of urban IoT data elements based on the AIoT 2.0 and IoT Digital
Intelligence Platform 2.0, so as to empower the urban digital transformation with digital intelligenceinnovations.
(1) Making the Society Safer
Focusing on the goal of ensuring a stable and orderly society, safe travel for the people, securelife for the masses and safeguarded production for enterprises, Dahua actively fulfills its socialmission and is committed to strengthen security in China. Centering on the four business areas ofpublic safety, traffic safety, life safety and production safety, it connects the "urban lifelines" of water,electricity, gas, heat and transportation, and creates a safety "immunization" system for cities.Empowered by digital intelligence, it enables the upgrading of the overall urban security system.
In the field of public security: In the year of the national 14th Five-Year Plan for high-qualitydevelopment, Dahua put its focus on deepening the vision system and actively embraced emergingtechnologies. By continuously deepening the combination of intelligent IoT technologies with publicsafety scenarios, the Company provides customers with more convenient urban IoT capabilities,smarter integration and connectivity, and more efficient social governance capabilities, deliveringsecurity protection from cities to villages, highways to railroads, and forests to river basins, andcontributing to the modernization of the urban public security system and capabilities. In 2023, theCompany focused on the mining of view data elements, particularly with the launch of visualcomputing solutions. Investing in the innovation of view data applications to activate the potential ofview data elements, the Company aims to help customers improve the depth and efficiency of datautilization, provide strong protection for the people and social security, and contribute tostrengthening security in China.
In the field of traffic safety: Guided by the 14th Five-Year Plan for National Road TrafficSafety, the Company further deepens the "reduction of traffic accidents and control of major ones" byfocusing on the three major scenarios of fine management of urban traffic safety, high-speed safetyprevention and control, and primary management of rural safety, so as to create a model of trafficsafety management that covers all scenarios and incorporates multiple means. Relying onfoundation models, the smart view engine is upgraded, to explore the applications of big data andAI technologies in traffic control. Targeted at light pollution control scenarios, the "Fluorescent" seriesof cameras was released in 2023 to address the problem of flashing light pollution at night. Weexplored comprehensive management scenarios of electric vehicles to enhance the safety and law-abiding awareness of electric vehicle drivers. For road hazard management scenarios, weinvestigated hidden traffic hazards to achieve precise and targeted management. For high-speedsafety prevention and control scenarios, innovative products and programs for multi-scenariomonitoring were launched. Through these efforts, we have enabled traffic safety management totransition to ex-ante prevention, and focused on solving the deep-rooted problems in traffic safety toenhance its intrinsic safety.
In the field of life safety: Surrounding on monitoring scenarios for urban lifeline safety such aswater, electricity, gas, heat and transportation, the Company aims at enhancing intrinsic safety with
"efficient monitoring, early warning and quick handling". By building front-end IoT sensing of urbaninfrastructures, intelligent video analysis and urban safety index modeling, Dahua realizes onlinemonitoring of safety operation data of lifeline projects as well as intelligent analysis and judgment ofvarious risk elements. This can meet the integrated business closed-loop of risk classification andwarning, intelligent research and judgment of trends, and linked handling of events, thus promotingthe transformation of safety supervision from "passive response" to "active supervision", andcreating a safety "immunization" system for city life.In the field of production safety: Taking "source management, process supervision andgraded handling" as the core principle, Dahua focuses on key supervisory fields such as hazardouschemicals, mines, industry and trade, fireworks and explosives, as well as hazardous chemicalparks. Support is offered to front-line employees, business leaders, and supervisory authorities inthe areas of supervising major sources of danger, early warning of risks in operation processes, andemergency rescue, so as to effectively safeguard the safety of corporate production and people'slives and properties.
(2) Making Cities More Orderly
Oriented around urban traffic management and urban infrastructure management, the Companyintegrates various digital capabilities such as holographic sensing, intelligent computing, graph-datafusion, and visual foundation models, to provide advanced digital solutions for the business areas ofurban traffic and urban infrastructure management, thus building a standardized and orderly urbanmanagement system with convenient travel and efficient management.In the field of urban traffic: Together with partners, we jointly create an autonomous servicesystem for urban traffic, bridging the full business chain of holographic perception, graph-datacomputing, simulation and deduction, intelligent decision-making, and precise services. Forintersection scenarios, we collect all traffic data from vehicles, non-vehicles, people, andinfrastructure, to actively study and analyze intersection traffic risk/congestion levels, intelligentlyadjust traffic light timing, objectively and quantitatively evaluate the effect of optimized autonomy,and improve the efficiency and safety level of intersection traffic operation. Relying on the city-levelholographic perception network, we can actively predict traffic status of urban road networks, andrealize intelligent and autonomous decision-making of city-level traffic, so as to promote theautonomy of traffic management and intelligence of services, and ultimately drive the transformationof urban traffic management from "manual management" to "operation autonomy".In the field of urban infrastructure management: Taking the airport scenario as anexample, automated energy management for green airports has become the focus of airportconstruction. Focusing on the four major categories of business scenarios, namely, monitoring,controlling, analyzing, and decision-making of energy in airport energy centers, Dahua offersintelligent energy automation management system solutions for airport energy centers by integratingintelligent inspection robots and back-end intelligent analysis capabilities. In a 4F-class airport, theintelligent transformation of its six 35KV substations, boiler rooms, and chiller rooms has enabled
online collection, unmanned inspection, and automatic control of its energy management, which hassignificantly improved management efficiency and reduced management costs.
(3) Making Governance More Efficient
The company has always been practicing "business-guided, scenario-based deployment",empowering efficient urban governance with digital intelligence. Holding on to the opportunitiesarising from the modernization of urban governance systems and capabilities, the Companyprovides unified solutions for management, urban governance, grassroots governance, andcommunity governance, solving various complex problems in urban governance with intelligentmeans and real-time online data to improve urban governance efficiency and enhance publicsatisfaction.In terms of "Unified Solution for Urban Management": Dahua has built a "Unified Solutionfor Urban Management" system with "comprehensive situational awareness, intelligent research andjudgment of trends, integrated scheduling of resources, and multi-sector synergy of operations", toempower the modernization of urban governance with sensing data. The unified video IoT hubrealizes one-screen overview of the whole area, the unified algorithm supermarket for rapiddetection of urban events, the unified fusion command and scheduling system for integratedscheduling of resources for event disposal, and the unified event center for multi-departmentalbusiness cooperation. The "Unified Solutions for Urban Management" sensing system enablestimely detection and handling of urban governance events, effectively upgrading the intelligencelevel of urban governance.In the field of urban management: With urban governance, operation safety and serving thepeople as the goal, Dahua has built the operation management system of "Intelligent, Fine and MassManagement of Big Cities". Focusing on street management, urban sanitation, and comprehensivegovernance, intelligent detection and early warning of events such as street violations, illegal wastedumping, urban flooding, dump trucks leaking, illegal urban construction, and missing manholecovers have been realized. Moreover, innovative scenarios such as mobile AI inspection and mobilevendor management have been introduced to build an urban governance model that integrates "real-time monitoring, dynamic analysis, coordination, command and supervision", aiming to make urbangovernance "smarter", urban operation "safer" and public services "more targeted".
(4) Making People's Life Better
"Powered by AI, we adhere to the protection of lucid waters and lush mountains and theenhancement of people's welfare". Focusing on two major fields of natural ecology andadministrative services, Dahua provides integrated applications of IoT sensing in industry-specificbusiness scenarios including biodiversity monitoring, ecological protection, arable land red lineguarding, digital twins of water conservancy, intelligent elderly care, and food safety, to boostecological development and make people's life better.
In the field of biodiversity protection: To realize intelligent monitoring of rare and protectedanimals, Dahua's relevant industry solutions focus on business scenarios and needs, to efficientlyand accurately identify treasured species, analyze their activity patterns, manage human activities,monitor forest and grass fires, and record data on such ecological factors as meteorology, hydrology
and water quality, and soil, so as to give full play to and strengthen the application of ecologicalperception and monitoring data fusion and analysis, and boost the construction of China's naturalprotected area system. The Company has deployed biodiversity monitoring and protection solutionsin numerous national parks and nature reserves in China, loaded with hundreds of bird and mammalidentification algorithms to detect, identify and categorize wildlife protection animals, and realize real-time accurate observation of animal habitats. Meanwhile, in response to the boundary managementrequirements of various types of protected areas, we are strengthening the management andguidance of human activities, reducing human interference with wildlife, and fully supportingmanagers in carrying out more refined ecological protection efforts on the basis of abundantmonitoring data records and statistical analysis results.In the field of forest and grassland fire prevention: To improve the efficiency of forest andgrassland fire prevention and reduce the work intensity of administrative personnel, ourcorresponding industry solutions, powered by digital intelligence, can realize the real-time earlywarning of fire in multi-dimensional space, the precise positioning of multiple fire points, thesecondary analysis, filtering and comprehensive judgment of fire, and the closed loop of handling.These solutions boost the accuracy of forest and grassland fire monitoring and alerting, andenhance the emergency response capability for fire prevention and extinguishing, with more "goldentime" secured for early and quickly suppression of any fires. Meanwhile, the wildlife is also protectedwith wider free green space, thus facilitating the harmony between human and nature.
4.1.2 Enterprise-level Businesses
4.1.2.1 Business Overview
In enterprise businesses, Dahua aims to become a preferred supplier of IoT infrastructure, aprofessional service provider of scenario-based digital intelligence applications, and a key builder ofthe IoT ecosystem. During the enterprise business 2.0 stage, Dahua is actively engaged ininnovation and practice, and continuously facilitates the digital intelligence upgrading of enterprisesin thousands of industries, including manufacturing, construction, electric power, petrochemicals,coal, iron and steel, finance, education, healthcare, culture and tourism, agriculture, logistics, andretail. By empowering the value realization of all scenarios, Dahua builds a big security system for itsusers, forges their digital productivity, and enhances their operational decisiveness, dedicated tobecoming a trustworthy partner for customers' digital intelligence upgrading. In this process, throughtechnical co-creation and commercial sharing with partners, we aim to build an intelligent IoTecological community of co-construction, win-win results and symbiosis, so as to jointly empower theupgrading of corporate digital intelligence.
4.1.2.2 Core Strategy
Dahua has rapidly built extensive basic business and industrial business applications on the
unified framework through common mid-end platform capabilities while serving the digitalintelligence upgrading of enterprises. To more efficiently serve the digital transformation ofcustomers in various industries, the solution framework has been upgraded to a unified "1+6+2+N"framework, with one set of unified framework to serve the digital transformation business, 6 majormid-end platforms to build internal engines, and 2 major platforms to support N types of applications,thus truly accelerating the roll-out of industrial applications and the coverage of industrial customers'scenarios and businesses.
(1) Strengthening mid-end platform capabilities of enterprises to build their digitalintelligence bases? IoT Mid-end Platform: A set of intelligent IoT architecture is used to access evolving IoT
devices in corporate business with low code, to solve the problem of unified elementalaccess to multi-manufacturers, multi-systems, and multi-kinds of IOT devices, whileresponding to the demand of group networking scales at the campus, provincial, regionaland national levels.
? Data Mid-end Platform: It provides the ability to store, compute, explore, and secure awide range of data including videos, images, and structured data. It solves the problem ofcontinuously growing data scales and types in enterprise businesses, and mutualintegration required. Meanwhile, it transforms the scenario awareness data into morevaluable industrial business big data through comprehensive means such as big data,expert knowledge and experience accumulation.
? Smart Mid-end Platform: It provides an algorithm generation center to address theintelligent implementation of generic and personalized scenarios for enterprise businesses.Core algorithmic assets are managed and distributed through the algorithm asset center,while the computing power resources of intelligent devices are given full play through thecomputing power scheduling center.
? Interaction Mid-end Platform: It perfects the twin capability by means of AR display, VR
display, 3D display, real-world 3D, and video twins, improves the data expression capabilityby means of low-code walls, and refines the control capability by means of large-screenmanagers, so that the value of enterprise digital transformation can be materialized.? Business Mid-end Platform: A variety of engines are accumulated to build a businessmid-end platform, which improves the reusability of software, shortens the developmentcycle of various types of fragmented industrial applications, and meets the personalizedbusiness needs of customers.? Open Mid-end Platform: On the one hand, it attracts professional manufacturers in theindustry into a company's business system to jointly enhance the capability foundations; onthe other, it opens the company's capability system to empower its eco-partners andprovide services that are more convenient to its corporate customers.
(2) Promoting the application of public cloud SaaS to facilitate the upgrading ofcorporate servicesTargeting corporate customers, Dahua Yunrui facilitates the optimization of their managementefficiency, boosts their business efficiency, explores data value, and avoids operational risks throughleading cloud-based intelligent applications and an open AI algorithm ecosystem. Dahua Yunruicomprises the public cloud SaaS application, the developer open platform and the AI capabilitymodule, featuring low-cost, high-availability, easy deployment and flexible expansion, which isinstrumental to the building of the corporate software system. Focusing on the rapid development ofvarious industries, Yunrui is continuously deepening its SaaS business in chain, parking, education,and community scenarios to provide holistic intelligent IoT solutions. In view of the fragmentation ofintelligent IoT scenarios and demands, Yunrui further optimizes its open platform, strengthens itslow-code development capability, optimizes its cloud intelligence, and makes every effort to developits partners to jointly expand businesses for win-win results.Yunrui's product applications cover various scenarios including chain operation, communityproperty, logistics, construction sites, farming, cultural tourism, general education, parking and parks.The basic capabilities of Yunrui have been comprehensively decentralized, with six mid-endplatforms established covering IoT, business, intelligence, data, O&M and operations, providingbasic SaaS services for cloud products in various industries, and enhancing business reusability andproduct stability.
(3) Building a business engine pool to accelerate N types of applications
Facing the different industrial and business needs of enterprises, the Company has built a poolof business engines to shape business mid-end platform capabilities, accelerate the N types ofcorporate digital intelligence applications, and develop solutions that fit customers' business andscenario applications. While continuing to consolidate conventional businesses, Dahua rapidlyadapts to customers' businesses, thus constantly accumulating replicable and scalable business
scenarios for digital intelligence.
Based on the evolution of the corporate digital intelligence framework, the continuousconsolidation of corporate mid-end platform capabilities and business expansion, Dahua haspenetrated into various niche industrial scenarios such as factories, hospitals, schools, campuses,and chemical parks, to continuously refine scenario-based solutions, and deeply extract industrialbusiness values, thus delivering scenario-based digital intelligence solutions that are implementable,quantifiable, and of calculable value to customers.
4.1.2.3 Practice of Values in All Industries
With the constant mining of business scenarios, algorithms are no longer applied in business asa generalized demand, but are deeply penetrated into production and operation scenarios andvarious settings, infiltrating into daily business operations and management. Their value is graduallyrecognized by customers and more widely applied, and corporate businesses are also upgraded to
2.0. Around building a large security system, casting digital intelligence productivity, and improvingoperational decisiveness, we can effectively facilitate the digital intelligence transformation andupgrading of thousands of industries, and empower the value realization in all scenarios.
(1) Building a comprehensive security system: From safety warning to security system building
Safety production is a long-term national basic policy as well as the cornerstone of corporateproduction and operation. The Company continues to delve into the actual production andoperation scenarios of customers, and combines the capabilities of video IoT with scenarios toachieve visualization, digitalization and intellgentization based on actual scenarios with the fivecapabilities of "Full Sensing, Full Connection, Full Intelligence, Full Computing and FullEcosystem". From safety prevention to safe production, with machines replacing manual work, we
can realize unmanned or less-manned operations in dangerous scenarios. Besides, we also build asafety knowledge system library to optimize the safety management and production process, so asto ensure the safety of personnel, equipment and facilities, production conditions, and public orderduring business operations.
(2) Casting digital intelligence productivity: From edge assistance to core productionWith the continuous development of digital economy, enterprises have an ever more cleardemand for digital transformation. Based on exceptional video technologies and intelligent IOTcapabilities, the Company applies such leading technologies as visual perception, AI intelligence, bigdata, IoT, and blockchain to help enterprises realize efficient operation and management of parksand digital upgrading of factories with digital intelligence. With deep interaction with the coreproduction and management systems, we empower IT+OT integration with digital intelligence,optimize production and management business processes, and improve quality management andproduction efficiency, so as to help enterprises transform and upgrade with digital intelligence.
(3) Enhancing operational decisiveness: From data aggregation to data-based decision-makingLeveraging on its capabilities in sensing, connectivity, computing, intelligence and ecology,Dahua aims to achieve online resources, business intelligence and data-based decision-making onthe basis of data aggregation. It deeply explores the value of production and management data toreduce the management cost, and builds the operational and decision-making value of data forenterprises based on multi-modal and foundation models, to facilitate business management whileenhancing decision-making.Focusing on enterprise business scenarios, the Company has been working intensively inmanufacturing, construction, education, electric power, petrochemical, coal, steel, finance,healthcare, logistics, culture and tourism, agriculture, and retail. Particularly in the "5+X" corescenarios (factory manufacturing, energy production, school education, healthcare and parkmanagement), the Company provides customers with high-value digital intelligence solutions,empowering enterprises to realize the value in all scenarios and enabling business innovation.? Factory manufacturing: Multidimensional perception integrated with digital twin,empowering intelligent manufacturing with integrated intelligenceIn industries, new-generation IT such as IoT, big data and cloud computing are employed todigitally express, control and optimize workshop production processes, realizing productionautomation, unmanned sites, data interconnection and intelligent management decision-making.
Giving full play to its advantage of multi-dimensional intelligence integration, Dahua appliesleading technologies including machine vision, automation, digitization, and AIoT, to build a human-computer interaction platform for industrial scenarios with digital twin as the top-level presentation.Via the digital twin platform, our factory scenario solution has expanded its coverage from singlescenario to multi-services, moving from factory security and workshop energy consumption toproduction operations, thus comprehensively improving the depth and breadth of interconnectionamong people, machines and systems. Through the digital integration of the product data flow,
manufacturing control flow, and order delivery flow, we can more efficiently visualize the wholeproduction process from orders to finished products.Meanwhile, based on the comprehensive management platform for business enterprises,Dahua has established intelligent management systems for energy consumption, vehicles,perimeters, and security-fire protection integration, to enable all-weather dynamic sensing ofintelligent manufacturing operations, accurate control of abnormalities in personnel and vehicles, aswell as effective real-time control of fire protection and security IoT facilities in factories. Moreimportantly, the development of video systems in tandem with business data, coupled withcompleted data collection, transmission, processing and analysis, provides scientific basis forcorporate management decisions, and data support for factory business decision-making, so as tobetter guide corporate strategic planning, and facilitate the building of future-oriented factories.For a prominent photovoltaic component corporation, the Company has implemented digital twintechnology to establish a workshop information management platform. This platform showcases a1:1 three-dimensional reproduction of the battery cell production process and equipment operation,enabling real-time monitoring and intelligent analysis on personnel status, production lines, productquality, equipment and facilities. This facilitates effective online remote management, leading toimproved efficiency in workshop control and ensuring adherence to production standards.? Energy production: Integrating video AI with smart IoT to establish a new model forrisk and hazard supervisionProduction scenarios within energy companies often encounter various risks and hazards,characterized by monotonous traditional regulatory methods, limited operational staff, and complexenvironments. The Company has long been dedicated to leveraging video AI and smart IoTtechnology, combining technological advancements and human intervention to achieve automatedonline monitoring of production scenario risks and intelligently provide early warnings. This reducesproduction risks, enhances operational efficiency, and greatly supports safe production practices forenergy companies.Using comprehensive perception capabilities including observation, listening, inquiry, and tactilefeedback, the Company has developed a new model of machine-assisted online supervision.Enhancing the AI capabilities of video processing, industrial television is revitalized, incorporatinginfrared, laser, gas cloud imaging, voiceprint, and other smart IoT technologies for multidimensionalperception. This enables remote intelligent visualization monitoring of equipment operation status,facilitating online compliance management of onsite operations and ensuring stable productionenvironments. In this way, it offers energy companies a novel approach to intelligent risks monitoringand control.The Company has already implemented this approach in various energy sub-industries. Forexample, in the petrochemical sector, online visual intelligent monitoring and early warning systemshave been established based on the new supervision model. This has significantly improved safetyproduction supervision, reduced accident rates, and minimized labor costs. The Company will
continue to explore deep integration of smart IoT technology with productivity to promote thedigitization and intelligence of safety production within energy companies.? School education: Providing a comprehensive solution for campus digitizationfocused on being "balanced, precise, efficient, and safe"The Company empowers digital reform in colleges and universities through digitization.Leveraging video capabilities as a foundation, it has introduced a digital reform solution foruniversities with campus multidimensional big data at its core, aiming to establish a smart campusInternet of Things (IoT) mid-end platform. Focusing on innovative integration of university businessprocesses, it enables data value to support digital reform in universities. By integrating AI and bigdata technology into video scenarios, the Company has developed various data analysis modelssuch as companion analysis, solitary individuals, absence for N days, and nocturnal activities. Thesemodels help identify student issues such as student missing, high-frequency strangers, mentalhealth concerns, and abnormal returns to dormitory. With timely warnings about personal andpsychological safety issues, the Company's solution shifts from reactive responses to proactiveprevention, enabling data-driven decision-making for a safer campus environment. Simultaneously,the Company prioritizes the development of campus-authority integrated and smart classroom-related businesses and products. Traditional classrooms are transformed into smart classrooms toenhance teaching efficiency, improve the learning environment, and assist in teaching evaluations,thereby enhancing a more rewarding teaching process.For example, at a mining university, the Company has assisted in establishing smart dormitorymanagement, and implemented solutions for campus vehicle overspeeding, significantly improvinglogistical satisfaction. At a university of finance and economics and political science, the Companyhas addressed student missing issues through campus safety big data technology. At an aviationuniversity, the Company's construction of smart classrooms has facilitated interactive teachingsystems, online classroom platforms, and IoT central control, promoting efficient teaching andenhancing the overall digitization capability of the university.? Healthcare: Supporting the high-quality development of the medical industry under
the guidance of "trinity" smart hospital constructionGuided by the national standards for "integrated smart hospital" construction, the Companysupports the foundational development of smart hospitals, driving the high-quality development ofpublic hospitals. Comprehensively enhancing the intelligent management level of hospitals,automating and digitizing nursing work, improving service efficiency, enhancing nursing precision,and enhancing the patient experience are at the core in current smart hospital construction efforts.While continuing to strengthen the construction of smart and safe hospitals, the Company activelyexpands its presence in outpatient and inpatient ward scenarios, leveraging its own strengths tosupport the high-quality development of the medical industry and complete its own business upgradeand transformation.In 2023, by focusing on its key business area of smart hospital wards, the Company, in line with
a series of documents released by the National Health Commission and with the goal of "promotingthe improvement of hospital nursing services and continuously enhancing patients' medicalexperience," leveraged its accumulated core capabilities in audiovisual technology and AI to developsmart ward solutions. Targeting medical, nursing, patient, and administrative entities, it delved intosystem data, conducted information cleansing and governance, and presented data in a moreintuitive and convenient manner across various smart terminals in different scenarios.Simultaneously, the Company developed a smart triage solution tailored for outpatient waitingscenarios. By reducing patient wait times, in-hospital travel time, and intermediary process steps, theCompany tapped into its expertise in algorithms and big data models to cover scenarios from patientadmission to discharge, appointment scheduling to treatment, and from waiting areas to examinationrooms. Optimal treatment paths were matched using algorithms, and guidance for patientconsultations was provided through navigation screens and smart terminals in various scenarios,further enhancing the service quality of hospitals.For instance, through collaboration with a 3A hospital in Hunan province, the Companyconstructed an intelligent medical and nursing intercom system. It ensured data security in a large-scale network environment during construction and usage, customized and upgraded isolationbetween various wards as per requirements, facilitated effective information exchange amongmedical staff, patients, and management personnel, and achieved refinement in the hospital'sgeneral and surgical wards. This initiative served as a model for digital ward construction in thehospital.? Park management: Harnessing AI as the core to build digital headquarters and smartparks, giving strong support to enterprisesAs the physical foundation and space for digital operations and smart city development, theintelligence level of park management directly impacts corporate operations and management. Withthe continuous advancement of technologies such as AI and smart IoT, the Company has beenexpanding the scope of its smart park business from traditional security surveillance tocomprehensive digitized park solutions. This expansion has achieved the transition from single-scenario coverage to collaborative coverage across multiple scenarios and businesses, and madethe improvement from peripheral operations to the core park management operations. The overallpark solution covers a comprehensive range of smart applications, including intelligent accesscontrol, smart office, intelligent meetings, digital energy consumption, and smart park managementservices. This approach facilitates multidimensional connections between architecture and the city,environment and office, culture and leisure, creating a cohesive and warm intelligent architecturalecosystem. Additionally, leveraging the park's intelligent brain, the integration of digital infrastructureand park management is deepened, establishing a benchmark park that is "smart, efficient, safe,and green."
Taking the five-dimensional integrated smart headquarters building in Zhangzhou, FujianProvince as an example, the Company has provided the following significant value propositions for
customers:
Low Energy Consumption: Centering around "source, grid, load, storage, charging, andmonitoring," the Company actively promotes energy saving and emission reduction, aligning with thedual carbon goals and effectively reducing energy consumption in the buildings.Smart Office Solutions: Leveraging intelligent connectivity throughout the park, the Companyoptimizes the working and meeting experiences for employees, unlocking the value of physicalspace.
Efficient Access Control: The Company manages complex permissions and pedestrian-vehicleaccess with a comprehensive management architecture, thereby reducing administrative costs.
Intelligent Security Systems: Integrating intelligent scheduling, the Company establishes aproactive three-dimensional security and control system, efficiently addressing potential risks andenhancing security efficiency.
Efficient Operations: Using digital twin to build the park's "brain", the Company creates a holisticclosed-loop business system characterized by online resources, intelligent business, and data-drivendecision-making, thereby enhancing park management efficiency.
? More industries: The Company is committed to engaging with various industries
under policy guidance and driven by the inherent needs of customers, activelyparticipating in the development of emerging opportunities across different sectors.
In the cultural and tourism industry, the Company responds proactively to the requirements ofemphasizing the digitalization of cultural relic protection efforts as outlined in the Cultural RelicsProtection Law. The Company's offerings include smart museums, intelligent cultural relicsmanagement (including preventive protection, digital preservation, warehouse management, andintelligent conservation), and cultural heritage protection (covering immovable cultural relicprotection, preventive protection of cultural relics and historical sites, and AI-assisted cultural relicprotection), thereby making significant contributions to the digitization of cultural heritage protectionefforts.
In the financial sector, the construction of smart branches goes beyond traditional securityservices, focusing on empowering branch services through digitalization. The Company incorporatessolutions such as screen display systems, intelligent electricity usage, and video twinning, coveringsix major scenarios: comprehensive reception, product release, interactive marketing, non-cashservices, wealth management, and convenience services. This comprehensive approach aims toelevate service standards and enhance user experience across all branches.
Construction industry: The Company actively engages in affordable housing construction,focusing on the operational management of affordable housing. Through the implementation of"water meter, electricity meter, and door lock", the Company achieves effective management ofhousing resources, beneficiary management, allocation management, and post-management(including occupancy, lease, lease renewal, interviews, coordination, subsidies, etc.). Additionally,leveraging general park capabilities, the Company facilitates on-site and property management,
assisting customers in enhancing operational efficiency and increasing regulatory transparency.
4.1.3 SME Businesses
For small and medium-sized enterprises (SMEs), amidst the ongoing economic recovery in2023 and gradual market revitalization, the Company proactively adjusts its channel strategies.With a core focus on boosting channel confidence, the Company actively engages in market ordermanagement, expands services to lower-tier markets, and establishes a presence in e-commerce.Faced with the business characteristics of a "broad but fragmented" channel market, the Companyrelies on "video + IoT" multidimensional intelligent applications to develop intelligent commercialproducts and solutions for SMB customers. This approach aligns with the Company's philosophy of"making society smarter and life better."
(1) Broadening channels for comprehensive business outreach
With the continuous growth in demand for intelligent applications within the IoT industry, theCompany leveraged its profound expertise in video-centric IoT technology, coupled withoutstanding capabilities in hardware integration, AI technology, and scenario solution integration,and successfully launched solutions of multiple intelligent scenarios tailored for SMEs. Thesesolutions aim to delve deep into segmented markets across various industries, catering to specificproduct demands while significantly enhancing the competitive advantage of terminal serviceproviders. Given the highly fragmented nature of the market, the key to success lies in improvingmarket both in width and depth. Therefore, the Company's SMB business not only focuses onexpanding market coverage and deepening market penetration but also prioritizes the expansion ofonline channel operations and the establishment of a robust service provider system.
(2) Market layout and leading product strategy
In the smart hardware industry, the Company meticulously plans the market distribution ofthree core sectors: security, telecommunications, and IoT applications. In the security sector, theCompany has launched three flagship series: Dahua Classic, Dahua Superpower, and DahuaSpecial. These series, by refreshing the brand image, comprehensively showcase the value andmarket competitiveness of the Company's security products to partners. In the digitalcommunication sector, the Company has strategically positioned itself with offerings in switchesand wireless network products, particularly its PoE switches which, boasting extended powersupply distances and intelligent power supply technology, demonstrates Dahua's extensiveresearch and technological expertise in this field accumulated over years. In the IoT applications,the Company's product line covers access control systems, pedestrian passage gates, vehiclebarriers, conference tablets, public broadcasting systems, fire equipment, and smart chargingstations. All these showcase the Company's steadfast commitment to delivering high-qualitysolutions and pursuing market growth in the realm of smart IoT.
Regarding the application of cloud computing and AI technologies, the Company hasintroduced intelligent networking solutions tailored for SMBs on the basis of the cloud
interconnection technology. This includes the highly acclaimed super MAX series of precisionsearch products, which have garnered widespread recognition and praise from customers.
(3) Strengthening the digital marketing system for channels and advancing the digitaltransformation of partners
The Company's SMB business not only focuses on horizontally expanding market coverageand vertically deepening market penetration but also prioritizes the expansion of online channeloperations and the establishment of a robust service provider system. By activating channels andestablishing a digital marketing system centered around "Dahua Cloud-Ecommerce," the Companyis dedicated to propelling the digital transformation of its partners. Simultaneously, it providessupport for "smart business" initiatives to partners, thus continuously expanding the network ofprofessional domain partners. This strategic approach not only further taps into the potential of theSMB market but also ensures a significant enhancement in business efficiency and marketinfluence.
4.1.4 Operator Business
4.1.4.1 Business Overview
With the innovation of new-generation information technology, the release of the top-levelplanning for Digital China, and the surge in demand for digital intelligence in the market, a wave ofdigital economy is sweeping through. As a capability provider and service provider of smart IoTinfrastructure and scenario-based solutions, the Company leverages the operators' advantages incustomer scale, 5G, AI, computational power network, big data, capability mid-end platform,security, etc. Through resource sharing and complementary advantages, the Company and itspartners jointly expand the market with an open mindset, co-create products, and load operationalservices, forming a new growth curve for mutual benefit and win-win cooperation.
4.1.4.2 Core Strategy
(1) Capability complementarity to forge new information infrastructure The Companypossesses leading technologies and intelligent manufacturing capabilities in fields such as visualIoT and connectivity, collaborating with operators' computational power network capabilities.Together, they create deeply customized industry products such as AI terminals and integratedindustry applications.
(2) Technological complementarity to build core technical capabilities The Company andits partners jointly build core capabilities such as foundation models and big data, promoting thetransformation of traditional communication services into digital and intelligent services andcreating new business models and growth points. Leveraging its own video capabilities, theCompany assists in the construction of operators' video IoT platforms by facilitating videoconvergence access, capability platform construction, AI scenario implementation, and applicationdevelopment expansion.
(3) Resource complementarity to accelerate industrial digital development With theconstruction of Digital China and the development of the digital economy, the extraction of datavalue, and the digital intelligence transformation and upgrade of government and enterprise, theCompany possesses a strong R&D team and business innovation capabilities, while operatorshave vast user resources and channel advantages. Both sides engage in deep cooperation inindustries such as social governance, smart transportation, education and tourism, naturalresources, industrial manufacturing, mining, and energy, jointly expanding and exploring newopportunities.
4.2 Oversea Business
4.2.1 Business Overview
Since 2003, the Company has implemented the "Go Global" strategy to enter internationalmarkets. Starting from 2008, it intensified efforts to strengthen its independent brand bycomprehensively deploying channel construction, technical support, and after-sales service toensure the healthy development of overseas business. In recent years, leveraging accumulatedexperience in the domestic market, coupled with increased investment in research anddevelopment and technological innovation, the Company has continuously improved its overseasbusiness in product competitiveness, solution capabilities, and localization service levels. It hasshowcased professional quality and excellent service to global customers, resulting in thecontinuous enhancement of brand value and laying a solid foundation for the acceleratedexpansion of the Company's overseas business. At present, the Company has established 69overseas subsidiaries in major countries across all continents, with its products and servicescovering over 180 countries and regions globally. With the continuously growing demand in theglobal smart IoT industry, the Company will continue to accelerate its pace, actively improve globalmarketing and service construction, and further explore international markets.
4.2.2 Core Strategy
(1) Establishing professional localized operational organizations
The Company maintains a prudent business strategy, continuously strengthening itsunderstanding and adaptability to the regulatory, political, and economic environments of regionswhere it operates. Tailored country-specific business strategies are formulated under the principleof "one country, one strategy". By actively recruiting local talents through continuous investment inchannel penetration, expansion of business with integrators, breakthroughs and replication invarious industries, and exploration of new business lines to build professional and diversifiedorganizational teams, the Company endeavors to adapt products and solutions to local needs,thereby consistently providing efficient, professional, and nearby services to frontline customers.
(2) Establishing an efficient supply and service system
To establish an efficient supply service system, the Company has set up six regional-levelsupply centers in Europe, Southeast Asia, the Middle East, Latin America, and other regions.Additionally, it has established national warehouses in key countries globally, creating a three-tieredsupply system of headquarters, regional supply centers, and national warehouses to enhanceglobal supply delivery capabilities. In terms of service systems, the Company has established suchglobally integrated systems as delivery system, technical support system, operation andmaintenance management system, customer service system, and training and certification system.It has established over 100 overseas service sites, with more than half of the countries directlyproviding overseas hotline services, significantly improving global service and delivery capabilities.
(3) Broadening and enriching innovative business categories
Leveraging its years of technical expertise and exploration in the smart IoT field, and incollaboration with upstream and downstream partners, the Company is bringing the latestdigitalization products, solutions, and technological concepts from China to various regionsworldwide, catering to differentiated scenarios and demands overseas. As a prominentrepresentative of digitalization enterprises venturing into international markets, the Company hascontinuously invested in technological innovation and product research and development,consistently improved its service system, and gradually enhanced its localized operationalcapabilities, all of which contribute to maintaining the Company's leading position in overseasmarkets for products and solutions. While traditional video businesses maintain steady growth,innovative businesses such as commercial displays, access control, alarms, and intercoms are alsoexperiencing rapid development, meeting the diverse business and scenario needs of differentcountries and regions overseas.
(4) Providing complete scenario-based solutions
In recent years, the Company has actively expanded vertical industry markets worldwide incollaboration with partners, providing comprehensive scenario-based solutions for industries suchas safe cities, intelligent transportation, retail, education, energy, and manufacturing. Particularlynoteworthy are the numerous successful implementations in digital urban governance, intelligenttraffic management, ecological environment protection, and digitalization of education. Forinstance, at the southernmost tip of the Earth, the Company's smart IoT solutions silently safeguardthe Antarctic penguins in extreme cold environments. In many regions including the Middle East,Latin America, and the Asia-Pacific, the deployment of the Company's intelligent trafficmanagement systems has led to a gradual decrease in traffic accident rates and improved roadefficiency, ensuring smoother traffic flow and enhanced travel efficiency. Simultaneously, theCompany's digitalized education solutions have contributed to the digitalization upgrade ofeducation in some overseas regions, enabling excellent educational resources to reach remoteareas and promoting the remote sharing of teaching resources and educational equity.
4.2.3 Social Value Practice
(1) Providing a multicultural integrated platform for international talent developmentThe Company's localization rate of overseas employees has exceeded sixty percent, with overhalf of the workforce sourced from talent pools in the respective countries of operation. On onehand, they contribute significantly to the localized operations of the Company. On the other hand,by employing them, the Company continually contributes to the local employment condition in theform of nurturing high-tech professional talent. The Company prioritizes the growth anddevelopment of its global workforce, continuously enhancing employee skills through knowledgetraining, enriching welfare systems, and providing promotion opportunities. It is committed tooffering a fair, just, and high-quality growth system and platform for all employees worldwide.
(2) Implementing the "dual carbon" strategy to support green developmentAdhering to sustainable development is a reflection of the Company's social responsibility andcommitment. The Company actively carries out innovative green design for products, reducesproduct energy consumption and promotes green expansion and business upgrading in the globalmarket through clean technologies. All smart IoT solutions are designed to be intelligently energy-saving and emission-reducing to promote global green solution applications, thus reducing globalcarbon emissions. For instance, the Company provides solutions in various fields such as smartsupervision of natural reserves, water conservancy monitoring, and forest fire prevention, activelyparticipating in and promoting sustainable development. Leveraging digital intelligence to empowerenvironmental protection and green development, the Company contributes to building a better andgreener world. In 2022, being recognized as a national-level green supply chain and green factory,the Company was honored with the title of "Leading Green Enterprise." In 2023, the Companybecame a member of the United Nations Global Compact organization, making its own contributionto the realization of United Nations sustainability goals. In the same year, the Company achieved asilver rating in the global sustainability assessment conducted by the authoritative sustainabilityrating agency EcoVadis, ranking among the top 15% of global enterprises.
4.3 Innovative Business
In recent years, the boundaries of the smart IoT industry have been continuously expanding.Based on a deep understanding of diverse customer demands and years of accumulated expertisein the field of smart IoT, the Company remains committed to expanding innovative businessventures in the industrial IoT sector, aiming to provide customers with more comprehensive andenriched solutions. The Company has been looking for fields with great growth potential andenormous market size, and has developed innovated business through talent selection andcorresponding incentive mechanism. The rapid development of innovated business has greatlybroadened the channel of the Company's smart IoT, which is an important driving force for theCompany to keep moving forward at a high speed. The Company's current innovative businessesinclude machine vision and mobile robots, smart living, thermal imaging, automotive electronics,
smart security inspection, smart fire protection, and storage media.
4.3.1 Machine Vision/Mobile Robot
The Company's subsidiary, Zhejiang HuaRay Technology Co., Ltd. (hereinafter referred to as"HuaRay Technology"), primarily engages in the research, development, production, and sales ofcore components for machine vision and mobile robots. Additionally, HuaRay Technology providescustomized industry solutions to downstream customers. Driven by technological innovation,HuaRay Technology assists customers in constructing digitalized workshops, fostering smartfactories, and enhancing manufacturing intelligence. HuaRay Technology remains steadfast inaddressing customer needs, aiming to reduce costs and create more value, thereby makingproduction more intelligent and operations more efficient.As a national high-tech enterprise, HuaRay Technology consistently upholds a commitment totechnological innovation, particularly in embedded software, image optimization, recognitionalgorithms, network transmission, navigational positioning, scheduling, and motion control. HuaRayproducts and solutions have been widely applied across industries such as lithium batteries,photovoltaics, logistics, and 3C. HuaRay machine vision products primarily comprise 2D industrialcameras, 3D industrial cameras, smart cameras, intelligent code readers, and acquisition cards.Coupled with the Company's independently developed MVP (Machine Vision Platform), theseproducts can be used in various scenarios such as code reading and recognition, defect detection,measurement, and positioning, providing customers with a one-stop service from product to visualsolution. The mobile robot lineup primarily includes various types of industrial mobile robots, such aslurking lifting, fork-type, and transfer-type robots. Leveraging its independently developed RCS(Robots Control System) and iWMS (Intelligent Warehouse Management System), HuaRay offersapplications in transportation, stacking, and towing. With technological expertise in machine visionand mobile robots, HuaRay Technology is capable of providing solutions to multiple key industries.Also, HuaRay Technology continues to explore new terminal application scenarios, assistingcustomers in improving quality and efficiency, reducing costs and inventory, ultimately achieving"interconnection, human-machine collaboration, data-driving, intelligent transformation,"empowering various industries and driving the development of a new form of global intelligentmanufacturing.
4.3.1.1 Machine Vision
In 2023, HuaRay Technology launched a series of new machine vision products, including 150MP large plane array cameras, 8K line-scan cameras, dual Full Cameralink acquisition cards, andintelligent code readers. The resolution of these products ranges from 0.3 MP to 600 MP, and theysupport interfaces such as GigE, USB, CameraLink, 10GigE, and CoaXPress. In the aspect ofmachine vision hardware products, HuaRay Technology has transitioned from providing industrialcameras alone to supplying core components and solutions of machine vision. The product seriescover plane array cameras, line array cameras, 3D cameras, smart cameras, code readers,acquisition cards, lenses, and lighting sources, offering comprehensive solutions for visionintegration.
During the reporting period, HuaRay Technology released the MVP (Machine Vision AlgorithmPlatform) V4.0 and the MVT (Machine Vision Training) Platform V3.0.
Developed independently by HuaRay Technology, the MVP aims to provide customers withalgorithmic tools for rapidly building vision applications. The platform integrates over a thousandproprietary basic image algorithms and serves as the "brain" of machine vision. It connectscameras with programmable logic controllers, robotic arms, and other devices to help form atechnological closed loop for perception, cognition, and decision-making. Simultaneously, theplatform combines deep learning algorithms for industrial component visual image perception,cognition, and decision-making training. It establishes big data detection models capable ofachieving high-precision, high-efficiency functions such as visual positioning, image recognition,and defect detection. With a GUI visualized interface, users can freely build vision processesthrough drag-and-drop, swiftly configuring vision solutions. It supports multi-task synchronizationand multi-process asynchrony, offering a rich set of communication interfaces to meet the efficientuse of multiple products. The MVP algorithm platform provides an open deep learning interface,supporting the inference application of AI models.
HuaRay Technology's MVT is an industrial AI vision platform based on deep learning, providing
customers with end-to-end full-process services to efficiently and cost-effectively construct an"industry brain." The platform integrates sample annotation, sample augmentation, and modeltraining, with built-in neural network models including classification, detection, semanticsegmentation, character recognition, and more. Each type of task supports large, medium, andsmall models to meet the diverse feature detection requirements in complex industrialenvironments. Through MVT training models, it can be easily loaded into the MVP Machine VisionAlgorithm Platform and flexibly combined with other arithmetic operators. Simultaneously, MVToffers various application scenarios including traditional learning, deep learning, and thecombination of traditional solutions and AI, significantly enhancing the generalization and versatilityof the algorithm platform products to meet the practical usage demands of various industries.
4.3.1.2 Mobile Robot
In 2023, HuaRay Technology launched a new generation of lurking robot series products,offering faster deployment and maintenance, higher operating accuracy, and a load range covering60Kg, 600Kg, 1000Kg, 1500Kg, 2000Kg, and 3000Kg. These include 5G communication-enabledforklifts, reducing control latency and expanding operations from indoor to outdoor environments. Itachieved laser SLAM navigation, visual navigation, inertial navigation, and multi-sensor fusionnavigation, compatible with visual obstacle avoidance and TOF stereo obstacle avoidance.Accompanied by a rich variety of network systems and intelligent charging systems, the productshave been successfully applied in multiple industries such as 3C, lithium batteries, andphotovoltaics.HuaRay Technology's independently developed RCS mobile robot dispatching systemintegrates intelligent dispatching algorithms. Based on the algorithms of autonomous navigation,high-performance cluster scheduling, trajectory planning, perception and recognition, motioncontrol, intelligent electronic control, high-precision intelligent electronic drive, and intelligentelectronic control, it achieves ultra-large-scale map construction and millisecond-level pathplanning, supporting optimal allocation of thousands of concurrent tasks and multi-server clusterscheduling. This enables functions such as multiple robot cluster path planning, collision avoidancecontrol, robot traffic management, intelligent task allocation, multi-vehicle avoidance, traffic balancecontrol, system load balancing, intelligent charging management, safety monitoring, warehousemanagement, intelligent operation and maintenance management, and report statistics.Additionally, HuaRay Technology has introduced the iWMS intelligent warehouse managementsystem, based on the RCS mobile robot dispatching system. It realizes various operationalscenarios such as goods-to-person sorting, point-to-point transportation, full-in full-out, andautomatic sorting, thereby reducing labor costs and improving operational efficiency. Variousconfigurable strategies, including putaway strategies, allocation strategies, wave picking strategies,mixed placement strategies, etc., are employed to meet the business needs of different industriesand customers. Combined with algorithmic analysis such as material correlation analysis, shelfusage rate analysis, popularity analysis, document clustering analysis, hit rate analysis, and dense
storage reorganization analysis, they have enhanced inventory management and businessprocesses.
Leveraging its years of accumulated AI technology expertise in the industrial sector and itsestablished ecosystem of industrial IoT, HuaRay Technology steadfastly upholds a commitment totechnological innovation and accumulation, continually delivering higher-quality products and morespecialized services to global customers. This dedication aids in industrial digitization, positioningitself as an expert in improving industrial intelligence efficiency.
4.3.2 Smart Living
Huacheng Network focuses on the intelligent home sector with visual technology as its core.Leveraging AI capabilities and digital platform prowess, Huacheng Network has established fourmajor product systems: "IMOU Security, IMOU Interconnection, IMOU Robots, and IMOU Lighting."These systems offer top-tier intelligent home products and services, including smart cameras,smart door locks, home service robots, and routers, to millions of households and businessesworldwide. Huacheng Network is dedicated to ensuring that every household enjoys a moreconvenient and secure smart lifestyle.
As of 2023, IMOU Cloud had experienced rapid growth in both global AIoT device connectionsand user numbers. Overall, AIoT device connections had increased by over 25%, while global userregistrations had grown by more than 35%. The monthly active user count on the IMOU Cloudplatform worldwide had exceeded 17 million.
4.3.2.1 Core Technologies
Huacheng Network has always adhered to a user-centric approach, responding to user needsand fostering independent technological innovation. By integrating resources and capabilities suchas cloud computing, big data, cloud storage, and AI, Huacheng Network has built a video-centricIoT cloud platform known as the IMOU Cloud platform. Significant research achievements havebeen made in AI algorithm technology, audio-video processing technology, cloud platformtechnology, and low-power consumption technology. As of December 2023, Huacheng Network hadbeen granted over 50 invention patents.
In the field of smart home products, Huacheng Network focuses on the intelligent upgrade andtransformation of various household devices, integrating smart technology into its products. Thisincludes a focus on general capabilities of devices such as visual analysis, visual interaction, andmultimodal correlation, continually iterating on technologies such as visual-text correlation, inter-frame object correlation, action recognition, multidimensional perception, multi-camera vision,comprehensive low-power consumption, and image adaptation. Specialized smart technologyrevolves around Huacheng Network's four key smart home product categories, including cameraadaptation to home environment, smart lock structure and applications, sensor control devicecapability expansion, and robot control and applications.
In the IoT cloud platform business domain, IMOU Cloud constructed a digital framework
targeting products and users in 2023. Huacheng Network uses physical models to define smarthardware digitally, continuously accumulating and precipitating data around the entire productlifecycle, refining digital capabilities to achieve a seamless connection and feedback loop betweenproducts and users, thus establishing continuous, feedback-driven digital operational capabilities.
4.3.2.2 Major Products and Services
Based on its own technological advantages in AI algorithms and digital intelligence, HuachengNetwork focuses on user-centricity, continuously iterating to meet the diverse product needs ofconsumers in home scenarios, and has fully deployed IMOU smart home products.
IMOU Security: This contains categories such as home surveillance cameras, smart doorlocks, smart doorbells, and smart peepholes. Through continuously upgrading its vision-centeredsmart home security system, IMOU provides comprehensive protection for household safety. In2023, Huacheng Network launched the dual-lens series home surveillance cameras and indoorcameras with interactive screens. Additionally, outdoor battery-powered PTZs were launched,enriching the range of home surveillance camera products. Across the board, wireless technologyhas transitioned to Wi-Fi 6, with mid-to-high-end series supporting Bluetooth networking. Whilemeeting the rigid demands of home security, innovative enhancements have been made to improvethe user experience and richness of smart home usage.
Smart door locks: In 2023, a brand-new Spark series video lock product was developed, withcontinuous upgrades in visual basic capabilities and multidimensional perception capabilities. Corefunctions such as door opening and recognition have been significantly improved. Continuousinvestment in visual AI has led to the introduction of functions such as child departure detection,package detection, and package guarding. The accuracy of alarm security systems for loitering,coercion, high temperature, and illegal users has been enhanced. Additionally, services such as 24-hour video monitoring, call services, and intelligent weather services are provided.
IMOU interconnection: This category comprises network transmission products such as
wireless routers, wireless relays, and wireless network cards. In 2023, targeting both domestic andinternational sales channels, IMOU formed a product system featuring various specifications ofrouters including Wi-Fi 4, Wi-Fi 5, and Wi-Fi 6. Simultaneously, IMOU routers, in conjunction withIMOU IPC (Internet Protocol Camera), facilitated seamless and rapid networking, and acceleratedmonitoring data transmission. While providing consumers with a stable wireless networkexperience, IMOU routers also enable unique functionalities when paired with other IMOU smarthome products.
IMOU robots: In 2023, further enhancements were made to the product lineup, achievingcomprehensive coverage with editions including charging dock edition, dust collection edition, andall-in-one self-cleaning edition. Through optimizations in core algorithms such as navigation,recharging, and repositioning, along with product design enhancements, IMOU has significantlyimproved key performance indicators of robotic vacuum cleaners including mapping efficiency,recharging efficiency, repositioning efficiency, cleaning and dust removal rate, and coverage.IMOU cloud platform: Tailored for ordinary consumers, IMOU Cloud offers personalized,scenario-based paid value-added services including intelligent cloud storage, cloud space, hybridcloud recording, online monitoring, elderly care, telephone reminders, and device sharing. Theseservices are primarily focused on optimizing user experience around core functions such as devicepreview, video playback, device addition, voice intercom, and smart scenarios. In 2023, based onthe usage and consumption habits of overseas users, and considering the differentiated scenariosin different overseas regions, IMOU further consolidated its value-added service system for IMOUProtect membership. Overseas value-added services were expanded and extended, currentlycovering most major countries where cloud services are provided.For enterprise developers, IMOU Cloud provides an open software and hardware platform. Theopen software platform offers third-party partners video-centric PaaS capabilities, providing IoTbasic access capabilities, video AI capabilities, and big data analysis capabilities. The openhardware platform facilitates the rapid integration of third-party ecological products through SDKs,IoT modules, video modules, Zigbee gateways, and other means, making it easier for morecustomer products to connect to IMOU Cloud. At present, IMOU Cloud has more than 10,000 third-party partners all over the world, and has established an open, sharing and cooperative IoTecosystem.Huacheng Network will continue to deepen its focus on users, with video technology as thecore, emphasizing home security. The aim is to ensure clear, inclusive, and accurate visibility forsafety. Additionally, efforts will be made to further enhance AI algorithm capabilities and digitalplatform capabilities, providing global consumers with richer and higher-quality products andservices.
4.3.3 Thermal Imaging
Our subsidiary Pixfra Technology takes thermal imaging as its core technology and provides
movements, modules, complete products, vision products and complete solutions worldwide. TheCompany focuses on the design, R&D, production, sales and technical services of thermal imagingpan-security equipment, industrial temperature measurement and business vision products. Itsproducts and solutions are widely used in numerous fields such as industrial temperaturemeasurement, biological temperature measurement, natural ecology, new energy, carbon neutrality,perimeter security, outdoor sports, smart elderly care, and consumer electronics. The Company isdedicated to sensing the world with temperature, by developing cutting-edge thermal imagingproducts and solutions to serve customers worldwide.
In 2023, Pixfra Technology completed the integration of its parent company's existing thermalimaging business, continuing to solidify its technological foundation. The Therm ISP and SmartThermal, two major technological pillars, were upgraded to version 4.0, further enhancingtechnological competitiveness. Additionally, a series of new products were released, accompaniedby continuous penetration into segmented industries and markets and the introduction of novelsolutions.
4.3.3.1 Technological Innovations
Pixfra Technology continued to reinforce its technological foundation in 2023, maintaining itsleading position in core technology within the industry. The core imaging technologies, Thermal ISPand the Smart Thermal algorithm family, were upgraded to the 4.0 era. In ISP 4.0, breakthroughswere achieved in algorithms such as continuous clarity throughout zooming, super-resolution, gasimage enhancement, and image adaptive adjustment, ensuring sustained leadership in the field ofimaging. Smart Thermal 4.0 incorporates intelligent algorithms for tracking vehicles, ships, humantargets, aircraft, radar-linked tracking, and fire prevention against false alarms, thereby enhancingthe intelligence level of thermal imaging product applications.
4.3.3.2 Product Breakthroughs
In terms of products, Pixfra Technology continues to maintain its leadership in the security fieldby continuously developing new products. In 2023, it released a newly designed multidimensionalperception spherical PTZ camera, which features a spherical, low-drag exterior and acomprehensive corrosion-resistant design, demonstrating strong adaptability to variousenvironments. Particularly suitable for large-scale perimeter scenarios, this product ensures normaloperation under conditions of ultra-low temperatures, strong corrosion, high altitudes, and highwind speeds, thereby enhancing the Company's competitiveness in the field of long-range largeperimeters.
Building upon its foundation in the security sector, Pixfra Technology also continues to expandinto new product forms and application areas. In the outdoor sports sector, it has introduced avariety of telescopes, short-range sights, and tube sights, achieving a comprehensive layout ofmainstream products and laying a solid foundation for continuous breakthroughs in business. In thethird-party integration field, a series of module products such as network cores and miniaturizeddigital cores have been launched to continuously explore integrated customers, expand businessscope, and contribute proactive efforts to the thermal imaging ecosystem. Targeting areas such asindustry, energy, electronic maintenance, and scientific research, Pixfra Technology has released aseries of handheld thermal imaging thermometers, further enriching its product portfolio.
4.3.3.3 Penetration into Segmented Industries
In 2023, Pixfra Technology focused on segmented scenarios, explored customer needs,
enhanced application effectiveness, and actively expanded the boundaries of thermal imagingapplication industries and scenarios. Pixfra Technology focused on high-potential thermal imagingapplication industries and segmented scenarios, conducting in-depth research into thecharacteristics of industries such as petrochemicals, steel smelting, industrial manufacturing, andnew energy. It analyzed the specific production processes of each industry, summarized thesegments in which thermal imaging products could be applied, and developed standardizedprofessional solution promotion materials, aiming to provide better products and solutions for theexpansion and promotion of the thermal imaging market.
4.3.4 Automotive Electronics
The Company's subsidiary, Hirige, specializes in intelligent automotive electronic products andsolutions. Fully leveraging its core technologies and product advantages in areas such as videoperception, AI, and digital IoT, Hirige is committed to providing comprehensive intelligent drivingproducts and services to both domestic and international customers in the passenger andcommercial vehicle sectors. Its main products include in-vehicle full-range cameras, in-vehiclemillimeter-wave radar, intelligent driving domain controllers, and systems, with comprehensivecapabilities in hardware, software, algorithm, and system research and development testing, aswell as lean manufacturing capabilities.
4.3.4.1 Passenger Vehicle Market
The passenger vehicle product lineup includes in-vehicle cameras, millimeter-wave radar,intelligent driving domain controllers, and the Hi-Pilot intelligent driving system. Hirige possessescomprehensive capabilities in hardware, software, algorithm, and system research anddevelopment testing, as well as manufacturing capabilities. Hirige has established deepcollaborations with multiple major OEMs, enabling the mass production of L2+ driver assistancesystems and intelligent parking systems.
Hirige has been consistently dedicated to cultivating partnerships with leading domesticpassenger vehicle brands. It has officially mass-produced fully automated parking products, driverassistance systems, and 1R1V products based on the fusion of visual and ultrasonic radartechnologies. These achievements have led to project appointments and mass productiondeliveries to numerous automotive manufacturers. Hirige will continue to increase its investment inintelligent driving sensors, algorithms and system products, give full play to the technicaladvantages of automotive electronics based on vision, ultrasonic and millimeter-wave radarintegrated with perception, and release more competitive solutions on intelligent driving andintelligent cockpit.
Hirige incorporates cutting-edge intelligent driving technology into the factory-installed market,introducing a forward-looking assisted driving solution. Among these offerings are the entry-level,cost-effective L2 driving solution 1V, which includes active safety features such as AEB and L2
ADAS functionality, while also supporting adaptation to overseas market regulations. Additionally,the mid-range, high-cost performance driving solution 1R1V provides stable and reliable single-laneassisted driving capabilities. For flagship configurations, the ultimate cost-effective L2+ drivingsolution 5R1V supports advanced features like highway driving without visual cues (NOA), blindspot detection, and front/rear cross-traffic detection, meeting the 2024 five-star rating criteria set byC-NCAP. In addition, Hirige has launched a lightweight driving-parking integrated solution, thusproviding a more adaptive version of intelligent driving products for the intelligent system ofautomobile enterprises. The solution realizes more complex and reliable driving-parking integratedfunction, supports active safety, HWA highway assisted driving, and intelligent parking assistedAPA, and gets ready to upgrade to a higher level intelligent driving system in the future.
In the field of intelligent cockpit, Hirige determines the shifting of development orientation fromcockpit safety system to cockpit interactive system and cockpit health system. The mass productionof all kinds of vision sensors in the cockpit has been achieved, and intelligent algorithms in thecockpit have been released to realize driver fatigue detection, dangerous driving behaviorrecognition, gesture and emotion recognition, heart rate detection and other functions. Meanwhile,360 circumnavigation algorithm has also been released in view of the performance improvement ofvehicle and engine. Hirige supports algorithm migration and adaptation for various platforms,including Qualcomm's 8155 and 8295, assisting customers in creating intelligent cabins withdistinctive features to enhance the driving and riding experience within the vehicle.
With the accelerated improvement of intelligent driving function, products of Hirige have madeadvance in development by leaps and bounds. In the field of visual sensors, Hirige has achievedthe release and application of products with different resolutions for panoramic, front-view, andsurround-view capabilities. These products have been integrated into many leading domestic OEMmanufacturers with mass production, effectively increasing market share and laying a foundationfor further market expansion. In the field of millimeter-wave radar, in line with the trend of domesticproduction of automotive radar, Hirige increased investment to introduce fourth-generation forwardand blind spot radars with superior performance. Additionally, Hirige has expanded productcoverage with newly developed in-cabin radars and door collision prevention radars.Simultaneously, Hirige has initiated research and development into imaging radar, laying thegroundwork for rapid growth in the future.
4.3.4.2 Commercial Vehicle Market
At present, the stock of commercial vehicles in China exceeds 20 million. A large number ofcommercial vehicle resources carry a large number of passenger and freight besides aviation,railway and water transportation, making commercial vehicles closely related to people's productionand life. However, safety problems such as traffic accidents, casualties and cargo damage havebecome increasingly prominent, and major traffic accidents have been reported frequently. Afterspeeding and fatigue driving, traffic accidents caused by blind areas of vision have significantlyincreased. Front-vehicle collision alarm, lane departure alarm, fatigue driving alarm and drivingbehavior analysis have gradually become the standard configurations of active safety advancedauxiliary driving construction projects of commercial vehicle all over the country. Hirige has deeplystudied vehicle operation scenarios, combined with the actual vehicle operation environment, andconducted in-depth exploration in the effect and efficiency of the algorithm, so as to further improvethe performance of the product system and realize the factory-installed and after-market-installedintelligent vehicle solutions through active safety products, auxiliary driving products, 360-degreepanoramic view system and other product systems, and intelligently empower commercial vehicles.At present, the solution has been widely applied in the freight logistics, waste residue, "tourist bus,Class C or above passenger car, and special vehicle for the transport of hazardous chemicals,fireworks and crackers and civil explosives", public transportation, school buses, sanitation vehiclesand other fields, providing advanced automotive electronic products and solutions to the world.In 2023, Hirige made comprehensive efforts across various fronts in the commercial vehiclemarket. Domestically, apart from enhancing traditional solutions for public transportation, taxi-hailing services, and freight transport, Hirige expanded into emerging sectors such as sanitationand school buses. Hirige established benchmark projects like the Guangdong Sanitation,Hangzhou Public Transport, and Xiamen Heavy Cargo initiatives. Overseas, Hirige focused onpivotal sectors such as public transportation, law enforcement vehicles, school buses, and freighttransport, achieving sustained high growth in 2023 and anticipating continued opportunities forrapid expansion overseas in the next 2-3 years.
In 2023, Hirige's strategy in the commercial vehicle market involved deploying resourcesstrategically to target key industries. It introduced new national standards, 1R1V systems, EuroR151 regulations, and 360-degree surround-view systems in the factory-installed market, furtherenhancing its comprehensive services. In the categories of tourist bus, Class C or abovepassenger car, and special vehicle for the transport of hazardous chemicals, fireworks and crackersand civil explosives, heavy truck transportation, and freight transport, Hirige accelerated thecoverage and implementation of the new/old national standards trilogy (Ministerial StandardMachinery/ADAS/DSM) in accordance with local policy implementations. In the publictransportation sector, Hirige aimed for complete coverage from provincial to municipal levelsnationwide and advanced the comprehensive implementation of second-generation integratedpublic transportation solutions. This included dispatch management, active safety features, blindspot monitoring, 360-degree surround view, passenger flow statistics, illegal bus lane occupationdetection, pedestrian crossing monitoring, and electronic rear-view mirrors. In the taxi-hailingmarket, Hirige launched a full suite of products and capitalized on opportunities presented bynational regulations to capture a larger share of provincial capital markets.Hirige remains committed to investing in research and development for the commercial vehiclemarket, continuously aligning its investments with customer business needs. By refining productsand solutions to deliver high-quality, high-value solutions, Hirige assists customers in overcomingoperational challenges and enhances their satisfaction, contributing to the advancement of thetransportation industry.
4.3.5 Smart Security Inspection
Zhejiang Huajian Technology Co., Ltd., a subsidiary of the Company, centers on core videotechnology, AI, big data, and IoT. It is dedicated to becoming a leading provider of comprehensivedigital security solutions in China. Huajian Technology upholds a mission of "contributing to globaltranquility and enhancing peace of mind in daily life," focusing on innovative research anddevelopment in the areas of security checks, retail theft prevention, and airspace security. With therapid development of technologies such as artificial intelligence, big data and IoT, thesetechnologies have been deeply and innovatively integrated with the security check industry, andglobal users are in need of reliable, convenient and advanced smart security check equipment and
services, making security check intelligence usher in a new round of development opportunities.With IoT technology and AI analysis technology as the core, Huajian Technology promotes thereform and development of the security check industry, bringing new business opportunities andnew vitality to the industry.
4.3.5.1 Security Inspection Machines
In terms of products of security-check machine, Huajian Technology takes its own researchand development capability as the industry foothold, and continues to explore and innovate in thefields including intelligent view, substance identification, civil aviation standards and other securityproducts and technical standards representing the top level of the industry. Huajian Technologyindependently developed a new generation of image algorithm engine "Qingkong", which greatlyimproves the precision and hierarchy of the imaging picture of the security-check machine, andoptimizes the working environment of manual and machine judgment under the premise ofensuring the localization of components. Leveraging the advantages of AI deep learning training,Huajian Technology's security inspection machines not only accurately identify organic, inorganic,and mixed substances but also effectively recognize certain types of highly hazardous prohibiteditems.
4.3.5.2 Security Inspection Doors
With profound technical expertise and project experience in the field of security inspectiondoors, Huajian Technology discovers during its independent research and development processthat high-precision magnetic field technology combined with AI deep learning can precisely identifyprohibited items such as mobile phones and cutting tools. This technology aligns perfectly with themarket trend of "strict management of examination room order and recommendation of intelligentsecurity doors." In 2023, Huajian Technology pioneered the introduction of a matrix imagingmillimeter-wave security door domestically, enhancing precision in human body imaging detectionin China's sophisticated security landscape. In addition, in the field of fine metal identification,
Huajian Technology was the first to introduce the acceptance standard of half a paper clip to themarket, which has been widely recognized by customers.Huajian Technology places great emphasis on the value and innovation of its product solutionsin practical application scenarios. Tailored for industries such as rail transit, large-scale events,judiciary, hospitals, education, and logistics, it has launched products and solutions with strongindustry attributes, ensuring sustained high standards and multi-level competitiveness. In thefuture, Huajian Technology will continue to implement the strategic policy of taking market demandsas the guide and R&D as the core productivity, and move towards the high-end security checkmarket. The core components of security check, quick imaging millimeter wave, CT security checkequipment and civil aviation security check equipment will be the main R&D investment directionsin the future. Huajian Technology will make full use of its own technical advantages andcharacteristics to create a new generation of high-value security check equipment with uniquecharacteristics.
4.3.6 Smart Fire Protection
Wisualarm Technology is an advanced provider of fire protection products, solutions, andoperational services, with a focus on IoT, big data, cloud computing, video AI, and othertechnologies. It is dedicated to continuously enhancing fire safety for individuals, businesses, andgovernmental customers worldwide. By offering advanced fire protection products, comprehensivesolutions, and operational services across all domains, Wisualarm Technology aims to achieveearly warning, prevention, and control of fires and other disasters, thereby elevating the overalllevel of social fire safety.
4.3.6.1 Fire Protection Products
Wisualarm Technology focuses on the development of the fire protection industry andconsistently adheres to the development philosophy of driving market expansion throughtechnological innovation. In 2023, building upon the continuous iteration and enrichment of productlines such as smart fire protection, safe power consumption, special equipment, industrial fireprotection, and traditional firefighting, Wisualarm Technology further enhanced the integration ofvideo, AI, and big data capabilities in products such as integrated fire and security solutions,enterprise software platforms, and fire protection platforms. Wisualarm Technology continues to payattention to the development of overseas business, gradually releasing a variety of internationallycertified products. These offerings aim to provide overseas customers with more intelligent andsecure integrated fire and security products and solutions. Consequently, the brand has gainedincreasing recognition in various national markets and among customers globally.
4.3.6.2 Solutions
Wisualarm Technology addresses the pain points and practical needs of fire management
across various industries, continually deepening its application scenario design. With integrated fireand security capabilities at its core, it has developed three major categories of smart fire solutions:
networked supervision of fire safety, integrated management of fire and security for enterprises,and operational management of fire safety for small-, medium-, and micro-sized enterprise venues.In the government sector, Wisualarm Technology focuses on the social governance of firesafety at the district and township levels. It implements smart fire perception infrastructureconstruction in industrial enterprises, street-front shops, vulnerable groups, rental properties,warehouses, and high-rise buildings. This effort aims to establish a smart fire IoT supervisionplatform for government regulatory departments, enabling intelligent enhancement andvisualization of fire prevention and control capabilities across the jurisdiction.
Within the corporate domain, Wisualarm Technology primarily offers integrated managementsolutions for smart fire protection and security. It progressively expands application scenarios andintegrates traditional firefighting, smart firefighting, industrial firefighting, and smart security into asingle platform. The management platform gradually incorporates application modules such as shifthandover in control rooms, a comprehensive map of electrical safety, management of hot workoperations, mobile control rooms, and inspection of hidden dangers. For large enterprises,Wisualarm Technology develops comprehensive networked supervision solutions, implementing atwo-tier management architecture to facilitate the digital transformation of fire safety duringproduction, thus assisting customers in achieving intelligent upgrades.In the domain of small-, medium-, and mirco-sized enterprises, Wisualarm Technology offerscloud-based intelligent fire operational management solutions, containing functions such asoperational monitoring, fire maintenance, and hazard inspections. By leveraging third-partyoperational service units, Wisualarm Technology minimizes end-user investments, centralizing thescattered fire business of its customers for streamlined management. Additionally, tailored controlmodules are developed to address specific business scenarios such as gas safety and smartaging, enabling rapid and flexible responses to market demands.
4.3.7 Storage Medium
Zhejiang Huayixin Technology Co. Ltd. (Huayixin), a subsidiary of the Company, is aninnovative technology firm dedicated to the research, development, production, and sales ofstorage media products. With product lines including solid-state drives (SSDs), storage cards, USBdrives, portable SSDs, and memory modules, Huayixin's business focuses on various applicationscenarios such as end-consumer electronics, industrial control, in-vehicle monitoring, and videosurveillance.Against the backdrop of industrial development and upgrading, as well as a focus on industry-driven research strategies, Huayixin achieved significant breakthroughs in storage productresearch and technological innovation in 2023. Major strides were made in the development ofSSDs, storage cards, memory modules, USB drives, and portable solid-state drives (PSSDs).Particularly noteworthy were the launches of flagship products in the core SSD product line,including SSDs optimized for video surveillance and vehicle applications.
(1) SSDs
Huayixin focuses on the research and development of innovative SSDs, introducing the next-generation V800 series video surveillance disks tailored for the monitoring sector. These productsuse domestically produced controllers and storage chips, supporting the D.L.B.A intelligent
algorithm. They boast stable video writing performance, ensuring seamless recording withoutdropped frames for 24/7 surveillance, and seamless coordination with the underlying file system ofstorage products. Addressing the demands of the vehicle-mounted products market, Huayixinlaunches the domestically produced S820 series vehicle-mounted video surveillance SSDs,specifically designed for vehicle-mounted video surveillance scenarios. These products are suitablefor frequent vibration environments within the automotive industry.
(2) Memory products
The X4000 series DDR5 RGB products tailored for the gaming market support speeds of up to6800MHz and are compatible with XMP 3.0, enhancing the high-end product lineup. Additionally,catering to the general consumer market, the C600 DDR5 RGB memory module is introduced,boasting capacities of up to 32GB.
(3) U-disk products
Continuously rolling out a variety of mainstream USB 2.0/3.0 direct-insertion flash drives andhigh-speed dual-interface protocol solid-state USB drives, supporting capacities of up to 1TB,Huayixin meets consumers' diverse demands for high-speed and high-capacity storage solutions.
(4) Storage cards
Upgrading the existing surveillance series SD/Micro SD storage card solutions to support widetemperature operating environments, the S100/H100 series is highly durable across the board,catering to mainstream security surveillance and vehicle-mounted industry usage scenarios.
(5) PSSDs
Introducing the T70 and T80 series of mobile PSSDs based on the SATA and PCIe protocolsrespectively, with a maximum capacity of up to 2TB, Huayixin meets the diverse mobile storageneeds of different users.
Huayixin has vigorously strengthened its market promotion and marketing networkconstruction. While steadily developing channel markets, it actively expands industry markets,demonstrating remarkable performance in industries such as PCs, rail transit, vehicle-mountedproducts, industrial automation, security surveillance, cloud storage, cloud computing, andhealthcare. Simultaneously, a marketing network centered in Hangzhou has been established,extending its reach to various countries and regions worldwide, covering all provinces in China andexporting to over a hundred countries and regions globally.
With the vision of being a "pioneer in secure storage", Huayixin is committed to providingstorage solutions with high quality, serving as the storage base of AloT development. With its globalpartners, Huayixin is building an industrial ecosystem and embracing the smart upgrade ofsolutions Made in China, to grow together with technologies, industries and users.
4.4 Develop Environmental Protection and Low-carbon BusinessTo achieve the dual carbon goals, the Company steadfastly supports sustainable developmentand environmental protection, actively implements environmental, social, and governance (ESG)initiatives, and bases its overall strategy on "digital empowerment, low-carbon future, sharedecology, and compliant operations." By integrating sustainable development with digitalempowerment, the Company empowers various sectors including biodiversity conservation,environmental protection, intelligent traffic management, smart energy, smart buildings, smarteducation, and safe production, thereby promoting sustainable, green, and high-qualitydevelopment across various industries.
(1) The Company's intelligent industrial park adopts the national green building three-starstandard and applies the Company's smart IoT solutions. It focuses on the aspects of source, grid,load, storage, charging, and inspection to achieve real-time monitoring of energy data in the park.Energy strategies can be automatically adjusted, making the entire microgrid of the park self-adaptive. Additionally, the flow of each energy source and the carbon footprint are tracked,achieving fine energy management and assisting enterprises in energy saving and emissionreduction to implement the "dual carbon" strategy.? With rooftop photovoltaic systems, buildings generate electricity for their own use. Anintelligent detection system for operational electricity production assists in ensuring safe andstable equipment operation.? To establish an intelligent microgrid within the park, energy usage is flexibly scheduled basedon peak and off-peak electricity rates, transformer capacity, and predictive demand forecasts.? An intelligent air conditioning gateway covers the entire park, automatically monitoring the
operational status of all air conditioning units. It can remotely turn them on/off or set unified
temperature levels. Using big data analysis of energy usage patterns of each space, it enables
adaptive environmental control, effectively reducing energy consumption by the airconditioning system and computers.? The application of intelligent dimmable lighting fixtures allows for gradual brightnessadjustment and smart management. Integrated with attendance, access control, and parkingsystems, each light can illuminate as needed, providing companion-style lighting.? By combining peak and off-peak loads, platform strategies are employed to facilitate orderly
charging for new energy vehicles, avoiding centralized fast charging and alleviating pressureon the power grid.? An intelligent circuit breaker system provides round-the-clock coverage for detection,automatically warning and swiftly responding to safety hazards such as leakage, overload, andovervoltage, with timely traceability. Real-time tracking of energy trends further avoids energywastage, achieving refined energy savings in buildings.
(2) The water conservancy industry progresses towards digital transformation by enhancingoperational efficiency and bolstering water security capabilities. The Company actively participatesin formulating the "Technical Guidelines for the Construction of Digital Twin Water Networks (Trial)"led by the Ministry of Water Resources. This initiative aims to aid in constructing digital twinplatforms, information infrastructure, operational scheduling, cyber security systems, and supportsystems. By providing comprehensive technical guidance for the planning, design, construction,and operation of water networks, it effectively promotes the digitization, networking, andintelligence of water resources management. Drawing upon a profound understanding of waterconservancy business scenarios and long-term technological expertise, the Company hasdeveloped sophisticated and comprehensive solutions for intelligent water resource visualizationand supervision. These solutions cater to various business scenarios such as hydrologicalforecasting, river and lake patrols, sand mining regulation, and water source protection. They offersystematic capabilities in intelligent perception, recognition, and early warning, empowering users'business applications comprehensively.? In terms of rivers and lakes, the Company has implemented an intelligent system forcomprehensive river and lake management, aiming to streamline operations and contribute tothe protection of the Yangtze River through practical actions, thereby enhancing the efficiencyof water area management.? Regarding reservoirs, the Company has collaborated on ecological initiatives to develop
application solutions for safety and operation supervision of water conservancy projects,
including dam safety monitoring. These efforts aim to elevate the level of fine management in
water conservancy engineering.? In the realm of water environment protection, the Company has introduced a hyperspectral
water quality analyzer to enable rapid, automated monitoring and early warning of various
water quality parameters such as turbidity and pH. This facilitates timely detection of changes
in water quality, enhancing the efficiency of water quality monitoring efforts.
The Company continues to explore new avenues in "digital and smart water governance,"accelerating the integration of digital technology with diverse water conservancy scenarios. Thisintegration empowers applications in disaster prevention (flood and drought) and mitigation,efficient and sustainable use of water resources, optimization of water resource allocation, andecological conservation and governance of major rivers, lakes, and water bodies.
(3) Relying on technologies, the Company continuously explores digital ecologicalconservation models to actively protect biodiversity. In Antarctica, the Company has overcome thechallenges of extreme cold and donated intelligent equipment systems to multiple scientific bases,facilitating research on animal populations and meteorology, and contributing to the protection ofAntarctic penguins. In high-altitude regions of China, the Company has developed specializedproduct solutions to achieve long-term and stable observation of black-necked cranes. In Hainan,the Company continuously trains algorithms through the Genius platform to assist in remotedetection of gibbons, providing scientific basis for understanding their population status. In Yunnan,the Company has assisted the Yunnan Forestry and Grassland Department in implementing dualmonitoring and protection of green peacocks through video surveillance and voice recognition,providing strong support for the research and protection of green peacocks. These initiatives notonly contribute to the protection of biodiversity but also make significant contributions to ecologicalconservation and sustainable development.III. Core Competitiveness Analysis
During expanding its services to digital transformation of cities and enterprises, the Companyis facing increasingly prominent diversity and fragmentation in the smart IoT industry. Dahua isenhancing its capabilities in diverse applications to tackle these challenges, and upgrading itsDahua Think# strategy of "connecting all things with cloud and creating a future with digitalintelligence". The Company will continue to broaden its product range, strengthen its marketingmodels, and focus on business penetration, employing a comprehensive approach to businessdevelopment. This entails iterative and optimized processes across multiple dimensions such asresearch and development, marketing, supply chain, and delivery services, thus buildingcompetitive advantages tailored to the diverse and fragmented smart IoT market. Throughcollaborative efforts with partners, sustainable and high-quality development will be pursued.
1. Invest in R&D and Innovation by Adhering to "Full Sensing, Full Connection, FullIntelligence, Full Computing, and Full Ecosystem" as the Core Concept to Deepen Client-Demand Orientation
As digitization and intelligence advance, continuous changes are occurring in technologyevolution, industry demands, and business models. The Company has a deep understanding ofthese development trends, firmly embracing two major technological strategies: AIoT and IoT digitalintelligence platform. It constructs a comprehensive "Full Sensing, Full Connection, FullIntelligence, Full Computing, and Full Ecosystem" capability foundation, achieving three
enhancements in comprehensive 6D perception technology. This upgrade enhances videoperception capabilities across multiple dimensions and expands full-frequency domain perceptioncapabilities comprehensively. With visual analysis as the core, the Company constructs a "1+2" AIcapability system, ensuring rapid adaptation of products to specific scenarios. For visual analysistasks, the Company has released the integrated multi-modal Galaxy foundation model. Based onseveral typical industries such as urban governance and power, it has developed a set of industryvisual foundation model computing frameworks. This framework can help continuously create moreindustry visual foundation models, accelerating the expansion of the intelligent market. TheCompany is building a "full-process control + full-product coverage" security assurance frameworkto provide more secure and reliable products for customers. The Company provides full-domaincloud-native, fully open, and fully-scenario-covered cloud products, fostering sharing, co-creation,and mutual benefits with partners. Based on continuous investment in technology research anddevelopment, the Company continuously develops competitive products such as Super Power,Fluorescence, Cloud-Link and Yunrui. In the future, the Company will continue to strengthenbusiness model innovation, establish itself as the preferred brand in smart IoT, and collaborate withpartners to create new formats for the digital era.
2. Continuously Optimizing the Global Marketing and Service System Layout to ExpandCustomer CoverageThe Company has a global marketing and service network. By the end of 2023, the Companyhad set 32 provincial offices in China. Dahua steps up its effort at the marketing end to increaseclient coverage and continues to provide service for small and medium-sized enterprises in low-level administrative divisions, to build a win-win ecosystem. It continuously covers more industryclients, and customers previously left behind have been reached. At the same time, the Companyfocuses on building multidimensional eco-partners and comprehensive altruistic service platformsto boost the sustainable innovation and development of our partners.
The Company possesses an extensive and in-depth distribution network overseas, laying asolid foundation for stable growth in core business, continuously expanding the influence of theDahua brand. Leveraging the Company's robust technical prowess, localized sales networks,global logistics and after-sales service system, it consistently delves into business opportunitiesand strengthens solution offerings and local market adaptation, gradually increasing the proportionof solution-based revenue in overseas markets. By nurturing an international businessdevelopment and management team and continuously enhancing local business expansion andorganizational operational capabilities, the Company further penetrates into international markets.
3、Deepen Intelligent Manufacturing and Construct a Digital Supply System Tailored toCustomer Needs
Faced with increasing complexity and diversity of customer demands, and uncertainty insupply chain, the Company has established manufacturing centers, HUB warehouses, and nationalwarehouses both domestically and internationally. This has formed a global multi-level supplynetwork, constructing an efficient, intelligent, and reliable supply chain system tailored to global
markets. It possesses capabilities for managing rapid market demands, mitigating order deliveryrisks, and ensuring timely delivery worldwide. In the construction of supply chain ecosystems, astable and healthy supply chain is crucial for product and service quality assurance. Adhering to theprinciples of "cooperation, win-win, transparency, and compliance", the Company continuouslyoptimizes its supplier management system, collaborating with suppliers to foster mutual growth.
To enhance digital delivery capabilities tailored to customer needs, the Company is committedto realizing customer value by establishing a customer-oriented digital delivery platform. Thisfacilitates the transparency and visualization of business opportunities from prediction to delivery,ultimately enhancing the delivery experience. Using a real-time visualized supply chain system, theCompany monitors the status, processes, and key data of various supply chain segments topromptly identify and address potential delivery issues. Rational delivery plans and strategies areformulated based on market demands and capacity planning, ensuring sufficient capacity andresources to meet customer needs. Internal departmental and external partner collaboration isreinforced, including real-time communication and cooperation among production, logistics, andsales segments, ensuring the efficiency and accuracy of deliveries. Appropriate logistics channelsand service providers are selected, optimizing the logistics network to reduce transportation costsand delivery lead times, thereby enhancing delivery speed and reliability.Through the construction of digital supply chain capabilities, including visualizing themanufacturing process, optimizing logistics, effectively managing suppliers, planning deliverycapacities, and fostering efficient internal collaboration, the Company achieves timely and reliabledelivery commitments to meet customer demands.
4. Improve Delivery and Service Capabilities to Shape Great Client Experience
With the customer-oriented core concepts, the Company is progressively establishing fourmajor service systems catering to the entire market and all business sectors. These include theintegrated delivery system, technical support system, operations and maintenance managementsystem, and training and certification system. Moreover, by integrating company resources andharnessing the collective strength of the ecosystem, the Company offers full lifecycle services forproducts and solutions to the market. This commitment aims to accelerate customerresponsiveness, enhance delivery efficiency, and strive towards building a globally leading,efficient, and professional delivery platform. The ultimate goal is to provide customers withunparalleled service and establish a distinguished brand in smart IoT services.
Under the guidance of its global business strategy, the Company makes use of the layout andability of its global delivery and service centers, loads digitalized and smart service tools to providecustomers with accurate and intelligent services and solutions. The Company's three-tiered servicenetwork, comprising headquarters, branch offices, and authorized service centers, delivers high-quality services to global customers. With a service network spanning over 180 countries, bolsteredby nine spare parts distribution centers and 173 spare parts stations (including 46 domesticstations), as well as over 2,000 delivery and service personnel and more than 1,000 servicepartners, the Company provides efficient service support worldwide, enhancing service experience
and user perception.
As the smart IoT industry continues to evolve, leading to increasing delivery complexities, theCompany has established software capability centers in key provinces across China. These centersprovide software development support for the provinces and surrounding regions, enabling flexibleand swift responses to customers' personalized customization needs. Through efficient delivery,Dahua aims to build its service competitiveness and enhance customer satisfaction amidst therising demand for software customization.
5. Adhere to the Full Ecosystem Strategy and Build a Smart IoT Ecosystem Communityfeaturing Co-construction, Win-win Outcome and Symbiosis
Ecological development is one of the most important strategic initiatives of Dahua, as we arecommitted to building a win-win ecosystem and jointly creating value with our partners. Our missionis to enable clients to fulfill their dreams. Adhering to the concept of "Full Ecosystem", we focus onrealizing clients' value, and build comprehensive open capacities from technology, business toservices. Through hardware, software, algorithms to services, business ecosystem to industrialclients, and full openness to developers, we join hands with eco-partners to open up new fields,shape new momentum, and create unlimited possibilities for industrial development, empoweringindustries to realize digital intelligence and achieve co-creation, symbiosis, and win-wincooperation.
Through DHOP, the Company facilitates device integration capability openness. Leveragingthe IoT smart platform foundation, it builds a rich array of components, transitioning from PaaS toSaaS capability openness. The Genius AI open platform offers a one-stop solution for algorithmtraining services. For service and business partners, the Company adheres to the principle of"leaving convenience to partners and complexity to itself" in its business operations. It tailorscorresponding marketing policies, resource support, and organizational optimizations around thisprinciple, fostering a virtuous shared and mutually beneficial ecosystem to realize the industryvision of "connecting all things with cloud and creating a future with digital intelligence".
6. Continuously Advance the Construction of the Company's Compliance System andEffectively Safeguard the Compliant Operation and Steady Development of Businesses
Adhering to the principles of integrity in business operations, upholding commercial ethics, andcomplying with the laws and regulations of the countries where the business operates have beencore tenets advocated and practiced by the Company. Against the backdrop of globalized businessoperations, the Company places great emphasis on compliance during business development andoperation processes. It continuously enhances the construction of its governance system and thelevel of risk management, further promoting mature organizational mechanisms and capabilities ofrisk prevention in compliance areas such as cyber security and data protection, export control andeconomic sanctions, technology ethics, antitrust, anti-money laundering, anti-bribery, and anti-corruption. As business globalization deepens, the Company maintains a prudent businessstrategy, continuously solidifying region-tailored compliance risk management mechanisms, andconsistently increasing labor and financial investment to establish and enhance risk control
capabilities in various compliance areas, as well as risk control organizational mechanisms fordomestic and overseas branches. Through solid operations and implementation focused on"starting compliance from the top, embedding compliance in processes, covering compliance for all,and digitizing compliance management", the Company effectively prevents major compliance risks,safeguarding the interests and reputable image of the Company. Simultaneously, the Company hasbeen committed to adhering to high standards of conduct and ethical norms, embodying theprinciple of "be a clean company seeking success in the right way". It continuously optimizescorporate governance and internal management, creating and maintaining a transparent, fair,clean, and trustworthy business environment for employees, customers, suppliers, and partners.
7. Adhering to the Principle of "Achieving Success for Customers and Stakeholders" toBuild a Platform for Mutual DevelopmentThe Company consistently upholds "achieving success for customers and stakeholders" as itscore values. Placing customer success at the forefront, the Company is guided by customer needs,aiming to create customer value continuously, supporting customers in achieving long-termsuccess, and realizing co-creation, symbiosis, and win-win results with customers. Simultaneously,the Company serves as a platform for realizing dreams and fostering collective development. Itensures that individuals who are committed to continuous efforts and contributions within theplatform receive deserved opportunities for development and rewards, leading to both material andspiritual fulfillment. This fosters a collaborative environment where all stakeholders contribute toand benefit from shared growth and development.IV. Main Business Analysis
1. Overview
The digital economy represents a transformative shift in economics, embodying a disruptive,comprehensive, and fundamental new form of macroeconomic structure. Led by AI, the digitaleconomy is rapidly altering the landscape of the global economy, industries, and societies.According to data from the China Academy of Information and Communications Technology,China's digital economy has grown from 16.2 trillion yuan in 2014 to 50.2 trillion yuan in 2022, withits share of GDP increasing from 25.1% to 41.5%. The digital economy is poised to become adriving force behind China's economic growth, serving as the primary arena for accelerating thecultivation of new productive forces. AI stands as a critical engine for developing new productiveforces, with accelerating the advancement of the new generation of AI holding significantimportance in seizing opportunities in the digital economy era and expediting the formation of newproductive forces.
The emergence of higher value around AI-driven video applications, AI foundation models, andIoT data underscores the continued expansion of market opportunities in the smart IoT fieldcentered around video applications. At present, the overall intelligent transformation and upgrading
of industries is still at an early stage, featuring both opportunities and challenges in the face ofdigital intelligence development demands from thousands of industries. It has become a generalconsensus for governments and enterprises to achieve high-quality development through digitalintelligence transformation, and there are also strong demands from industries for digitalintelligence transformation. However, such demands are fragmented and differentiated amongdifferent industries or even within industries. The current challenge is how to reduce costs, quicklymeet the fragmented and differentiated market demands in a controlled way, and enhance theeconomies of scale.With the expansion of the market room, the continuous emergence of new demands and theacceleration of new technology upgrading and iteration, the economies of scale for thetransformation and upgrading of digital intelligence are bound to be achieved through acontinuously penetrating process. We will maintain sufficient strategic concentration andinvestment, with great emphasis on the accumulation and investment in R&D innovation and theexploration of cutting-edge technologies. On one hand, the Company persistently deepens its focuson industry-specific solutions, maintaining a leading edge in key capabilities such as AIoTperception, IoT digital intelligence platforms, scenario-based AI, AI foundation models, and dataelements. This expansion serves to fortify the Company's competitive advantages. On the otherhand, the Company continuously enhances its marketing and delivery service organizations,expanding the scope of its ecosystem collaborations and closely engaging with customers toensure they benefit from comprehensive service experiences. In addition, we will continuouslydeepen and broaden the transformation and upgrading business of industrial digital intelligence, tosatisfy and cultivate customers' business scenario habits, enhance their business adhesion,strengthen our overall competitiveness, and consolidate our stronghold in the industry to maintainour leading position.
During the reporting period, despite various domestic and international factors, the Companyadhered to the principles of fine management and high-quality development, achieving anoperating revenue of RMB 32.218 billion yuan, representing a year-on-year growth of 5.41%. TheCompany also achieved a net profit attributable to shareholders of the listed company, excludingnon-recurring gains and losses, of RMB 2.962 billion yuan, marking a year-on-year growth of
87.39%.
1. Achieving Growth Based on Stability While Upholding High-Quality Development
The Company adheres to the principle of high-quality development, aiming to stimulate growth,strengthen ecosystems, enhance personnel efficiency, prioritize customer-centricity, and pursueboth commercial success and customer advancement. Emphasizing ecological development, theCompany seeks to build a new ecosystem of co-construction, symbiosis, and mutual benefit,striving to create unique and differentiated value for partners and achieve mutual growth. Throughan emphasis on efficiency in management, the Company drives improvements in personnelefficiency and organizational effectiveness. It maintains balanced business development to lay asolid foundation for sustainable high-quality growth, thereby better serving its customers. Moreover,
the Company shoulders greater social responsibility by actively engaging in ESG (Environmental,Social, and Governance), low-carbon initiatives, rural revitalization, poverty alleviation, andtechnological equity, striving to complete its mission of "making society smarter and life better".
2. Upgrading the Dahua Think# Strategy to Empower Urban and Corporate DigitalTransformationAs a world-leading video-centric smart IoT solutions and service provider, the Companyupgraded its Dahua Think# 2.0 strategy in 2023. This strategic shift from intelligence to integratedintelligence continues to focus on two core businesses: urban and corporate sectors. Firmlycommitted to the AIoT and IoT digital intelligence platform strategies, the Company fully activatesthe value of data elements centered around video, empowering the construction of efficient urbangovernance systems and the digital transformation and upgrading of enterprises.
3. Continuously Investing Precisely in R&D and Further Improving the Capabilities of"Full Sensing, Full Connection, Full Intelligence, Full Computing, and Full Ecosystem"
The Company takes technological innovation as the core and invests heavily in R&D to furtheradvance the capabilities of "Full Sensing, Full Connection, Full Intelligence, Full Computing, andFull Ecosystem". In 2023, the Company invested RMB 3.967 billion in R&D, registering a year-on-year increase of 2.17%, and accounting for 12.31% of the operating revenue. In addition tomaintaining investment in traditional video technology, the Company continues to strengthen itsresearch, development, and commercialization efforts in various technological fields, includingmultidimensional perception, AI foundation models, data intelligence, intelligent computing, cloudcomputing, software platforms, network communication, cyber security, and innovative businesses.Deepening its capabilities of "Full Sensing, Full Connection, Full Intelligence, Full Computing, andFull Ecosystem" and focusing on value business scenarios, the Company constructs industry-leading solutions, products, and technological systems. In 2023, the Company launched the Galaxyfoundation model, which significantly enhances visual resolution capabilities by integrating multi-modal data such as images, point clouds, text, and voice. Additionally, the Company establishedthe Future Communication Research Institute to focus on three aspects: network connectiontechnology, data exchange technology, and cutting-edge network technology. It aims to build a"3+N" integrated connectivity system to support the upgrade from the IoT to the video IoT, enablingmore reliable, efficient, and intelligent data processing and decision-making.
4. Enhancing Software Management Capabilities and Deepening Involvement in DataIndustry Chain
Focusing on the value realization process of data elements, the Company actively plays theroles of data resource provider, data asset practitioner, and data commodification enabler, startingfrom aspects such as multidimensional perception, multi-source connectivity, view intelligence, andopen platforms. Collaborating with partners and bridging gaps, it leverages the "multiplier effect" ofdata elements to empower efficient urban governance and enterprise digitalization upgrades. TheIoT digital intelligence platform undergoes a renewed upgrade, consolidating the graph-data fusioncomputing system and establishing a one-stop data intelligence engine. It breaks down
computational barriers between view data and business data, enabling multi-dimensional featureexploration and multi-modal relationship establishment, thereby empowering efficient urbangovernance and enterprise digitalization. Leveraging software engineering capabilities, theCompany's industry scenario modules can quickly integrate CV foundation models and graph-datafusion technology, enabling the flexible construction of diverse industry applications. This amplifiesthe value of innovative businesses in various urban and enterprise value chain circulation. Basedon the developer platform, Dahua's public cloud provides various industries with rich SaaS services,including Dahua Yunrui, Dahua Cloud-Link, DoLynk, and other public cloud products. It offersenterprises a new operational model, transitioning from manual to "data + intelligence" driven,thereby empowering enterprise with digital management transformation.
5. Driving the Development of Innovative Businesses and Exploring New High-GrowthPoints
In the field of innovative businesses, leveraging in-depth understanding of diverse customerneeds and years of accumulation in the field of intelligent IoT, the Company continues to exploreemerging business areas, including: machine vision and mobile robots, smart living, thermalimaging, automotive electronics, smart security inspection, smart fire protection, storage media,and other innovative businesses, aiming to continuously expand new high-growth points for theCompany.
6. Joining Hands with Partners to Grow Together, Aiming to Build a Thriving Ecosystemof Co-Creation, Symbiosis, and Mutual Benefit
Facing unprecedented opportunities in the digital economy, the Company will continue to makeexploration and practice with its ecosystem partners, striving to build a comprehensive altruisticservice platform integrating technology, products, solutions, operations, services, and businessmanagement consulting services. This will empower partners to innovate and develop continuously.In China, we have accelerated front-line business response through city-based businessdeployment, capacity deployment in forms of training empowerment and special support,hierarchical management, business authority delegation, and management decision delegation.Overseas distribution deployment has focused on customer grading, precise investment andmarketing, and brand coverage strengthening. Integrators deployment has focused on key marketsand customers, while reinforcing the deployment support system. The Company and its partnerswill adhere to the "Employee + Partner" concept, continuously implementing the integrateddevelopment of "new opportunities, new ideas, new order, new models, new management, newgoals, and new responsibilities". Upholding the altruistic mindset and strengthening the ecosystem,the Company will comprehensively support the development of high-quality businesses.
2. Revenue and Costs
(1) Operating revenue structure
Unit: RMB
| 2023 | 2022 | Year-on-year increase or decrease | |||
| Amount | Proportion in Operating Revenue | Amount | Proportion in Operating Revenue | ||
| Total Revenue | 32,218,317,636.77 | 100.00% | 30,565,370,012.64 | 100.00% | 5.41% |
| By Industry | |||||
| Smart IoT Industry | 32,218,317,636.77 | 100.00% | 30,565,370,012.64 | 100.00% | 5.41% |
| By Product | |||||
| Smart IoT Products and Solutions | 26,644,648,182.18 | 82.70% | 25,187,418,289.20 | 82.40% | 5.79% |
| Including: Software Business | 1,797,226,644.00 | 5.58% | 1,478,048,030.19 | 4.84% | 21.59% |
| Innovative Business (Note) | 4,906,653,657.98 | 15.23% | 4,116,225,405.96 | 13.47% | 19.20% |
| Others | 667,015,796.61 | 2.07% | 1,261,726,317.48 | 4.13% | -47.13% |
| By Region | |||||
| Domestic | 16,891,274,970.99 | 52.43% | 15,799,558,052.51 | 51.69% | 6.91% |
| Overseas | 15,327,042,665.78 | 47.57% | 14,765,811,960.13 | 48.31% | 3.80% |
Domestic Sub-business Segment
Unit: RMB
| 2023 | 2022 | Year-on-year increase or decrease | |||
| Amount | Proportion in Domestic Operating Revenue | Amount | Proportion in Domestic Operating Revenue | ||
| To G | 4,333,197,296.68 | 25.65% | 4,325,525,354.94 | 27.38% | 0.18% |
| To B | 9,087,212,028.79 | 53.80% | 8,267,364,222.98 | 52.32% | 9.92% |
| Others | 3,470,865,645.52 | 20.55% | 3,206,668,474.59 | 20.30% | 8.24% |
| Total | 16,891,274,970.99 | 100.00% | 15,799,558,052.51 | 100.00% | 6.91% |
Note: Innovative businesses mainly include corresponding businesses such as machine vision and mobilerobots, smart living, thermal imaging, automotive electronics, smart security inspection, smart fireprotection, and storage media.
(2) Industry, product, region, or sales mode accounting for more than 10% of the Company's operatingrevenue or profit? Applicable □ Not applicable
Unit: RMB
| Operating revenue | Operating Cost | Gross margin | Increase or decrease of operating revenue compared with the same period of last year | Increase and decrease of operating cost over the same period of last year | Increase or decrease of gross profit compared with the same period of last year | |
| By Industry | ||||||
| Smart IoT Industry | 32,218,317,636.77 | 18,674,970,923.46 | 42.04% | 5.41% | -1.66% | 4.17% |
| By Product | ||||||
| Smart IoT Products and Solutions | 26,644,648,182.18 | 14,925,853,403.30 | 43.98% | 5.79% | -1.20% | 3.96% |
| Including: Software Business | 1,797,226,644.00 | 591,429,713.59 | 67.09% | 21.59% | 29.40% | -1.99% |
| Innovative Businesses | 4,906,653,657.98 | 3,169,076,284.13 | 35.41% | 19.20% | 14.84% | 2.45% |
| By Region | ||||||
| Domestic | 16,891,274,970.99 | 10,462,264,668.17 | 38.06% | 6.91% | -0.89% | 4.87% |
| Overseas | 15,327,042,665.78 | 8,212,706,255.29 | 46.42% | 3.80% | -2.62% | 3.54% |
| Domestic Sub-business Segment | ||||||
| To G | 4,333,197,296.68 | 2,360,838,585.93 | 45.52% | 0.18% | -10.25% | 6.33% |
| To B | 9,087,212,028.79 | 5,429,359,031.43 | 40.25% | 9.92% | 3.35% | 3.80% |
| Others | 3,470,865,645.52 | 2,672,067,050.81 | 23.01% | 8.24% | 0.01% | 6.33% |
When the statistical caliber of the company's main business data is adjusted in the reporting period, the company'smain business data should be subject to the one after the statistical caliber at the end of the reporting period isadjusted in the most recent year.
□ Applicable ? Not applicable
(3) Is the company's physical sales income greater than the labor income?
?Yes □ No
| Industry Classification | Item | Unit | 2023 | 2022 | Year-on-year increase or decrease |
| Smart IoT Industry | Sales volume | Unit/set | 82,494,035 | 78,831,492 | 4.65% |
| Production output | Unit/set | 79,919,254 | 78,017,213 | 2.44% | |
| Stock | Unit/set | 10,493,991 | 13,068,772 | -19.70% |
Reasons for over 30% changes in related data on year-on-year basis
□ Applicable ? Not applicable
(4) Performance of major sales contracts and major procurement contracts signed by the Company as ofthe report period
□ Applicable ? Not applicable
(5) Operating Cost Structure
Industry Classification
Unit: RMB
| Industry Classification | Item | 2023 | 2022 | Year-on-year increase or decrease | ||
| Amount | Proportion to Operating Cost | Amount | Proportion to Operating Cost | |||
| Smart IoT Industry | Operating Cost | 18,674,970,923.46 | 100.00% | 18,989,797,670.92 | 100.00% | -1.66% |
Product Classification
Unit: RMB
| Product Classification | Item | 2023 | 2022 | Year-on-year increase or decrease | ||
| Amount | Proportion to Operating Cost | Amount | Proportion to Operating Cost | |||
| Smart IoT Products and Solutions | Operating Cost | 14,925,853,403.30 | 79.92% | 15,106,909,590.16 | 79.55% | -1.20% |
| Including: Software Business | Operating Cost | 591,429,713.59 | 3.17% | 457,050,171.52 | 2.41% | 29.40% |
| Innovative Businesses | Operating Cost | 3,169,076,284.13 | 16.97% | 2,759,497,499.20 | 14.53% | 14.84% |
| Others | Operating Cost | 580,041,236.03 | 3.11% | 1,123,390,581.56 | 5.92% | -48.37% |
(6) Has the scope of consolidation changed during the reporting period?
?Yes □ No
(1) The Company has established three domestic subsidiaries in this period: Zhejiang Shuhang IntelligentTechnology Co., Ltd., Guangdong Huaxiyue Intelligent Technology Co., Ltd., and Zhejiang Huajie New EnergyOperation Service Co., Ltd. Additionally, it has established seven overseas subsidiaries: Dahua TechnologyBelgium BV, Dahua Technology Regional Headquarters, Dahua Technology Azerbaijan LLC, Dahua TechnologyVietnam Company Limited, Huaray Technology Korea Company Limited, HuaRay Technology GmbH, and DahuaTechnology Angola S.U. lda. All the aforementioned subsidiaries have been consolidated into the financial reportsof the Company from their respective establishment dates.
(2) The Company's holding subsidiary, Huajian Technology, acquired 100% equity of Zhejiang Huajian TechnologyCo., Ltd. in February 2023, thereby obtaining substantial control over it. Consequently, it has been consolidated intothe financial reports of the Company.
(3) The Company's subsidiary, Guizhou Dahua Information Technology Co., Ltd., was deregistered during thisperiod and is no longer included in the financial report of the Company from the date of deregistration.
(7) Major changes or adjustments to the company's business, products, or services during the reportingperiod
□ Applicable ? Not applicable
(8) Major Clients and Suppliers
The Company's Major Clients
| Total sales amount of the top five customers | 3,524,879,758.55 |
| Proportion of the total sales amount of the top five | 10.94% |
| customers to the total annual sales | |
| Proportion of the total sales amount of the related parties in the top five customers to the total annual sales | 4.35% |
Profiles of the Company's top five customers
| No. | Name of customer | Sales amount (RMB) | Proportion to the annual sales |
| 1 | Company 1 | 922,720,270.18 | 2.86% |
| 2 | Company 2 (related party) | 865,178,578.92 | 2.69% |
| 3 | Company 3 | 755,011,698.83 | 2.34% |
| 4 | Company 4 (Note 1) | 540,807,462.10 | 1.68% |
| 5 | Company 5 | 441,161,748.52 | 1.37% |
| Total | -- | 3,524,879,758.55 | 10.94% |
Note 1: Certain entities under the same control as Company 4 are related parties of the Company. The sales torelated parties amounted to RMB 535,229,822.82 yuan.Other Information Notes for Major Clients
□ Applicable ? Not applicable
Major suppliers
| Total Purchase Amount of Top Five Suppliers (yuan) | 2,804,668,334.92 |
| Proportion of the total purchase amount of top five suppliers to the total annual purchase amount | 16.00% |
| Proportion of the total purchase amount of the related parties in top five suppliers to the total annual purchase amount | 0.00% |
Profiles of the Company's top five suppliers
| No. | Supplier Name | Purchase amount (RMB) | Proportion to the total annual purchase amount |
| 1 | Company 1 | 1,014,239,959.03 | 5.79% |
| 2 | Company 2 | 681,353,779.99 | 3.89% |
| 3 | Company 3 | 380,171,785.65 | 2.17% |
| 4 | Company 4 | 374,291,935.60 | 2.13% |
| 5 | Company 5 | 354,610,874.65 | 2.02% |
| Total | -- | 2,804,668,334.92 | 16.00% |
Other Information Notes for Major Suppliers
□ Applicable ? Not applicable
3. Expenses
Unit: RMB
| 2023 | 2022 | Year-on-year increase or decrease | Statement on Significant Changes | |
| Sales Expenses | 5,292,570,225.69 | 5,115,163,159.61 | 3.47% | |
| Administration expenses | 1,257,429,514.27 | 1,143,968,823.89 | 9.92% | |
| Financial Expenses | -409,307,989.62 | -510,976,797.98 | 19.90% | Due to fluctuations in the exchange rate, |
| gains from foreign exchange decreased. | ||||
| Research and development expense | 3,967,248,795.22 | 3,883,005,582.82 | 2.17% |
4. R&D Investment
R&D personnel of the Company
| 2023 | 2022 | Change Ratio | |
| Number of R&D personnel | 12,372 | 12,219 | 1.25% |
| Percentage of R&D personnel | 52.80% | 51.80% | 1.00% |
| Education background of R&D personnel | |||
| Bachelor | 8,214 | 7,900 | 3.97% |
| Master and above | 3,056 | 3,242 | -5.74% |
| Age of R&D personnel | |||
| Under 30 | 6,537 | 7,140 | -8.45% |
| 30-40 | 5,253 | 4,652 | 12.92% |
Company's R&D investment
| 2023 | 2022 | Change Ratio | |
| R&D investment (yuan) | 3,967,248,795.22 | 3,883,005,582.82 | 2.17% |
| The proportion of R&D investment to operating revenue | 12.31% | 12.70% | -0.39% |
| Capitalized R&D investment | 0.00 | 0.00 | 0.00% |
| Proportion of capitalized R&D investment to R&D investment | 0.00% | 0.00% | 0.00% |
Causes and effects of significant changes in the composition of R&D personnel
□ Applicable ? Not applicable
The reason for the significant change in the proportion of the total amount of R&D investment to operating revenuecompared with last year
□ Applicable ? Not applicable
Reasons and rational explanations on the substantial change in capitalization rate of R&D investment
□ Applicable ? Not applicable
5. Cash Flow
Unit: RMB
| Item | 2023 | 2022 | Year-on-year increase or decrease |
| Subtotal of cash inflow from operational activities | 37,198,634,257.76 | 36,530,473,767.40 | 1.83% |
| Subtotal of cash outflow from operational activities | 32,599,855,603.29 | 35,476,886,117.94 | -8.11% |
| Net cash flow generated by operating activities | 4,598,778,654.47 | 1,053,587,649.46 | 336.49% |
| Subtotal of cash inflow from investment activities | 4,824,255,692.30 | 2,991,957,633.76 | 61.24% |
| Subtotal of cash outflows | 3,098,033,765.83 | 3,591,920,704.41 | -13.75% |
| from investment activities | |||
| Net amount of cash flow generated by investment activities | 1,726,221,926.47 | -599,963,070.65 | 387.72% |
| Subtotal of cash inflow from financing activities | 8,465,159,516.11 | 5,909,237,490.28 | 43.25% |
| Subtotal of cash outflow from financing activities | 6,812,296,481.85 | 6,253,025,354.87 | 8.94% |
| Net cash flow generated by financing activities | 1,652,863,034.26 | -343,787,864.59 | 580.78% |
| Net Increase in Cash and Cash Equivalents | 8,002,194,542.32 | 260,888,200.31 | 2,967.29% |
Description of the main factors affecting the significant changes in related data over the same period of last year? Applicable □ Not applicable
1. The net cash flow generated from operating activities increased by 336.49% compared to the same period of theprevious year, mainly due to a decrease in purchasing expenses compared to the same period of the previous year.
2. The net cash flow generated from investing activities increased by 387.72% compared to the same period of theprevious year, primarily due to a higher cash inflow from equity transfers during this period.
3. The net cash flow generated from financing activities increased by 580.78% compared to the same period of theprevious year, mainly due to an increase in funds received from investment absorption during this period.Reasons for the significant difference between the net cash flow generated by the company's operating activities inthe reporting period and the net profit in the current year
□ Applicable ? Not applicable
V. Non-Main Business Analysis
? Applicable □ Not applicable
Unit: RMB
| Amount | Percentage of profit contribution | Reasons | Whether it is sustainable | |
| Investment income | 4,495,973,812.03 | 55.36% | Mainly due to the disposal of a 7.88% equity stake in Leapmotor Technology, a company in which the Company holds shares. | No |
VI. Analysis of Assets and Liabilities
1. Significant changes in assets composition
Unit: RMB
| End of 2023 | Start of 2023 | Proportion increase | Statement on Significant | |||
| Amount | Proportion | Amount | Proportion | |||
| To Total Assets | To Total Assets | and decrease | Changes | |||
| Cash and Bank Balances | 15,971,005,114.47 | 30.20% | 8,029,878,650.77 | 17.36% | 12.84% | The main reason is the receipt of funds raised from private placements and the disposal of equity interests in associated companies. |
| Accounts receivable | 16,276,803,954.03 | 30.78% | 15,411,908,561.50 | 33.32% | -2.54% | No major changes. |
| Contract Assets | 86,714,216.34 | 0.16% | 106,335,405.35 | 0.23% | -0.07% | No major changes. |
| Inventory | 5,332,608,544.02 | 10.08% | 7,315,372,440.02 | 15.82% | -5.74% | This is primarily due to a decrease in inventory during the current period. |
| Investment Property | 129,637,004.00 | 0.25% | 423,035,823.82 | 0.91% | -0.66% | No major changes. |
| Long-term Equity Investment | 727,453,629.75 | 1.38% | 1,461,099,644.55 | 3.16% | -1.78% | This is attributed to the disposal of some equity interests in associated companies. |
| Fixed Assets | 4,937,180,876.88 | 9.34% | 4,643,617,574.85 | 10.04% | -0.70% | No major changes. |
| Projects under Construction | 1,008,612,408.49 | 1.91% | 423,535,552.03 | 0.92% | 0.99% | No major changes. |
| Right-of-use Assets | 299,202,586.56 | 0.57% | 314,700,977.50 | 0.68% | -0.11% | No major changes. |
| Short-term loan | 957,426,330.18 | 1.81% | 257,943,618.51 | 0.56% | 1.25% | This is primarily due to the increase in bill discounting. |
| Contract liabilities | 1,194,534,307.04 | 2.26% | 1,219,548,011.88 | 2.64% | -0.38% | No major changes. |
| Long-term loan | 0.00% | 453,825,000.00 | 0.98% | -0.98% | This was mainly caused by repayment for the long-term loans. | |
| Lease Liabilities | 176,580,049.57 | 0.33% | 196,340,654.27 | 0.42% | -0.09% | No major changes. |
The proportion of overseas assets is relatively high
□ Applicable ? Not applicable
2. Assets and liabilities measured at fair value
? Applicable □ Not applicable
Unit: RMB
| Item | At the beginning of the reporting period | Changes in fair value gains and losses in the current period | Cumulative fair value changes in equity | Impairment loss of the reporting period | Purchase amount of the reporting period | Sales amount of the reporting period | Other variations | At the end of the reporting period |
| Financial Assets | ||||||||
| 1. Other Non-current Financial Assets | 931,043,130.33 | 101,037,455.74 | 500,000,000.00 | 2,971,341.37 | 6,633,141.01 | 1,535,742,385.71 | ||
| 2. Receivables Financing | 679,441,917.62 | 131,271,350.24 | 810,713,267.86 | |||||
| 3. Other events | 1,470,000.00 | 1,470,000.00 | ||||||
| Financial assets subtotal | 1,611,955,047.95 | 101,037,455.74 | 500,000,000.00 | 2,971,341.37 | 137,904,491.25 | 2,347,925,653.57 | ||
| Total | 1,611,955,047.95 | 101,037,455.74 | 500,000,000.00 | 2,971,341.37 | 137,904,491.25 | 2,347,925,653.57 | ||
| Financial liabilities | 26,652,319.25 | -26,590,919.13 | 61,400.12 | |||||
Are there any significant changes in the measurement attributes of the company's main assets during the reportingperiod?
□ Yes ? No
3. Restrictions on asset rights as of the end of the reporting period
As of December 31, 2023, restricted assets of the Company are as follows:
| Item | Closing balance (RMB) | Cause of restrictions |
| Cash and Bank Balances | 75,843,683.23 | Guarantee letter security deposit and other restricted funds |
| Notes receivable and receivables financing | 951,747,362.20 | Pledge used to issue bank acceptance bills and endorsed or discounted notes not derecognized |
| Accounts receivable | 7,238,385.64 | Non-derecognition of supply chain finance discounting and factoring |
| Total | 1,034,829,431.07 |
VII. Investment Analysis
1. Overview
? Applicable □ Not applicable
| Investment in the Reporting Period (RMB) | Investment for the same Period of Last Year | Rate of Change |
| 3,337,590,020.22 | 512,368,718.70 | 551.40% |
2. Significant equity investments acquired during the reporting period
□ Applicable ? Not applicable
3. Major non-equity investments underway during the reporting period
? Applicable □ Not applicableFor details, refer to Section 5 "Utilization of Raised Funds".
4. Financial assets investment
(1). Securities investment
□ Applicable ? Not applicable
No such case as securities investment during the reporting period.
(2). Derivatives investment
? Applicable □ Not applicable
1) Derivative investments made during the reporting period for the purpose of hedging? Applicable □ Not applicable
Unit: RMB ten thousand
| Types of derivatives investment | Initial investment amount | Opening balance | Changes in fair value gains and losses in the current period | Cumulative fair value changes in equity | Amount purchased during the reporting period | Amount sold during the reporting period | Closing balance | Proportion of investment amount in the company’s net assets at end of the reporting period | |
| Foreign exchange contract | 55,141.49 | 2,659.09 | 514,817.46 | 540,120.70 | 29,838.25 | 0.86% | |||
| Total | 55,141.49 | 2,659.09 | 514,817.46 | 540,120.70 | 29,838.25 | 0.86% | |||
| Explanation of whether the | The Company calculated and presented its foreign exchange derivatives trading | ||||||||
| Company’s hedging business accounting policies and specific accounting principles have changed significantly during the reporting period compared with the previous reporting period | business in accordance with Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments and other relevant provisions. Held-for-trading financial assets/held-for-trading financial liabilities were adopted for initial and subsequent measurements of the foreign exchange contracts. The fair values of the foreign exchange contracts were basically determined by referencing the different parameters of the financial institutions based on the then market conditions as well as the remaining term and duration of transaction, so as to be recognized as the held-for-trading financial assets or held-for-trading financial liabilities. There was no significant change in the fair values of the foreign exchange contracts compared with that in the previous reporting period. |
| Description of actual profit and loss during the reporting period | During this reporting period, the actual profit and loss amounted to RMB -44,929,400 yuan. |
| Descriptions of the effect of hedging | The Company carried out foreign exchange hedging business appropriately as the case may be, which could effectively reduce the risks in foreign exchange market and avoid exchange rate risks. |
| Sources of funds for derivatives investment | Equity Fund |
| Risk analysis and description of control measures for derivatives positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | For specific details regarding risk analysis and control measures, see the Company's announcement titled "Announcement on Carrying out Foreign Exchange Hedging Transactions" (Announcement No. 2023-030), disclosed on April 28, 2023. |
| Changes in market prices or product fair value of invested derivatives during the reporting period, and the analysis of the fair value of derivatives should disclose the specific methods used and the setting of related assumptions and parameters. | The Company recognized and measured its foreign exchange hedging business in accordance with Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments and other relevant provisions. The fair values of foreign exchange forward contracts were basically measured and recognized by referencing the different parameters of the financial institutions based on the then market conditions as well as the remaining term and duration of the transaction. During the reporting period, the fair value change income of foreign exchange contracts was RMB 26,590,900 yuan. |
| Litigation involved (if applicable) | N/A |
| Disclosure date of board of directors' announcement on the approval of derivatives investment (if any) | April 28, 2023 |
| Disclosure date of shareholder meeting's announcement on the approval of derivatives investment (if any) | May 27, 2023 |
| Independent directors' special opinions on the Company's derivatives investment and risk control | For details, please refer to the "Independent Opinions of Independent Directors on Related Matters" disclosed by the Company on April 28, 2023. |
2) Derivatives investments for speculative purposes during the reporting period
□ Applicable ? Not applicable
The Company had no derivatives investments for speculative purposes during the reporting period.
5. Utilization of raised funds
? Applicable □ Not applicable
(1) Overview of utilization of raised funds
? Applicable □ Not applicable
Unit: RMB ten thousand
| Year of raising | Method of raising | Total amount of raised funds | Net amount of raised funds | Total amount of raised funds used during this period | Cumulative total amount of raised funds used | Total amount of raised funds whose purpose has been changed during the reporting period | Cumulative total amount of raised funds whose purpose has been changed | Proportion of cumulative total amount of raised funds whose purpose has been changed | Total amount of raised funds not yet used | Purpose and disposition of raised funds not used | Amount of raised funds unused for over two years |
| 2023 | Non-public issuance of shares | 509,999.92 | 508,983.26 | 389,161.55 | 389,161.55 | 0 | 0 | 0.00% | 124,635.81 | Bank of deposit | 0 |
| Total | -- | 509,999.92 | 508,983.26 | 389,161.55 | 389,161.55 | 0 | 0 | 0.00% | 124,635.81 | -- | 0 |
| Explanation of overall use of raised funds | |||||||||||
| 1. According to the approval issued by the China Securities Regulatory Commission in the document titled "Approval for the Non-public Issuance of Shares by Zhejiang Dahua Technology Co., Ltd." (CSRC Permit [2022] No. 853), the Company issued 293,103,400 shares to specific parties at a price of RMB 17.40 yuan per share. The total amount of funds raised in this issuance was RMB 5,099,999,160.00 yuan. After deducting expenses related to the issuance amounting to RMB 10,166,575.28 yuan (excluding value-added tax), the net amount of funds raised was RMB 5,089,832,584.72 yuan. This amount has been verified by BDO China Shu Lun Pan Certified Public Accountants LLP (special general partnership), who issued the "Verification Report" (XKSBZ [2023] ZF10231). 2. The Company has cumulatively used raised funds totaling RMB 3,891,615,500 yuan (including the upfront investment replacement amount of RMB 2,156,868,200 yuan). The net amount of bank interest received is RMB 48.141 million yuan. As of December 31, 2023, the remaining balance of raised funds unused is RMB 1,246,358,100 yuan (excluding unpaid issuance expenses of RMB 1.2728 million yuan). | |||||||||||
(2) Status of projects for which the raised funds are promised to be used
? Applicable □ Not applicable
Unit: RMB ten thousand
| Committed investment projects and allocation of excess raised funds | Whether there has been a change in projects (including partial changes) | Total committed investment amount of raised funds | Total investment amount after adjustment (1) | Amount Invested in the Current Reporting Period | Cumulative amount invested as of the end of the period (2) | Investment progress as of the end of the period (3) = (2) / (1) | Scheduled date for projects to reach intended usability | Benefits achieved during the reporting period | Whether expected benefits have been realized | Whether there are significant changes in project feasibility |
| Committed investment projects | ||||||||||
| Project of Smart IoT Solution R & D and Industrialization | No | 92,990.00 | 92,990.00 | 92,990.00 | 92,990.00 | 100.00% | 2023 | 3,391.55 | No | No |
| The phase II construction project of the smart manufacturing base in Hangzhou | No | 77,580.00 | 77,580.00 | 74,279.88 | 74,279.88 | 95.75% | 2024 | Not applicable. | Not applicable. | No |
| Construction Project of Xi'an R & D Center (Note 1) | No | 88,960.00 | 88,960.00 | 58,444.33 | 58,444.33 | 65.70% | 2026 | Not applicable. | Not applicable. | Please refer to the explanation of significant changes in project feasibility |
| New project of Southwest R&D Center of Dahua Co., Ltd. (Note 1) | No | 100,470.00 | 100,470.00 | 13,335.35 | 13,335.35 | 13.27% | 2026 | Not applicable. | Not applicable. | |
| Supplement to working capital | No | 148,983.26 | 148,983.26 | 150,111.99 | 150,111.99 | 100.76% (Note 2) | Not applicable. | Not applicable. | Not applicable. | No |
| Sub-total of committed investment projects | -- | 508,983.26 | 508,983.26 | 389,161.55 | 389,161.55 | -- | -- | 3,391.55 | -- | -- | |
| Allocation of excess funds | |||||||||||
| N/A | |||||||||||
| Total | -- | 508,983.26 | 508,983.26 | 389,161.55 | 389,161.55 | -- | -- | 3,391.55 | -- | -- | |
| Explanation of projects not meeting planned progress or expected returns and reasons (including reasons for selecting "Not Applicable" for "Whether expected benefits have been realized") | 1. The Smart IoT Solution Research and Industrialization Project did not achieve the expected benefits mainly due to (1) industry-wide influences resulting in lower-than-expected project revenue; (2) adjustments made to product structure to address market demands and expand into specific scenarios, leading to a decrease in gross profit margin for certain product lines; (3) the Company's continued emphasis on research, development, and commercialization in areas such as software platforms, cloud computing, and big data, resulting in increased R&D expenditure. 2. The phase II construction project of the smart manufacturing base in Hangzhou is still in the investment period, and there are no expected benefits corresponding to this reporting period. | ||||||||||
| Explanation of significant changes in project feasibility | The Company convened the Fourth Meeting of the Eighth Board of Directors and the Third Meeting of the Eighth Supervisory Board on January 12, 2024, and held the First Extraordinary General Meeting of Shareholders for the year 2024 on January 29, 2024. The meetings deliberated and approved the "Proposal on Adjusting the Investment Amount, Investment Structure, and Increasing the Implementation Entity and Implementation Location of Some Fundraising Projects," agreeing to adjust the investment amount, raised fund investment amount, internal investment structure, implementation methods and entities, implementation locations, and project names of the "Construction Project of Xi'an R & D Center" and the "New project of Southwest R&D Center of Dahua Co., Ltd." As a result of the aforementioned adjustments, the Company simultaneously adjusted the construction area of the project sites and the investment amount of raised fund required for site construction. For the amount of raised fund already invested in and exceeding the amount required for site construction, the Company has exchanged a total of RMB 403.882 million yuan with its own funds on February 1, 2024, to replace the raised funds to be replaced and the interest calculated based on the raised funds invested in each year before this adjustment, calculated at the market loan interest rate for each respective year. | ||||||||||
| Usage and progress of excess raised funds | Not applicable. | ||||||||||
| Changes in the implementation locations of raised fund investment projects | Not applicable. | ||||||||||
| Adjustments to the implementation methods of raised fund investment projects | On May 19, 2023, the Company convened the Forty-third Meeting of the Seventh Board of Directors and the Thirtieth Meeting of the Seventh Supervisory Board, approving the "Proposal on Increasing Some Fundraising Project Implementing Entities," agreeing to add Chengdu Dahua Zhilian Information Technology Co., Ltd., a wholly-owned subsidiary, as one of the implementing entities for the fundraising project "New project of Southwest R&D Center of Dahua Co., Ltd." (now renamed as "5G, IoT, and Multidimensional Perception Product Solution Research and Development Project"). | ||||||||||
| Advance investment and replacement status of fundraising investment | On May 19, 2023, the Company convened the Forty-third Meeting of the Seventh Board of Directors and the Thirtieth Meeting of the Seventh Supervisory Board, approving the "Proposal on Using Raised Funds to Replace Self-raised Funds | ||||||||||
| projects | Previously Invested in Fundraising Projects and Issuance Expenses Already Paid," agreeing to use a total of RMB 2,156.8682 million yuan of raised funds to replace self-raised funds previously invested in fundraising projects and to use RMB 2.2211 million yuan of raised funds to replace self-raised funds previously used to pay issuance expenses, totaling RMB 2,159.0893 million yuan of raised funds to replace the aforementioned previously invested and paid self-raised funds. During the reporting period, the Company has completed the aforementioned capital replacement with raised funds, in accordance with the regulation stipulating the replacement within six months of the receipt of raised funds. |
| The temporary supplementation of working capital with idle raised funds | Not applicable. |
| The amount and reasons for the surplus of raised funds during project implementation | Not applicable. |
| Purpose and disposition of raised funds not used | Unused raised funds (including interest income from the raised funds account) are kept in the Company's special account for raised funds. |
| Issues or other circumstances regarding the use and disclosure of raised funds | N/A |
Note 1: The project names were changed in January 2024. "Construction Project of Xi'an R & D Center" was changedto "AI Technology Research and Application Project," and "New project of Southwest R&D Center of Dahua Co., Ltd."was changed to "5G, IoT, and Multidimensional Perception Product Solution Research and Development Project."Note 2: The actual investment in relevant supplementary working capital projects exceeds the committed totalinvestment of raised funds, due to bank deposit interest income.
(3) Changes to projects for which raised funds intended to be used
□ Applicable ? Not applicable
There were no raised fund project changes during the reporting period.
VIII. Major Assets and Equity Sales
1. Major assets sales
□ Applicable ? Not applicable
No major assets sales in the reporting period of the Company
2. Major equity sales
? Applicable □ Not applicable
| Counterparty | Equities sold | Date of sale | Transaction price (RMB ten thousand) | The net profits contributed by the | The influence of the sale on the Com | The proportion of the net profits contri | Pricing principle of equity selling | Whether it is a related transaction | The relationship with the counterparty | Whether all the equities involved | Whether the implementation proceeded | Date of Disclosure | Disclosure Index |
| equities to the listed Company from the beginning of the current period to the date of sale (RMB ten thousand) | pany | buted to the listed Company by equity selling in the total net profits | have been transferred | as scheduled | |||||||||
| STELLANTIS N.V. | 7.88% equity stake in Leapmotor Technology | November 20, 2023 | 320,438.65 | -31,089.78 | An increase of RMB 4.137 billion yuan in the Company's net profit attributable to the parent company in 2023 | 56.20% | Reference shall be made to the average closing price of Leapmotor Technology's stock on the Hong Kong Stock Exchange for 60 trading days, 30 trading days, and | Yes | The actual controllers, Mr. Fu Liquan and Mrs. Chen Ailing, who are spouses, are members of the largest shareholder group of Leapmotor Technology and have no | Yes | It was implemented as planed | October 26, 2023 | Juchao Information Network http://cninfo.com.cn |
| the previous trading day before signing the agreement, as mutually agreed upon after consultation between the parties. | affiliated relationship with the counterparty in the transaction. |
IX. Analysis of Major Subsidiaries and Associates? Applicable □ Not applicableMajor subsidiaries and joint-stock companies with a net profit impact of over 10%.
Unit: RMB
| Company Name | Company Type | Main businesses | Registered Capital | Total Assets | Net Assets | Operating revenue | Operating Profit | Net Profit |
| Zhejiang Dahua System Engineering Co., Ltd. | Subsidiary Company | Design, construction and installation of construction projects; technology development, services, consultation and transfer; development, manufacturing, | 500,000,000.00 | 3,347,849,044.45 | 1,269,980,252.01 | 1,060,066,495.48 | 4,965,954.88 | 19,904,357.04 |
installationandmarketingofelectronicproducts,safetyequipmentandcommunicationdevices;manufacturing andmarketingofcomputerhardwareandsoftware;import andexport ofgoods andtechnologies
| Zhejiang Dahua Vision Technology Co., Ltd. | Subsidiary Company | Technology development, services, consultation, and transfer; manufacturing, marketing and system services of computer hardware and software; design, development, manufacturing and marketing of electronic products and safety equipment; marketing and | 1,306,810,000.00 | 23,252,030,866.78 | 2,492,881,654.80 | 21,737,923,298.19 | 134,019,642.77 | 123,665,495.71 |
| technical services of IOT equipment; warehousing services, bonded warehouse operation | ||||||||
| Zhejiang Dahua Zhilian Co., Ltd. | Subsidiary Company | Technology development, services, consultation, and transfer; manufacturing and marketing of computer hardware and software; development, manufacturing and marketing of electronic products and electronic components, safety equipment and communication devices; leasing of self-owned houses; warehousing services; catering services; import and export of goods | 1,885,800,000.00 | 7,025,248,134.94 | 1,593,231,586.71 | 6,732,970,923.10 | 140,622,928.61 | 40,503,130.39 |
Acquisition and disposal of subsidiaries during the reporting period? Applicable □ Not applicable
| Company Name | Method of acquisition and disposal of subsidiaries during the reporting period | Impact on overall production management and performance |
| Zhejiang Huajian Technology Co., Ltd. | Purchase of equity | No significant impact on overall production, operation, and performance |
| Zhejiang Shuhang Intelligent Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation, and performance |
| Guangdong Huaxiyue Intelligent Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation, and performance |
| Zhejiang Huajie New Energy Operation Service Co., Ltd. | Established with investment | No significant impact on overall production, operation, and performance |
| Dahua Technology Belgium BV | Established with investment | No significant impact on overall production, operation, and performance |
| Dahua Technology Regional Headquarters | Established with investment | No significant impact on overall production, operation, and performance |
| Dahua Technology Azerbaijan LLC | Established with investment | No significant impact on overall production, operation, and performance |
| Dahua Technology Vietnam Company Limited | Established with investment | No significant impact on overall production, operation, and performance |
| HUARAY TECHNOLOGY KOREA COMPANY LIMITED | Established with investment | No significant impact on overall production, operation, and performance |
| Huaray technology GmbH | Established with investment | No significant impact on overall production, operation, and performance |
| Dahua Technology Angola S.U. lda | Established with investment | No significant impact on overall production, operation, and performance |
| Guizhou Dahua Information Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation, and performance |
X. Structured Entity Controlled by the Company
□ Applicable ? Not applicable
XI. Prospects for the Future Development of the Company
1. Deepening High-Quality Development
Dahua will continue to pay the most attention in the smart IoT industry, adhere to the strategicpositioning of a video-centric smart IoT solution and service provider, and focuses on two majorbusiness directions of cities and enterprises. It will focus on two main business directions: urban and
enterprise sectors. With insights into industry scenarios and profound understanding of customerneeds, the Company will provide good smart IoT solutions, so as to promote high-quality, green andinnovative development of economy and society. Simultaneously, adhering to the core values of"achieving success for customers and stakeholders", the Company upholds the mission of "makingsociety smarter and life better". Grounded in the market with exceptional products and services, theCompany aims to create greater value for customers, enabling various industries to enjoy the benefitsof technology and contributing tirelessly to the construction of a better and harmonious world.
In response to the rapid advancing of AI, the Company will continue to invest heavily in researchand development in relevant areas, driving the large-scale implementation of the AI industry. TheCompany will deepen the research and application of its Galaxy industry model, exploring the valueof video-centric data elements, empowering efficient urban governance systems and facilitating thetransformation and upgrading of enterprises into intelligent entities. After years of accumulation, theCompany has garnered extensive business experience across various industries in government andenterprises settings. Focusing on industry demands and leveraging multi-modal and foundationmodel technology capabilities, the Company will prioritize the development and industrialimplementation of industry visual foundation models for industry-specific applications. This will furtheraccelerate the expansion of government and enterprise intelligence and enhance the penetration rateof AI.
To grasp the vast opportunities in the smart IoT industry, the Company will deepen altruisticthinking and strengthen ecological construction, creating unique and differentiated value for partnersto realize a new ecosystem of "co-construction, symbiosis, and mutual benefit." By enhancing theCompany's capability to meet the digitalization needs across various industries, increasing investmentin innovative business ventures, optimizing the construction of the Company's global marketingnetwork and organizational capabilities, advancing operational decentralization, and strengthening itsglobal compliance system, the Company aims to maintain steady growth in its operational scale whilesustaining a healthy gross profit margin, continuously improving cash flow, targeting sustained growthin net profits, and achieving balanced development of businesses. These efforts will lay a solidfoundation for sustainable high-quality development.
2. Focus on prioritized tasks
(1) The Company is committed to continuously increasing investments in innovation and core
technologies, establishing barriers with core technological capabilities, and maintaining a focus
on AIoT and IoT digital intelligence platforms as its two main technological directions. It aims to
construct capabilities of "Full Sensing, Full Connection, Full Intelligence, Full Computing, and Full
Ecosystem" to achieve triple enhancements in the comprehensive 6D perception technology,
elevating video perception capabilities in multiple dimensions, and broadly expanding full-
frequency domain perception capabilities. The Company is also strengthening its research and
development in AI, integrating multimodal and foundation model capabilities to advance the
development and industrial application of industry-specific vision-based foundation models,
accelerating the AI industry upgrade, and further expanding the scale of digital and intelligentservices for cities and enterprises.
(2) The Company adheres to a full ecosystem strategy, anchoring its focus on realizing customervalue through services. By building all-round open capabilities from technology, business toservice, and opening up to industry customers and developers with hardware, software,algorithms, services and business ecology, the Company works together with its partners topioneer new fields and create new dynamics, so as to jointly develop infinite possibilities forindustrial development and empower the digital transformation of various industries.
(3) The Company will optimize its global marketing network, continue to reach more customers in keydomestic cities and key overseas countries, explore customers' needs, strengthen the front-lineoperation, technology and service capacity, accelerate the response in front-line business, findaccurate resources and accumulate customers with value.
(4) In the field of innovative businesses, leveraging in-depth understanding of diverse customer needsand years of accumulation in the field of intelligent IoT, the Company continues to exploreemerging business areas, including: machine vision and mobile robots, smart living, thermalimaging, automotive electronics, smart security inspection, smart fire protection, storage media,and other innovative businesses, aiming to continuously expand new high-growth points for theCompany.
(5) Deepen intelligent manufacturing and construct a digital supply system tailored to customerneeds. Through the construction of digital supply chain capabilities, including visualizing themanufacturing process, optimizing logistics, effectively managing suppliers, planning deliverycapacities, and fostering efficient internal collaboration, the Company achieves timely andreliable delivery commitments to meet customer demands.
(6) Enhancing operational efficiency within the enterprise, the Company focuses on high-qualitybusiness, so as to further upgrade the fine management of clients and business opportunities,and enhance frontline operational capabilities. The supply chain implements flexible sourcing toreduce delivery time and further lower costs. Strengthening quality management, the Companyputs in comprehensive effort to enhance product delivery and quality, promoting the practicalapplication of new technologies in intelligent software programming, intelligent pre-sales, andintelligent operations and maintenance.
(7) The Company will strengthen organizational capabilities, advance the deployment of operational
talents into various operational areas; focus on employee development, cultivate a stableworkforce structure, and foster a virtuous cycle involving both management personnel andtechnical professionals; advocate a high-performance culture, enhance organizational andindividual efficiency; inspire hard work for reward, and continue to promote the "EmployeeDevelopment Community Plan".
(8) The Company will continuously advance the construction of the compliance system and effectivelysafeguard the compliant operation and steady development of businesses.
XII. Reception of Visits, Communication, Interviews, and Other Activities in the Report Period? Applicable □ Not applicable
| Reception Time | Reception location | Reception Method | Reception target type | Reception objects | Main content of the discussion and the information provided | Index of the basic information of research |
| February 6, 2023 | Meeting room | Field Investigation | Institution | A total of 24 institutions including Sinolink Securities and Bosra Funds | The business summary in 2022 and the development outlook for 2023 for the Company | Records of Investor Relations Activities on February 6th and 8th, 2023 (Published on Juchao Information Network) |
| February 16, 2023 | Meeting room | Field Investigation | Institution | A total of 10 institutions including CITIC Securities and Caitong Securities | The Company's Investments and Strategic Positioning in Software, and the Products and Intelligent Advantages of Its Subsidiary IMOU | Records of Investor Relations Activities on February 16th and 17th, 2023 (Published on Juchao Information Network) |
| March 1, 2023 | Meeting room | Field Investigation | Institution | A total of 12 institutions including Xinda Aoyin and Granford Capital | The Company's Business Development Outlook for 2023 and the Development Status of the Dahua Haorui Platform | Records of Investor Relations Activities on March 1, 2023 (Published on Juchao Information Network) |
| March 9, 2023 | Meeting room | Field Investigation | Institution | A total of 15 institutions, including Topsperity Securities Asset Management and Essence Securities. | The Company's High-Reusability Application Scenario Solutions and the Extent of Ecological Collaboration Coverage | Records of Investor Relations Activities on March 9th and 10th, 2023 (Published on Juchao Information Network) |
| March 13, 2023 | Meeting room | Field Investigation | Institution | A total of 9 institutions including China Universal | The Company's Initiatives in Channel Ecological | Records of Investor Relations Activities on March 13th |
| Asset Management, AXA SPDB Investment Managers, etc. | Cooperation and Solutions with High Reusability in Application Scenarios | and 14th, 2023 (Published on Juchao Information Network) | ||||
| March 23, 2023 | Meeting room | Field Investigation | Institution | A total of 7 institutions including Harvest Fund and First-Trust Fund | The Company's Omni-Ecological Architecture and the Implementation of the Company's AI Capabilities | Records of Investor Relations Activities on March 23th and 24th, 2023 (Published on Juchao Information Network) |
| April 28, 2023 | Meeting room | Field Investigation | Institution | A total of 282 institutions including CICC and China Merchants Securities | The Overall Operational Status of the Company in 2022 and the Outlook for Cooperation with China Mobile | Records of Investor Relations Activities on April 28th, 2023 (Published on Juchao Information Network) |
| May 11, 2023 | Meeting room | Field Investigation | Institution | A total of 10 institutions including Changjiang Pension and China Life Security | The implementation status of the Company's AI technology and the Company's strategy and execution in the multimodal aspect | Records of Investor Relations Activities on May 11th and 12th, 2023 (Published on Juchao Information Network) |
| May 16, 2023 | Meeting room | Field Investigation | Institution | A total of 8 institutions including Sinolink Securities and Efunds | The co-creation of technology with ecosystem partners by the Company, along with specific industry applications of intelligent manufacturing solutions | Records of Investor Relations Activities on May 16th and 17th, 2023 (Published on Juchao Information Network) |
| May 26, 2023 | Meeting room | Field Investigation | Institutions and individuals | A total of 30 institutions including Harvest Fund and Orient | The recent development of the Company's industrial | Records of Investor Relations Activities on May 26th, |
| Securities, and 6 individual investors including Zhen Rongjun | robots and machine vision businesses, and the Company's support for partner business implementation in commercial sharing | 2023 (Published on Juchao Information Network) | ||||
| June 7, 2023 | Meeting room | Field Investigation | Institution | A total of 6 institutions including Bosra Funds and Guolian Securities | The development of the Company's intelligent manufacturing business and the collaborative cooperation between the Company and China Mobile | Records of Investor Relations Activities from June 7th to 9th, 2023 (Published on Juchao Information Network) |
| August 26, 2023 | Meeting room | Telephone communication | Institutions and individuals | A total of 213 institutions including Morgan Stanley and Sequoia Capital, and 6 individual investors such as Xie Ziyou | The Company's operational performance in the first half of 2023 and the outlook for business development trends in the second half | Records of Investor Relations Activities on August 26th, 2023 (Published on Juchao Information Network) |
| September 19, 2023 | Meeting room | Field Investigation | Institution | A total of 11 institutions including Zheshang Securities and Essence Securities | The Company's progress in foundation model research and development, and in software field | Records of Investor Relations Activities on September 19, 2023 (Published on Juchao Information Network) |
| October 21, 2023 | Meeting room | Telephone communication | Institutions and individuals | A total of 212 institutions including CICC and Goldman Sachs (Asia), and 6 individual investors such as Yang Yiran. | The Company's operational performance in the first three quarters of 2023 and the outlook for business development trends in the | Records of Investor Relations Activities on October 21, 2023 (Published on Juchao Information Network) |
| future | ||||||
| November 10, 2023 | Meeting room | Field Investigation | Institution | A total of 11 institutions including China International Fund Management and China Universal Asset Management | The recent release of the upgraded "Dahua Think #2.0" strategy, the characteristics of industry foundation model, and the progress of cooperation with China Mobile | Records of Investor Relations Activities on November 10th and 13th, 2023 (Published on Juchao Information Network) |
| December 1, 2023 | Meeting room | Field Investigation | Institution | A total of 9 institutions including Changjiang Pension and Founder Securities | The development of the Company in the field of "Full Sensing", the introduction of the Company's lightweight Genius AI open platform, as well as the Galaxy foundation model | Records of Investor Relations Activities on December1st and 4th, 2023 (Published on Juchao Information Network) |
XIII. The Implementation of the "Quality and Returns Enhancement" Action PlanHas the Company disclosed the "Quality and Returns Enhancement" action plan??Yes □ No
To safeguard the interests of all shareholders and based on confidence in the Company's futuredevelopment prospects and recognition of the stock's value, the Company has formulated the"Quality and Returns Enhancement" action plan. For specific details, see the announcement titled"Announcement on the 'Quality and Returns Enhancement' Action Plan" disclosed on February 7,2024, on the Juchao Information Network (announcement number: 2024-013).
The Company consistently prioritizes high-quality development, adhering to the core values of"achieving success for customers and stakeholders", and fulfilling the mission of "making societysmarter and life better." Leveraging two major technological strategies, AloT and IoT digitalintelligence platform, the Company empowers the construction of efficient urban governance systemsand the digital intelligence transformation and upgrading of enterprises. It deeply understandsindustry scenarios, comprehends customer needs, provides comprehensive smart IoT solutions, andis committed to building the preferred brand for smart IoT, promoting high-quality, green, andinnovative economic and social development.
The Company continuously strengthens its corporate governance foundation by establishinginternal control systems and promoting the responsible performance of the shareholders meeting,
board of directors, board of supervisors, and the management team. It regulates the rights andobligations of the Company and shareholders, preventing the abuse of shareholder rights and the useof management advantages to harm the interests of small and medium investors. The Companyenhances investor relations management, expands channels for institutional investors to participate incorporate governance, guides small and medium investors to actively participate in shareholders'meetings, facilitates the participation of various investor entities in major decision-making, andenhances investors' voice and sense of participation.While solidifying its own development foundation, the Company has firmly established a sense ofrewarding the shareholders. Since its listing in 2008, it has adhered to the practice of annual cashdividends, with the cumulative cash dividend amount exceeding RMB 5.7 billion yuan. In the fiscalyear 2023, the Company achieved a cumulative cash dividend of RMB 1.436 billion yuan throughmethods such as mid-year cash dividends and share repurchases. With the aim of better rewardingshareholders, and considering the capital needs for future business development and productionoperations, the Company has formulated a plan for the distribution of profits for the fiscal year 2023. Itproposes to distribute cash dividends of RMB 3.82 yuan (including tax) per 10 shares to allshareholders, amounting to approximately RMB 1.251 billion yuan (including tax) in cash dividends.Taking into account the mid-term cash dividends already distributed, the amount spent on sharerepurchases, and the proposed cash dividends for the fiscal year 2023, the total cash dividends forthe fiscal year 2023 amounted to RMB 2,686,469,500 yuan, accounting for 36.49% of the net profitattributable to the shareholders of the Company for the fiscal year 2023.
Section IV Corporate Governance
I. Basic Situation on Corporate GovernanceDahua has strictly established a "three meeting and one layer" corporate governance structure for the shareholders'meeting, board of directors, supervisory board, and management by following the Company Law, Securities Law,Code of Corporate Governance for Listed Companies and other relevant laws, regulations, and regulatory documentsof regulatory authorities. There are four special committees under the board of directors, including the StrategyCommittee, Audit Committee, Nomination Committee, and Remuneration and Appraisal Committee, with each havingclear responsibilities and coordinated operations.During the reporting period, the Company constantly improved corporate governance structure, established a souinternal control system, constantly improved the Company's standardized operation level, strictly performed theinformation disclosure obligations, and focused on protection of the investors' interests. The actual situation ofcorporate governance is in line with the laws, regulations, regulatory documents, and rules of self-regulation on thegovernance of listed companies issued by China Securities Regulatory Commission and Shenzhen Stock Exchange.(I) Shareholders and shareholder meetingsThe Company strictly adheres to the provisions and requirements of the Company Law, the Company's Articles ofAssociation, and the Rules of Procedure for Shareholders' Meetings to convene and conduct shareholders' meetings.This ensures equal treatment of all shareholders and guarantees shareholders' rights to information, participation, andvoting on significant company matters. During the reporting period, a total of four shareholders' meetings wereconvened, where resolutions were made on matters including regular reports, board elections, equity sales, andadjustments to equity incentive plans. The Company hires a lawyer to issue legal opinions on the convening of theGeneral Meeting of Shareholders, the qualifications of the attenders, the qualifications of the convener, the votingprocedure, and the voting results to ensure that the operation mechanism of the General Meeting of Shareholderscomplies with relevant provisions, and protects the legitimate rights and interests of the shareholders.(II) The Company and controlling shareholdersThe Company operates independently from its controlling shareholder in terms of business, personnel, assets,finances, and organization. Each operates with independent accounting, assuming individual responsibilities and risks.During the reporting period, the controlling shareholders adhered strictly to regulations, exercising shareholder rights inaccordance with relevant laws, regulations, and the Company's articles of association. There were no instances ofabusing its controlling position to harm the legitimate rights and interests of the Company and other shareholders, norwere there any cases of non-operational use of the Company's funds.(III) Directors and the Board of DirectorsThe Company elects the directors and appoints the independent directors in strict accordance with the selection andemployment procedure specified in the Company Law and the Articles of Association. At present, the Company hasnine directors, including three independent directors, all of whom are experts in corporate management and financialaccounting and other fields. The number and composition of the board of directors meet the requirements of relevant
laws and regulations and the Articles of Association. All of the Company's directors should perform their duties withintegrity and diligence in accordance with the principles of maximizing the interests of the company and shareholders.The Board of Directors convened board meetings and implemented the resolutions of the shareholders' meeting instrict accordance with "Articles of Association" and "Rules of Procedure of the Board of Directors"; All the directorswere able to perform their due duties and conscientiously attended the Board meetings and shareholders' meetings tosafeguard the legitimate rights and interests of the Company and shareholders.(IV) Supervisors and the Board of SupervisorsThe Company strictly elects the supervisors by the election and appointment procedures specified in the CompanyLaw and the Articles of Association. The Company currently has three supervisors. The number and composition ofthe board of supervisors meet the requirements of relevant laws and regulations and the Articles of Association. Theboard of supervisors convenes supervisor meetings in strict accordance with the Articles of Association and the Rulesof Procedure of the Board of Supervisors. All the supervisors perform their duties conscientiously, and effectivelysupervise and express independent opinions on the legitimacy and compliance of the corporate finance, directors, andsenior managers in fulfilling their duties,in an integral, diligent and conscientious manner, to safeguard the legitimaterights and interests of the Company and shareholders.(V) Senior Management PersonnelThe responsibilities of senior management personnel within the Company are clearly defined, and they diligently fulfilltheir duties in strict accordance with various management systems, including the Company's Articles of Association.They demonstrate diligence and responsibility, effectively implementing and executing resolutions made by the boardof directors.(VI) Performance Appraisal and Incentive and ConstraintTo further establish and improve the Company's incentive mechanism and strengthen the Company's philosophy ofsustainable development of both management and core employees, the Company implements a stock option andrestricted stock incentive plan, aiming to reinforce the interest sharing and restraint mechanisms applied toshareholders and core business personnel. It has maintained the stability of management teams and business leaders,guaranteed the realization of the Company's development strategy and business objectives, and ensured theCompany's long-term sound development. The appointment of company executives is open, transparent and complieswith laws and regulations.(VII) StakeholdersThe Company fully respects and safeguards the legitimate rights and interests of stakeholders. While striving forsteady growth in company performance, it earnestly treats and protects the legitimate rights and interests of allstakeholders. The Company strengthens communication and cooperation with various parties, continuously improvesproduct quality, attaches importance to corporate social responsibility, and achieves a balance of interests amongshareholders, employees, and society. This is done to promote the Company's sustained, stable, and healthydevelopment.(VIII) Information Disclosure and Investor Relations
The Company performs obligations for truthful, accurate, timely, and complete information disclosure in strictaccordance with the relevant laws and regulations, the Company's "Information Disclosure Management System" and"Investor Relation Management System", and designates Securities Times and Juchao Information Network(www.cninfo.com.cn) as the media channels for such disclosure; the Company strictly enforces the confidentiality ofundisclosed information. According to the Company's "Inside Information Confidentiality System", internal informationinsiders have been properly registered and filed. The internal information insider filing system has been establishedand submitted to the regulatory authorities for record in time as required, and the behavior of submitting companyinformation to external information users has been strictly regulated. During the reporting period, no incidence of stocktrading based on insider information has occurred.At the same time, the Company actively engages in communication with investors by setting up an special column ofinvestor relations management on its official website, and answering investors' questions through the investorinteraction platform of Shenzhen Stock Exchange and the Company's investor hotline, so as to keep investors'communication channels available, help investors understand and work with the Company, improve the Company'stransparency, and protect the legitimate rights and interests of all shareholders.Whether the actual status of corporate governance significantly deviates from laws, administrative regulations and therules issued by the China Securities Regulatory Commission regarding the governance of listed companies.
□ Yes ? No
There is no significant difference between the actual situation of corporate governance and laws, administrativeregulations and the rules issued by China Securities Regulatory Commission regarding the governance of listedcompanies.II. The Company's Independence from the Controlling Shareholders, Actual Controllers inAsset, Personnel, Finance, Organization, Business, etc.The company and the controlling shareholders are completely separated in terms of business, personnel, assets,organization, and finance, and has independent and complete businesses and capabilities of independent operation.
1. Business independence
The Company's business is independent of the controlling shareholders, actual controllers and other enterprises undertheir control, and has an independent and complete R&D, production, procurement, and sales system; the technologyrequired for production and operation is legal, independently owned, or licensed for use by the Company with no assetdisputes. The company has signed all external contracts independently, and has the ability to independently makeproduction and operation decisions and engage in production and business activities.
2. Personnel independence
The Company's personnel are independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company has an independent human resources department responsible for labor, personnel,and payroll management. The Company has established an independent labor, personnel, and salary managementsystem. The production, operation, and administration are independent of the controlling shareholders, actualcontrollers, and other companies controlled by them; the recommendation, election, and appointment of directors,supervisors, and senior managers of the Company are conducted legally and independently; senior managementpersonnel such as the president, executive president, senior vice president, board secretary, and finance director did
not hold positions other than directors and supervisors for controlling shareholders, actual controllers, and othercompanies controlled by them or receive salaries from them; the Company's financial staff do not have a part-time jobwith the controlling shareholders, actual controllers, and other companies controlled by them.
3. Asset independence
The Company's assets are independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company's main assets include the ownership and use rights of complete land, plants,machinery and equipment, trademarks, patents, non-patented technology required for the main business, and anindependent raw material procurement and product sales system. The property rights of the above assets are clearand completely independent of the controlling shareholders and major shareholders. There was misappropriation ofthe company's assets by the controlling shareholders and major shareholders.
4. Organization independence
The Company's organizations are independent from the controlling shareholders, actual controllers and othercompanies controlled by them. The Company has established decision-making, implementation, and supervisionbodies for general meeting of shareholders, board of directors and board of supervisors. It has also appointed seniormanagers such as president, executive president, senior vice president, board secretary, and chief financial officer; theCompany has set up specialized departments equipped with the necessary personnel independently responsible fordomestic/overseas sales, R&D, supply chain, delivery and service, quality and service, finance, legal affairs, securities,internal audit, human resources, administration, IT, and other functions. The internal organizations perform theirrespective operational management responsibilities under the leadership of the board of directors and the president inaccordance with the rules and regulations; there have been no cases in which the controlling shareholders, actualcontrollers, and other companies controlled by them are confused with their identities and duties; There is nocircumstance in which the controlling shareholder or actual controller interferes with its organizational setup.
5. Finance independence
The Company's finance is independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company has established an independent financial department with full-time financialaccounting personnel, and has established an independent financial accounting system for independent financialdecisions. It has a standardized financial accounting system and financial management system for subsidiaries; thecompany has independently opened a basic deposit account so that there is no sharing of bank accounts with actualcontrollers, controlling shareholders, and other companies controlled by it; the company handled tax registrations withthe Zhejiang Provincial State Tax Bureau and the Zhejiang Provincial Local Tax Bureau and paid taxes independentlyas required by law.III Horizontal competition
□ Applicable ? Not applicable
IV. Relevant Situation of the Annual General Meeting of Shareholders and the ExtraordinaryGeneral Meeting of Shareholders Held in the Reporting Period
1. The shareholders' meetings for this reporting period
| Conference Session | Conference Type | Percentage of Investors Involved | Date of Conference | Date of Disclosure | Conference Resolution |
| First Extraordinary General Meeting of Shareholders in 2023 | Extraordinary General Meeting | 39.75% | March 6, 2023 | March 7, 2023 | For details, see the Announcement of Resolutions at the First Extraordinary General Meeting of Shareholders in 2023 published on Juchao Information Network (www.cninfo.com.cn) |
| 2022 Annual General Meeting of Shareholders | Annual General Meeting | 52.63% | May 26, 2023 | May 27, 2023 | For details, see the Announcement of Resolutions at the 2022 Annual General Meeting of Shareholders published on Juchao Information Network (www.cninfo.com.cn) |
| Second Extraordinary General Meeting of Shareholders in 2023 | Extraordinary General Meeting | 51.13% | September 11, 2023 | September 12, 2023 | For details, see the Announcement of Resolutions at the Second Extraordinary General Meeting of Shareholders in 2023 published on Juchao Information Network (www.cninfo.com.cn) |
| Third Extraordinary General Meeting of Shareholders in 2023 | Extraordinary General Meeting | 46.15% | November 6, 2023 | November 7, 2023 | For details, see the Announcement of Resolutions at the Third |
ExtraordinaryGeneral Meetingof Shareholdersin 2023published onJuchaoInformationNetwork(www.cninfo.com.cn)
2. Convening of the Extraordinary General Meeting of Shareholders upon request of thepreferred stockholders whose voting rights are restored
□ Applicable ? Not applicable
IV. Directors, Supervisors and Senior Management
1. Basic information
| Name | Gender | Age | Post | Position status | Starting date of tenure | Termination Date of tenure | Number of shares held at the beginning of the period (share) | Number of shares increased in the period (share) | Number of shares decreased in the period (share) | Other changes (share) | Number of shares held at the end of the period | Reasons for increase and decrease in shares |
| Fu Liquan | Male | 57 | Chairman | Incumbent | April 1, 2005 | September 10, 2026 | 1,023,868,980 | 0 | 0 | 0 | 1,023,868,980 | |
| Wu Jun | Male | 52 | Vice Chairman | Incumbent | April 1, 2005 | September 10, 2026 | 69,172,886 | 0 | 0 | 0 | 69,172,886 | |
| Chen Ailing | Female | 57 | Director | Incumbent | April 1, 2005 | September 10, 2026 | 71,262,813 | 0 | 0 | 0 | 71,262,813 | |
| Zhao Yuning | Male | 47 | Director | Incumbent | March 6, 2023 | September 10, 2026 | 1,639,000 | 0 | 0 | -326,400 | 1,312,600 | Participation in the Company's equity incentive plan, with a portion of the held shares repurchased and canceled. |
| Yuan Lihua | Male | 57 | Director | Incumbent | September 11, 2023 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | |
| Zhang Xiaoming | Male | 53 | Director | Incumbent | September 11, 2023 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | |
| Liu Hanlin | Male | 61 | Independent Director | Incumbent | August 12, 2020 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | |
| Cao Yanlong | Male | 49 | Independent Director | Incumbent | December 20, 2021 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | |
| Zhang Yuli | Male | 59 | Independent Director | Incumbent | August 12, 2020 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | |
| Song Maoyuan | Female | 42 | Chairman of the Board of Supervisors | Incumbent | April 3, 2008 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | |
| Zheng Jieping | Female | 43 | Supervisor | Incumbent | August 12, 2020 | September 10, 2026 | 50,200 | 0 | 0 | 0 | 50,200 | |
| Jia Qi | Male | 47 | Supervisor | Incumbent | September 11, 2023 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | |
| Fu Liquan | Male | 57 | President | Incumbent | February 27, 2020 | September 10, 2026 | ||||||
| Zhao Yuning | Male | 47 | Executive President | Incumbent | December 19, 2022 | September 10, 2026 | ||||||
| Liu Ming | Male | 43 | Senior Vice President | Incumbent | October 12, 2020 | September 10, 2026 | 1,059,900 | 0 | 0 | -254,400 | 805,500 | Participation in the Company's equity incentive plan, with a portion of the held shares repurchased and |
| canceled. | ||||||||||||
| Li Zhijie | Male | 49 | Senior Vice President | Incumbent | February 27, 2020 | September 10, 2026 | 1,195,000 | 0 | 0 | -254,400 | 940,600 | Participation in the Company's equity incentive plan, with a portion of the held shares repurchased and canceled. |
| Song Ke | Male | 46 | Senior Vice President | Incumbent | October 12, 2020 | September 10, 2026 | 546,000 | 0 | 0 | -218,400 | 327,600 | Participation in the Company's equity incentive plan, with a portion of the held shares repurchased and canceled. |
| Wu Jian | Male | 50 | Secretary of the Board and Senior Vice President | Incumbent | December 1, 2005 | September 10, 2026 | 1,879,335 | 0 | 0 | -254,400 | 1,624,935 | Participation in the Company's equity incentive plan, with a portion of the held shares repurchased and canceled. |
| Xu Qiaofen | Female | 52 | CFO and Senior Vice President | Incumbent | February 27, 2020 | September 10, 2026 | 1,047,000 | 0 | 0 | -218,400 | 828,600 | Participation in the Company's equity incentive plan, with a portion of the held shares repurchased and canceled. |
| Xu Zhicheng | Male | 58 | Senior Vice President | Incumbent | March 22, 2018 | September 10, 2026 | 1,137,000 | 0 | 0 | -254,400 | 882,600 | Participation in the Company's equity incentive plan, with a portion of the held shares |
| repurchased and canceled. | ||||||||||||
| Zhu Jiantang | Male | 42 | Senior Vice President | Incumbent | March 22, 2018 | September 10, 2026 | 1,330,225 | 0 | 0 | -254,400 | 1,075,825 | Participation in the Company's equity incentive plan, with a portion of the held shares repurchased and canceled. |
| Zuo Pengfei | Female | 46 | Supervisor | Resigned | April 3, 2008 | September 10, 2023 | 0 | 0 | 0 | 0 | 0 | |
| Total | -- | -- | -- | -- | -- | -- | 1,174,188,339 | 0 | 0 | -2,035,200 | 1,172,153,139 | -- |
Whether there is any outgoing directors, supervisors, or dismissal of senior management in their term of office duringthe reporting period.?Yes □ NoDuring the reporting period, Ms. Zuo Pengfei, a supervisor of the Company, left her position upon the expiration of herterm and ceased to serve as a company supervisor.Changes of Directors, Supervisors and Senior Management of the Company? Applicable □ Not applicable
| Name | Title | Type | Date | Causes |
| Zuo Pengfei | Supervisor | Resigned upon term expiry | September 11, 2023 | Resigned upon term expiry and no longer served as a supervisor |
| Zhao Yuning | Director | Elected | March 6, 2023 | Elected |
| Yuan Lihua | Director | Elected | September 11, 2023 | Elected |
| Zhang Xiaoming | Director | Elected | September 11, 2023 | Elected |
| Jia Qi | Supervisor | Elected | September 11, 2023 | Elected |
2. Positions
Professional backgrounds, major work experiences and current main responsibilities in the Company for incumbentdirectors, supervisors and senior management of the CompanyMr. Fu Liquan, Chinese nationality, born in 1967, with master degree in EMBA of Zhejiang University. As one of themain founders of the Company, he served as chairman and president of the Company, and now serves as chairmanand president of the Company. He has won the honors of "Top Ten Influential Zhejiang Entrepreneurs", "Model Workerof Zhejiang Province", "Excellent Constructor of Socialism with Chinese Characteristics in the New Era of Non-PublicEconomy in Zhejiang Province", "Excellent Enterprise Operator with Outstanding Contributions to the InformationEconomy", "Outstanding Contributions Award in ‘Ingenuity for a Safe China’", Global Security Contribution Award, TopTen Figures in Security and Protection Industry, and the Best CEO of listed companies of Forbes, and more.Mr. Wu Jun, Chinese nationality, born in 1972, with a bachelor's degree, engineer, served as vice chairman and vice
president of the Company and general manager of Zhejiang Dahua System Engineering Co., Ltd. He now serves asvice chairman of the Company and executive director of Zhejiang Dahua System Engineering Co., Ltd.Ms. Chen Ailing, Chinese nationality, born in 1967, holding a bachelor's degree. As one of the main founders of theCompany, she served as director and CFO of the Company, and now serves as director of the Company.Mr. Zhao Yuning, Chinese nationality, was born in 1977 and graduated from National University of Singapore with amaster degree in science. From July 2017 to December 2022, he served as Vice President of the Company, GeneralManager of the Overseas Marketing Center, Senior Vice President of the Company, and President of the OverseasMarketing Center in turn. He is currently the director and executive president of the Company.Mr. Yuan Lihua, Chinese nationality, born in 1968, holds a Master's degree. He previously served as a director anddeputy general manager of China Mobile Communications Group Terminal Co., Ltd., and deputy general manager ofthe Foreign Investment Management Department of China Mobile Communications Group Co., Ltd. He currentlyserves as a director of the Company, a director, deputy general manager, and the Chief Legal Counsel of ChinaMobile Capital Holdings Co., Ltd.Mr. Zhang Xiaoming, Chinese nationality, born in 1972, holds a Master's degree. He previously served as the DeputyGeneral Manager of the Marketing Center at China Mobile Communications Group Beijing Co., Ltd., the Manager ofthe Key Customer Department at China Mobile Communications Group Co., Ltd., and the Deputy General Manager atChina Mobile Aspire Holdings Limited. He currently holds a position as a director in the Company.Mr. Cao Yanlong, Chinese nationality, born in 1975, is a member of the Communist Party of China and holds adoctoral degree. He has previously served as a lecturer/postdoctoral fellow at the College of Biosystems Engineeringand Food Science at Zhejiang University, a visiting scholar at the Center for Precision Measurement at the Universityof Huddersfield in the United Kingdom, and an assistant director of the Hangzhou Municipal Commission of Economyand Informatization. Currently, he holds the position of professor at the School of Mechanical Engineering at ZhejiangUniversity. He concurrently serves as the director of the Shandong Industrial Technology Research Institute ofZhejiang University and an independent director of the Company.Mr. Liu Hanlin, Chinese nationality, born in 1963, holds a postgraduate degree. He has held various positions atHangzhou Dianzi University, starting as an assistant, lecturer, associate professor, and eventually becoming aprofessor in the field of accounting. Previously, he served as the Vice Dean of the School of Economics and the PartySecretary of the School of Accounting at Hangzhou Dianzi University. Currently, Mr. Liu holds the position of professorat Hangzhou Dianzi University. Additionally, he serves as a member of the Chinese Institute of Certified PublicAccountants, a director of the Electronic Branch of the Accounting Society of China, a director and committee memberof the Accounting Society of Zhejiang Province, an executive director of the Zhejiang Institute of Certified PublicAccountants, and a deputy director of the Expert Consultation Committee on Management Accounting in ZhejiangProvince. Furthermore, he acts as an independent director for Litian Pictures Holdings Ltd., Zhejiang Runyang NewMaterial Technology Co., Ltd., and Zhejiang Great Shengda Packaging Co., Ltd. He is Independent Director of theCompany.Mr. Zhang Yuli, Chinese nationality, born in 1965, holds a doctoral degree. He previously served as the ExecutiveDeputy Director of the MBA Center, Vice Dean of the Graduate School, Vice Dean and Dean of the Business Schoolat Nankai University. Currently, he holds positions as a Professor and PhD Supervisor at the Nankai University NankaiBusiness School, as well as the Dean of the Nankai University Innovation and Entrepreneurship Institute. Additionally,he serves as a member of the Management Science Department of the Ministry of Education's Science and
Technology Committee, the China High-Quality MBA Education Accreditation Working Committee, the TianjinDiscipline Review Group, and the Professional Degree Education Guidance Committee. Furthermore, he holdspositions as an expert reviewer for the National Natural Science Foundation and the National Social ScienceFoundation, as well as serving as an independent director for Tianjin Port Co., Ltd. and Tianjin Benefo Tejing ElectricCo., Ltd. He was awarded the Special Allowance by the State Council in 2004 and was selected as a "ChangjiangScholar" Distinguished Professor by the Ministry of Education in 2013. He is Independent Director of the Company.Ms. Song Maoyuan, Chinese nationality, was born in 1982, holding a bachelor's degree. She currently serves as thePresident's Secretary and Chairperson of the Board of Supervisors at the Company.Ms. Zheng Jieping, Chinese nationality, born in 1979, holds a Bachelor's degree. She currently serves as thePresident of HR Center and a supervisor of the Company.Mr. Jia Qi, Chinese nationality, born in 1978, holds a Bachelor's degree. He previously served as the General Managerof the Comprehensive Department and Research and Development Department of China Mobile CommunicationsGroup Terminal Co., Ltd., and as the General Manager of its Beijing Branch. He currently serves as a DepartmentalGeneral Manager of China Mobile Capital Holdings Co., Ltd. and a supervisor of the Company.Mr. Wu Jian, Chinese nationality, born in 1974, holds a Master's degree. In the past five years, he has served as theSecretary of the Board of Directors and Vice President of the Company. He currently serves as the Secretary of theBoard of Directors and Senior Vice President of the Company.Ms. Xu Qiaofen, Chinese nationality, born in 1972, holds a college degree. She served as the chief financial officer ofthe Company's Finance Center from January 2015 to January 2017, the deputy general manager of the Company'sFinance Center from January 2017 to December 2017, and the general manager of the Company's Finance Centersince December 2017. She now serves as the CFO, Senior Vice President, and President of the Finance Center of theCompany.Mr. Liu Ming, Chinese nationality, born in 1981, holds a Master's degree. He joined the Company in 2006 and hasserved in various roles over the past 5 years, including Director of Hardware Platform Development Department,General Manager of R&D Center Front-end Product Line, General Manager of R&D Center Product DevelopmentDepartment, and Deputy General Manager of the R&D Center. He has been a standing deputy general manager of theR&D Center since March 2020. He now serves as a Senior Vice President of the Company and President of the R&DCenter.Mr. Li Zhijie, Chinese nationality, born in 1975, holds a Master's degree. He served as technical engineer, director ofthe Delivery and Service Department of the Representative Office, national delivery representative, and president ofRegional Delivery Department of Huawei Technologies Co., Ltd. from March 2005 to August 2017, and has beenserving as general manager of the Delivery and Service Center of the Company since September 2017. He nowserves as a senior vice president of the Company and President of Delivery and Service Center of the Company, andPresident of Zhejiang Dahua Smart IoT Services Co., Ltd.Mr. Song Ke, Chinese nationality, born in 1978, holds a master degree. He previously served as a manager of ITDepartment of Hangzhou H3C Co., Ltd., the General Manager of IT Center of Zhejiang Dahua Technology Co., Ltd.,and a supervisor of the Company. He now serves as a senior vice president of the Company and president of theProcess IT Center.
Mr. Xu Zhicheng, Chinese nationality, born in 1966, holds a college degree. He successively served as deputy generalmanager, general manager and supervisor of the Marketing Department of the Company from September 2013 toJune 2015, has been serving as general manager of the Internal Audit Department of the Company since June 2015,and now serves as a senior vice president of the Company and general manager of the Company's QualityManagement Center.Mr. Zhu Jiantang, Chinese nationality, born in 1982, holds a Bachelor's degree. From March 2012 to January 2015, hehas successively served as Product Director of R&D and Deputy General Manager of R&D Center. Since January2015, he has been the general manager of the Company's Supply Chain Management Center. He is currently a seniorvice president of the Company and the president of the Supply Chain Management Center.Position held in shareholders entities
□ Applicable ? Not applicable
Position held in other entities? Applicable □ Not applicable
| Name of office-holder | Name of other entity | Position held in other entities | Renumeration received from other entity or not |
| Fu Liquan | Ningbo Huayang Venture Capital Investment Partnership (Limited Partnership) | Executive Partner | No |
| Fu Liquan | Hangzhou Gulin Equity Investment Partnership (limited partnership) | Executive Partner | No |
| Fu Liquan | Ningbo Huaqi Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Fu Liquan | Zhejiang Huashi Investment Management Co., Ltd. | Executive Director | No |
| Chen Ailing | Zhejiang Huanuokang Technology Co., Ltd. | Chairman | No |
| Chen Ailing | Zhejiang Huashi Investment Management Co., Ltd. | General Manager | No |
| Chen Ailing | Hangzhou Huaxi Information Technology Co., Ltd. | Executive Director and General Manager | No |
| Chen Ailing | Ningbo Hualing Venture Capital Investment Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huagu Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huaqi Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Huayan Capital (Hangzhou) Private Equity Fund Management Co., Ltd. | Chairman | No |
| Chen Ailing | Hangzhou Huazhen Equity Investment Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Jikang I Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Jikang II Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Jikang III Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Jikang IV Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Ruipin Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Huaxiao 02 Corporate Management Partnership Enterprise (limited partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Huaxiao 01 Corporate Management Partnership Enterprise (limited partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Huatan Corporate Management Partnership Enterprise (limited partnership) | Executive Partner | No |
| Wu Jun | Ningbo Huakun Venture Capital Investment Partnership (Limited Partnership) | Executive Partner | No |
| Wu Jun | Zhoushan Xinhao Technology Development Co., Ltd. | Executive Director and General Manager | No |
| Yuan Lihua | Central Enterprise Rural Industry Investment Fund Co., Ltd. | Vice Chairman | No |
| Yuan Lihua | China Mobile Investment Holding Co., Ltd. | Director | No |
| Yuan Lihua | China Mobile Capital Holdings Co., Ltd. | Director, deputy general manager, chief legal advisor | Yes |
| Liu Hanlin | Zhejiang Runyang New Material Technology Co., Ltd. | Independent Director | Yes |
| Liu Hanlin | Litian Pictures Holdings Limited | Independent Director | Yes |
| Liu Hanlin | Zhejiang Great Shengda Packaging Co., Ltd. | Independent Director | Yes |
| Liu Hanlin | Hangzhou Crysound Electrical Co., Ltd. | Independent Director | No |
| Zhang Yuli | Tianjin TEDA Construction Group Co., Ltd. | Director | No |
| Zhang Yuli | Tianjin Benefo Tejing Electric Co., Ltd. | Independent Director | Yes |
| Zhang Yuli | Tianjin Port Holdings Co., Ltd. | Independent Director | Yes |
| Cao Yanlong | Hangzhou Hanmo Industrial Group Co., Ltd. | Supervisor | No |
| Cao Yanlong | Shandong Chuangzhi Intelligent Technology Co., Ltd. | Executive Director and General Manager | No |
| Cao Yanlong | Hangzhou Xiaotu Technology Co., Ltd. | Manager | No |
| Song Maoyuan | Hangzhou Huaxi Information Technology Co., Ltd. | Supervisor | No |
| Zheng Jieping | Hangzhou Huarong Investment Management Co., Ltd. | General Manager | No |
| Jia Qi | China Mobile Capital Holdings Co., Ltd. | Departmental General Manager | Yes |
Penalties imposed by CSRC on incumbent or outgoing directors, supervisors, and senior management during thereporting period in the last three years
□ Applicable ? Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
The followings are the decision-making program, determination basis and actual payment of remuneration fordirectors, supervisors, and senior management.Top management of the Company shall be evaluated by the performance commitments of senior management and thedepartment managers and those above shall be evaluated by their work report at the end of the year. The managershave made a system of responsibility for business objectives in their term of office, and formulated the assessment
method in which the company-level KPI index commitments are combined with individual performance commitments.They have met these indexes, meaning that they are able to complete their respective tasks in the latest term of office.The Company will increase their remuneration or adopt other incentive measures, as appropriate, based on theircompletion of objectives.Remuneration of directors, supervisors and senior management in the reporting period of the Company
Unit: RMB ten thousand
| Name | Gender | Age | Post | Position status | Total remuneration from the Company before tax | Whether to receive remuneration from related parties or not |
| Fu Liquan | Male | 57 | Chairman, President | Incumbent | 99.65 | No |
| Wu Jun | Male | 52 | Vice Chairman | Incumbent | 8.99 | No |
| Chen Ailing | Female | 57 | Director | Incumbent | 0 | No |
| Zhao Yuning | Male | 47 | Director, Executive President | Incumbent | 243.78 | No |
| Yuan Lihua | Male | 57 | Director | Incumbent | 0 | Yes |
| Zhang Xiaoming | Male | 53 | Director | Incumbent | 43.07 | No |
| Liu Hanlin | Male | 61 | Independent Director | Incumbent | 25.75 | No |
| Zhang Yuli | Male | 59 | Independent Director | Incumbent | 25.75 | No |
| Cao Yanlong | Male | 49 | Independent Director | Incumbent | 25.75 | No |
| Song Maoyuan | Female | 42 | Employee Supervisor | Incumbent | 66.43 | No |
| Zheng Jieping | Female | 45 | Employee Supervisor | Incumbent | 162.69 | No |
| Jia Qi | Male | 47 | Supervisor | Incumbent | 0 | Yes |
| Liu Ming | Male | 43 | Senior Vice President | Incumbent | 219.54 | No |
| Li Zhijie | Male | 49 | Senior Vice President | Incumbent | 206.16 | No |
| Song Ke | Male | 46 | Senior Vice President | Incumbent | 200.65 | No |
| Wu Jian | Male | 50 | Senior Vice President and Secretary of the Board | Incumbent | 204.13 | No |
| Xu Qiaofen | Female | 52 | Senior Vice President and Chief Financial Officer | Incumbent | 191.18 | No |
| Xu Zhicheng | Male | 58 | Senior Vice President | Incumbent | 216.53 | No |
| Zhu Jiantang | Male | 42 | Senior Vice President | Incumbent | 225.98 | No |
| Zuo Pengfei | Female | 46 | Employee Supervisor | Resigned | 34.92 | No |
| Total | -- | -- | -- | -- | 2,200.95 | -- |
Other notes
□ Applicable ? Not applicable
VI. The Performance of the Duties of Directors During the Reporting Period
1. The Board for this reporting period
| Conference Session | Date of Conference | Date of Disclosure | Conference Resolution |
| The 39th meeting of the 7th board of directors | February 17, 2023 | February 18, 2023 | For details, see the Announcement of Resolutions at the 39th meeting of the 7th board of |
| directors published on Juchao Information Network (www.cninfo.com.cn) | |||
| The 40th meeting of the 7th board of directors | March 17, 2023 | March 21, 2023 | For details, see the Announcement of Resolutions at the 40th meeting of the 7th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 41st meeting of the 7th board of directors | April 7, 2023 | April 8, 2023 | For details, see the Announcement of Resolutions at the 41st meeting of the 7th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 42nd meeting of the 7th board of directors | April 27, 2023 | April 28, 2023 | For details, see the Announcement of Resolutions at the 42nd meeting of the 7th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 43rd meeting of the 7th board of directors | May 19, 2023 | May 20, 2023 | For details, see the Announcement of Resolutions at the 43rd meeting of the 7th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 44th meeting of the 7th board of directors | June 16, 2023 | June 17, 2023 | For details, see the Announcement of Resolutions at the 44th meeting of the 7th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 45th meeting of the 7th board of directors | June 25, 2023 | June 27, 2023 | For details, see the Announcement of Resolutions at the 45th meeting of the 7th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 46th meeting of the 7th board of directors | August 25, 2023 | August 26, 2023 | For details, see the Announcement of Resolutions at the 46th meeting of the 7th board of directors published on |
| Juchao Information Network (www.cninfo.com.cn) | |||
| The 1st meeting of the 8th board of directors | September 11, 2023 | September 12, 2023 | For details, see the Announcement of Resolutions at the 1st meeting of the 8th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 2nd meeting of the 8th board of directors | October 20, 2023 | October 21, 2023 | For details, see the Announcement of Resolutions at the 2nd meeting of the 8th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
| The 3rd meeting of the 8th board of directors | October 26, 2023 | October 26, 2023 | For details, see the Announcement of Resolutions at the 3rd meeting of the 8th board of directors published on Juchao Information Network (www.cninfo.com.cn) |
2. Attendance of directors at the BOD meetings and shareholders' general meetings
| Attendance of directors at the BOD meetings and shareholders' general meetings | |||||||
| Name of director | Number of board meetings to attend during the reporting period | Number of attending the board meetings on site | Number of attendances of board meetings by means of telecommunications | Number of attendances of board meetings by entrustees | Number of absences at board meetings | Whether absent from board meetings in person for two consecutive times | Number of attendance of shareholders' general meetings |
| Fu Liquan | 11 | 10 | 1 | 0 | 0 | No | 4 |
| Wu Jun | 11 | 11 | 0 | 0 | 0 | No | 4 |
| Chen Ailing | 11 | 11 | 0 | 0 | 0 | No | 4 |
| Zhao Yuning | 10 | 10 | 0 | 0 | 0 | No | 4 |
| Yuan Lihua | 3 | 1 | 2 | 0 | 0 | No | 2 |
| Zhang Xiaoming | 3 | 3 | 0 | 0 | 0 | No | 2 |
| Liu Hanlin | 11 | 3 | 8 | 0 | 0 | No | 4 |
| Zhang Yuli | 11 | 1 | 10 | 0 | 0 | No | 3 |
| Cao Yanlong | 11 | 3 | 8 | 0 | 0 | No | 1 |
Explanation for failure to attend the board meeting in person twice in a rowN/A
3. Objections of directors to related issues of the company
Whether the directors challenge the company's related issues?
□ Yes ? No
During the reporting period, no director raised objections to the company's related issues.
4. Other information on directors' performance of duties
Whether director's proposals on the company issues are accepted??Yes □ NoNote on the acceptance or rejection of director's proposals on company issues.During the reporting period, the directors of the Company diligently attended the board meetings and shareholdermeetings in strict accordance with relevant laws and regulations such as the "Rules Governing the Listing of Shares onShenzhen Stock Exchange" and the Company's Articles of Association. They conscientiously fulfilled their duties andprovided constructive opinions or suggestions on the Company's development decisions. Simultaneously, theyproactively monitored the Company's operational and financial status, as well as significant matters, to promote thecontinuous, stable, and healthy development of the Company's operations.The independent directors demonstrated diligence and dedication by actively understanding the Company'soperational status, internal control system construction, and the implementation of resolutions of the board of directorsand shareholder meetings. They particularly scrutinized matters such as related-party transactions and profitdistribution plans, offering prudent oversight and expressing professional opinions. Their active and effectiveperformance of directorial duties served to uphold the overall interests of the Company and the legitimate rights andinterests of all shareholders, especially minority shareholders. They played a positive role in promoting the Company'sstandardized, stable, and healthy development.
VII. Performance of the Special Committee Under the Board of Directors During the ReportingPeriod
| Committee Name | Members | Number of Meetings Held | Date of Conference | Meeting Content | Offered Important Ideas and Suggestions | The Performance of the Others Duties | Details of Objections (if any) |
| Audit Committee | Liu Hanlin, Chen Ailing, Cao Yanlong, Zhang Yuli, (appointed for this role on September 11, 2023, Yuan Lihua (appointed for this role on September 11, 2023) | 6 | March 27, 2023 | Communicating with the auditing firm regarding the initial audit draft | |||
| April 20, 2023 | Deliberating on matters such as the 2022 annual report, the 2023 first-quarter report, and other related issues | ||||||
| August 23, 2023 | Deliberating on matters such as the 2023 semi-annual report and other related issues |
| September 11, 2023 | Reviewing and verifying the information of the appointed Chief Financial Officer and Head of Internal Audit | ||||||
| October 18, 2023 | Deliberating on the 2023 third quarter report | ||||||
| December 28, 2023 | Communicating on the 2023 annual audit plan | ||||||
| Remuneration and Appraisal Committee | Zhang Yuli, Fu Liquan, Liu Hanlin | 3 | April 20, 2023 | Deliberated and determined the remunerations for the directors, supervisors, and the senior executives, the repurchase and cancellation of restricted shares under equity-based incentives | |||
| June 9, 2023 | Deliberating on and verifying adjustments to the 2022 equity incentive plan | ||||||
| August 24, 2023 | Reviewing the compensation scheme for independent directors of the 8th board of directors | ||||||
| Nomination Committee | Cao Yanlong, Liu Hanlin, Fu Liquan | 3 | February 16, 2023 | Deliberating on the proposal for the nomination of candidates for non-independent directors of the 7th board of directors | |||
| August 24, 2023 | Deliberating on the proposal for the nomination of candidates for non-independent directors and independent directors of the 8th board of directors | ||||||
| September 11, 2023 | Deliberating and verifying the information of the senior management candidates | ||||||
| Strategy Committee | Fu Liquan, Zhang Yuli, Wu Jun, Zhao Yuning (appointed for this role on March 6, 2023) | 2 | April 20, 2023 | Deliberating on the 2023 development strategy of the Company | |||
| August 24, 2023 | Deliberating on the Company's share repurchase plan |
VIII. Performance of the Supervisory CommitteeHas the supervisory board discovered any risk in the company during the supervision in the reporting period
□ Yes ? No
The supervisory board had no objection to the supervisory matters in the report period.
IX. Employees in the Company
1. Number, profession composition and educational background of the employees
| Number of incumbent employees in the parent company at the end of the reporting period (person) | 12,205 |
| Number of incumbent employees in major subsidiaries at the end of the reporting period (person) | 11,247 |
| Total number of incumbent employees at the end of the reporting period (person) | 23,452 |
| Number of employees receiving salaries in current period (person) | 23,452 |
| Number of retired employees requiring the parent company and major subsidiaries to bear their costs | 7 |
| Profession composition | |
| Type of profession composition | Number of employees for profession composition (person) |
| Salesperson | 4,859 |
| R&D personnel | 12,372 |
| Supply chain | 3,988 |
| Management personnel | 450 |
| Professional support staff | 1,783 |
| Total | 23,452 |
| Educational background | |
| Type of educational background | Number of employees (person) |
| Master and above | 3,963 |
| Bachelor | 13,581 |
| College, technical secondary school | 3,172 |
| Others | 2,736 |
| Total | 23,452 |
2. Remuneration policies
The Company has established complete remuneration management systems and incentive mechanismsin strictaccordance with Labor Law, Labor Contract Law and other relevant laws and regulations, departmental rules, andnormative documents, providing the employees with competitive remunerations. The Company links its remunerationsystem and performance appraisal system with the business performance of the Company, which fully arouses theenthusiasm of the employees and effectively improves the executive force and responsibility consciousness ofemployees, thus better attracting and retaining talents and providing guarantee for sustainable, stable development ofthe Company in respect of human resources.
3. Training plan
The Company has been dedicated to the building of employee education and training system, established the internallecturer management measures including new employee training and in-service employee training, implementedtraining credits management system, improved the comprehensive quality of the Company's employees, created goodleaning atmosphere, established learning organization and comprehensively helped employees to improve their abilityto meet challenges and reforms in the future, thus providing powerful talent guarantee and support for sustainable, fastgrowth of the Company and achieving joint development of employees and the Company.
4. Labor outsourcing
□ Applicable ? Not applicable
X. Profits Distribution of the Company and Capitalization of Capital ReservesProfits Distribution policies during the reporting period, especially the formulation, implementation, or adjustment of thecash dividend policies? Applicable □ Not applicable
1. The Company held its annual shareholders' meeting for the year 2022 on May 26, 2023, and approved the profitdistribution plan for the year 2022: Based on a total share capital of 3,326,264,570 shares, a cash dividend of RMB
2.41 yuan (including tax) was distributed to all shareholders for every 10 shares held. The total cash dividend amountwas RMB 801,629,761.37 yuan. No bonus shares were issued, and no increase in share capital from reserves wascarried out. The remaining undistributed profits were carried over to the next financial year. This profit distribution planwas successfully implemented on June 6, 2023.
2. The Company convened its third extraordinary shareholders' meeting for the year 2023 on November 6, 2023, andapproved the profit distribution proposal for the first three quarters of 2023: Based on the remaining shares3,274,649,389 after deducting the repurchased 19,819,601 shares from a total share capital of 3,294,468,990 shares,a cash dividend of RMB 3.101383 yuan per 10 shares (including tax) was distributed to all shareholders. The totalcash dividend amount was RMB 1,015,594,194.60 yuan. No bonus shares were issued, and no increase in sharecapital from reserves was carried out. The remaining undistributed profits were retained for future distribution. Thisprofit distribution plan was successfully implemented on Thursday, November 16, 2023.
| Special notes on cash dividend policies | |
| Whether they comply with the requirements of the Company's articles of incorporation or the resolutions of the General Meeting of Shareholders: | Yes |
| Whether the dividend standards and proportions are distinct and clear: | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether the independent directors performed their duties and played their due role: | Yes |
| The Company should disclose specific reasons for not conducting cash dividends (if so planned), and outline the next steps and measures planned to enhance investor | Not applicable. |
| returns. | |
| Whether the minority shareholders have the opportunity to fully express their opinions and appeals, and whether their legitimate rights and interests have been fully protected: | Yes |
| Whether relevant conditions and procedures are compliant and transparent when the cash dividend policies are being adjusted or changed: | The Company has formulated a "Shareholder Return Plan for the Next Three Years (2024-2026)", which involves cash dividend planning in compliance with relevant regulations and provisions of the Company's Articles of Association, and has undergone the required review procedures as stipulated. |
The Company's profits during the reporting period and the parent company's shareholders' profits distribution arepositive but a cash dividend distribution preplan is not proposed.
□ Applicable ? Not applicable
Profit Distribution and Capital Reserve Converted to Share Capital in the Reporting Period? Applicable □ Not applicable
| Number of bonus shares per 10 shares (shares) | 0 |
| Number of dividend payout per 10 shares (RMB) (tax included) | 3.82 |
| Equity base in the distribution preplan (shares) | 3,274,649,389 |
| The amount of cash dividends (yuan) (including tax) | 1,250,916,066.60 |
| The amount of cash dividends (yuan, Note 1) in other ways (such as share repurchase) | 1,435,553,405.87 |
| The total amount of cash dividends (including in other ways) (yuan) | 2,686,469,472.47 |
| Distributable profits (RMB) | 24,448,835,337.15 |
| The ratio of the total amount of cash dividends (including in other ways) to the total amount of profit distribution | 100% |
| Latest cash dividend | |
| If the Company is in a growth stage with significant capital expenditure arrangements, the proportion of cash dividends in the current profit distribution should be at least 20%. | |
| Details of the preplans on profit distribution or capitalization of capital reserves | |
| Based on a total share capital of 3,274,649,389 shares as of December 31, 2023, after deducting the Company's repurchased shares (19,819,601 shares), a cash dividend of RMB 3.82 yuan per 10 shares (including tax) will be distributed to all shareholders. The total amount of this cash dividend distribution is RMB 1,250,916,066.60 yuan (including tax). No bonus shares will be issued, and no increase in share capital from reserves will be carried out. Any remaining undistributed profits will be reserved for future distribution. If the Company's share capital entitled to profit distribution rights changes due to convertible bond conversions, share repurchase, exercise of stock options in equity incentives, or additional shares listed through refinancing before the implementation of the distribution plan, the distribution ratios will be adjusted accordingly while maintaining the total distribution amount unchanged. | |
Note 1: The "other forms of cash dividends" include cash dividends for the first three quarters of 2023 and the amountspent on share repurchase in 2023.XI. Implementation of the Company's Equity Incentive Plan, Employee Stock Ownership Planor Other Employee Incentive Measures? Applicable □ Not applicable
1. Equity incentive
1. On April 27, 2023, the Company held the 42nd meeting of the 7th board of directors and the 29th meeting of the 7thboard of supervisors, approving "the Proposal on the Cancellation of a Portion of Restricted Stock from the 2022 StockOption and Restricted Stock Incentive Plan" and "the Proposal on the Cancellation of a Portion of Stock Options fromthe 2022 Stock Option and Restricted Stock Incentive Plan." In accordance with the relevant provisions of the "2022Stock Option and Restricted Stock Incentive Plan (Draft)," due to the Company's performance for the year 2022 notmeeting the first unlocking condition as stipulated, and 208 incentive recipients leaving their positions or experiencingchanges in control at subsidiary companies leading to non-compliance with incentive conditions, the Company decidedto cancel/repurchase a total of 31,861,466 stock options and 31,795,580 restricted shares held by 4,249 incentiverecipients.
2. On June 16, 2023, the Company convened the 44th meeting of the 7th board of directors and the 31st meeting ofthe 7th board of supervisors., approving "the Proposal Regarding the Company's Revised Draft of the 2022 StockOption and Restricted Stock Incentive Plan along with its Summary" and "the Proposal Regarding the Company'sRevised Draft of the Implementation and Assessment Management Measures of the 2022 Stock Option and RestrictedStock Incentive Plan," aiming to better align the individual interests of incentive recipients with the interests ofshareholders and the Company and revising the performance evaluation indicators at the corporate level for the period2023-2024 in the 2022 incentive plan.On September 11, 2023, the Company held the second extraordinary general meeting of shareholders in 2023, ,approving "the Proposal Regarding the Company's Revised Draft of the 2022 Stock Option and Restricted StockIncentive Plan along with its Summary" and "the Proposal Regarding the Company's Revised Draft of theImplementation and Assessment Management Measures of the 2022 Stock Option and Restricted Stock IncentivePlan."Share incentives for the Company's directors, supervisors, and senior executives? Applicable □ Not applicable
Unit: share
| Name | Post | Number of stock options held at the beginning of the year | Number of stock options newly granted during the reporting period | Number of vesting shares during the reporting period | Number of vested shares during the reporting period | The exercise price of the vested shares during the reporting period (yuan/share) | Number of stock options held at the end of the period | Market price at the end of the reporting period (yuan/share) | Number of restricted stocks held at the beginning of the period | Number of unlocked shares in this period | Number of restricted stocks newly granted during the reporting period | The granting price of restricted stocks (yuan/share) | Number of restricted stocks held at the end of the period |
| Zhao Yuning | Director, Exec | 544,000 | 0 | 0 | 0 | 0 | 326,400 | 18.45 | 816,000 | 0 | 0 | 8.16 | 489,600 |
| utive President | |||||||||||||
| Liu Ming | Senior Vice President | 424,000 | 0 | 0 | 0 | 0 | 254,400 | 18.45 | 636,000 | 0 | 0 | 8.16 | 381,600 |
| Li Zhijie | Senior Vice President | 424,000 | 0 | 0 | 0 | 0 | 254,400 | 18.45 | 636,000 | 0 | 0 | 8.16 | 381,600 |
| Song Ke | Senior Vice President | 364,000 | 0 | 0 | 0 | 0 | 218,400 | 18.45 | 546,000 | 0 | 0 | 8.16 | 327,600 |
| Wu Jian | Secretary of the board of directors, senior vice president | 424,000 | 0 | 0 | 0 | 0 | 254,400 | 18.45 | 636,000 | 0 | 0 | 8.16 | 381,600 |
| Xu Qiaofen | CFO, Senior Vice President | 364,000 | 0 | 0 | 0 | 0 | 218,400 | 18.45 | 546,000 | 0 | 0 | 8.16 | 327,600 |
| Zhu Jiantang | Senior Vice President | 424,000 | 0 | 0 | 0 | 0 | 254,400 | 18.45 | 636,000 | 0 | 0 | 8.16 | 381,600 |
| Xu Zhicheng | Senior Vice President | 424,000 | 0 | 0 | 0 | 0 | 254,400 | 18.45 | 636,000 | 0 | 0 | 8.16 | 381,600 |
| Total | -- | 3,392,000 | 0 | 0 | 0 | -- | 2,035,200 | -- | 5,088,000 | 0 | 0 | -- | 3,052,800 |
Evaluation and Incentive Mechanisms for Senior ManagementTop management of the Company shall be evaluated by the performance commitments of senior managementand the department managers and those above shall be evaluated by their work report at the end of the year. Themanagers have made a system of responsibility for business objectives in their term of office, and formulated theassessment method in which the company-level KPI index commitments are combined with individual performancecommitments. They have met these indexes, meaning that they are able to complete their respective tasks in the latestterm of office. The Company will increase their remuneration or adopt other incentive measures, as appropriate, basedon their completion of objectives.
2. Implementation of employee stock ownership plan
□ Applicable ? Not applicable
3. Other employee incentive measures
? Applicable □ Not applicableThe Company advocates for a "employee-based" philosophy, which emphasizes valuing employees who are dedicatedand hardworking. Building upon long-term incentives based on equity in the listed company, the Company haslaunched an employee co-investment incentive plan centered around specific innovative business subsidiaries. Thegoal is to organically align the interests of the Company and its employees, ensuring sustainable and healthydevelopment while fostering employees' enthusiasm for innovation and entrepreneurship.XII. Development and Implementation of Internal Control System During the Reporting Period
1. Development and implementation of internal control system
The Company has established and effectively implemented a sound internal control system in accordance with the"Basic Norms of Enterprise Internal Control" and its supporting guidelines, as well as other internal control regulatoryrequirements, and in light of the Company's current situation. The internal control system covers all business linksrelated to financial reporting and information disclosure affairs in the company's business activities, including the Rulesof Procedure of the Board of Directors, Rules of Procedure of the Board of Supervisors, Supervision and Managementof Subsidiaries, Seal Management, Investment and Financing Management, Human Resources Management,Information System Management, Capital Activities, Procurement Management, Asset Management, Sales andCollection Management, Cost and Expense Management, Information System Security Management, and InformationDisclosure Affairs Management.The Company has set up the Audit Committee under the board of directors, leading internal audit institutions, toinspect and supervise the establishment and implementation of the company's internal control, and to conductsystematic internal audit and supervision of the Company's economic activities. The Company has established a "risk-oriented, system-based, process-bonded, control-enabled, and IT-supported" risk management system framework toprovide excellent support for the realization of corporate strategies. Through identifying risks and evaluating theirlevels in terms of severity, likelihood and effectiveness of existing measures, the Company improves the hierarchicaldecision-making authorization system according to the acceptable level of risks, establishes or optimizes systems andprocesses, promotes the IT-supported processes and other control activities, and perfects process systems, tocomprehensively address the internal and external risks that may be foreseen in production and operation activities.The Company emphasizes the cultivation of risk awareness and regularly organizes risk management training for alldepartments, so as to strengthen the Company's risk warning and handling capabilities and develop the risk controlawareness among all staff.According to the identification of material weaknesses in the financial reporting internal control of the Company, as ofthe base date of the internal control assessment report, there is no material weakness in the internal control overfinancial reports, and the Company has maintained effective internal control on financial reports in all material aspectsin accordance with the requirements of the enterprise internal control system and relevant regulations. According tothe identification of material weaknesses in non-financial reporting internal control of the Company, no materialweaknesses in non-financial reporting internal control were found as of the base date of the internal controlassessment report.
2. Details of material weakness in internal control found during the reporting period
□ Yes ? No
XIII. Company's Management of Subsidiaries During the Reporting PeriodNot applicable.XIV. Internal Control Evaluation Report or Internal Control Audit Report
1. Internal Control Evaluation Report
| Date of full-text disclosure for internal control assessment report | April 16, 2024 | |
| Full-text disclosure index for internal control assessment report | http://www.cninfo.com.cn | |
| Percentage of total asset from units included in the assessment out of the total asset from the company's consolidated financial statements | 100.00% | |
| The proportion of operating revenue of parties included in the assessment to the operating revenue from the Company's consolidated financial statements | 100.00% | |
| Defect identification criteria | ||
| Category | Financial Report | Non-financial reports |
| Qualitative standards | Signs of material weakness in financial reporting include: (1) Corrupt practices of directors, supervisors, and senior managers of the Company; (2) Material misstatements in the current Financial Report discovered by the Certified Public Accountants but not recognized by the internal control of the Company; (3) Invalid internal control and supervision of the External Financial Report and the Financial Report of the Company by the Audit Committee and the Audit Department. Signs of significant deficiencies in financial reporting include: (1) Failure to select and apply the accounting policies in accordance with the accepted accounting standards; (2) Failure to establish anti-fraud procedure and control measures; (3) No appropriate control mechanism established or appropriate compensating control | The identification of non-financial report defects is mainly determined by the extent of their influence on validity of business process and the probability of occurrence. If the defect is less likely to occur, which may reduce the work efficiency or result, or with a greater uncertainty, or make it deviate from the expected goal, then it should be defined as a common defect; If the defect is likely to occur and will significantly lower the work efficiency or effect, significantly increase the uncertainty, or make it deviate from the expected goal, then it is a significant defect. If the defect is likely to occur and will seriously lower the work efficiency or effect, or seriously increase the uncertainty, or make it seriously deviate from the expected goal, then it is a major defect. Signs of material weakness in non-financial reporting internal control include: |
| implemented for accounting treatment of irregular or special transactions; (4) There are one or more defects in the control of final financial reporting process, and no reasonable guarantee that the financial statements can achieve the goal of being true and complete. General deficiencies refer to the control deficiencies other than the material deficiencies and important deficiencies described above. | 1) The decision-making procedures of the Company are not scientific, such as decision-making errors, causing failure to meet the desired objectives after mergers and acquisitions. 2) Violation of national laws and regulations, resulting in investigation by relevant departments and regulatory bodies; 3) Loss of management personnel or key technical personnel; 4) Frequent negative news in the media; 5) The results of internal control assessment, especially major or important deficiencies, have not been rectified; 6) Institutional controls are lacking or experiencing systemic failures in critical business operations. | |
| Quantitative standards | Losses which have been or may be incurred due to internal control deficiencies and are related to the profit statement should be measured by the operating revenue indicators. If the misreporting amount in the financial statement, which may be incurred by the deficiencies alone or together with other deficiencies, is less than 0.5% of the operating revenue, it is considered as a general defect; If it exceeds 0.5% of the operating revenue but is less than 1%, then it is an significant defect; If it exceeds 1% of the operating revenue, then it is considered as a major defect. Losses which have been or may be incurred due to internal control deficiencies and are related to the asset management should be measured by the total asset indicators. If the misstated amount in the financial statement, which may be incurred by the defect alone or together with other deficiencies, is less than 0.5% of the total asset, it is considered as a general defect; If it exceeds 0.5% of the total asset but less than 1%, it is an important defect; If it exceeds 1% of the total asset, it is considered as a major defect. | The quantitative criteria are based on operating revenue and total assets. Losses which have been or may be incurred due to internal control deficiencies and are related to the profit statement should be measured by the operating revenue indicators If the misreporting amount in the financial statement, which may be incurred by the deficiencies alone or together with other deficiencies, is less than 0.5% of the operating revenue, it is considered as a general defect; If it exceeds 0.5% of the operating revenue but is less than 1%, then it is an significant defect; If it exceeds 1% of the operating revenue, then it is considered as a major defect. Losses which have been or may be incurred due to internal control deficiencies and are related to the asset management should be measured by the total asset indicators. If the misstated amount in the financial statement, which may be incurred by the defect alone or together with other defects, is less than 0.5% of the total asset, it is considered as a common defect; If it exceeds 0.5% of the total asset but is less than 1%, then it is considered as an important defect; If it exceeds 1% of the total asset, it is considered as a major defect. |
| Number of material weakness in financial reports | 0 |
| Number of material weakness in non-financial reports | 0 |
| Number of significant deficiency in financial reports | 0 |
| Number of significant deficiency in non-financial report | 0 |
2. Internal control audit report
? Applicable □ Not applicable
| Deliberations Paragraph in the Internal Control Audit Report | |
| Dahua is deemed having maintained effective internal control, in all material respects, with respect to the financial statements in accordance with the "Basic Norms of Enterprise Internal Control" and relevant regulations, as of December 31, 2023. | |
| Disclosure in the internal control audit report | Disclosure |
| Date of full-text disclosure for the internal control audit report | April 16, 2024 |
| Full-text disclosure index for the internal control audit report | http://www.cninfo.com.cn |
| Opinion type in the internal control audit report | Standard unqualified opinion |
| Whether there are material deficiencies in the non-financial reports | No |
Whether the accounting firm has issued an internal control audit report with modified opinions
□ Yes ? No
Whether the opinions in the internal control audit report issued by the accounting firm are consistent with those in theself-evaluation report issued by the board of directors?Yes □ NoXV. Rectification of Self-inspection Problems of Special Actions for Corporate Governance ofListed Companies
N/A
Section V Environmental and Social Responsibilities
I. Major Environmental IssuesWhether the listed company and its subsidiaries belong to the key pollutant discharging units announced by theenvironmental protection department
□ Yes ? No
Administrative penalties for environmental offences during the reporting periodNot applicable.See other environmental information disclosed by key pollutant discharge units.Not applicable.Measures taken during the reporting period to reduce carbon emissions and their effectiveness? Applicable □ Not applicableSee the 2023 Environmental, Social and Governance Report released on the same day on Juchao InformationNetwork (www.cninfo.com.cn).Reasons for not disclosing other environmental informationDuring the reporting period, the Company and its subsidiaries do not fall under the category of key pollutantdischarging units announced by the environmental protection department.II. Social ResponsibilitiesSee the "2023 Social Responsibility Report" and "2023 Environmental, Social and Governance Report" released onthe same day on Juchao Information Network (www.cninfo.com.cn).III. Consolidation and Expansion of Poverty Alleviation Achievements and Rural Revitalization
In the reporting period, there have been no targeted poverty alleviation and rural revitalization activities in theCompany.
Section VI Significant EventsI. Performance of Commitments
1. Commitments that have been fulfilled by the Company's actual controller(s), shareholders,related parties, acquirers, the Company and the relevant parties during the reporting periodand those that have not been fulfilled by the end of the reporting period
? Applicable □ Not applicable
| Commitments | Party making commitments | Commitment Type | Content | Time | Term | Performance |
| Commitments made during initial public offerings or refinancing | Fu Liquan, Chen Ailing, Wu Jun | Commitment on restricted shares | The number of shares transferred each year during his/her term of service shall not exceed 25 percent of the total number of shares he/she holds in the Company; he/she shall not transfer his/her shares in the Company within half a year after he/she leaves the Company; within the next twelve months, the number of shares sold through the stock exchange listing transactions shall not exceed 50% of the total shares he/she holds. | July 15, 2007 | Long-term | Being fulfilled normally |
| Commitments made during initial public offerings or refinancing | Zhu Jiangming | Commitment on restricted shares | The number of shares transferred each year during his/her term of service shall not exceed 25 percent of the total number of shares he/she holds in the Company; he/she shall not transfer his/her shares in the Company within half a year after he/she leaves the Company; within the next twelve months, the number of shares sold through the stock exchange listing transactions shall not exceed 50% of the total shares he/she holds. | July 15, 2007 | June 17, 2023 | Completed |
| Commitments made during initial public offerings or refinancing | All directors and senior executives | Other commitments | Commitment to practical fulfilment of the measures for return filling involved in non-public offering | March 26, 2021 | Long-term | Being fulfilled normally |
| Commitments made during initial public offerings or refinancing | Fu Liquan, Chen Ailing | Other commitments | Commitment to practical fulfilment of the measures for return filling involved in non-public offering | March 26, 2021 | Long-term | Being fulfilled normally |
| Commitments made during initial public offerings or refinancing | China Mobile Communications Group Co., Ltd. | Commitment on restricted shares | For a period of 36 months from the date of completion of the stock issuance by Dahua to specific investors (i.e., the first day of listing of the newly issued shares), our company will not transfer the Dahua shares subscribed in this issuance in any manner, nor will Dahua repurchase these shares. After this issuance is completed, any additional shares our company acquires from Dahua due to bonus shares, capital stock increases, or similar reasons must also comply with the above agreement. | April 14, 2023 | 36 months | Being fulfilled normally |
| Other commitments to minority shareholders of the Company | Fu Liquan, Chen Ailing | Commitment on horizontal competition | (1) He/she will not directly engage in operational activities that constitute horizontal competition with the stock company's business; (2) for companies he/she held or indirectly held, he/she will fulfill the obligations under this commitment through agencies and personnel (including but not limited to directors and managers); (3) if the stock company further expands its range of products and business scope, he/she and the company held by him/her will not compete with the expanded range of products or businesses of the stock company. | June 30, 2007 | Long-term | Being fulfilled normally |
| Whether the commitment is fulfilled on time | Yes | |||||
| Where the commitment is overdue, the specific reasons for not completing the performance and the following work plan shall be explained in detail | Not applicable. | |||||
2. If there is a profit forecast for the Company's assets or projects, and the reporting period isstill within the profit forecast period, the Company shall make an explanation on the fulfillmentand its reasons
□ Applicable ? Not applicable
II. Non-operational capital occupation over listed companies by controlling shareholders andtheir related parties
□ Applicable ? Not applicable
During the reporting period, there is no non-operational capital occupation over listed companies by controllingshareholders and their related parties.
III. Illegal external guarantees
□ Applicable ? Not applicable
No illegal external guarantees during the reporting period.
IV. Statement by the Board of Directors on the "Non-Standard Audit Report" of the Last Period
□ Applicable ? Not applicable
V. Explanations Made by the Board of Directors, the Board of Supervisors, and IndependentDirectors (If Any) on the "Non-standard Audit Report" from the Accounting Firm during theReporting Period
□ Applicable ? Not applicable
VI. Changes in Accounting Policies and Accounting Estimates or Correction of SignificantAccounting Errors Compared with the Previous Year's Financial Report? Applicable □ Not applicableFor changes in accounting policies and accounting methods during the reporting period, please refer to "Section X:
Financial Reports/V: Important Accounting Policies and Accounting Estimates/38: Changes in Important AccountingPolicies and Accounting Estimates."
VII. Changes in the Scope of Consolidated Financial Statements Compared with the PreviousYear's Financial Report
? Applicable □ Not applicable
(1) The Company has established three domestic subsidiaries in this period: Zhejiang Shuhang Intelligent TechnologyCo., Ltd., Guangdong Huaxiyue Intelligent Technology Co., Ltd., and Zhejiang Huajie New Energy Operation ServiceCo., Ltd. Additionally, it has established seven overseas subsidiaries: Dahua Technology Belgium BV, DahuaTechnology Regional Headquarters, Dahua Technology Azerbaijan LLC, Dahua Technology Vietnam CompanyLimited, Huaray Technology Korea Company Limited, HuaRay Technology GmbH, and Dahua Technology Angola S.U.
lda. All the aforementioned subsidiaries have been consolidated into the financial reports of the Company from theirrespective establishment dates.
(2) The Company's holding subsidiary, Huajian Technology, acquired 100% equity of Zhejiang Huajian Technology Co.,Ltd. in February 2023, thereby obtaining substantial control over it. Consequently, it has been consolidated into thefinancial reports of the Company.
(3) The Company's subsidiary, Guizhou Dahua Information Technology Co., Ltd., was deregistered during this periodand is no longer included in the financial report of the Company from the date of deregistration.
VIII. Appointment and Dismissal of Accounting FirmsCurrently appointed accounting firms
| Names of domestic accounting firms | BDO China Shu Lun Pan CPAs (special general partnership) |
| Remuneration to domestic accounting firms (Unit: RMB ten thousand) | 200 |
| Years of continuous audit service of domestic accounting firms | 20 |
| Names of Certified Public Accountants from domestic accounting firms | Du Na, Zhang Junhui |
| The continuous period of audit service for certified public accountants in domestic accounting firms | Du Na has been in service for 1 year and Zhang Junhui has been in service for 4 consecutive years. |
Whether to reappoint accounting firms for current period
□ Yes ? No
Appointment of accounting firms, financial advisers, or sponsors for internal control auditing? Applicable □ Not applicable
1. During the 2023 reporting period, the Company engaged BDO China Shu Lun Pan Certified Public Accountants LLP(special general partnership) as the internal control audit accounting firm, with a total of internal audit expense of RMB400,000 yuan paid.
2. During the reporting period, the Company completed the issuance of shares to specific investors and paidunderwriting fees totaling RMB 3 million yuan to the sponsor institution Guosen Securities Co., Ltd.
IX. Delisting after Disclosure of the Annual Report
□ Applicable ? Not applicable
X. Bankruptcy and Restructuring
□ Applicable ? Not applicable
No such case as bankruptcy and reorganization related event during the reporting period.
XI. Significant Lawsuits and Arbitrations
□ Applicable ? Not applicable
There is no major lawsuit or arbitration during this reporting period.XII. Penalties and Rectification
□ Applicable ? Not applicable
XIII. Integrity of the Company, Its Controlling Shareholders and Actual Controllers
□ Applicable ? Not applicable
XIV. Significant Related-party Transactions
1. Related transactions relevant to daily operations
□ Applicable ? Not applicable
No such case as significant related-party transactions connected with daily operations.
2. Related transactions in acquisition or sale of assets or equities
? Applicable □ Not applicableFor details, see "7. Other significant related-party transactions" in this section.
3. Significant related-party transactions arising from joint investments on external parties
? Applicable □ Not applicableFor details, see "7. Other significant related-party transactions" in this section.
4. Related-party creditor's rights and debts
□ Applicable ? Not applicable
No such case as related credits and debts during the reporting period.
5. Transactions with related financial companies
□ Applicable ? Not applicable
No deposit, loan, credit or other financial business between the Company and the related financial company and therelated parties.
6. Transactions between the financial company controlled by the Company and the relatedparties
□ Applicable ? Not applicable
There are no deposit, loan, credit, or other financial business between the financial company controlled by theCompany and the related parties.
7. Other significant related-party transactions
? Applicable □ Not applicable
1. On February 17, 2023, the Company convened the 39th meeting of the 7th board of directors and the 27th meetingof the 7th board of supervisors, during which the "Proposal on Capital Increase by Certain Senior Management andCore Employees of the Company and Related Transactions to the Planned Spin-off Subsidiary" was deliberated andapproved. The proposal sanctioned that certain senior management and core employees of the Company wouldcollectively increase their investment in the holding subsidiary, Zhejiang HuaRay Technology Co., Ltd. (hereinafterreferred to as "HuaRay Technology"), by a total of RMB 6,049,190 yuan (increasing the registered capital by RMB1,675,676 yuan , with the remaining portion allocated to capital surplus). Among them, 11 natural persons, includingsenior management Zhao Yuning and Zhu Jiantang, would collectively invest RMB 4,839,353 yuan directly. Followingthis capital increase, the Company's equity stake in HuaRay Technology changed from 42.2280% to 41.0878%.HuaRay Technology continues to be a holding subsidiary within the consolidated financial statements of the Company.
2. On March 17, 2023, the Company convened the 40th meeting of the 7th board of directors, deliberating andapproving the "Proposal on Increasing Capital and Shares of Holding Subsidiaries and Introducing Investors, as wellas Related Transactions." In the meeting, the Company's holding subsidiary, HuaRay Technology, was approved tointroduce a total of 8 investors, including Yibin Green Energy Equity Investment Partnership (Limited Partnership), andZhu Jiangming, among others. The investors planned to inject a total of RMB 260,000,061 yuan in cash into HuaRayTechnology (RMB 8,934,710 yuan as additional registered capital, with the remainder credited to capital surplus),thereby collectively obtaining a 12.58% equity in HuaRay Technology after capital increase. Following this capitalincrease, the Company's equity stake in HuaRay Technology changed from 41.0878% to 35.9171%. HuaRayTechnology continues to be a holding subsidiary within the consolidated financial statements of the Company.
3. On April 7, 2023, the Company convened the 41st meeting of the 7th board of directors, deliberating and approvingthe "Proposal on Waiving the Priority Right of First Refusal of Holding Subsidiary and Related Transactions." Thispertained to the transfer of a 20% equity stake in Zhejiang Wisualarm Technology Co., Ltd. (hereinafter referred to asWisualarm Technology) by its shareholder, Zhejiang Huashi Investment Management Co., Ltd., to the WisualarmTechnology Employee Shareholding Platform and core management. The Company's board of directors agreed towaive the aforementioned equity stake's priority right of first refusal.
4. Additionally, on April 7, 2023, the Company convened both the 41st meeting of the 7th board of directors and the28th meeting of the 7th board of supervisors. At these meetings, during which the "Proposal on Implementing EquityIncentives for Holding Subsidiaries and Related Transactions" was deliberated and approved. It was agreed toimplement equity incentives for certain directors, supervisors, executives, and core employees of Hangzhou HuachengNetwork Technology Co., Ltd. (hereinafter referred to as "Huacheng Network") through a capital increase. Amongthese, director Zhao Yuning, supervisor Zheng Jieping, and senior executives Liu Ming, Zhu Jiantang, Li Zhijie, XuZhicheng, Wu Jian, Song Ke, and Xu Qiaofen, collectively increased Huacheng Network's capital by RMB7,881,049.75 yuan (leading to an additional registered capital of RMB 2,236,316 yuan). Following the completion ofthis equity incentive implementation, the Company's equity stake in Huacheng Network changed from 51.00% to
44.61%, while Huacheng Network continues to be a holding subsidiary within the consolidated financial statements ofthe Company.
5. On June 25, 2023, the Company convened the 45th meeting of the 7th board of directors and the 32nd meeting ofthe 7th board of supervisors. During the meetings, the "Proposal on Capital Increase for Holding Subsidiaries,Implementation of Equity Incentives, and Related Transactions" was deliberated and approved. The Company agreedto increase its investment in Zhejiang Huagan Technology Co., Ltd. (hereinafter referred to as "Huagan Technology")by valuing the assets of the thermal imaging business asset group at RMB 539,864,700 yuan and injecting the
business into Huagan Technology, increasing the registered capital of Huagan Technology by RMB 2,81,091,690 yuan.Simultaneously, Huagan Technology incentivized certain directors, supervisors, executives, core employees, and theircore management team through a capital increase, priced at RMB 1 yuan per share.
6. On October 26, 2023, the Company held the 3rd meeting of the 8th board of directors and convened the thirdextraordinary general meeting of shareholders of 2023 on November 6, 2023. The "Proposal on Transfer of Equity inthe Invested Company and Related Transactions" was deliberated and approved. The Company agreed to transfer 90million shares (of which 45 million shares are "fully tradable" H shares and the other 45 million shares are domesticshares) of Zhejiang Leapmotor Technology Co., Ltd. (hereinafter referred to as "Leapmotor") to STELLANTIS N.V. at aprice of HK$3,492.90 million. In November 2023, the Company completed the delivery of the fully tradable H sharesand domestic shares of Leapmotor involved in this transaction to STELLANTIS N.V. as agreed, and the Company nolonger holds any shares of Leapmotor.Website for disclosing the interim report on significant related-party transactions
| Announcement name | Disclosure date | Website for the disclosure |
| Announcement on the Capital Increase by Certain Senior Management and Core Employees of the Company and Related Transactions for the Planned Spin-off Subsidiary | February 18, 2023 | Juchao Information Network http://www.cninfo.com.cn/ |
| Announcement on Increasing Capital and Shares of Holding Subsidiaries and Introducing Investors, as well as Related Transactions | March 21, 2023 | Juchao Information Network http://www.cninfo.com.cn/ |
| Announcement on Waiving the Priority Right of First Refusal of Holding Subsidiary and Related Transactions | April 8, 2023 | Juchao Information Network http://www.cninfo.com.cn/ |
| Announcement on Implementing Equity Incentives for Holding Subsidiaries and Related Transactions | April 8, 2023 | Juchao Information Network http://www.cninfo.com.cn/ |
| Announcement on Capital Increase for Holding Subsidiaries, Implementation of Equity Incentives, and Related Transactions | June 27, 2023 | Juchao Information Network http://www.cninfo.com.cn/ |
| Announcement on Transfer of Equity in the Invested Company and Related Transactions | October 26, 2023 | Juchao Information Network http://www.cninfo.com.cn/ |
XV. Significant Contracts and Performance
1. Matters on trusteeship, contracting, and leasehold
(1) Matters on trusteeship
□ Applicable ? Not applicable
No such case as custody during the reporting period.
(2) Contracting
□ Applicable ? Not applicable
No such case as contracting during the reporting period.
(3) Leasing
? Applicable □ Not applicableExplanations on leasesDuring the reporting period, some of the Company's own real estate properties were used for rental, and there are noother leases of major property except for the leased real estate property used for office, warehouse, and productionworkshops.Cases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reportingperiod
□ Applicable ? Not applicable
No such leases that brought the profit and loss accounted for more than 10% of the Company's total profit during thereporting period.
2. Significant guarantees
? Applicable □ Not applicable
Unit: RMB ten thousand
| External guarantees from the Company and its subsidiaries (excluding guarantees to the subsidiaries) | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Total amount of guarantees approved during the reporting period (A1) | Total amount of guarantees actually occurred during the reporting period (A2) | |||||||
| Total amount of guarantees approved by the end of the reporting period (A3) | Total balance of guarantees at the end of the reporting period (A4) | |||||||
| Company's guarantees to subsidiaries | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Zhejiang Dahua Vision Technology Co., Ltd. | April 28, 2023 | 840,000.00 | August 12, 2020 | 60,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | No |
| August 18, 2020 | 33,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | No | |||
| August 1, 2020 | 3,500.00 | Joint liability guarantee | From August 1, 2021 to July 31, 2023 | Yes | No |
| September 27, 2021 | 90,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No |
| June 10, 2022 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No |
| June 10, 2022 | 20,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| July 25, 2022 | 35,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No |
| June 9， 2023 | 20,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No |
| October 13, 2017 | 22,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | No |
| September 21, 2018 | 28,330.80 ( US$ 40 million) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | No |
| April 7, 2020 | 53,000.00 | Joint liability guarantee | From April 7, 2020 to March 31, 2024 | No | No |
| September 1, 2020 | 30,000.00 | Joint liability guarantee | Five years upon expiration of debt period of master contract | No | No |
| February 4, 2021 | 100,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | No |
| July 26, 2021 | 44,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | No |
| October 20, 2021 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the | No | No |
| master contract | |||||
| July 22, 2022 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | No |
| September 19, 2022 | 60,000.00 | Joint liability guarantee | From September 19, 2022 to September 18, 2024 | No | No |
| June 9， 2023 | 40,000.00 | Joint liability guarantee | From the effective date of the guarantee until three years after the maturity date of each loan or other financing under the "Credit Agreement," or the maturity date of accounts receivable rights acquired by the Hangzhou Branch of China Merchants Bank, or the date of each advance payment. In the event of any specific credit extension, the guarantee period shall extend until three years after the expiration of the extension period. | No | No |
| June 25， 2023 | 20,000.00 | Joint liability guarantee | The guarantee period extends to three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | No | No |
| July 24, 2023 | 40,000.00 | Joint liability guarantee | From the date of expiration of each individual main debt obligation until three years after the expiration of the performance term of all main debt obligations under the entire main contract | No | No |
| July 25, 2023 | 50,000.00 | Joint liability guarantee | From the effective date of the "Maximum Guarantee Contract" until three years after the expiration of | No | No |
| the performance term of each debt under the credit business agreement | ||||||||
| July 26, 2023 | 90,000.00 | Joint liability guarantee | Separately calculated for each individual credit facility arranged by Dahua Technology for the debtor, i.e. from the date of signing the main contract for the individual credit facility until three years after the expiration of the performance term of the debtor under that main contract. | No | No | |||
| July 26, 2023 | 33,000.00 | Joint liability guarantee | Three years starting from the expiration of the performance term of the debtor as stipulated in the main debt contract | No | No | |||
| November 20, 2021 | 20,000.00 | Joint liability guarantee | Three years starting from the day following the promise by the Qingchun Branch of the Industrial and Commercial Bank of China to make external payment | No | No | |||
| Zhejiang Dahua Zhilian Co., Ltd. | April 28, 2023 | 270,000.00 | November 10, 2021 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No |
| March 25, 2022 | 8,000.00 | Joint liability guarantee | From March 25, 2022 to December 31, 2023 | Yes | No | |||
| April 29, 2022 | 42,496.20 (US$ 60 million) | Joint liability guarantee | One years upon expiration of debt period of master contract | Yes | No | |||
| April 29, 2022 | 1,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | Yes | No | |||
| May 14, 2022 | 38,954.85 (US$ 55 million) | Joint liability guarantee | From May 14, 2022 to May 14, 2023 | Yes | No | |||
| June 10, 2022 | 16,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No | |||
| June 10, 2022 | 16,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the | Yes | No |
| maturity date of each note discounted by the China Merchants Bank within the credit extension period | |||||
| November 16, 2022 | 15,581.94 (US$ 22 million) | Joint liability guarantee | 2022.11.16-2023.05.14 | Yes | No |
| June 9, 2023 | 16,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No |
| September 24, 2020 | 30,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | No |
| July 26, 2021 | 16,500.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | No |
| December 3, 2021 | 3,541.35 (US$ 5 million) | Joint liability guarantee | From December 3, 2021 to December 2, 2024 | No | No |
| August 25, 2022 | 20,000.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No |
| September 19, 2022 | 15,000.00 | Joint liability guarantee | From September 19, 2022 to September 18, 2024 | No | No |
| June 9, 2023 | 16,000.00 | Joint liability guarantee | From the effective date of the guarantee until three years after the maturity date of each loan or other financing under the "Credit Agreement," or the maturity date of accounts receivable rights acquired by the Hangzhou Branch of China Merchants Bank, or the date of each advance payment. In the event of any specific credit extension, the guarantee period shall extend until three years after the expiration of | No | No |
| the extension period. | ||||||||
| June 19, 2023 | 12,000.00 | Joint liability guarantee | June 19, 2023 to June 18, 2024 | No | No | |||
| June 19, 2023 | 35,000.00 | Joint liability guarantee | June 19, 2023 to June 18, 2024 | No | No | |||
| July 13, 2023 | 8,853.38 (US$ 12.5 million) | Joint liability guarantee | July 13, 2023 to July 12, 2024 | No | No | |||
| July 24, 2023 | 50,000.00 | Joint liability guarantee | From the date of expiration of each individual main debt obligation until three years after the expiration of the performance term of all main debt obligations under the entire main contract | No | No | |||
| Zhejiang Dahua System Engineering Co., Ltd. | April 28, 2023 | 30,000.00 | November 10, 2021 | 6,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No |
| June 10, 2022 | 4,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No | |||
| June 10, 2022 | 4,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No | |||
| July 25, | 5,000.00 | Joint liability | Three years after the maturity of the | Yes | No |
| 2022 | guarantee | debts in the master contract | ||||||
| August 30, 2019 | 1,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | No | |||
| August 25, 2022 | 500.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| June 9, 2023 | 4,000.00 | Joint liability guarantee | From the effective date of the guarantee until three years after the maturity date of each loan or other financing under the "Credit Agreement," or the maturity date of accounts receivable rights acquired by the Hangzhou Branch of China Merchants Bank, or the date of each advance payment. In the event of any specific credit extension, the guarantee period shall extend until three years after the expiration of the extension period. | No | No | |||
| July 25, 2023 | 5,000.00 | Joint liability guarantee | From the effective date of the "Maximum Guarantee Contract" until three years after the expiration of the performance term of each debt under the credit business agreement | No | No | |||
| September 11, 2023 | 160.21 | Joint liability guarantee | One year from the date of signing the project contract or upon the stable operation of the system for six months (whichever comes later) | No | No | |||
| Dahua Technology (HK) Limited | April 28, 2023 | 60,000.00 | March 25, 2022 | 1,416.54 (US$ 2 million) | Joint liability guarantee | March 25, 2022 to March 25, 2023 | Yes | No |
| April 21, 2023 | 1,416.54 (US$ 2 million) | Joint liability guarantee | April 21, 2023 to April 21, 2024 | No | No | |||
| DAHUA TECHNOLOGY MEXICO S.A. DE | April 28, 2023 | 8,000.00 | September 1, | 708.27 (US$ 1 million) | Joint liability guarantee | September 1, 2021 to December 1, 2023 | Yes | No |
| C.V | 2021 | |||||||
| October 21, 2022 | 3,541.35 (US$ 5 million) | Joint liability guarantee | October 21, 2022 to October 20, 2023 | Yes | No | |||
| October 18, 2023 | 708.27 (US$ 1 million) | Joint liability guarantee | October 18, 2023 to October 20, 2024 | No | No | |||
| Hangzhou Huacheng Network Technology Co., Ltd. | April 28, 2023 | 17,000.00 | August 30, 2019 | 5,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | No |
| July 26, 2021 | 5,500.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | No | |||
| August 25, 2022 | 6,500.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| Dahua Technology UK Limited | April 28, 2023 | 2,000.00 | August 12, 2020 | 1,048.77 (GBP 1.16 million) | Joint liability guarantee | August 12, 2020 to the date of signing termination notice | No | No |
| Zhejiang Huayixin Technology Co., Ltd. | April 28, 2023 | 4,500.00 | June 10, 2022 | 1,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 1,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| April 29, 2022 | 1,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | No | |||
| May 16, 2022 | 1,416.54 (US$ 2 million) | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | No | |||
| August 25, 2022 | 200.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| October 21, 2022 | 800.00 | Joint liability guarantee | October 21, 2022 to September 18, 2024 | No | No | |||
| Zhejiang Fengshi Technology Co., Ltd. | April 28, 2023 | 15,000.00 | June 10, 2022 | 2,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of | Yes | No |
| each note discounted by the China Merchants Bank within the credit extension period | ||||||||
| June 9, 2023 | 2,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| August 25, 2022 | 10,000.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| October 21, 2022 | 2,000.00 | Joint liability guarantee | October 21, 2022 to September 18, 2024 | No | No | |||
| June 25, 2023 | 2,000.00 | Joint liability guarantee | The guarantee period extends to three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | No | No | |||
| Jiangsu Huaruipin Technology Co. Ltd. | April 28, 2023 | 4,500.00 | October 20, 2021 | 1,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | No |
| June 10, 2022 | 1,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No | |||
| June 9, 2023 | 1,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| August 25, 2022 | 800.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No |
| October 21, 2022 | 1,500.00 | Joint liability guarantee | October 21, 2022 to September 18, 2024 | No | No | |||
| Zhejiang Huaxiao Technology Co., Ltd. | April 28, 2023 | 2,000.00 | June 10, 2022 | 1,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 1,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| August 25, 2022 | 200.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| October 21, 2022 | 800.00 | Joint liability guarantee | October 21, 2022 to September 18, 2024 | No | No | |||
| Xi'an Dahua Zhilian Technology Co., Ltd. | April 28, 2023 | 20,000.00 | June 10, 2022 | 5,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 5,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| August 25, 2022 | 10,000.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| October 21, 2022 | 2,500.00 | Joint liability guarantee | October 21, 2022 to September 18, 2024 | No | No | |||
| June 25, 2023 | 5,000.00 | Joint liability guarantee | The guarantee period extends to three years after the maturity date | No | No |
| of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | ||||||||
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | April 28, 2023 | 10,000.00 | June 10, 2022 | 5,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 5,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| August 25, 2022 | 3,000.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| June 25, 2023 | 5,000.00 | Joint liability guarantee | The guarantee period extends to three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | No | No | |||
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | April 28, 2023 | 15,000.00 | June 10, 2022 | 10,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 8,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No |
| June 25, 2023 | 8,000.00 | Joint liability guarantee | The guarantee period extends to three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | No | No | |||
| Changsha Dahua Technology Co., Ltd. | April 28, 2023 | 8,000.00 | June 10, 2022 | 1,000.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 1,000.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| August 25, 2022 | 3,000.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| October 21, 2022 | 2,000.00 | Joint liability guarantee | October 21, 2022 to September 18, 2024 | No | No | |||
| June 25, 2023 | 1,000.00 | Joint liability guarantee | The guarantee period extends to three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | No | No | |||
| Zhejiang Pixfra Technology Co., Ltd. | April 28, 2023 | 1,000.00 | June 10, 2022 | 500.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 500.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill | Yes | No |
| discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | ||||||||
| August 25, 2022 | 500.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| Zhejiang Huafei Intelligent Technology CO., LTD. | April 28, 2023 | 700.00 | June 10, 2022 | 500.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| August 25, 2022 | 200.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| Zhejiang Huajian Technology Co., Ltd. | April 28, 2023 | 1,000.00 | June 10, 2022 | 500.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| June 9, 2023 | 500.00 | Joint liability guarantee | From the effective date of the letter of commitment until three years after the maturity date of each bill discounted by the Hangzhou Branch of China Merchants Bank in the credit period. | Yes | No | |||
| August 25, 2022 | 200.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No | |||
| Hangzhou Xiaohua Technology CO., LTD. | April 28, 2023 | 700.00 | June 10, 2022 | 500.00 | Joint liability guarantee | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes | No |
| August 25, 2022 | 200.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No |
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | April 28, 2023 | 500.00 | August 25, 2022 | 500.00 | Joint liability guarantee | August 25, 2022 to August 25, 2025 | No | No |
| Dahua Technology France SAS | April 28, 2023 | 700.00 | December 7, 2023 | 114.50 (EUR 145,700) | Joint liability guarantee | From December 7, 2023 to August 31, 2029 | No | No |
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Guangxi Dahua Information Technology Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Guangxi Dahua Technology Co., Ltd. | April 28, 2023 | 300.00 | No such case during the reporting period | |||||
| Anhui Dahua Zhilian Information Technology Co., Ltd. | April 28, 2023 | 800.00 | No such case during the reporting period | |||||
| Anhui Dahua Zhishu Information Technology Co., Ltd. | April 28, 2023 | 800.00 | No such case during the reporting period | |||||
| Chengdu Dahua Zhilian Information Technology Co., Ltd. | April 28, 2023 | 800.00 | No such case during the reporting period | |||||
| Chengdu Dahua Zhishu Information Technology Service Co., Ltd. | April 28, 2023 | 800.00 | No such case during the reporting period | |||||
| Chengdu Huishan Smart Network Technology Co., Ltd. | April 28, 2023 | 800.00 | No such case during the reporting period | |||||
| Chengdu Zhichuang Yunshu Technology Co., Ltd. | April 28, 2023 | 800.00 | No such case during the reporting period | |||||
| Hangzhou Fuyang Hua'ao Technology Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Henan Dahua Zhilian Information Technology Co., Ltd. | April 28, 2023 | 800.00 | No such case during the reporting period | |||||
| Hunan Dahua Zhilong Information Technology Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Tianjin Dahua Information Technology Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Tianjin Huajian Technology Co., Ltd. | April 28, 2023 | 200.00 | No such case during the reporting period | |||||
| Yiwu Huaxi Technology Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Intelligent IoT | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Operation Service Co., Ltd. | |||
| Zhejiang Huakong Software Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period |
| Dahua Technology USA Inc. | April 28, 2023 | 15,000.00 | No such case during the reporting period |
| Dahua Technology Japan LLC | April 28, 2023 | 100.00 | No such case during the reporting period |
| DAHUA EUROPE B.V. | April 28, 2023 | 10,000.00 | No such case during the reporting period |
| Dahua Technology Singapore Pte.Ltd. | April 28, 2023 | 200.00 | No such case during the reporting period |
| Dahua Technology Poland Sp.Zo.O. | April 28, 2023 | 1,000.00 | No such case during the reporting period |
| Dahua Technology Hungary Kft | April 28, 2023 | 1,000.00 | No such case during the reporting period |
| Dahua Technology India Private Limited | April 28, 2023 | 2,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY BRASIL COM?RCIO E SERVI?OS EM SEGURAN?A ELETR?NICA LTDA | April 28, 2023 | 1,000.00 | No such case during the reporting period |
| Dahua Technology Middle East FZE | April 28, 2023 | 1,000.00 | No such case during the reporting period |
| Dahua Technology Perú S.A.C | April 28, 2023 | 1,000.00 | No such case during the reporting period |
| Dahua Technology Australia PTY LTD | April 28, 2023 | 500.00 | No such case during the reporting period |
| Dahua Technology South Africa Proprietary Limited | April 28, 2023 | 500.00 | No such case during the reporting period |
| Dahua Technology Canada INC. | April 28, 2023 | 1,000.00 | No such case during the reporting period |
| Dahua Guvenlik Teknolojileri Sanayi ve Ticaret A.S. | April 28, 2023 | 1,000.00 | No such case during the reporting period |
| Dahua Technology SRB d.o.o. | April 28, 2023 | 100.00 | No such case during the reporting period |
| Dahua Technology Bulgaria EOOD | April 28, 2023 | 100.00 | No such case during the reporting period |
| Dahua Iberia, S.L. | April 28, 2023 | 100.00 | No such case during the reporting period |
| Dahua Security Malaysia SDN. BHD. | April 28, 2023 | 100.00 | No such case during the reporting period |
| Dahua Technology Kazakhstan LLP | April 28, 2023 | 100.00 | No such case during the reporting period |
| PT. Dahua Vision Technology Indonesia | April 28, 2023 | 100.00 | No such case during the reporting period |
| Dahua Technology Korea Company Limited | April 28, 2023 | 100.00 | No such case during the reporting period |
| Dahua Technology S.R.L. | April 28, 2023 | 100.00 | No such case during the reporting period |
| Dahua Vision LLc | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Dahua Technology New Zealand Limited | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology GmbH | April 28, 2023 | 300.00 | No such case during the reporting period | |||||
| Dahua Technology Colombia S.A.S. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Dahua Technology Panama S.A. | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Chile SpA | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Tunisia Limited Liability Company | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Kenya Limited | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Pakistan (private) Limited | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Morocco SARL | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Argentina S.A. | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Czech s.r.o. | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Denmark ApS | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology(Thailand) Co.,LTD. | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Dahua Technology Italy S.R.L. | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Luoyang Dahua Zhiyu Information Technology Co., Ltd. | April 28, 2023 | 500.00 | No such case during the reporting period | |||||
| Dahua Technology Belgium B.V. | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| VISMEXTECH DHM SERVICIOS, S.A. DE C.V. | April 28, 2023 | 100.00 | No such case during the reporting period | |||||
| Total amount of guarantees to subsidiaries approved during the reporting period (B1) | 1,360,000.00 | Total amount of guarantees to subsidiaries actually occurred during the reporting period (B2) | 508,252.90 | |||||
| Total amount of guarantees to subsidiaries approved by the end of the reporting period (B3) | 1,360,000.00 | Total balance of guarantees actually paid to subsidiaries at the end of the reporting period (B4) | 969,990.35 | |||||
| Subsidiaries' guarantees to subsidiaries | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Total amount of guarantees to subsidiaries approved during the reporting period (C1) | Total amount of guarantees to subsidiaries actually occurred during the reporting period (C2) | |||||||
| Total amount of guarantees to subsidiaries approved at the end of the reporting period (C3) | Total of actual guarantee balance for subsidiaries at the end of the reporting period (C4) | |||||||
| Total amount of company guarantees (namely sum of the previous three major items) | ||||||||
| Total amount of guarantees approved during the reporting period (A1+B1+C1) | 1,360,000.00 | Total amount of guarantees actually occurred during the reporting period (A2+B2+C2) | 508,252.90 | |||||
| Total amount of guarantees approved by the end of the reporting period (A3+B3+C3) | 1,360,000.00 | Total balance of guarantees actually paid at the end of the reporting period (A4+B4+C4) | 969,990.35 | |||||
| Total amount of actual guarantees (A4+B4+C4) as a percentage of the Company's net assets | 27.94% | |||||||
| Including: | ||||||||
| Balance of guarantees to the shareholders, actual controllers and their related parties (D) | ||||||||
| Balance of debt guarantees directly or indirectly offered to guaranteed objects with asset-liability ratio exceeding 70% (E) | 924,330.14 | |||||||
| Amount of the guarantees with the total volume exceeding 50% of the net assets (F) | ||||||||
| Total amount of the above three guarantees (D+E+F) | 924,330.14 | |||||||
| Notes on unexpired guarantees with guarantee responsibilities occurred or possible joint liabilities within the reporting period (if any) | ||||||||
| Notes on providing external guarantees in violation of specified procedures (if any) | ||||||||
Explanation of guarantee using a composite methodN/A
3. Entrusting Others to Manage Cash Assets
(1) Entrusted Financing
? Applicable □ Not applicableEntrusted financing during the reporting period
Unit: RMB ten thousand
| Specific type | Funding source | Entrusted amount | Unexpired balance | Overdue outstanding amount | Impairment amount accrued for overdue financial management |
| Financial | Equity Fund | 50,000.00 | 100,000.00 |
| products of securities companies | |||||
| Total | 50,000.00 | 100,000.00 | |||
Specific matters on high-risk entrusted capital management with a large amount for a single item, or with low securityand poor liquidity? Applicable □ Not applicable
Unit: RMB ten thousand
| Name of trustee organization (or name of trustee) | Trustee organization (or trustee) type | Product type | Amount | Capital Source | Starting date | Termination date | Investment direction | Payment determination method | Reference for annualized rate of return | Expected earnings (if any) | Actual profit and loss during the reporting period | Actual recovery of profits and losses during the reporting period | Amount of provision for impairment accrued (if any) | Whether it passed the legal procedures | Whether there will be entrusted financial plan in the future | Item overview and related query index (if any) |
| Guosen Securities co., Ltd. | Securities | Asset Management Plan | 100,000.00 | Equity Fund | February 10, 2021 | February 9, 2031 | Private equity fund products, fixed income assets, equity assets, public equity hybrid funds | Payment of principal and income at maturity | 181.96 | Unexpired | Yes | No | ||||
| Total | 100,000.00 | -- | -- | -- | -- | -- | -- | 181.96 | -- | -- | -- | -- | ||||
Cases of entrusted financing expected to be unable to recover the principal or cases that may result in impairment
□ Applicable ? Not applicable
(2) Entrusted Loans
□ Applicable ? Not applicable
No such case as entrusted loan during the reporting period.
4. Other Significant Contracts
□ Applicable ? Not applicable
No such case as other significant contract during the reporting period.XVI. Explanations on Other Significant Matters? Applicable □ Not applicable
1. Repurchase of company shares through centralized competitive bidding tradingOn August 25, 2023, the Company held its 46th meeting of the 7th board of directors, during which the "Proposal onthe Repurchase of Shares" was deliberated and approved. The Company planned to use its own funds to repurchasea portion of its shares through centralized competitive bidding. This repurchase was intended for implementing equityincentives or an employee stock ownership plan. The total amount allocated for the repurchase would be no less thanRMB 400 million yuan and no more than RMB 600 million yuan. The repurchase price per share would not exceedRMB 31.71.As of October 27, 2023, the Company had repurchased 19,819,601 shares through its designated securities accountvia centralized competitive bidding, accounting for 0.60% of the Company's total share capital. The highest transactionprice was RMB 21.70 per share, and the lowest was RMB 19.70 yuan per share. The total transaction amount wasRMB 419,959,211.27 yuan (excluding transaction fees). This share repurchase plan has been completed.
2. Equity distribution for the first three quarters
On October 21, 2023 and November 6, 2023, the Company convened the 2nd meeting of the 8th board of directorsand the 3rd extraordinary general meeting of shareholders for the year 2023, respectively. Both meetings deliberatedand approved the "Profit Distribution Proposal for the First Three Quarters of 2023." Based on a total share capital of3,294,468,990 shares, excluding the repurchased 19,819,601 shares, resulting in a base of 3,274,649,389 shares, theCompany proposed to distribute cash dividends of RMB 3.101383 yuan per 10 shares (including tax) to allshareholders. The total cash dividend amount is RMB 1,015,594,194.60 yuan. No bonus shares were issued, and noincrease in share capital from reserves was carried out. The remaining undistributed profits were retained for futuredistribution. This equity distribution has been fully implemented.
The announcements above have been disclosed through the designated media Securities Times and JuchaoInformation Network (http://www.cninfo.com.cn).
XVII. Significant Events of the Company’s Subsidiaries
□ Applicable ? Not applicable
Section VII Changes in Shares and Information about
ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
| Before the change | Increase or decrease in the change (+, -) | After the change | |||||||
| Quantity | Percentage | Shares newly issued | Bonus shares | Shares converted from capital reserves | Others | Subtotal | Quantity | Percentage | |
| I. Shares with limited sales condition | 1,075,053,850 | 35.44% | 293,103,400 | 0 | 0 | -32,697,694 | 260,405,706 | 1,335,459,556 | 40.54% |
| 1. Shares held by state | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. Shares held by state-owned legal persons | 0 | 0.00% | 293,103,400 | 0 | 0 | 0 | 293,103,400.00 | 293,103,400 | 8.90% |
| 3. Other domestic shares | 1,075,053,850 | 35.44% | 0 | 0 | 0 | -32,697,694 | -32,697,694 | 1,042,356,156 | 31.64% |
| Of which: Shares held by domestic legal persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic natural persons | 1,075,053,850 | 35.44% | 0 | 0 | 0 | -32,697,694 | -32,697,694 | 1,042,356,156 | 31.64% |
| 4. Foreign | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| shares | |||||||||
| Of which: Shares held by foreign legal persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by foreign natural persons | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| II. Shares without restrictions | 1,958,107,320 | 64.56% | 0 | 0 | 0 | 902,114 | 902,114 | 1,959,009,434 | 59.46% |
| 1. RMB ordinary shares | 1,958,107,320 | 64.56% | 0 | 0 | 0 | 902,114 | 902,114 | 1,959,009,434 | 59.46% |
| 2. Foreign shares listed in China | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Foreign shares listed in foreign countries | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Other | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total | 3,033,161,170 | 100.00% | 293,103,400 | 0 | 0 | -31,795,580 | 261,307,820 | 3,294,468,990 | 100.00% |
Reasons for changes in shares? Applicable □ Not applicable
1. During the reporting period, the Company successfully completed the issuance of shares to China MobileCommunications Group Co., Ltd. The 293,103,400 shares issued became listed on April 14, 2023.
2. Throughout the reporting period, the Company repurchased and canceled a portion of the restricted shares grantedbut not yet unlocked under the 2022 Stock Option and Restricted Stock Incentive Plan. The repurchase involved atotal of 31,795,580 shares.
3. According to relevant regulations, the Company shall lock the shares held by its directors, supervisors and seniorexecutives through reverification at the beginning of each year and shall lock the shares held by the resigned directors,supervisors and senior executives in different proportions at different stages based on their resignation dates andformer terms of office.Approval for changes in shares
? Applicable □ Not applicable
1. On April 18, 2022, the Company's application for the issuance of shares to China Mobile Communications GroupCo., Ltd was approved by the Issuance Examination Committee of the China Securities Regulatory Commission(CSRC). Subsequently, on April 24, 2022, the Company obtained from the CSRC the "Approval for the Non-publicIssuance of Shares by Zhejiang Dahua Technology Co., Ltd." (CSRC Permit [2022] No. 853).
2. The Company's repurchase and cancellation of a portion of the restricted shares under the 2022 Stock Option andRestricted Stock Incentive Plan have been approved at the 42nd meeting of the 7th Board of Directors and the 29thmeeting of the 7th Board of Supervisors, held on April 27, 2023, and subsequently endorsed at the 2022 AnnualGeneral Meeting held on May 26, 2023.Transfer for changes in shares? Applicable □ Not applicable
1. During the reporting period, the Company successfully completed the issuance of shares to China MobileCommunications Group Co., Ltd. The 293,103,400 shares issued became listed on April 14, 2023.
2. Throughout the reporting period, the Company repurchased and canceled a portion of the restricted shares grantedbut not yet unlocked under the 2022 Stock Option and Restricted Stock Incentive Plan. The repurchase involved atotal of 31,795,580 shares.Effects of changes in shares on the basic earnings per share ("EPS"), diluted EPS, net assets per share, attributable tocommon shareholders of the Company, and other financial indexes over the last year and last period? Applicable □ Not applicableDuring the reporting period, changes in the Company's share capital occurred due to the issuance of shares to specificparties and the cancellation of some restricted stock repurchases. The impact of these changes on the Company'sbasic earnings per share, diluted earnings per share, and net assets per share attributable to ordinary shareholders ofthe Company for the most recent year and period can be found in detail in "Section II. VI. Key Accounting Data andFinancial Indicators."Other contents that the Company considers necessary or are required by the securities regulatory authorities todisclose
□ Applicable ? Not applicable
2. Changes in restricted stocks
? Applicable □ Not applicable
Unit: share
| Name of Shareholder | Number Of Shares With Limited Sales Condition At The Beginning Of The Period | Number of increased shares with limited sales condition in current period | Number of unlocked shares with limited sales condition in current period | Number of shares with limited sales condition at the end of the period | Reasons for limited sales | Date of unlocking |
| Fu Liquan | 767,901,735 | 0 | 0 | 767,901,735 | Lock-up Shares of Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, |
| and senior management | ||||||
| China Mobile Communications Group Co., Ltd. | 0 | 293,103,400 | 0 | 293,103,400 | Issue restricted shares to specific parties | April 13, 2026 |
| Zhu Jiangming | 120,433,117 | 0 | 301,500 | 120,131,617 | Lock-up Shares of Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, and senior management |
| Chen Ailing | 53,447,110 | 0 | 0 | 53,447,110 | Lock-up Shares of Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, and senior management |
| Wu Jun | 51,860,164 | 19,500 | 0 | 51,879,664 | Lock-up Shares of Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, and senior management |
| Zhang Xingming | 2,710,153 | 0 | 1,109,538 | 1,600,615 | Lock-up Shares and Restricted Shares under Equity Incentive Plans for Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, and senior management, as well as equity incentive plans |
| Wu Jian | 1,401,251 | 0 | 246,150 | 1,155,101 | Lock-up Shares and Restricted Shares under Equity Incentive Plans for | Follow relevant regulations on the management of shares held by directors, |
| Directors, Supervisors, and Senior Management | supervisors, and senior management, as well as equity incentive plans | |||||
| Zhao Yuning | 1,132,750 | 0 | 25,900 | 1,106,850 | Lock-up Shares and Restricted Shares under Equity Incentive Plans for Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, and senior management, as well as equity incentive plans |
| Chen Yuqing | 1,073,963 | 19,500 | 0 | 1,093,463 | Lock-up Shares of Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, and senior management |
| Other executives and equity incentive recipients | 75,093,607 | 0 | 31,053,606 | 44,040,001 | Lock-up Shares and Restricted Shares under Equity Incentive Plans for Directors, Supervisors, and Senior Management | Follow relevant regulations on the management of shares held by directors, supervisors, and senior management, as well as equity incentive plans |
| Total | 1,075,053,850 | 293,142,400 | 32,736,694 | 1,335,459,556 | -- | -- |
II. Issuance and listing of securities
1. Securities (excluding preferred share) issued in reporting period
? Applicable □ Not applicable
| Name of the stock and its derivative securities | Issue Date | Issuance price (or interest rate) | Quantity of issuance | Listing date | Number of approved listed transactions | Transaction termination date | Disclosure Index | Date of Disclosure |
| Stocks | ||||||||
| DAHUA | March 23, 2023 | 17.4 | 293,103,400 | April 14, 2023 | 293,103,400 | Juchao Information Network Announcement | April 12, 2023 | |
| Convertible corporate bonds, separately-traded convertible corporate bonds, corporate bonds | ||||||||
| Other derivative securities | ||||||||
Description of the issuance of securities (not including preferred stocks) during the reporting periodAccording to the approval issued by the China Securities Regulatory Commission in the document titled "Approval forthe Non-public Issuance of Shares by Zhejiang Dahua Technology Co., Ltd." (CSRC Permit [2022] No. 853), theCompany issued 293,103,400 shares to China Mobile Communications Group Co., Ltd. at a price of RMB 17.40 yuanper share. These shared became listed on April 14, 2023 on Shenzhen Stock Exchange.
2. Explanation on changes in total number of the Company's shares & the structure ofshareholders and the structure of assets and liabilities
? Applicable □ Not applicable
1. According to the approval issued by the China Securities Regulatory Commission in document "Approval for theNon-public Issuance of Shares by Zhejiang Dahua Technology Co., Ltd." (CSRC Permit [2022] No. 853), during thereporting period, the Company issued 293,103,400 shares to China Mobile Communications Group Co., Ltd., andthese shared were listed on April 14, 2023.
2. Upon approval at the 42nd meeting of the 7th Board of Directors, the 29th meeting of the 7th Board of Supervisors,and the 2022 Annual General Meeting of Shareholders , the Company repurchased and canceled a portion of therestricted shares (totaling 31,795,580 shares) held by 4,249 incentive recipients on August 15, 2023.Following the issuance of the aforementioned shares and the cancellation of restricted shares, the total share capitalof the Company changed to 3,294,468,990 shares.
3. Existing shares held by internal staff of the Company
□ Applicable ? Not applicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
| Total Number of Common Shareholders at The End of The Reporting Period | 141,936 | Total number of common shareholders at the end of previous month before the disclosure date of the annual report | 173,354 | Total Number of Preferred Shareholders (If Any) (Refer to Note 8) Whose Voting Rights have been Recovered at the End of the Reporting Period | 0 | Total number of preferred shareholders (if any) (refer to Note 8) with resumed voting rights at the end of previous month before the disclosure date of the annual report | 0 | |
| Shareholding list of shareholders with over 5% shares or top ten shareholders (excluding shares lent through stock pledge repos) | ||||||||
| Name of Shareholder | Nature of Shareholder | Shareholding Percentage | Number of shares held at the end of the reporting period | Changes in the reporting period | Number of shares held with limited sales conditions | Number of shares held without limited sales condition | Pledges, markings or freezing | |
| State Of Shares | Quantity | |||||||
| Fu Liquan | Domestic Natural Person | 31.08% | 1,023,868,980 | 0 | 767,901,735 | 255,967,245 | Pledge | 192,307,693 |
| China Mobile Communications Group Co., Ltd. | State-owned Legal Person | 8.90% | 293,103,400 | 293,103,400 | 293,103,400 | 0 | Not applicable. | 0 |
| Zhu Jiangming | Domestic Natural Person | 4.86% | 160,175,490 | 0 | 120,131,617 | 40,043,873 | Not applicable. | 0 |
| Chen Ailing | Domestic Natural Person | 2.16% | 71,262,813 | 0 | 53,447,110 | 17,815,703 | Pledge | 31,800,000 |
| Wu Jun | Domestic Natural Person | 2.10% | 69,172,886 | 0 | 51,879,664 | 17,293,222 | Not applicable. | 0 |
| Hong | Overseas | 1.95% | 64,339,74 | - | 0 | 64,339,74 | Not | 0 |
| Kong Securities Clearing Co. Ltd. | Legal Person | 4 | 93,794,864 | 4 | applicable. | |||
| National Social Security Fund 103 | Others | 1.64% | 54,000,000 | 54,000,000 | 0 | 54,000,000 | Not applicable. | 0 |
| China Securities Finance Co., Ltd. | Domestic Non-state-owned Legal Person | 1.20% | 39,611,241 | 0 | 0 | 39,611,241 | Not applicable. | 0 |
| New China Life Insurance Company Ltd.－Conventional－Common Insurance Product-018L-CT001 Shenzhen | Others | 0.74% | 24,321,736 | 24,321,736 | 0 | 24,321,736 | Not applicable. | 0 |
| Agricultural Bank of China Co., Ltd.- China International Fund Management Emerging Power Hybrid Securities Investment Fund | Others | 0.60% | 19,853,094 | 19,853,094 | 0 | 19,853,094 | Not applicable. | 0 |
| Strategic investors or general legal entities becoming top 10 shareholders as a result of the placement of new shares (if any) (see Note 3) | China Mobile Communications Group Co., Ltd. is a strategic investor in the Company and has committed not to transfer any subscribed shares of the Company in any way during the 36 months following the first day of its listing. | |||||||
| Description of the association relationship or concerted action of above-mentioned shareholders | Mr. Fu Liquan and Ms. Chen Ailing are husband and wife. The Company Is Unaware Of Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert | |||||||
| Explanation of the above shareholders involved in proxy/trustee voting | Not applicable. | |||||||
| rights and abstention from voting rights | |||
| Special note on the existence of repurchase special accounts among the top 10 shareholders (if any) (see Note 10) | Not applicable. | ||
| Shareholding of the top ten shareholders without limited sales condition | |||
| Name of Shareholder | Number of shares held without limited sales condition at the end of the reporting period | Type of shares | |
| Type of shares | Quantity | ||
| Fu Liquan | 255,967,245 | RMB common stock | 255,967,245 |
| Hong Kong Securities Clearing Co. Ltd. | 64,339,744 | RMB common stock | 64,339,744 |
| National Social Security Fund 103 | 54,000,000 | RMB common stock | 54,000,000 |
| Zhu Jiangming | 40,043,873 | RMB common stock | 40,043,873 |
| China Securities Finance Co., Ltd. | 39,611,241 | RMB common stock | 39,611,241 |
| New China Life Insurance Company Ltd.－Conventional－Common Insurance Product－018LCT001 Shenzhen | 24,321,736 | RMB common stock | 24,321,736 |
| Agricultural Bank of China Co., Ltd.- China International Fund Management Emerging Power Hybrid Securities Investment Fund | 19,853,094 | RMB common stock | 19,853,094 |
| Chen Ailing | 17,815,703 | RMB common stock | 17,815,703 |
| Wu Jun | 17,293,222 | RMB common stock | 17,293,222 |
| National Social Security Fund 101 | 16,362,587 | RMB common stock | 16,362,587 |
| Explanation on associated relationship or persons acting in concert among top ten shareholders without limited shares, and between top ten shareholders without | Mr. Fu Liquan and Ms. Chen Ailing are husband and wife. The Company Is Unaware Of Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert | ||
| limited shares and top ten shareholders | |
| Explanation on Top Ten Common Shareholders’ Participation in Securities Margin Trading (If Any) (see Note 4) | N/A |
| Special Note Regarding Repurchase Accounts Among the Top 10 Unrestricted Shareholders | It is hereby stated that, as of December 31, 2023, the Company's securities repurchase account holds 19,819,601 ordinary A shares of the Company, representing 0.60% of the total shares outstanding. As per the requirement, these shares are not included in the list of the Company's top 10 unrestricted shareholders. |
Participation of the Top Ten Shareholders in Lending out Shares under Stock Pledge Repo Transactions
□ Applicable ? Not applicable
Changes of the top 10 shareholders compared with the previous period? Applicable □ Not applicable
Unit: share
| Changes of the top 10 shareholders compared with at the end of the previous period | |||||
| Name of Shareholder (full name) | Newly added to /removed from the previous Top Ten Shareholders List | The quantity of shares lent through stock pledge repo transactions at the end of the period and not yet returned | The total quantity of shares held in shareholder's ordinary accounts, credit accounts, and shares lent through stock pledge repo transactions at the end of the period and not yet returned | ||
| Total quantity | Proportion to total shares | Total quantity | Proportion to total shares | ||
| China Mobile Communications Group Co., Ltd. | Newly added | 0 | 0.00% | 293,103,400 | 8.90% |
| National Social Security Fund 103 | Newly added | 0 | 0.00% | 54,000,000 | 1.64% |
| New China Life Insurance Company Ltd.－Conventional－Common Insurance Product-018L-CT001 Shenzhen | Newly added | 0 | 0.00% | 24,321,736 | 0.74% |
| Agricultural Bank of China Co., Ltd.- China International Fund Management Emerging Power Hybrid Securities Investment Fund | Newly added | 0 | 0.00% | 19,853,094 | 0.60% |
| China Galaxy Securities Co., | Removed | 0 | 0.00% | 35,914,160 | 1.18% |
| Ltd. | |||||
| Liu Wenhua | Removed | 0 | 0.00% | 13,838,281 | 0.46% |
| China Life Insurance Company Ltd. － traditional －general insurance products-005L-CT001 S. | Removed | 0 | 0.00% | 10,799,739 | 0.36% |
| PICC Life Insurance Company Limited－dividends－dividends of personal insurance | Removed | 0 | 0.00% | 8,621,950 | 0.28% |
Whether the Company's top ten common shareholders or top ten common shareholders without limited shares agreeon any repurchase transaction in the reporting period
□ Yes ? No
None of the Company's top ten common shareholders or top ten common shareholders without limited shares agreedon repurchase in the reporting period.
2. Particulars about the controlling shareholder
Nature of the controlling shareholder: Natural person-ownedType of the controlling shareholder: Natural person
| Name of the controlling shareholder | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Fu Liquan | China | No |
| Main occupation and title | Chairman and President of the Company | |
| Shares held in other listed companies by controlling or holding in the reporting period | As of December 31, 2023, Mr. Fu Liquan, the Company's controlling shareholder, directly holds 6.82% of the shares of Leapmotor (HK.09863). In addition to his direct holdings, Mr. Fu Liquan, together with Mr. Zhu Jiangming, Mrs. Liu Yunzhen (Mr. Zhu Jiangming's wife), and Mrs. Chen Ailing (Mr. Fu Liquan's wife), collectively and ultimately hold approximately 23.47% of Leapmotor's shares, maintaining consistent actions. | |
Change of the controlling shareholders in the reporting period
□ Applicable ? Not applicable
No change has happened to the controlling shareholder in the reporting period of the Company
3. The actual controller of the Company and persons acting in concert
Nature of the actual controller: Domestic natural personType of the actual controller: Natural person
| Name of the actual controller | Relationship with the actual controller | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Fu Liquan | Himself | China | No |
| Chen Ailing | Himself | China | No |
| Main occupation and title | Mr. Fu Liquan holds the position of the chairman and president of the Company; Ms. Chen Ailing holds the position of the director of the Company | ||
| Information about other listed companies at home and abroad controlled in the last ten years | N/A | ||
Change of the actual controller in the reporting period
□ Applicable ? Not applicable
No change has happened to the actual controller in the reporting periodBlock Digram for Property Right and Control Relationship between the Company and Actual Controllers
The actual controller controls the Company via trust or other ways of asset management
□ Applicable ? Not applicable
4. The accumulated number of shares pledged by the controlling shareholder or the firstmajority shareholder of the Company and his/her persons acting in concert accounted for 80%of all the shares held by him/her in the Company
□ Applicable ? Not applicable
5. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable ? Not applicable
6. Particulars on share reduction restricted for controlling shareholders, actual controller,restructuring party or other commitment entities
□ Applicable ? Not applicable
IV. Specific Implementation of Share Repurchase in the Reporting Period
The progress on share repurchases? Applicable □ Not applicable
| Proposal disclosur | Proposed Repurchase | Proportion to total | Proposed Repurchase | Proposed Repurchase | Purpose of Repurchase | Quantity Already | Percentage of |
| e time | Quantity (Shares) | shares | Amount | Period | Repurchased (Shares) | Repurchased Quantity Relative to the Stock Options under Equity Incentive Plan (if applicable) | |
| August 26, 2023 | 12,614,317 shares to 18,921,476 shares (calculated based on the upper limit repurchase price of 31.71 RMB per share) | 0.38%-0.57% | RMB 400 million (inclusive) to 600 million (inclusive) | August 25, 2023 to August 24, 2024 | For employee stock ownership plans or equity incentives | 19,819,601 |
The progress in reduction of re-purchase shares by means of centralized competitive bidding transaction
□ Applicable ? Not applicable
Section VIII Information of Preferred Shares
□ Applicable ? Not applicable
There are no preferred shares in the reporting period.
Section IX Situation on Corporate Bonds
□ Applicable ? Not applicable
Section X Financial ReportI. Audit Reports
| Audit opinion type | Standard Unqualified Opinion |
| Signature Date of audit report | April 15, 2024 |
| Name of audit institution | BDO China Shu Lun Pan CPAs (special general partnership) |
| Audit report ref. | XKSBZ [2024] No.ZF10311 |
| Name of Certified Public Accountant | Du Na, Zhang Junhui |
Audit Report TextTo the shareholders of Zhejiang Dahua Technology Co., Ltd.:
I. OpinionWe have audited the financial statements of Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to asDahua), including the parent company's and the consolidated balance sheet dated December 31, 2023, the parentcompany's and the consolidated income statement, the parent company's and the consolidated cash flow statementand the parent company's and the consolidated statement of changes in owners' equity in 2023, as well as the notesto relevant financial statements.In our opinion, the attached financial statements are prepared, in all material respects, in accordance with“Accounting Standards for Business Enterprises”, which fairly reflected the financial position of the merged companiesand the parent company as at December 31, 2023 and the operating results and cash flows of the merged companiesand the parent company in 2023.II. Basis for Our Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants in China. Ourresponsibilities under those standards are further described in the CPA's Responsibilities for the Audit of the FinancialStatements section of our report. According to the “Code of Ethics for Chinese Certified Public Accountants”, we areindependent of Dahua and have fulfilled our other ethical responsibilities in accordance with the Code. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matters that we identified in the audit are as follows:
| Key Audit Matters | How the matter was addressed in the audit |
| A. Recognition of revenue | |
| The operating revenue of Dahua in 2023 was RMB 32,218,317,600 yuan, which is an important part of Dahua's profit statement. Since the revenue is one of Dahua's key performance indicators, there is an inherent risk that the | The main audit procedure we implemented for the above key audit item includes: ① Understand the design and implementation of the internal control system and the financial accounting system in relation to revenue recognition, and test the effectiveness of their operation; ② Check the agreements of relevant contracts |
| management may alter the time point of revenue recognition in order to meet specific targets or expectations. Therefore, we identify the recognition of revenue as a key audit item. Based on the accounting policy of Dahua, the Company's main products include security standard products, system integration and other labor services. Among them, the security standard products for domestic sales were delivered to customers or picked up by customers based on the contractual terms in the sales contract. The revenue was recognized after customers received and accepted the goods and the Company obtained the evidence proving the customers' receipt of goods; for the security standard products exported by domestic companies, the revenue was recognized after the goods were declared and exported, and for the security standard products sold overseas by overseas subsidiaries, the revenue was recognized after the customer received and accepted the goods; the revenue from the system integration sales was recognized after the acceptance of goods by customers; the revenue from the labor services sales was recognized when relevant labor services were provided. See Notes III (26) for details. | for different sales types in accordance with the actual situation of the specific businesses, and evaluate whether the revenue recognition meets the requirements of Accounting Standards for Business Enterprises; ③ Perform an analytical procedures to judge the reasonableness of the changes in sales revenue and gross profit margin; ④ Perform verification procedures: for the annual sales amount and the outstanding amount at the end of the year, sample and confirm with customers by letter, and the export sales income shall be certified by the customs; ⑤ Sampling inspection for different types of income: For standard products for domestic sales and overseas sales of overseas subsidiaries, sample the out-of-stock records, shipping orders, customer countersign records, received payment records and so on; for standard products exported by domestic companies, check the out-of-stock records, customs declaration, bill of lading, and received payment records; for integrated system sales, check the product delivery records, shipping list and contract list, unpacking acceptance report, acceptance report for the completion of installation and commissioning, received payment records and so on. ⑥ Sample the transactions made before or after the balance sheet date and check their out-of-stock records, customs declaration, and other relevant supportive documents to confirm whether the revenues have been recognized in an appropriate accounting period. |
| B. Recoverability of accounts receivable | |
| At the end of 2023, Dahua’s net value of receivables was RMB 16,276,804,000 yuan. The management needs to make significant judgments about the identification of accounts receivable impairment accounts, the likelihood of inward cash flows of future customers. The management's estimates and assumptions are uncertain. Since the amount of accounts receivable is significant to the financial statements as a whole and the recoverability involves the estimation and judgment of future cash flows, we recognize the recoverability of accounts receivable as a key audit matter. | We evaluated the recoverability of accounts receivable by the following procedure: ① Understand the management's internal controls of key financial reporting related to credit control, account recovery and assessment of impairment provision for receivables, and evaluate the effectiveness of the design and operation of the internal controls; ② Understand the Company's management procedures for customers' credit and the collection measures for overdue debts; ③ For accounts receivable for which the expected credit loss is calculated based on the combination of credit risk characteristics, review the management's division of the combination, and assess the reasonableness of the expected credit loss rate based on the estimates including historical credit loss rate, current circumstance and prediction of the future economic condition. We assessed the reasonableness of the accrued proportion with reference to the historical audit experience and prospective information, tested the accuracy of the portfolio classification and aging division of the accounts receivable, and recalculated the accuracy of the accrued amount of the expected credit loss; we sampled the accounts receivable subject to separate bad debt provision, and |
reviewed the basis for the Management’s assessment of the expected credit lossbased on the financial position and credit position of the customer, historicalrepayment records and prediction of the future economic condition. We validatedthe management's assessment against the evidence we have obtained during theaudit process, including background information, transaction history and paymentstatus of the customer, and forward-looking considerations; ④ Test the paymentreceived after the balance sheet date; ⑤ Perform the correspondence-basedconfirmation procedure and check whether the confirmation results areconsistent; ⑥ Analyze whether there are amounts of accounts receivable thatcannot be recovered and need to be written off.
IV. Other Information
The management of Dahua (hereinafter referred to as the Management) is responsible for the other information.The other information includes the information covered in Dahua's annual report in 2023, but excludes the financialstatements and our audit report.Our opinion on the financial statements does not cover the other information and we do not and will not expressany form of assurance conclusion thereon.In combination with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit, or otherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Those Charged with Governance for the FinancialStatementsThe Management is responsible for preparing the financial statements in accordance with the requirements ofAccounting Standards for Business Enterprises to achieve a fair presentation, and design, implement and maintainnecessary internal control to ensure that the financial statements are free from material misstatements, whether due tofrauds or errors.In preparing the financial statements, the Management is responsible for assessing Dahua's ability to continueoperating, disclosing matters related to continuous operation (if applicable) and using the hypothesis of continuousoperation unless there is a plan to liquidate, terminate operations or no other realistic options.The management is responsible for supervising the financial reporting process of Dahua.VI. CPA's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance withthe audit standards will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expected to influencethe economic decisions of users made on the basis of these financial statements.
As part of an audit in accordance with the audit standards, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures to address those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,or the override of internal control.
(II) Understand the internal control related to the audit in order to design appropriate audit procedure.
(III) Evaluate the appropriateness of accounting policies used, and the reasonableness of accounting estimatesand related disclosures made, by the Management.
(IV) Conclude on the appropriateness of using the going concern assumption by the Management. At the sametime, draw a conclusion, based on the audit evidence obtained, on whether there is significant uncertainty in matters orsituations that may cause major doubts about Dahua's ability in continuous operation. If we conclude that a materialuncertainty exists, we are required to draw attention in our audit report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the informationavailable up to the date of our audit report. However, future events or conditions may result in Dahua's inability tocontinue operating.
(V) Evaluate the overall presentation (including the disclosures), structure and content of the financial statements,and whether the financial statements fairly reflect the relevant transactions and events.
(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or businessactivities within Dahua to express an opinion on the consolidated financial statements. We are responsible for guiding,supervising, and implementing the group audit, and remain solely responsible for our audit opinion.
We have communicated with those charged with governance on such matters as the scope of audit as planned,the schedule and material audit findings, including the defects in the internal control that are worth paying attention tofound in this audit.
We have also provided those charged with governance with a statement on observing the professional ethicsrelated to independence, and communicated with those charged with governance on all the relationships and othermatters that might be reasonably deemed to affect our independence, and relevant preventative measures.
From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the key audit matters.We describe these matters in our audit report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
BDO China Shu Lun Pan Certified Public Accountants LLP Chinese CPA: Du Na(Special general partnership) (Project partner)
Chinese CPA: Zhang Junhui
Shanghai, China April 15, 2024
II. Financial StatementsUnits of financial reports in the notes: yuan
1. Consolidated Balance Sheet
Prepared by: Zhejiang Dahua Technology Co., Ltd.
Unit: RMB
| Item | December 31, 2023 | January 1, 2023 |
| Current Assets: | ||
| Cash and Bank Balances | 15,971,005,114.47 | 8,029,878,650.77 |
| Deposit Reservation for Balance | ||
| Loans to Banks and Other Financial Institutions | ||
| Trading Financial Assets | 1,470,000.00 | 1,470,000.00 |
| Derivative Financial Assets | ||
| Notes receivable | 813,039,192.75 | 872,302,071.18 |
| Accounts receivable | 16,276,803,954.03 | 15,411,908,561.50 |
| Receivables Financing | 810,713,267.86 | 679,441,917.62 |
| Prepayments | 189,388,716.99 | 121,691,239.14 |
| Premium Receivable | ||
| Reinsurance Accounts Receivable | ||
| Reinsurance Contract Reserves Receivable | ||
| Other Receivables | 337,524,688.36 | 401,849,246.88 |
| Including: interest receivable | ||
| Dividends Receivable | 5,784,225.02 | 8,519,063.17 |
| Buying Back the Sale of Financial Assets | ||
| Inventory | 5,332,608,544.02 | 7,315,372,440.02 |
| Contract Assets | 86,714,216.34 | 106,335,405.35 |
| Holding for-sale assets | ||
| Non-current Assets Due within 1 Year | 303,454,116.40 | 476,871,949.75 |
| Other Current Assets | 939,374,868.31 | 1,352,406,151.72 |
| Subtotal of Current Assets | 41,062,096,679.53 | 34,769,527,633.93 |
| Non-current Assets: | ||
| Granting of loans and advances | ||
| Investment in Creditor's Rights | ||
| Investment in Other Creditor's Rights | ||
| Long-term Receivables | 946,659,309.70 | 1,436,256,651.54 |
| Long-term Equity Investment | 727,453,629.75 | 1,461,099,644.55 |
| Investment in Other Equity Instruments |
| Other Non-current Financial Assets | 1,535,742,385.71 | 931,043,130.33 |
| Investment Property | 129,637,004.00 | 423,035,823.82 |
| Fixed Assets | 4,937,180,876.88 | 4,643,617,574.85 |
| Projects under Construction | 1,008,612,408.49 | 423,535,552.03 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | 299,202,586.56 | 314,700,977.50 |
| Intangible Assets | 594,679,018.11 | 557,183,251.12 |
| Development Expenditure | ||
| Goodwill | 6,615,294.18 | 6,615,294.18 |
| Long-term Deferred Expenses | 135,335,273.95 | 130,626,422.97 |
| Deferred Income Tax Assets | 1,287,903,482.65 | 1,014,419,944.15 |
| Other Non-current Assets | 210,809,264.49 | 141,231,903.57 |
| Subtotal of Non-current Assets | 11,819,830,534.47 | 11,483,366,170.61 |
| Total assets | 52,881,927,214.00 | 46,252,893,804.54 |
| Current Liabilities: | ||
| Short-term loan | 957,426,330.18 | 257,943,618.51 |
| Borrowings from the Central Bank | ||
| Borrowings from Banks and Other Financial Institutions | ||
| Transactional financial liabilities | 61,400.12 | 26,652,319.25 |
| Derivative Financial Liabilities | ||
| Notes Payable | 3,296,294,946.26 | 4,364,097,761.17 |
| Accounts Payable | 5,815,123,195.55 | 7,340,277,388.29 |
| Received Prepayments | ||
| Contract liabilities | 1,194,534,307.04 | 1,219,548,011.88 |
| Financial Assets Sold for Repurchase | ||
| Deposit Taking and Interbank Deposit | ||
| Receiving from Vicariously Traded Securities | ||
| Receiving from Vicariously Sold Securities | ||
| Payroll payable | 1,933,955,631.12 | 1,583,203,165.43 |
| Tax Payable | 1,243,482,361.08 | 326,881,747.78 |
| Other Payables | 812,424,146.52 | 1,004,056,999.91 |
| Including: interest payable | ||
| Dividends Payable | 23,667,047.02 | |
| Service Charge and Commission Payable | ||
| Reinsurance Accounts Payable | ||
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 | 901,722,028.75 | 2,558,010,785.73 |
| Year | ||
| Other Current Liabilities | 155,182,705.02 | 166,004,612.27 |
| Subtotal of Current Liabilities | 16,310,207,051.64 | 18,846,676,410.22 |
| Non-current Liabilities: | ||
| Insurance Contract Reserves | ||
| Long-term loan | 453,825,000.00 | |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | 176,580,049.57 | 196,340,654.27 |
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 224,542,626.90 | 227,764,387.93 |
| Deferred Income | 166,711,673.04 | 104,663,047.38 |
| Deferred Income Tax Liabilities | 737,367.19 | 1,168,473.33 |
| Other Non-current Liabilities | 119,054,046.66 | 204,084,072.08 |
| Subtotal of Non-current Liabilities | 687,625,763.36 | 1,187,845,634.99 |
| Total Liabilities | 16,997,832,815.00 | 20,034,522,045.21 |
| Shareholders' Equity: | ||
| Share Capital | 3,294,468,990.00 | 3,033,161,170.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 7,124,125,996.49 | 3,950,209,243.25 |
| Less: Treasury Share | 746,699,863.45 | 609,859,632.00 |
| Other Comprehensive Incomes | 65,993,020.83 | 36,942,339.77 |
| Special Reserves | ||
| Surplus Reserves | 1,647,234,495.00 | 1,553,691,005.92 |
| General Risk Reserves | ||
| Undistributed Profits | 23,334,051,186.55 | 17,872,654,791.67 |
| Total Shareholders' Equity Attributable to the Parent Company | 34,719,173,825.42 | 25,836,798,918.61 |
| Minority Shareholders' Equity | 1,164,920,573.58 | 381,572,840.72 |
| Total Shareholders' Equity | 35,884,094,399.00 | 26,218,371,759.33 |
| Total Liabilities and Shareholders' Equity | 52,881,927,214.00 | 46,252,893,804.54 |
Legal representative: Fu Liquan Person in charge of accounting: Xu Qiaofen Person in charge of the accounting institution: Zhu Zhuling
2. Balance Sheet of the Parent Company
Unit: RMB
| Item | December 31, 2023 | January 1, 2023 |
| Current Assets: | ||
| Cash and Bank Balances | 9,624,679,601.93 | 4,022,841,447.49 |
| Trading Financial Assets | ||
| Derivative Financial Assets | ||
| Notes receivable | 368,774,122.18 | 178,821,430.81 |
| Accounts receivable | 6,640,946,970.53 | 4,837,478,515.65 |
| Receivables Financing | 698,297,307.69 | 1,061,433,149.01 |
| Prepayments | 31,587,070.13 | 11,881,594.83 |
| Other Receivables | 11,736,609,900.41 | 13,025,162,686.64 |
| Including: interest receivable | ||
| Dividends Receivable | ||
| Inventory | 447,927,880.25 | 950,125,105.39 |
| Contract Assets | 12,985,980.46 | 27,158,633.27 |
| Holding for-sale assets | ||
| Non-current Assets Due within 1 Year | 10,032,002.75 | 35,911,131.98 |
| Other Current Assets | 348,700,342.87 | 627,219,565.83 |
| Subtotal of Current Assets | 29,920,541,179.20 | 24,778,033,260.90 |
| Non-current Assets: | ||
| Investment in Creditor's Rights | ||
| Investment in Other Creditor's Rights | ||
| Long-term Receivables | 5,359,168.22 | 12,287,217.89 |
| Long-term Equity Investment | 8,191,802,935.85 | 5,482,249,288.75 |
| Investment in Other Equity Instruments | ||
| Other Non-current Financial Assets | 1,513,272,385.71 | 908,573,130.33 |
| Investment Property | 1,817,925.82 | 317,849,081.03 |
| Fixed Assets | 1,814,451,576.60 | 1,627,286,403.38 |
| Projects under Construction | 3,556,445.35 | 34,991,576.38 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | 94,348,785.64 | 114,223,037.09 |
| Intangible Assets | 140,815,043.41 | 132,109,501.05 |
| Development Expenditure | ||
| Goodwill | ||
| Long-term Deferred Expenses | 66,926,895.55 | 69,447,374.46 |
| Deferred Income Tax Assets | 1,008,929.69 | 39,347,253.53 |
| Other Non-current Assets | 18,782,264.32 | 25,825,038.50 |
| Subtotal of Non-current Assets | 11,852,142,356.16 | 8,764,188,902.39 |
| Total assets | 41,772,683,535.36 | 33,542,222,163.29 |
| Current Liabilities: | ||
| Short-term loan | 600,266,666.67 | 3,632,141.60 |
| Transactional financial liabilities | ||
| Derivative Financial Liabilities | ||
| Notes Payable | 221,026,659.43 | 485,319,623.33 |
| Accounts Payable | 884,748,949.13 | 1,074,133,501.08 |
| Received Prepayments |
| Contract liabilities | 125,050,543.58 | 169,956,348.75 |
| Payroll payable | 1,354,637,328.45 | 1,116,235,627.09 |
| Tax Payable | 1,008,009,000.74 | 140,279,695.45 |
| Other Payables | 1,193,481,602.34 | 1,328,875,885.44 |
| Including: interest payable | ||
| Dividends Payable | 23,667,047.02 | |
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | 787,284,456.59 | 2,393,499,176.95 |
| Other Current Liabilities | 22,753,109.13 | 85,397,527.74 |
| Subtotal of Current Liabilities | 6,197,258,316.06 | 6,797,329,527.43 |
| Non-current Liabilities: | ||
| Long-term loan | 350,000,000.00 | |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | 48,328,489.38 | 64,598,842.13 |
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 1,550,020.50 | 2,204,024.80 |
| Deferred Income | ||
| Deferred Income Tax Liabilities | ||
| Other Non-current Liabilities | 144,070.84 | 392,972.39 |
| Subtotal of Non-current Liabilities | 50,022,580.72 | 417,195,839.32 |
| Total Liabilities | 6,247,280,896.78 | 7,214,525,366.75 |
| Shareholders' Equity: | ||
| Share Capital | 3,294,468,990.00 | 3,033,161,170.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 6,881,563,679.88 | 3,788,412,149.09 |
| Less: Treasury Share | 746,699,863.45 | 609,859,632.00 |
| Other Comprehensive Incomes | ||
| Special Reserves | ||
| Surplus Reserves | 1,647,234,495.00 | 1,553,691,005.92 |
| Undistributed Profits | 24,448,835,337.15 | 18,562,292,103.53 |
| Total Shareholders' Equity | 35,525,402,638.58 | 26,327,696,796.54 |
| Total Liabilities and Shareholders' Equity | 41,772,683,535.36 | 33,542,222,163.29 |
3. Consolidated Income Statement
Unit: RMB
| Item | 2023 | 2022 |
| I. Total Operating Revenue | 32,218,317,636.77 | 30,565,370,012.64 |
| Including: Operating Revenue | 32,218,317,636.77 | 30,565,370,012.64 |
| Interest Income | ||
| Earned Premiums | ||
| Service Charge and Commission Income | ||
| II. Total Operating Cost | 29,058,697,666.07 | 28,808,656,031.31 |
| Including: Operating Cost | 18,674,970,923.46 | 18,989,797,670.92 |
| Interest Expenditures | ||
| Service Charge and Commission Expenses | ||
| Surrender Value | ||
| Net Claims Paid | ||
| Net Amount of Withdrawn Reserve for Insurance Liability Contract | ||
| Policyholder Dividend Expense | ||
| Reinsurance Cost | ||
| Taxes and Surcharges | 275,786,197.05 | 187,697,592.05 |
| Sales Expenses | 5,292,570,225.69 | 5,115,163,159.61 |
| Administration expenses | 1,257,429,514.27 | 1,143,968,823.89 |
| Research and development expense | 3,967,248,795.22 | 3,883,005,582.82 |
| Financial Expenses | -409,307,989.62 | -510,976,797.98 |
| Including: interest expenses | 95,985,194.10 | 129,841,192.93 |
| Interest Income | 345,537,378.77 | 197,933,592.28 |
| Add: Other income | 942,767,172.83 | 988,838,317.21 |
| Investment Income (Mark "-" for Loss) | 4,495,973,812.03 | 280,749,308.20 |
| Including: Investment Income from Affiliates and Joint Ventures | -242,631,295.52 | -399,809,570.81 |
| Profits from recognition Termination of Financial Assets at Amortized Cost | -16,573,899.23 | -1,731,597.86 |
| Exchange Gains (Mark "-" for Losses) | ||
| Profit of Net Exposure Hedging (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 127,628,374.87 | -46,015,577.97 |
| Credit Impairment Losses (Mark "-" for Loss) | -412,457,117.43 | -596,505,944.29 |
| Asset Impairment Losses (Mark "-" for Loss) | -174,514,315.74 | -106,653,049.64 |
| Asset Disposal Income (Mark "-" for Loss) | 2,007,798.39 | 2,965,788.77 |
| III. Operating Profit (Mark "-" for Loss) | 8,141,025,695.65 | 2,280,092,823.61 |
| Add: Non-operating Revenues | 13,528,994.25 | 17,921,304.59 |
| Less: Non-operating Expenses | 32,849,032.26 | 10,836,066.92 |
| IV. Total Profit (Mark "-" for Total Loss) | 8,121,705,657.64 | 2,287,178,061.28 |
| Less: Income Tax Expense | 646,438,172.09 | 25,327,807.96 |
| V. Net Profit (Mark "-" for Net Loss) | 7,475,267,485.55 | 2,261,850,253.32 |
| (I) Classified by operation continuity | ||
| 1. Net Profit as a Going Concern (Mark "-" for Net Loss) | 7,475,267,485.55 | 2,261,850,253.32 |
| 2. Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| (II) Classified by the attribution of ownership | ||
| 1. Net Profit Attributable to Shareholders of Parent Company | 7,361,892,404.52 | 2,324,356,092.20 |
| 2. Minority Shareholders' Profit and Loss | 113,375,081.03 | -62,505,838.88 |
| VI. Net Amount of Other Comprehensive Incomes after Tax | 29,150,995.25 | -39,267,173.55 |
| Net Amount of Other Comprehensive Incomes after Tax Attributable to the Parent Company's Owner | 29,050,681.06 | -39,063,452.72 |
| (I) Other comprehensive income that cannot be reclassified into profit or loss | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified as P/L | 29,050,681.06 | -39,063,452.72 |
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Provisions for the credit impairment of investment in other creditor's rights | ||
| 5. Cash flow hedge reserves | ||
| 6. Currency translation difference | 29,050,681.06 | -39,063,452.72 |
| 7. Others | ||
| Net Amount of Other Comprehensive Incomes After Tax Attributable to Minority Shareholders | 100,314.19 | -203,720.83 |
| VII. Total Comprehensive Income | 7,504,418,480.80 | 2,222,583,079.77 |
| Total Comprehensive Income Attributable to the Parent Company's Owner | 7,390,943,085.58 | 2,285,292,639.48 |
| Total Comprehensive Income Attributable to Minority Shareholders | 113,475,395.22 | -62,709,559.71 |
| VIII. Earnings per Share | ||
| (I) Basic Earnings per Share | 2.31 | 0.79 |
| (II) Diluted Earnings per Share | 2.31 | 0.79 |
Legal representative: Fu Liquan Person in charge of accounting: Xu Qiaofen Person in charge of the accounting institution: Zhu Zhuling
4. Income Statement of the Parent Company
Unit: RMB
| Item | 2023 | 2022 |
| I. Operating Revenue | 10,675,914,320.02 | 8,458,444,111.37 |
| Less: Operating Cost | 1,691,024,232.43 | 1,230,036,081.64 |
| Taxes and Surcharges | 146,495,115.07 | 122,607,735.59 |
| Sales Expenses | 2,462,570,281.18 | 2,337,221,204.22 |
| Administration expenses | 680,831,535.05 | 615,717,298.20 |
| Research and development expense | 2,864,986,091.20 | 2,714,151,497.47 |
| Financial Expenses | -91,154,399.90 | -18,613,854.17 |
| Including: interest expenses | 81,261,266.60 | 93,567,329.76 |
| Interest Income | 213,951,362.84 | 110,285,473.81 |
| Add: Other income | 679,492,419.86 | 797,553,509.91 |
| Investment Income (Mark "-" for Loss) | 4,314,965,696.38 | -302,194,016.65 |
| Including: Investment Income from Affiliates and Joint Ventures | -309,247,666.73 | -455,385,100.70 |
| Profits from Derecognition of Financial Assets at Amortized Cost (Mark "-" for Loss) | -4,044,983.67 | -3,752,816.76 |
| Profit of Net Exposure Hedging (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 101,037,455.74 | -10,144,713.55 |
| Credit Impairment Losses (Mark "-" for Loss) | -43,204,243.79 | -1,310,481.21 |
| Asset Impairment Losses (Mark "-" for Loss) | -449,430.51 | -6,453,322.10 |
| Asset Disposal Income (Mark "-" for Loss) | 539,633,345.30 | 1,109,370.89 |
| II. Operating Profit (Mark "-" for Loss) | 8,512,636,707.97 | 1,935,884,495.71 |
| Add: Non-operating Revenues | 1,578,964.62 | 4,169,504.86 |
| Less: Non-operating Expenses | 1,596,176.55 | 5,180,651.11 |
| III. Total Profit (Mark "-" for Total Loss) | 8,512,619,496.04 | 1,934,873,349.46 |
| Less: Income Tax Expense | 725,580,252.78 | 4,336,964.90 |
| IV. Net Profit (Mark "-" for Net Loss) | 7,787,039,243.26 | 1,930,536,384.56 |
| (I) Net Profit as a Going Concern (Mark "-" for Net Loss) | 7,787,039,243.26 | 1,930,536,384.56 |
| (II) Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| V. Net Amount of Other Comprehensive Incomes After Tax | ||
| (I) Other comprehensive income that cannot be reclassified into profit or loss | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (II) Other comprehensive income that will be reclassified as P/L | ||
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Provisions for the credit impairment of investment in other creditor's rights | ||
| 5. Cash flow hedge reserves | ||
| 6. Currency translation difference | ||
| 7. Others | ||
| VI. Total Comprehensive Income | 7,787,039,243.26 | 1,930,536,384.56 |
| VII. Earnings per Share | ||
| (I) Basic Earnings per Share | 2.45 | 0.65 |
| (II) Diluted Earnings per Share | 2.44 | 0.65 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2023 | 2022 |
| I. Cash Flow Generated by Operational Activities: |
| Cash from Sales of Merchandise and Provision of Services | 34,442,145,403.42 | 33,784,604,846.55 |
| Net Increase in Customer's Bank Deposits and Interbank Deposits | ||
| Net Increase in Borrowings from the Central Bank | ||
| Net Increase in Borrowings from Other Financial Institutions | ||
| Cash Arising from Receiving Premiums for the Original Insurance Contract | ||
| Net Amount Arising from Reinsurance Business | ||
| Net Increase in Deposits and Investments from Policyholders | ||
| Cash Arising from Interests, Service Charges and Commissions | ||
| Net Increase in Borrowings from Banks and Other Financial Institutions | ||
| Net Increase in Repurchase Business Funds | ||
| Net Amount of Cash Received from the Vicariously Traded Securities | ||
| Tax Refund | 1,297,555,479.60 | 1,494,092,979.78 |
| Other Received Cashes Related to Operational Activities | 1,458,933,374.74 | 1,251,775,941.07 |
| Subtotal of cash inflow from operational activities | 37,198,634,257.76 | 36,530,473,767.40 |
| Cash Paid for Merchandise and Services | 21,282,073,936.41 | 23,777,092,221.87 |
| Net Increase in Loans and Advances to Customers | ||
| Net Increase in Deposits with Central Bank and Other Financial Institutions | ||
| Cash Paid for Original Insurance Contract Claims | ||
| Net increase of funds lent | ||
| Cash Paid for Interests, Service Charges and Commissions | ||
| Cash Paid for Policy Dividends | ||
| Cash Paid to and for Employees | 7,048,918,522.07 | 7,458,518,121.11 |
| Cash Paid for Taxes and Surcharges | 1,924,186,453.49 | 2,068,760,288.72 |
| Other Paid Cashes Related to Operational Activities | 2,344,676,691.32 | 2,172,515,486.24 |
| Subtotal of cash outflow from operational activities | 32,599,855,603.29 | 35,476,886,117.94 |
| Net cash flow generated by operating activities | 4,598,778,654.47 | 1,053,587,649.46 |
| II. Cash Flow from Investment |
| Activities: | ||
| Cash Arising from Disposal of Investments | 4,741,623,320.96 | 2,264,115,058.67 |
| Cash Arising from Investment Incomes | 28,682,909.98 | 24,768,046.36 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 4,137,565.27 | 11,943,847.27 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | 665,433,193.86 | |
| Other Received Cashes Related to Investment Activities | 49,811,896.09 | 25,697,487.60 |
| Subtotal of cash inflow from investment activities | 4,824,255,692.30 | 2,991,957,633.76 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 1,445,917,821.13 | 1,295,439,929.32 |
| Cash Paid for Investments | 1,566,078,364.60 | 2,238,484,786.11 |
| Net Increase in Pledge Loans | ||
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | ||
| Other Paid Cashes Related to Investment Activities | 86,037,580.10 | 57,995,988.98 |
| Subtotal of cash outflows from investment activities | 3,098,033,765.83 | 3,591,920,704.41 |
| Net amount of cash flow generated by investment activities | 1,726,221,926.47 | -599,963,070.65 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 5,835,668,662.56 | 642,408,134.84 |
| Including: Cash Arising from Subsidiaries Absorbing Investments by Minority Shareholders | 739,669,502.56 | 32,548,502.84 |
| Cash Arising from Borrowings | 2,629,490,853.55 | 5,266,376,091.63 |
| Other Received Cashes Related to Financing Activities | 0.00 | 453,263.81 |
| Subtotal of cash inflow from financing activities | 8,465,159,516.11 | 5,909,237,490.28 |
| Cash Paid for Debts Repayment | 4,075,180,609.51 | 4,841,487,732.91 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 1,868,381,166.79 | 910,569,303.98 |
| Including: Dividends and Profits Paid to Minority Shareholders by Subsidiaries | 1,104,770.95 | |
| Other Paid Cashes Related to Financing Activities | 868,734,705.55 | 500,968,317.98 |
| Subtotal of cash outflow from financing activities | 6,812,296,481.85 | 6,253,025,354.87 |
| Net cash flow generated by financing activities | 1,652,863,034.26 | -343,787,864.59 |
| IV. Impact of Fluctuation in Exchange | 24,330,927.12 | 151,051,486.09 |
| Rate on Cash and Cash Equivalents | ||
| V. Net Increase in Cash and Cash Equivalents | 8,002,194,542.32 | 260,888,200.31 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 7,878,465,052.63 | 7,617,576,852.32 |
| VI. Cash and Cash Equivalents at the End of the Period | 15,880,659,594.95 | 7,878,465,052.63 |
6. Cash Flow Statement of the Parent Company
Unit: RMB
| Item | 2023 | 2022 |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 9,580,658,235.54 | 8,412,862,445.50 |
| Tax Refund | ||
| Other Received Cashes Related to Operational Activities | 995,036,096.41 | 1,025,365,997.09 |
| Subtotal of cash inflow from operational activities | 10,575,694,331.95 | 9,438,228,442.59 |
| Cash Paid for Merchandise and Services | 894,299,605.11 | 805,027,908.27 |
| Cash Paid to and for Employees | 4,148,209,445.47 | 4,335,058,098.20 |
| Cash Paid for Taxes and Surcharges | 980,532,790.15 | 1,263,894,274.07 |
| Other Paid Cashes Related to Operational Activities | 1,218,042,054.87 | 1,275,450,400.47 |
| Subtotal of cash outflow from operational activities | 7,241,083,895.60 | 7,679,430,681.01 |
| Net cash flow generated by operating activities | 3,334,610,436.35 | 1,758,797,761.58 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 4,438,176,060.20 | 1,235,609,621.67 |
| Cash Arising from Investment Incomes | 5,321,510.33 | 9,173,028.68 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 6,507,850.94 | 18,870,107.90 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | ||
| Other Received Cashes Related to Investment Activities | ||
| Subtotal of cash inflow from investment activities | 4,450,005,421.47 | 1,263,652,758.25 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 306,866,259.04 | 480,624,220.25 |
| Cash Paid for Investments | 4,253,829,235.00 | 989,118,779.17 |
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units |
| Other Paid Cashes Related to Investment Activities | ||
| Subtotal of cash outflows from investment activities | 4,560,695,494.04 | 1,469,742,999.42 |
| Net amount of cash flow generated by investment activities | -110,690,072.57 | -206,090,241.17 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 5,095,999,160.00 | 609,859,632.00 |
| Cash Arising from Borrowings | 1,200,000,000.00 | 1,893,632,141.60 |
| Other Received Cashes Related to Financing Activities | 1,931,048,415.78 | 2,488,594,518.78 |
| Subtotal of cash inflow from financing activities | 8,227,047,575.78 | 4,992,086,292.38 |
| Cash Paid for Debts Repayment | 2,553,632,141.60 | 1,393,066,910.69 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 1,846,648,732.12 | 875,930,736.99 |
| Other Paid Cashes Related to Financing Activities | 1,363,667,384.09 | 2,751,592,825.48 |
| Subtotal of cash outflow from financing activities | 5,763,948,257.81 | 5,020,590,473.16 |
| Net cash flow generated by financing activities | 2,463,099,317.97 | -28,504,180.78 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | -38,899,297.35 | 613,656.19 |
| V. Net Increase in Cash and Cash Equivalents | 5,648,120,384.40 | 1,524,816,995.82 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 3,933,169,520.92 | 2,408,352,525.10 |
| VI. Cash and Cash Equivalents at the End of the Period | 9,581,289,905.32 | 3,933,169,520.92 |
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
Unit: RMB
| Item | 2023 | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 3,033,161,170.00 | 3,950,209,243.25 | 609,859,632.00 | 36,942,339.77 | 1,553,691,005.92 | 17,872,654,791.67 | 25,836,798,918.61 | 381,572,840.72 | 26,218,371,759.33 | ||||||
| Add: Changes in Accounting Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Others | |||||||||||||||
| II. Balance | 3,033,161,17 | 3,950,209,243.25 | 609,859,632.00 | 36,942,339.77 | 1,553,691,005.92 | 17,872,654,791.67 | 25,836,798,918.61 | 381,572,840.72 | 26,218,371,759.33 | ||||||
| at the Start of This Year | 0.00 | ||||||||||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 261,307,820.00 | 3,173,916,753.24 | 136,840,231.45 | 29,050,681.06 | 93,543,489.08 | 5,461,396,394.88 | 8,882,374,906.81 | 783,347,732.86 | 9,665,722,639.67 | ||||||
| (I) Total Comprehensive Income | 29,050,681.06 | 7,361,892,404.52 | 7,390,943,085.58 | 113,475,395.22 | 7,504,418,480.80 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 261,307,820.00 | 4,819,307,262.43 | 136,840,231.45 | 4,943,774,850.98 | 797,188,107.34 | 5,740,962,958.32 | |||||||||
| 1． Common stock invested by the owner | 261,307,820.00 | 4,569,028,534.26 | 136,840,231.45 | 4,693,496,122.81 | 739,669,502.56 | 5,433,165,625.37 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instrumen |
| ts | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 250,278,728.17 | 250,278,728.17 | 57,518,604.78 | 307,797,332.95 | |||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | 93,543,489.08 | -1,903,104,710.27 | -1,809,561,221.19 | -1,809,561,221.19 | |||||||||||
| 1． Appropriation of Surplus Reserves | 93,543,489.08 | -93,543,489.08 | |||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -1,809,561,221.19 | -1,809,561,221.19 | -1,809,561,221.19 | ||||||||||||
| 4． Others | |||||||||||||||
| (IV) Internal Carry-forward of Sharehold | 2,608,700.63 | 2,608,700.63 | 2,608,700.63 |
| ers' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Other Carry-forward Retained Earnings of the | 2,608,700.63 | 2,608,700.63 | 2,608,700.63 |
| Comprehensive Income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | -1,645,390,509.19 | -1,645,390,509.19 | -127,315,769.70 | -1,772,706,278.89 | |||||||||||
| IV. Balance at the End of This Period | 3,294,468,990.00 | 7,124,125,996.49 | 746,699,863.45 | 65,993,020.83 | 1,647,234,495.00 | 23,334,051,186.55 | 34,719,173,825.42 | 1,164,920,573.58 | 35,884,094,399.00 |
Amount of Previous Period
Unit: RMB
| Item | 2022 | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 2,994,550,730.00 | 2,939,512,235.75 | 277,169,524.09 | 76,005,792.49 | 1,553,691,005.92 | 16,331,012,273.48 | 23,617,602,513.55 | 552,741,994.59 | 24,170,344,508.14 | ||||||
| Add: Changes in Accounting Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 2,994,550,730.00 | 2,939,512,235.75 | 277,169,524.09 | 76,005,792.49 | 1,553,691,005.92 | 16,331,012,273.48 | 23,617,602,513.55 | 552,741,994.59 | 24,170,344,508.14 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 38,610,440.00 | 1,010,697,007.50 | 332,690,107.91 | -39,063,452.72 | 1,541,642,518.19 | 2,219,196,405.06 | -171,169,153.87 | 2,048,027,251.19 | |||||||
| (I) Total Comprehensive Income | -39,063,452.72 | 2,324,356,092.20 | 2,285,292,639.48 | -62,709,559.71 | 2,222,583,079.77 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 38,610,440.00 | 476,971,722.71 | 332,690,107.91 | 182,892,054.80 | 87,713,091.86 | 270,605,146.66 | |||||||||
| 1． Common stock invested by the owner | 38,610,440.00 | 278,018,905.02 | 332,690,107.91 | -16,060,762.89 | 848,502.84 | -15,212,260.05 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into | 198,952,817.69 | 198,952,817.69 | 86,864,589.02 | 285,817,406.71 |
| Shareholders' Equity | |||||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | -782,713,574.01 | -782,713,574.01 | -782,713,574.01 | ||||||||||||
| 1． Appropriation of Surplus Reserves | |||||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -782,713,574.01 | -782,713,574.01 | -782,713,574.01 | ||||||||||||
| 4． Others | |||||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal in this |
| period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | 533,725,284.79 | 533,725,284.79 | -196,172,686.02 | 337,552,598.77 | |||||||||||
| IV. Balance at the End of This Period | 3,033,161,170.00 | 3,950,209,243.25 | 609,859,632.00 | 36,942,339.77 | 1,553,691,005.92 | 17,872,654,791.67 | 25,836,798,918.61 | 381,572,840.72 | 26,218,371,759.33 |
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
| Item | 2023 | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 3,033,161,170.00 | 3,788,412,149.09 | 609,859,632.00 | 1,553,691,005.92 | 18,562,292,103.53 | 26,327,696,796.54 | ||||||
| Add: Changes in Accounting Policies | ||||||||||||
| Correction of Errors in the Previous | ||||||||||||
| Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 3,033,161,170.00 | 3,788,412,149.09 | 609,859,632.00 | 1,553,691,005.92 | 18,562,292,103.53 | 26,327,696,796.54 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 261,307,820.00 | 3,093,151,530.79 | 136,840,231.45 | 93,543,489.08 | 5,886,543,233.62 | 9,197,705,842.04 | ||||||
| (I) Total Comprehensive Income | 7,787,039,243.26 | 7,787,039,243.26 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 261,307,820.00 | 4,831,835,630.39 | 136,840,231.45 | 4,956,303,218.94 | ||||||||
| 1． Common stock invested by the owner | 261,307,820.00 | 4,569,028,534.26 | 136,840,231.45 | 4,693,496,122.81 | ||||||||
| 2． Capital Invested by Holders of Other |
| Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 262,807,096.13 | 262,807,096.13 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | 93,543,489.08 | -1,903,104,710.27 | -1,809,561,221.19 | |||||||||
| 1． Appropriation of Surplus Reserves | 93,543,489.08 | -93,543,489.08 | ||||||||||
| 2． Distribution to Owners (or Shareholders) | -1,809,561,221.19 | -1,809,561,221.19 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | 2,608,700.63 | 2,608,700.63 | ||||||||||
| 1． Capital Reserves Transferred into |
| Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | 2,608,700.63 | 2,608,700.63 | ||||||||||
| 6. Others | ||||||||||||
| (V) |
| Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period | ||||||||||||
| (VI) Others | -1,738,684,099.60 | -1,738,684,099.60 | ||||||||||
| IV. Balance at the End of This Period | 3,294,468,990.00 | 6,881,563,679.88 | 746,699,863.45 | 1,647,234,495.00 | 24,448,835,337.15 | 35,525,402,638.58 |
Amount of Previous Period
Unit: RMB
| Item | 2022 | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 2,994,550,730.00 | 2,925,020,649.68 | 277,169,524.09 | 1,553,691,005.92 | 17,370,986,709.52 | 24,567,079,571.03 | ||||||
| Add: Changes in Accounting Policies | ||||||||||||
| C | ||||||||||||
| orrection of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 2,994,550,730.00 | 2,925,020,649.68 | 277,169,524.09 | 1,553,691,005.92 | 17,370,986,709.52 | 24,567,079,571.03 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 38,610,440.00 | 863,391,499.41 | 332,690,107.91 | 1,191,305,394.01 | 1,760,617,225.51 | |||||||
| (I) Total Comprehensive Income | 1,930,536,384.56 | 1,930,536,384.56 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 38,610,440.00 | 419,952,914.63 | 332,690,107.91 | 125,873,246.72 | ||||||||
| 1． Common stock invested by the owner | 38,610,440.00 | 278,018,905.02 | 332,690,107.91 | -16,060,762.89 |
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 141,934,009.61 | 141,934,009.61 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | -782,713,574.01 | -782,713,574.01 | ||||||||||
| 1． Appropriation of Surplus Reserves | ||||||||||||
| 2． Distribution to Owners (or Shareholders) | -782,713,574.01 | -782,713,574.01 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital |
| Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income |
| 6. Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period | ||||||||||||
| (VI) Others | 443,438,584.78 | 43,482,583.46 | 486,921,168.24 | |||||||||
| IV. Balance at the End of This Period | 3,033,161,170.00 | 3,788,412,149.09 | 609,859,632.00 | 1,553,691,005.92 | 18,562,292,103.53 | 26,327,696,796.54 |
III. Basic Information about the CompanyZhejiang Dahua Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company") was incorporatedunder the official approval document No. 18 [2002] issued by Zhejiang Provincial People's Government Work LeadingGroup for Enterprise Listing in June 2002, a stock corporation established on the basis of overall change of the formerHangzhou Dahua Information Technology Co., Ltd. It was co-founded by five natural persons, including Fu Liquan,Chen Ailing, Zhu Jiangming, Liu Yunzhen and Chen Jianfeng.On April 22, 2008, the Company issued 16.8 million shares of common stock in RMB to the general public for the firsttime under the approval document No. 573 [2008] Securities Regulatory Issuance, issued by China SecuritiesRegulatory Commission ("CSRC"). It was listed on Shenzhen Stock Exchange on May 20, 2008 with a registeredcapital of RMB 66.8 million and the change registration filed with Administration for Industry and Commerce wascompleted on May 23, 2008. The Company's unified social credit code is 91330000727215176K. The Company fallswithin the intelligent Internet of Things industry.As of December 31, 2023, the Company has issued a total of 3,294,468,990 shares, with a registered capital of RMB3,294,468,990.00 yuan. The registered address is No.1187, Bin'an Road, Binjiang District, Hangzhou, and theheadquarters address is No.1399, Binxing Road, Binjiang District, Hangzhou.The Company’s main operation activities include: R&D, production and sales of smart IoT products, and provision ofvideo-centric smart IoT solutions and services.The actual controllers of the Company are Fu Liquan and Chen Ailing.This financial statement has been approved by Board of Directors on April 15, 2024.IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Company prepares the financial statement, as a going concern, based on transactions and matters that haveactually occurred, in accordance with Accounting Standards for Business Enterprises - Basic Standards issued by theMinistry of Finance and all specific accounting standards, application guidelines for accounting standards for businessenterprises, explanations on the accounting standards for business enterprises and other related regulations(hereinafter referred to as "Accounting Standards for Business Enterprises" collectively), and the disclosure provisionsin the Preparation Rules for Information Disclosures by Companies Offering Securities to the Public No. 15 - GeneralProvisions on Financial Reports issued by CSRC.
2. Going concern
The Company has the capability to continue as a going concern for at least 12 months as of the end of currentreporting period, without any significant item affecting the capability for continuing as a going concern.
V. Significant Accounting Polices and Accounting EstimatesThe following disclosures cover the specific accounting policies and accounting estimates formulated by the Companyaccording to the characteristics of its production and operation.
1. Statement on compliance with Accounting Standards for Business EnterprisesThis financial statement is in compliance with the requirements in the “Accounting Standards for Business Enterprises”promulgated by the Ministry of Finance and presents truly and completely the financial position of the mergedcompanies and the parent company as at December 31, 2023 and the operating results and cash flows of the mergedcompanies and the parent company in 2023.
2. Accounting period
The fiscal year of the Company is from January 1 to December 31 of each calendar year.
3. Operating cycle
The Company's operating cycle is 12 months.
4. Functional currency
For the domestic operating entities of the Company and its overseas operating entity Dahua Technology (HK) Limited,the functional currency is Renminbi ("RMB"). The other overseas operating entities take the appropriate currency asthe functional currency on the basis of the currency in the major economic environment in which they operate. Thisfinancial statement is presented in RMB.
5. Method for determination and basis for selection of the importance criteria? Applicable □ Not applicable
| Item | Importance criteria |
| Important accounts receivable with the bad debt provision accrued based on single item | Amount accrued based on single item accounting for 0.5% of the total asset at the end of the period |
| Significant amount of recovered or reversed bad debt provision of the receivables in this period | Amount of recovered or reversed bad debt provision of the receivables in this period exceeding 0.5% of the total asset at the end of the period |
| Important accounts receivable written off | Amount of accounts receivable written off based on single item exceeding 0.5% of the total asset at the end of the period |
| Important projects under construction | Project investment budget exceeding 0.5% of the total asset |
| Important prepayments aged over 1 year | Prepayments aged over 1 year exceeding 0.1% of the total asset |
| Important accounts payable aged over 1 year | Payables aged over 1 year exceeding 0.5% of the total asset |
| Other important payables aged over 1 year | Other payables aged over 1 year exceeding 0.5% of the total asset |
| Important contract liabilities aged over 1 year | Contract liabilities aged over 1 year exceeding 0.5% of the total asset |
| Important cash flow from investment activities | Projects with cash flow exceeding 5% of the total asset |
| Important overseas business entities | Overseas business entities with any of the total asset/gross revenue/total profit exceeding 15% of the Group’s total asset/gross revenue/total profit |
| Important non-wholly owned subsidiaries | Non-wholly owned subsidiaries with any of the total asset/gross revenue/total profit exceeding 15% of the Group’s total asset/gross revenue/total profit |
| Important joint ventures or associates | Investment income from the joint ventures or associates exceeding 10% of the audited profit of the Company in the last period |
6. The accounting treatment of business combinations involving entities under commoncontrol and business combinations involving entities not under common control
Business combination involving entities under common control: The assets and liabilities acquired by the mergingparty in business combination (including goodwill incurred in the acquisition of the merged party by ultimate controllingparty) shall be measured at the book value of the assets and liabilities of the merged party in the consolidated financialstatements of the ultimate controlling party on the date of combination. The difference between the book value of thenet assets obtained and the book value of the consideration paid for the combination (or total nominal value of theissued shares) is adjusted to capital premium in capital reserve. Adjustments shall be made to retained earnings in theevent that the share premiums in the capital reserves are not sufficient for write-down.Business combination involving entities not under common control: The cost of combination is the fair value of theassets paid, the liabilities incurred or assumed, and the equity securities issued by the acquirer to acquire the controlof the acquiree on the date of acquisition. Where the cost of combination is higher than the fair value of the identifiablenet assets acquired from the merging party in business combination, such difference shall be recognized as goodwill;where the cost of combination is less than the fair value of the identifiable net assets acquired from the merging partyin business combination, such difference shall be charged to the profit or loss for the period. The identifiable assets,liabilities and contingent liabilities of the acquiree obtained in the combination that satisfy the recognition criteria shallbe measured by the fair value on the date of acquisition.The fees which are directly related to the business combination shall be recognized as the profit or loss in the periodwhen the costs are incurred; the transaction expenses of issuing equity securities or debt securities for businessmerger shall be initially capitalized for equity securities or debt securities.
7. Criterion for judgment of control and preparation method of consolidated financialstatements
(1) Criterion for judgment of control
The scope of consolidation of the consolidated financial statements is based on controlling interests and includes theCompany and all the subsidiaries. Control means that the Company has the power with respect to the investee toobtain variable returns by engaging in relevant activities of the investee, and has the ability to influence the amount ofits returns by applying its power with respect to the investee.
(2) Preparation method of consolidated financial statements
The Company treats the enterprise group as a single accounting entity and prepares the consolidated financialstatements in accordance with the unified accounting policy to reflect the Group's overall financial position, operatingresults, and cash flow. The influence from the internal transactions between the Company and the subsidiaries orbetween different subsidiaries shall be eliminated. Internal transactions show that impairment loss of relevant assetsshall be recognized as such loss in full. In preparing the consolidated financial statements, where the accountingpolicies and the accounting periods are inconsistent between the Company and subsidiaries, the financial statementsof subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company.The shares belonging to minority shareholders in owner's equity, the net profit or loss and the comprehensive incomeof the subsidiary of the current period are presented separately under the owners' equity in the consolidated balancesheet, the net profits, and the total comprehensive income in the consolidated income statement respectively. Wherelosses attributable to the minority shareholders of a subsidiary of the current period exceed the minority shareholders'interest entitled in the shareholders' equity of the subsidiary at the beginning of the period, the excess shall be offsetagainst the equity of minority shareholders.
① Acquisition of Subsidiaries or Business
For acquisition of subsidiaries or business due to business combination involving entities under common control duringthe reporting period, the operating results and cash flow of such subsidiaries or business from the beginning to the endof the reporting period when the merger occurs are included in the consolidated income statement; and the openingbalance and comparative figures of the consolidated financial statements should be adjusted simultaneously as if theconsolidated reporting entity has been in existence since the beginning of the control by the ultimate controlling party.In connection with imposing control over the investee under common control due to additional investment and otherreasons, the equity investment held before gaining the control of the combined party is recognized as relevant profit orloss, other comprehensive income and changes in other net assets at the later of the date of acquisition of the originalequity and the date when the combining and the merged parties are under common control, and shall be written downto the opening balance retained earnings or current profit or loss in the comparative reporting period.Additional subsidiaries or business due to business combination involving entities not under common control duringthe reporting period will be included in the consolidated financial statements as of the date of acquisition on the basisof the fair value of the identifiable assets, liabilities or contingent liabilities determined on the date of acquisition.In connection with imposing control over the investee not under common control due to additional investment andother reasons, the equity of acquiree held before acquisition date shall be remeasured at the fair value of such equityon the acquisition date and the difference between fair value and book value shall be recognized as investmentincome in current period. Other comprehensive income that may later be reclassified into profit or loss and changes inother owner's equity accounted by equity method contained in the acquiree's equity held before the acquisition dateshall be transferred to current investment gains on the date of acquisition.
② Disposal of Subsidiaries or Business
a. General TreatmentWhen losing control of the investee due to partial disposal of the equity investment, or any other reasons, theremaining equity investment is remeasured at fair value at the date in which control is lost. The sum of consideration
received from disposal of equity investment and the fair value of the remaining equity investment, net of the differencebetween the sum of the Company's previous share of the subsidiary's net assets recorded from the acquisition date orcombination date and the sum of goodwill, is recognized in investment income in the period in which control is lost.Other comprehensive income that may later be reclassified into profit or loss and changes in other owner's equityaccounted by equity method in connection with the equity investment of the original subsidiaries shall be transferred tothe current investment gains when the control is lost.b. Disposal of Subsidiary Achieved by StagesWhen the equity investment of subsidiaries is disposed of through multiple transactions until the control is lost, suchmultiple transactions are generally treated as a package deal if the terms, conditions, and economic impact of thetransactions to dispose of the subsidiary's equity investment satisfy one or more of the following conditions:
? These transactions are achieved at the same time or the mutual effects on each other are considered;? A complete set of commercial results can be achieved with reference to the series of transactions as a whole;? Achieving a transaction depends on achieving of at least one of the other transaction;? One transaction recognized separately is not economical, but it is economical when considered together with othertransactions.If multiple transactions are recognized as a package deal, these transactions shall be subject to accounting treatmentas a transaction to dispose of the subsidiaries and lose control. The differences between the price on each disposaland disposal of investment on the subsidiary's net assets shall be recognized in other comprehensive income in theconsolidated financial statements, and included in profit or loss for the period when the control is lost.If the transactions are not a package deal, accounting treatment for partial disposal of equity investments of thesubsidiary without losing control shall be applied before control is lost. When the control is lost, general accountingtreatment for disposal of a subsidiary shall be used.
③ Acquisition of Minority Interest of Subsidiaries
The Company shall adjust the share premium in the capital reserve of the consolidated balance sheet with respect toany difference between the long-term equity investment arising from the purchase of minority interest and the netassets attributing to the parent company continuously calculated on the basis of the newly increased share proportionas of the acquisition date or date of combination or, adjust the retained earnings if the share premium in the capitalreserve is insufficient for write-down.
④ Partial Disposal of Equity Investment in Subsidiaries without Losing Control
The difference between the disposal consideration and the share of net assets in the subsidiaries calculated fromdisposal of long-term equity investment as of the date of acquisition or combination date shall be adjusted to sharepremium in the capital reserve in the consolidated balance sheet. Adjustments shall be made to retained earnings inthe event that the share premiums in the capital reserves are not sufficient for write-down.
8. Classification of joint venture arrangement and accounting treatment methods for jointoperationJoint venture arrangement is classified into joint operation and joint venture.Joint operation means the joint venture arrangement in which the joint venture parties have the assets and assume theliabilities related to such arrangement.The Company recognizes the following items related to the share of interests in the joint operation:
(1) The assets separately held by the Company and assets jointly held as recognized by the share of the Company;
(2) The liabilities separately assumed by the Company and liabilities jointly assumed as recognized by the share of theCompany;
(3) Income from selling the share of the Company in the output of the joint operation;
(4) Income from joint operation of the sold output as recognized by the share of the Company;
(5) The expenses separately incurred and expenses jointly incurred as recognized by the share of the Company;The Company adopts the equity method for the investment of the joint venture. For details, refer to this sectionFinancial Report - V. Significant Accounting Polices and Accounting Estimates - 20. Long-term equity investment.
9. Recognition criteria of cash and cash equivalents
Cash means the cash on hand and deposits that are available for payment at any time of the Company.Cash equivalents mean the investments held by the Company which are short-term, highly liquid, easy to be convertedinto known amounts of cash and have little risk of value change.
10. Conversion of transactions and financial statements denominated in foreign currencies
(1) Foreign currency transactions
Foreign currency transactions shall be translated into functional currency at the spot exchange rate on the day whenthe transactions occurred.The Balance of foreign currency monetary items shall be translated at the spot exchange rate on the balance sheetdate. The resulting exchange differences are recognized in profit or loss for the current period, except for thosedifferences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency foracquisitions, construction, or production of the qualified assets, which should be incuded in current profit and loss.
(2) Translation of foreign currency financial statements
All assets and liabilities in balance sheet are translated based on spot exchange rate on the balance sheet date;owners' equity items other than "undistributed profit" are translated at a spot exchange rate when accrued. Revenueand expense items in the income statement are translated at a spot exchange rate at the transaction occurrence date.For disposal of overseas operation, the translation difference as stated in the foreign currency financial statementsrelating to overseas operation, is accounted for in the profit and loss account in the current period from owners' equityitems.
11. Financial instruments
A financial asset, financial liability or equity instrument is recognized when the Company becomes a party to thefinancial instrument contract.
(1) Classification of the financial instruments
According to the Company's business model for management of the financial assets and the contractual cash flowfeatures of the financial assets, the financial assets, when initially recognized, are classified as: financial assets atamortized cost, financial assets at fair value through other comprehensive income (debt instruments) and financialassets at fair value through profit or loss.The financial assets which satisfy the following conditions, and are not designated as financial assets at fair valuethrough profit or loss will be classified by the Company as financial assets at amortized cost:
① The business model is designed to collect the contractual cash flow;
② The contractual cash flow is only used to pay the principal and the interests based on the outstanding principalamount.The financial assets which satisfy the following conditions, and are not designated as financial assets at fair valuethrough profit or loss will be classified by the Company as the financial assets (equity instruments) at fair value throughother comprehensive income:
① The business model is designed to both collect the contractual cash flow and sell the financial assets;
② The contractual cash flow is only used to pay the principal and the interests based on the outstanding principalamount.For non-trading investments in equity instruments, the Company may, at the time of initial recognition, irrevocablydesignate them as financial assets (equity instruments) at fair value through other comprehensive income. Suchdesignation is based on the individual investments, and relevant investments fall within the definition of the equityinstrument from the perspective of the issuer.Except for the financial assets at amortized cost, and financial assets at fair value through other comprehensiveincome, all the remaining financial assets are classified as the financial assets at fair value through profit or loss. At thetime of initial recognition, the financial assets which should have been classified as financial assets at amortized costor financial assets at fair value through other comprehensive income can be irrevocably designated by the Companyas financial assets at fair value through profit or loss if the accounting mismatch can be eliminated or significantlyreduced.The financial liabilities, when initially recognized, are classified as: financial liabilities at fair value through profit or lossand financial liabilities at amortized cost.Financial liabilities which meet one of the following conditions will be, when initially measured, designated as financialliabilities at fair value through profit or loss:
① Such designation may be able to eliminate or significantly reduce the accounting mismatch;
② The portfolio of financial liabilities or the portfolio of financial assets and financial liabilities shall be subject tomanagement and performance evaluation on the basis of fair value according to the enterprise risk management orinvestment strategy contained in the formal documentations, and a report shall be made to the key managementpersonnel within the enterprise on this basis;
③ Such financial liabilities shall contain embedded derivatives to be split separately.
(2) Recognition and measurement of financial instruments
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables, long-termreceivables and creditors investment, which shall be initially measured at fair value, and the relevant transactionexpenses should be initially capitalized; The accounts receivable that do not contain material financing compositions
and those for which the Company decides to not take into account the financing compositions of no more than oneyear shall be initially measured at the contract transaction price.The interest calculated by effective interest method during the holding period is recorded into the current profit andloss.At the time of recovery or disposal, the difference between the price obtained and the book value shall be included inthe current profit or loss.
② Financial assets measured at fair value and whose changes are included in other comprehensive income (debtinstruments)Financial assets measured at fair value and its changes are included in other comprehensive income (debtinstruments) include receivables financing and investments in other creditor's rights. They are initially measured at fairvalue, and the relevant transaction expenses should be initially capitalized. These financial assets are subsequentlymeasured at fair value, and the change in fair value, other than the interest, the impairment loss or profit and the profitor loss on foreign exchange, shall be included in other comprehensive income.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall beremoved from other comprehensive income and included in the profit or loss for the period.
③ Financial assets measured at fair value and whose changes are included in other comprehensive income (equityinstruments)Financial assets at fair value through other comprehensive income (equity instruments) include investment in otherequity instruments. They are initially measured at fair value, and the transaction expenses shall be initially capitalized.These financial assets are subsequently measured at fair value, and the change in fair value shall be included in othercomprehensive income. The dividends obtained shall be included in the profit or loss for the period.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall beremoved from other comprehensive income and included in the carry-forward retained earnings.
④ Financial assets measured at fair value and whose changes are included in the current profit or lossFinancial assets at fair value through profit or loss include trading financial assets, derivative financial assets, andother non-current financial assets. They are initially measured at fair value, and the transaction expenses related tothem are included in the current profit or loss. These financial assets are subsequently measured at fair value, and thechange in fair value shall be included in the profit or loss for the period.
⑤ Financial liabilities at fair value through profit or loss in this period
Financial liabilities at fair value through profit or loss include trading financial liabilities and derivative financial liabilities.They are initially measured at fair value, and the transaction expenses related to them are included in the profit or lossfor the period. These financial liabilities are subsequently measured at fair value, and the change in fair value shall beincluded in the profit or loss for the period.Upon derecognition, the difference between their book value and the consideration paid is included in the profit or lossfor the period.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term loans, notes payable, accounts payable, other payables, long-term loans, bonds payable, and long-term payables. They are initially measured at fair value, and the transactionexpenses shall be initially capitalized.The interest calculated by effective interest method during the holding period is recorded into the current profit andloss.Upon derecognition, the difference between the consideration paid and the book value of these financial liabilities isincluded in the current profit or loss.
(3) Derecognition and transfer of financial assets
When one of the following conditions is met, financial assets are derecognized by the Company:
① The contractual right to receive cash flows from financial assets is terminated;
② The financial assets have been transferred and nearly all the risks and rewards related to the ownership of thefinancial assets have been transferred to the transferee;
③ The financial assets have been transferred and although the Company neither transfers or retains all the risks andrewards related to the ownership of the financial assets, the Company retains no control of the financial assets;If the Company and the counterpary modify or re-negotiate the contract, which constitute material modifications, theoriginal financial assets will be derecognized and a new financial asset will be recognized according to the modifiedterms.The financial assets when transferred will not be derecognized if the Company has retained nearly all the risks andrewards related to the ownership of the financial assets.The substance-over-form principle shall be adopted while making judgment on whether the transfer of financial assetssatisfies the above conditions for termination of recognition.The transfer of financial assets can be classified into entire transfer and partial transfer. If the transfer of an entirefinancial asset satisfies the conditions for termination of recognition, the difference between the two amounts belowshall be recorded into profit or loss for the period:
① The book value of the financial asset transferred;
② The consideration received as a result of the transfer, plus the accumulative amount of the change in fair valuepreviously recorded into the owners' equity (in cases where the transferred financial assets are financial assetsmeasured at fair value and whose changes are included in other comprehensive income (debt instruments)).If the partial transfer of financial assets satisfies the conditions for termination of recognition, the overall book value ofthe transferred financial asset shall be apportioned according to their respective relative fair value between therecognition terminated part and the remaining part, and the difference between the two amounts below shall berecorded into profit or loss for the current period:
① The book value of the derecognized portion;
② The sum of consideration of the derecognized portion and the corresponding portion of accumulated change in fairvalue previously recorded into owners' equity (in cases where the transferred financial assets are financial assetsmeasured at fair value and whose changes are included in other comprehensive income (debt instruments)).Financial assets will still be recognized if they fail to satisfy the conditions for termination of recognition, with theconsideration received recognized as a financial liability.
(4) Derecognition of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the recognition of the wholeor relevant portion of the liability is terminated; an agreement is entered between the Company and a creditor toreplace the original financial liabilities with new financial liabilities with substantially different terms, terminate therecognition of the original financial liabilities as well as recognize the new financial liabilities.If all or part of the contract terms of the original financial liabilities are substantially amended, the recognition of theoriginal financial liabilities will be terminated in full or in part, and the financial liabilities whose terms have beenamended shall be recognized as a new financial liability.When recognition of financial liabilities is terminated in full or in part, the difference between the book value of thefinancial liabilities terminated and the consideration paid (including transferred non-cash assets or new financial liability)is recognized in profit or loss for the current period.Where the Company repurchases part of its financial liabilities, the book value of such financial liabilities will beallocated according to the relative fair value between the continued recognized part and terminated part on the
repurchase date. The difference between the book value of the financial liabilities terminated and the considerationpaid (including transferred non-cash assets or new financial liability) is recognized in profit or loss for the current period.
(5) Method of determining the fair values of financial assets and liabilities
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the activemarket. The fair value of a financial instrument that is not traded in an active market is determined by using a valuationtechnique. The Company uses the valuation technique when it is applicable under current conditions and there areenough available data and other information to support and the technique should maximize the use of relevantobservable. It chooses the inputs which are consistent with the asset or liability's characteristics considered by marketparticipants in the transaction of the relevant asset or liability and makes the maximum use of relevant observableinputs. Unobservable inputs are used under the circumstance that the relevant observable inputs cannot be obtainedor not feasible.
(6) Test method and accounting treatment for impairment of financial assets
The Company bases its impairment accounting treatment on the expected credit loss on the financial assets atamortized cost, the financial assets at fair value through other comprehensive income (debt instruments), and thefinancial guarantee contracts.Taking into the reasonable and well-grounded information including past matters, current situation and prediction offuture economic conditions, the Company calculates the possibly weighted amount of the present value of thedifference between the cash flows receivable under the contract and the cash flows expected to be received, takingthe risk of default as the weight, and recognizes the expected credit loss.The Company will always measure the loss provision for the accounts receivable and contract assets arising from thetransactions regulated by "Accounting Standard for Business Enterprises No.14 - Revenue", whether they containmaterial financing compositions or not, by the amount of the expected credit loss throughout the duration.For the lease receivables arising from the transactions regulated by "Accounting Standard for Business Enterprises No.21 - Lease", the Company will always measure the loss provision for the accounts receivable, by the amount of theexpected credit loss throughout the duration.For other financial instruments, the Company assesses at each balance sheet date the changes in the credit risk ofrelevant financial instruments since initial recognition.By comparing the risk of default of financial instruments on the balance sheet date with the risk of default on the initialrecognition date, the Company determines the relative change in the risk of default over the expected life of financialinstruments to assess whether the credit risk of financial instruments has increased significantly since initialrecognition. If the financial instrument becomes overdue for more than 30 days, the Company believes that the creditrisk of this financial instrument has been significantly increased, unless there are concrete evidences that the creditrisk of this financial instrument has not been significantly increased upon initial recognition.If the financial instrument carries low credit risk at the balance sheet date, the Company believes that the credit risk ofthis financial instrument is not significantly increased upon initial recognition.If the credit risk of this financial instrument has been significantly increased upon initial recognition, the Companymeasures its loss provision in accordance with the amount equivalent to the expected credit loss of the financialinstrument throughout the duration; if the credit risk of this financial instrument is not significantly increased upon initialrecognition, the Company will measure the loss provision of this financial instrument by the amount of its expectedcredit loss in the 12 months to come. The increased or reversed amount of the loss provision resulting therefrom isincluded in the current profit or loss as the impairment loss or profit. For the financial assets measured at fair value andwhose changes are included in other comprehensive income (debt instruments), their loss reserve is recognized inother comprehensive income and the impairment loss or gain is included in the current profit or loss without reducingthe book value of such financial assets listed in the balance sheet.
If there are objective evidences showing that a certain account receivable has been subject to credit impairment, theCompany will accrue impairment provision for this account receivable on the individual item basis.The Company divides the financial instruments other than the above accounts receivable with the bad debt provisionaccrued based on single item into several combinations based on the credit risk characteristics, and determines theexpected credit loss on a combined basis. The combination categories of the Company for which the expected creditloss is accrued, including notes receivable, accounts receivable, receivables financing, other receivables, contractassets (including contract assets presented in other non-current assets) and long-term receivables (including long-term receivables due within 1 year presented in non-current assets due within 1 year) and the basis for determinationthereof are shown as follows:
| Item | Combination Category | Basis of Determination |
| Notes receivable | Bill type | With reference to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, the expected credit loss is calculated through the exposure at default and the expected credit loss rate throughout the duration. |
| Receivables Financing | ||
| Accounts receivable, other receivables | Aging mechanics | With reference to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, the expected credit loss is calculated through the exposure at default and the expected credit loss rate throughout the duration. |
| Accounts receivable, other receivables | Related parties that are included in the scope of consolidated financial statements | With reference to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, the expected credit loss is calculated through the exposure at default and the expected credit loss rate throughout the duration. |
| Contract assets (including contract assets presented in other non-current assets) | Nature of the funds | With reference to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, the expected credit loss is calculated through the exposure at default and the expected credit loss rate throughout the duration. |
| Long-term receivables (including long-term receivables due within 1 year presented in non-current assets due within 1 year) | Nature of the funds | With reference to the historical credit loss experience, combined with the current situation and the prediction of future economic conditions, the expected credit loss is calculated through the exposure at default and the expected credit loss rate throughout the duration. |
If the Company no longer reasonably expects that the cash flow of the financial asset contract can be recovered as awhole or in part, the book balance of such financial assets will be directly reduced.
12. Notes receivable
Refer to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financialinstruments
13. Accounts receivable
Refer to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financialinstruments
14. Receivables financing
Refer to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financialinstruments
15. Other receivables
Refer to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financialinstruments
16. Contract assets
(1) Recognition method and criteria of contract assets
The Company lists contract assets or contract liabilities in the balance sheet according to the relationship betweenperformance obligations and customer payments. Considerations that the Company has the right to collect forcommodities transferred or services provided to customers (and such right depends on other factors than passing oftime) are presented as contract assets. The contract assets and contract liabilities under the same contract arepresented in net amount. The Company separately presents the right possessed to collect consideration fromcustomers unconditionally (only depending on the passing of time) as accounts receivable.
(2) Determination method and accounting treatment method for the expected credit loss of contract assetsFor details, refer to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11.Financial instruments
17. Inventories
(1) Category of inventory
Inventories are classified as raw materials, commodity stocks, products in progress and materials commissioned forprocessing.The inventories are initially measured at cost, which comprises the cost of purchase, cost of conversion and otherexpenditure incurred in bringing the inventories to their present location and condition.
(2) Determination of cost
Cost of inventories is determined using the weighted average method.
(3) Basis for the determination of net realizable value and different type of inventoriesAt the balance sheet date, inventories are measured at the lower of cost and net realizable value. When the cost ofinventories is higher than their net realizable value, reserve for stock depreciation shall be accrued. The net realizablevalue means the amount after deducting the estimated cost of completion, estimated selling expenses and relevanttaxes from the estimated selling price of inventories in the daily activities.Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, and held-for-sale rawmaterials, during the normal course of production and operation, shall be determined by their estimated sales less therelated selling expenses and taxes; the net realizable value of material inventories, which need to be processed,during the normal course of production and operation, shall be determined by the amount after deducting theestimated cost of completion, estimated selling expenses and relevant taxes from the estimated selling price offinished goods; the net realizable value of inventories held for execution of sales contracts or labor contracts shall becalculated on the ground of the contracted price. If an enterprise holds more inventories than the quantity stipulated in
the sales contract, the net realizable value of the exceeding part shall be calculated on the ground of general sellingprice.If the Company accrues the reserve for stock depreciation based on the combination, the combination category andthe basis for determination thereof as well as the basis for determination of the net realizable value of different types ofinventories are shown as follows:
| Combination category of inventories | Basis for determination of the combination | Basis for determination of the net realizable value |
| Raw materials | Inventory category | Estimated selling price of inventories - estimated cost of completion - estimated selling expenses - relevant taxes |
| Work-in-progress | Inventory category | |
| Finished goods | Inventory category | |
| Contract performance costs | Inventory category |
If the factors influencing the write-down of the inventory value have disappeared, resulting in higher net realizablevalue of inventories than their book value after the reserve for stock depreciation is accrued, a reversal shall apply inthe amount of reserve for stock depreciation previously accrued, and the reserved amount shall be included in thecurrent profit or loss.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method;
② Packaging materials are amortized using the immediate write-off method.
18. Holding assets for sale
(1) Recognition criteria and accounting treatment method
An asset of which the book value is recovered mainly through sale (including exchange of non-monetary asset of acommercial nature), rather than continuous use of a non-current asset or a disposal group, is classified as a holdingasset for sale.A non-current asset or disposed group is classified by the Company as holding for sale if it meets the following criteriaat the same time:
① Immediate sale could be made under the current circumstances in accordance with the convention of selling suchkind of assets or disposal groups in similar transactions;
② Selling is highly likely to occur, i.e., the Company has made a resolution on a sales plan and obtained confirmedpurchase commitments, and the sales is predicted to be completed within 1 year. If required by relevant provisions thatselling shall only be made after approved by the relevant competent authority or supervision department of theCompany, such approval should have been obtained.If the book value of the non-current assets (excluding financial assets, deferred income tax assets, and assets toconstitute payroll payable) or disposal groups classified as holding for-sale assets is higher than the net amount afterdeducting the selling expenses from the book value, the book value will be written down to the net amount afterdeducting the selling expenses from the fair value, and the amount written down will be recognized as the impairmentloss of assets and included in the current profit or loss. At the same time, the impairment provision for holding for-saleassets will be accrued.
(2) Identification criteria and presentation method for termination of business
Termination of business is a separately distinguishable constituent part that satisfies one of the following conditionsand that has been disposed of or classified by the Company as held for sale:
② This constituent part represents an independent primary business or a separate principal operating area;
② This constituent part is part of an associated plan to dispose of an independent primary business or a separateprincipal operating area;
③ This constituent part is a subsidiary acquired for resale.
The profit or loss from going concern and the profit or loss from discontinued operation will be separately presented inthe income statement. The operating profit or loss and the profit or loss from disposal, including impairment loss andreversed amount from discontinued operation, will be presented as the profit or loss from discontinued operation. Forthe discontinued operation presented in the current period, the Company will present the information previouslypresented as the profit or loss from going concern as the profit or loss from discontinued operation during thecomparable accounting period.
19. Long-term receivables
Refer to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financialinstruments
20. Long-term equity investment
(1) Criterion of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, and exists only when requiring theunanimous consent of the parties sharing control before making decisions about the relevant activities of thearrangement. The Company together with the other joint venture parties can jointly control over the investee and areentitled to the right of the net assets of the investee, as the investee is joint venture of the Company.Significant influence refers to the power to participate in making decisions on the financial and operating policies of anenterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. Where theCompany can exercise significant influence over the investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination
For the long-term equity investment in the subsidiaries arising from business combination involving entities undercommon control, the initial investment cost of the long-term equity investment is the share with reference to the bookvalue of the shareholders' equity of the combined party in the consolidated financial statements of the ultimatecontrolling party on the date of combination. The share premium in the capital reserve shall be adjusted according tothe difference between the initial investment cost of the long-term equity investment and the carrying amount of the
consideration paid; if the share premium in the capital reserve is insufficient to offset, the retained earnings shall beadjusted. In connection with imposing control over the investee under common control as a result of additionalinvestment and other reasons, the share premium shall be adjusted according to the difference between the initialinvestment cost of the long-term equity investment as recognized by the above principle and the carrying value of thelong-term equity investment before combination and the sum of carrying value of newly paid consideration foradditional shares acquired on the date of combination. If the share premium is insufficient for write-down, the retainedearnings shall be offset.For the long-term equity investment in the subsidiaries arising from business combinations involving entities not undercommon control, the cost of the combination ascertained on the date of acquisition shall be taken as the initialinvestment cost of the long-term equity investment. In connection with imposing control over the investee not undercommon control as a result of additional investment and other reasons, the initial investment cost shall be the sum ofthe book value of the equity investment originally held and the newly increased initial investment cost.
② Long-term equity investments acquired by the means other than business combinationThe initial cost of a long-term equity investment obtained by cash payment shall be the purchase costs actually paid.The initial cost of investment of a long-term equity investment obtained by means of issuance of equity securities shallbe the fair value of the equity securities issued.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment calculated by cost method
Long-term equity investment in subsidiaries of the Company is calculated by cost method, unless the investmentmeets the conditions for holding for sale. except for the actual consideration paid for the acquisition of investment orthe declared but not yet distributed cash dividends or profits which are included in the consideration, investment gainsare recognized as the Company' shares of the cash dividends or profits declared by the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and joint ventures are calculated using equity method. Where the initialinvestment cost of the long-term equity investment exceeds the investor's interest in the fair value of the investee'sidentifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost; where theinitial investment cost is less than the investor's interest in the fair value of the investee's identifiable net assets at theacquisition date, the difference shall be charged to the profit or loss for the current period. At the same time, the cost ofthe long-term equity investment shall be adjusted.The Company recognizes the investment income and other comprehensive income according to the shares of netprofit or loss and other comprehensive income realized by the investee which it shall be entitled or shared respectively,and simultaneously makes adjustment to the book value of long-term equity investment; The book value of long-termequity investment shall be reduced by attributable share of the profit or cash dividends for distribution declared by theinvestee. In relation to other changes in the owner's equity except for net profits and losses, other comprehensiveincome and profit distributions of the investee (hereinafter referred to as “Changes in Other Owner's Equity”), the bookvalue of the long-term equity investment shall be adjusted and included in owner's equity.
When determining the amount of proportion of net profit or loss, other comprehensive income and other changes in theowner's equity in the investee which it entitles, the fair value of each identifiable net assets of the investee at the timewhen the investment is obtained shall be used as basis, and according to the accounting policies and accountingperiod of the Company, adjustment shall be made to the net profit and other comprehensive income of the investee.The unrealized profit or loss resulting from transactions between the Company and its associates or joint venture shallbe eliminated in proportion to the investor's equity interest of investee, based on which investment income or loss shallbe recognized, except for those assets invested or sold constituting a business. Any losses resulting from transactions,which are attributable to impairment of assets, shall be fully recognized.The net loss incurred by the Company to the joint ventures or affiliates is capped when the carrying amount of long-term equity investment and the long-term equity that substantially constitutes the net investment in the joint ventures oraffiliates have been wrote down to zero, except to the extent that the Company has an additional loss obligation. If thejoint ventures or affiliates later realize net profit, the Company will resume recognition of the income share after theincome share makes up the unrecognized loss share.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the book value and the consideration actuallyreceived shall be included in the current profit or loss.If the remaining equity is still subject to the equity method in partial disposal of the long-term equity investment underthe equity method, other comprehensive income recognized in the original equity investment shall be carried forwardat the appropriate proportion on the same basis used by the investee for direct disposal of relevant assets or liabilities,and other changes in the owner's equity shall be carried forward into the current profit or loss at the appropriateproportion. When losing the control or material influence over the investee due to disposal of the equity investmentand other reasons, other comprehensive income recognized in the original equity investment due to adoption of theequity method shall be subject to accounting treatment on the same basis used by the investee for direct disposal ofrelevant assets or liabilities when ceasing to use the equity method, and other changes in the owner's equity shall becarried forward into the current profit or loss in full when ceasing to use the equity method.If the control over the investee is lost due to partial disposal of the equity investment and other reasons, and if theremaining equities can exercise common control or material influence over the investee in preparing the individualfinancial statements, the remaining equities shall be accounted by the equity method and shall be adjusted as if suchremaining equities have been accounted for under the equity method since they are obtained. Other comprehensiveincome recognized before the control over the investee is obtained shall be carried forward pro rata on the same basisused by the investee for direct disposal of relevant assets or liabilities, and other changes in the owner's equityrecognized under the equity method shall be carried forward into the current profit or loss pro rata. The remainingequities which cannot exercise common control or material influence over the investee shall be recognized as financialassets, and the difference between their fair value and book value on the date when the control is lost shall beincluded in the current profit or loss. Other comprehensive income recognized and other changes in the owner's equityrecognized before the control over the investee is obtained shall be carried forward in full.If the disposal of the equity investment in the subsidiaries through multiple transactions until loss of the control is apackage deal, each transaction shall be subject to accounting treatment as a transaction to dispose of the equity
investment in the subsidiaries and to lose the control; the difference between the price for each disposal before loss ofthe control and the book value of the long-term equity investment of the equity disposed of shall be first recognized asother comprehensive income in the individual financial statements and shall then be carried forward to the profit or lossfor the very period when the control is lost. If it is not a package deal, each transaction shall be subject to accountingtreatment.
21. Investment properties
Investment property refers to the real estate held to generate rental income or capital appreciation, or both, includingleased land use rights, land use rights held for transfer after appreciation, and leased buildings (including buildings thatare leased after completion of self-construction or development activities and buildings in construction or developmentthat are used for rental in the future).The Company adopts the cost mode to measure the existing investment property. The subsequent expenditure relatedto the investment property will be included in the cost of the investment property when relevant economic benefits arelikely to flow in and costs can be measured reliably, or otherwise be included in the current profit or loss whenoccurred. Investment property measured at cost - buildings held for leasing shall adopt the same depreciation policyfor fixed assets of the company, land use rights held for leasing shall adopt the same amortization policy for theintangible assets.
22. Fixed assets
(1) Conditions for recognition of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental toothers, or for administrative purposes; and have a service life of more than one fiscal year. Fixed asset is recognizedwhen it meets the following conditions at the same time: ① It is probable that the economic benefits associated withthe fixed asset will flow to the enterprise; ② Its cost can be reliably measured.The fixed assets are initially measured at cost (with the impact of predicted discard expense taken into account).The subsequent expenditure related to the fixed assets will be included in the cost of the fixed assets when theeconomic benefits in connection therewith are likely to flow in and costs can be measured reliably; the book value ofthe replaced part will be derecognized; all other subsequent expenditure will be included in the current profit or losswhen occurred.
(2) Methods for depreciation
| Category | Depreciation method | Useful lives of depreciation | Residual Ratio | Annual depreciation rate |
| Housing and building | Straight-line method | 20 | 5% | 4.75% |
| Machinery and equipment | Straight-line method | 5-10 | 5% | 19.00%-9.50% |
| Means of transport | Straight-line method | 4-8 | 5% | 23.75%-11.88% |
| Electronic and other equipment | Straight-line method | 3-5 | 5% | 31.67%-19.00% |
Fixed assets are depreciated by categories using the straight-line method, and the annual depreciation rates aredetermined by categories based upon their estimated useful lives and their estimated residual values. Where the partsof a fixed asset have different useful lives or cause economic benefits for the enterprise in different ways, differentdepreciation rates or depreciation methods shall apply, and each part is depreciated separately.
(3) Disposal of fixed assets
When fixed assets are disposed of or when no economic benefits can be expected through use or disposal thereof,such fixed assets will be derecognized. The income from disposal of the fixed assets through sale, transfer, scrappingor damage with the book value thereof and relevant taxes deducted is included in the current profit or loss.
23. Projects under construction
The projects under construction are measured at the actual cost. The actual cost comprises the building cost,installation cost, borrowing cost qualified for capitalization and other necessary expenditures incurred to bring theprojects under construction to the conditions before they are made ready for the intended use. The projects underconstruction will be converted into fixed assets when they are ready for intended use and will be depreciated from thenext month on. The criterion and time point for the projects under construction of the Company to be carried forwardinto fixed assets are shown as follows:
| Category | Criterion and time point for carrying forward into fixed assets |
| Housing and building | When the housing and buildings meet the criteria for living by people after the completion acceptance and fire acceptance are completed and the water and power are available |
| Machinery and equipment | When the equipment is installed, commissioned and available for normal use |
| Electronic and other equipment | When the equipment is installed, commissioned and available for normal use |
24. Borrowing costs
(1) Criteria for recognition of capitalized borrowing costs
For borrowing costs incurred by the Company that are directly attributable to the acquisition, construction or productionof assets qualified for capitalization, the costs will be capitalized and included in the costs of the related assets. Otherborrowing costs shall be recognized as expense in the period in which they are incurred and included in the profit orloss for the current period. Assets qualified for capitalization are assets (fixed assets, investment property, inventories,etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for theirintended use or sale.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation of capitalization ofborrowing costs, excluding the period in which capitalization of borrowing costs is suspended. Capitalization ofborrowing costs begins when the following three conditions are fully satisfied:
① Asset expenditures (including cash paid, transferred non-currency assets or expenditure for holding debt liability forthe acquisition, construction or production of assets qualified for capitalization) have been incurred;
② Borrowing costs have been incurred;
③ The acquisition, construction or production necessary to enable the asset reach its intended state of serviceabilityor marketability have commenced. Capitalization of borrowing costs shall be suspended during periods in which thequalifying asset under acquisition and construction or production ready for the intended use or sale.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction orproduction of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than3 months; if the interruption is a necessary step for making the qualifying asset under acquisition and construction orproduction ready for the intended use or sale, the capitalization of the borrowing costs shall continue. The borrowingcosts incurred during such period shall be recognized as profits and losses of the current period. When the acquisitionand construction or production of the asset resumes, the capitalization of borrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
Specific borrowings for the acquisition, construction or production of assets qualified for capitalization, borrowing costsof the specific borrowings actually incurred in the current period minus the interest income earned on the unusedborrowing loans as a deposit in the bank or as investment income earned from temporary investment will be used todetermine the amount of borrowing costs for capitalization.General borrowings for the acquisition, construction or production of assets qualified for capitalization, the to-be-capitalized amount of interests on the general borrowing shall be calculated and determined by multiplying theweighted average asset disbursement of the part of the accumulative asset disbursements minus the specificallyborrowed loans by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated anddetermined according to the weighted average interest rate of the general borrowing.During the capitalization, the difference between the principal and interest of special borrowings in foreign currencyshall be capitalized and included in the cost of assets qualified for capitalization. The difference between the principaland interest of the borrowings in foreign currency other than the special borrowings in foreign currency shall beincluded in the current profit or loss.
25. Intangible assets
(1) Service life and its basis of determination, estimation, amortization method or reviewprocedure
① Valuation method of intangible assets
a. Intangible assets are initially measured at cost upon acquisition;The costs of an externally purchased intangible asset include the purchase price, relevant taxes and expenses paid,and other expenditures directly attributable to putting the asset into condition for its intended use.b. Subsequent measurement
The service life of intangible assets shall be analyzed and judged upon acquisition.As for intangible assets with a finite service life, they are amortized using the straight-line method over the term inwhich economic benefits are brought to the firm; If the term in which economic benefits are brought to the firm by anintangible asset cannot be estimated, the intangible asset shall be taken as an intangible asset with indefinite servicelife, and shall not be amortized.
② Estimation of service life of the intangible assets with limited service life
| Item | Estimated useful lives | Basis |
| Land use rights | 40 or 50 years | Land use certificate |
| Non-patented technology | 5-10 years | Expected benefited period |
| Software | 2-5 years | Expected benefited period |
| Trademark rights | 6 years | Expected benefited period |
| Software copyright | 10 years | Expected benefited period |
For an intangible asset with a finite service life, review on its service life and amortization method is performed at theend of each end.Upon review, service life and amortization method for the intangible assets are the same with the previous estimate atthe end of this period.
③ The basis for the judgment of intangible assets with uncertain service life and the procedure for reviewing theirservice lifeAs at the balance sheet date, the Company has no intangible assets with uncertain service life.
(2) Scope of accumulation and relevant accounting treatment method for R&D expenditures
① Scope of accumulation for R&D expenditures
The expenditures incurred by the Company during the research and development include employee compensations ofthe personnel who are engaged in the R&D activities, costs of materials consumed, costs of depreciation andamortization and other relevant expenditures.
② Specific criteria for the division of research phase and development phase
The expenses for internal research and development projects of the Company are divided into expenses in theresearch phase and expenses in the development phase.Research phase: Scheduled innovative investigations and research activities to obtain and understand scientific ortechnological knowledge.Development phase: Apply the research outcomes or other knowledge to a plan or design prior to a commercialproduction or use in order to produce new or essentially-improved materials, devices, products, etc.
③ Specific condition for capitalizing expenditure during the development phase
Expenses in the research phase are recorded into the profits and losses for the current period when they occur. Theexpenses in the development phase are recognized as intangible assets if the following conditions are fulfilled, and areincluded in the current profit or loss if following conditions are not fulfilled:
a. It is technically feasible to complete such intangible asset so that it will be available for use or for sale;b. There is intention to complete the intangible asset for use or sale;c. The ways in which intangible asset generates economic benefits, including there is evidence that the productsproduced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset isfor internal use, there is evidence that there exists usage for the intangible asset;d. There is sufficient support in terms of technology, financial resources and other resources in order to complete thedevelopment of the intangible asset, and there is capability to use or sell the intangible asset;e. The expenses attributable to the development stage of the intangible asset can be measured reliably.
If the expenses in the research phase and expenses in the development phase cannot be distinguished, all theexpenses incurred for R&D are included in the current profit or loss.
26. Impairment of long-term assets
Long-term assets, such as long-term equity investment, investment properties that are measured at cost, fixed assets,construction in progress, intangible assets with limited service life and oil and gas assets are tested for impairment ifthere is any indication that an asset may be impaired at the balance sheet date. If the result of the impairment testindicates that the recoverable amount of the asset is less than its book value, a provision for impairment and animpairment loss are recognized for the amount by which the asset's book value exceeds its recoverable amount. Therecoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cashflows expected to be derived from the asset. Provision for asset impairment is determined and recognized on theindividual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverableamount of a group of assets to which the asset belongs to is determined. A group of assets is the smallest group ofassets that is able to generate cash inflows independently.For the goodwill arising from business combination, intangible assets with uncertain service life, and intangible assetswhich are not ready for intended use, impairment test shall be conducted at least at the end of each year, regardlessof whether there are signs of impairment or not.When the Company carry out impairment test to goodwill, the Company shall, as of the purchasing day, allocate on areasonable basis the book value of the goodwill formed by merger of enterprises to the relevant asset groups, or ifthere is a difficulty in allocation, to allocate it to the sets of asset groups. Relevant asset groups or the sets of assetgroups mean those can benefit from the synergy of business combination.For the purpose of impairment test on the relevant asset groups or the sets of asset groups containing goodwill, if anyevidence shows that the impairment of asset groups or sets of asset groups related to goodwill is possible, animpairment test will be made first on the asset groups or sets of asset groups not containing goodwill, thus calculatingthe recoverable amount and comparing it with the relevant book value so as to recognize the correspondingimpairment loss. An impairment test will be made on the asset groups or sets of asset groups containing goodwill tocompare the book value of these asset groups or sets of asset groups with the recoverable amount. Where therecoverable amount is lower than the book value, the amount of impairment loss shall set off and be apportioned to thebook value of the goodwill in the asset groups or sets of asset groups, and then set off the book value of other assetspro rata according to the proportion of the book value of other assets other than the goodwill in the asset groups orsets of asset groups.Once the above asset impairment loss is recognized, it will not be reversed in the subsequent accounting periods.
27. Long-term deferred expenses
Long-term deferred expenses are expenses which have occurred but will benefit over 1 year and shall be amortizedover the current period and subsequent periods.The amortization period and amortization method of various expenses are:
| Item | Amortization method | Amortization period |
| Improvement expenditure of fixed assets leased by operating lease | Straight-line method | By period of benefit |
| Renovation Cost | Straight-line method | By period of benefit |
28. Contract liabilities
The Company lists contract assets or contract liabilities in the balance sheet according to the relationship betweenperformance obligations and customer payments. The Company lists the obligation to transfer commodities or offerservices to customers for the consideration received or receivable from customers as contract liabilities. The contractassets and contract liabilities under the same contract are presented in net amount.
29. Employee compensation
(1) Accountant treatment of short-term remuneration
During the accounting period when the staff provides service, the Company will recognize the short-term remunerationactually incurred as liabilities, and the liabilities would be charged into current profits and loss or costs of assets.The Company will pay social insurance and housing funds, and will make provision of trade union funds and staffeducation costs in accordance with the requirements. During the accounting period when the staff provides service,the Company will determine the relevant amount of employee benefits in accordance with the required provision basisand provision ratios.Employee compensation actually incurred by the Company will be included in the current profit or loss or relevantasset costs when actually incurred, in which non-monetary benefits will be measured at the fair value.
(2) Accountant treatment of retirement benefit plan
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance with the relevantprovisions of the local government for the staff. During the accounting period when the staff provides service, theCompany will calculate the amount payable in accordance with the local stipulated basis and proportions which will berecognized as liabilities, and the liabilities would be charged into current profits and loss or costs of assets.
② Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formula determined by projected unitcredit method would be vested to the service period of the staff and charged into current profits and loss or costs ofassets.
(3) Accountant treatment of termination benefits
If the dismissal welfare is provided by the Company to employees, the employee compensation liabilities arising fromthe dismissal welfare shall be determined at the earliest of the following two, and included in the current profits andlosses: When the company cannot unilaterally withdraw the dismissal welfare provided due to the termination of laborrelations plan or layoff proposal; When the company determines the costs or expenses associated with therestructuring involving the payment of dismissal welfare.
30. Estimated liabilities
The Company shall recognize the obligations related to contingencies as estimated liabilities, when all of the followingconditions are satisfied:
(1) The obligation is a present obligation of the Company;
(2) It is probable that an outflow of economic benefits will be required to settle the obligation;
(3) The amount of the obligation can be measured reliably.
Estimated liabilities shall be initially measured at the best estimate of the expenditure required to settle the relatedpresent obligation.Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be taken into account asa whole in reaching the best estimate. Where the effect of the time value of money is material, the best estimate shallbe determined by discounting the related future cash outflow.The expenses required have a successive range, in which the possibilities of occurrence of each result are the same,and the best estimate should be determined as the middle value for the range; in other circumstances, the bestestimate will be handled as follows, respectively:
(1) For the contingencies involving a single item, it will be determined according to the amount most likely to occur.
(2) For the contingencies involving several items, it will be determined according to the possible results and therelevant possibilities.Where some or all of the expenditure required to settle an estimated liability is expected to be reimbursed by a thirdparty, the reimbursement is separately recognized as an asset when it is virtually certain that the reimbursement willbe received. The amount recognized for the reimbursement is limited to the book value of the estimated liability.The Company will review the book value of the estimated liabilities on the balance sheet date, and if there areconcrete evidences that such book value cannot reflect the current best estimate, the book value will be adjustedaccording to the current best estimate.
31. Share-based payment
The Company's share-based payment refers to a transaction in which an enterprise determines the liabilities on thebasis of equity instruments granting or bearing for the acquisition of service from its employees or other parties. TheCompany's share-based payment is equity-settled.As to an equity-settled share-based payment in return for services of employees, calculation will be based on the fairvalue of the equity instrument granted to the employees. The share-based payment transactions vested immediatelyafter the date of grant will be included in the relevant cost or expense based on the fair value of the equity instrumenton the date of grant, and the capital reserve will be increased accordingly. For the services within the waiting period orthe share-based payment transactions that may only be vested when the specified performance conditions are metafter the date of grant, the Company will include the services obtained in the current period in relevant cost or expenseand increase the capital reserve at the fair value on the date of grant according to the best estimate of the number ofthe exercisable equity instruments on each balance sheet date in the waiting period.If the terms of the equity-settled share-based payment are amended, the Company shall recognize the servicesreceived at least based on the situation before the amendment was made. In addition, any amendment resulting in theincrease of the fair value of the equity instrument granted or changes that are beneficial to the staff on the amendmentdate, will be recognized as an increase in the service received.If the equity instruments vested are canceled during the waiting period, the Company will take the vested equityinstruments canceled as accelerated exercise, and immediately include the amount to recognized during the waitingperiod in the current profit or loss. At the same time, the capital reserve will be recognized. However, if new equity
instruments are vested and they are verified at the vesting date of new equity instrument as alternatives vested tocanceled equity instruments, the treatment on the new equity instrument is in conformity with the modified treatmenton disposal of equity instrument.
32. Revenue
(1) Accounting policies for revenue recognition and measurement
If the Company performed the obligations in the contract, revenue shall be recognized when the customer acquires theright of control over relevant commodities or services. Acquisition of control over relevant commodities or servicesmeans gaining the ability to direct the use of such commodities or services and obtain nearly all the economic benefitstherefrom.If the contract contains two or more performance obligations, the Company shall apportion the transaction price toeach individual performance obligation on the contract commencement date according to the relative proportion of theindividual selling price of the commodities or services promised by each individual performance obligation. TheCompany measures the revenue according to the transaction price apportioned to each individual performanceobligation.The transaction price refers to the amount of consideration that the Company is expected to be entitled to collect dueto the transfer of commodities or services to customers, excluding the payments collected on behalf of third partiesand the payments expected to be returned to customers. The Company will determine the transaction price accordingto the contract provisions and its past practices, and may take into account the impact from the variable consideration,the major financing components in the contract, the non-cash consideration, the payable customer consideration andother factors when determining the transaction price. The Company shall determine the transaction price containingthe variable consideration according to the amount not exceeding the amount by which the accumulative recognizedrevenue is much more unlikely to be significantly reversed when relevant uncertainties are eliminated. If there aremajor financing components in the contract, the Company shall determine the transaction price according to theamount due assumed to be paid in cash when the customer acquires the control over the commodities or services,and shall amortize the difference between such transaction price and the contract consideration using the effectiveinterest rate method during the contract period.When one of the following conditions is met, it belongs to the performance obligation within a certain period of time, orotherwise it belongs to the performance obligation at a certain point of time:
① The customer acquires and consumes the economic benefits arising from the Company's performance while thecompany performs the contract;
② The customer can control the commodities in progress during the Company's performance;
③ The commodities produced by the Company during the performance possess irreplaceable usage, and theCompany has the right to collect payment for the performance part accumulated so far during the whole contractperiod.For the performance obligations performed within a certain period of time, the Company shall recognize the revenueaccording to the performance progress within that period of time, except that the performance progress cannot bereasonably determined. The Company will determine the performance progress through the output or input method bytaking into account the nature of commodities or services. If the performance progress cannot be reasonablyrecognized and the costs incurred are expected to be compensated, the Company will recognize the revenueaccording to the amount of costs incurred until the performance progress can be reasonably recognized.For the performance obligations performed at a certain point of time, the Company will recognize the revenue whenthe customer acquires the right of control over relevant commodities or services. While determining whether thecustomer has acquired the control over the commodities or services, the Company shall take the following into
consideration:
① The Company has the current collection right for the such commodities or services, that is, the customer has thecurrent payment obligation for such commodities or services;
② The Company has transferred the legal title of such commodities to the customer, that is, the customer already hasthe legal title of such commodities;
③ The Company has transferred the physical commodities to the customer, that is, the customer has possessed thephysical commodities;
④ The Company has transferred the major risks and rewards of the commodity title to the customer, that is, thecustomer has acquired the major risks and rewards of the commodity title;
⑤ The customer has accepted such commodities or services.
The Company will judge whether it is a principal or agent at the time of transaction based on the fact as to whether theCompany has the right of control over the commodities or services before such commodities or services aretransferred to the clients. If the Company has control over the commodities or services before such commodities orservices are transferred to the clients, the Company is a principal and the income is recognized by the totalconsideration received or receivable; or otherwise, the Company is an agent, and the income is recognized by theamount of commission or service charge that the Company is expected to be entitled to collect.
(2) Recognition and measurement of the specific income disclosed per business type
① Principle for recognizing revenue from the domestic sales of standard products: The Company's security standardproducts are sold, through both direct sale and distribution, to the project clients, dealers and other customers. TheCompany and customers sign sales contracts and send the goods to customers according to the contractual terms ofdelivery, or the customers pick up goods. The revenue is recognized after the customer receives and accepts thegoods and the Company obtains the evidence proving the client's receipt of goods;
② Principle for recognizing revenue from the overseas sales of standard products: If the domestic company makesdirect export, the FOB and CIF terms are generally adopted and the Company recognizes the sale income after theproduct is declared and exported. If a foreign subsidiary sells the goods abroad, the goods will be sent to the customeror the customer will collect the goods according to the delivery method agreed with the customer, and the income willbe recognized when the customer receives and accepts the goods;
③ Principle for recognizing system-integrated sales revenue: The sales of the system-integrated products of theCompany include providing the supporting services such as plan design, supporting products, installation, debuggingand system trial operation. The sales income will be recognized upon acceptance;
④ Principle for recognizing the income from labor services: The income is recognized when the labor service isprovided.
33. Contract costs
The contract costs comprise the contract performance cost and the cost to obtain a contract.The costs incurred by the Company for contract performance which fall outside the scope of the enterprise accountingstandards such as inventories, fixed assets or intangible assets will be identified as an asset of the contractperformance costs upon satisfying all of the following conditions:
(1) The costs are directly related to one existing contract or one contract that is expected to be obtained;
(2) The costs enrich the Company's resources for future contract performance;
(3) The costs are estimated to be recovered.
The incremental costs which are incurred by the Company to obtain the contract and are expected to be recovered willbe identified as an asset of the costs to obtain a contract.The assets related to the contract costs will be amortized on the same basis for recognition of the income fromcommodities or services related to the assets; but if the amortization period of the costs to obtain the contract is nomore than 1 year, the Company will include such costs in the current profit or loss once occurred.In case that the book value of assets related to contract costs is higher than the difference between the two itemsbelow, the Company will accrue the impairment provision for the extra part, and recognize that part as impairment loss:
(1) Estimated residual consideration to be obtained from transfer of commodities or services related to the assets;
(2) Estimated costs incurred from transfer of relevant commodities or services.
If the factors for impairment in the previous periods are subsequently changed, making the aforesaid difference higherthan the book value of the assets, the Company will reverse the accrued impairment provision and include it in thecurrent profit or loss, provided that the book value of the reversed assets does not exceed the book value of the assetswithout impairment provision accrued on such date of reversal.
34. Government subsidies
(1) Type
Government grants are monetary assets and non-monetary assets acquired by the Company from the governmentfree of charge. Government grants are classified into government grants related to assets and government grantsrelated to revenue.Government grants related to assets refer to government grants acquired by the Company for the purpose ofpurchasing or constructing or otherwise forming long-term assets. Government grants related to revenue refer to thegovernment grants other than those related to assets.
(2) Confirmation of time point
Government grants related to assets will be measured at the actual amount of money received at the time of receipt.The assets (bank deposits) and deferred income shall be period by period included in the profits and losses of thecurrent period in a reasonable and systematic manner from the time the assets are available for use (those related tothe Company's daily activities shall be included in other income; those unrelated to the Company's daily activities shallbe recognized as non-operating revenue). When the relevant assets are disposed of (sold, transferred, scrapped, etc.)at or before the end of their service life, the balance of the deferred income that has not yet been apportioned will betransferred to the current-period income from the disposal of the assets on an one-time manner, and will not bedeferred.For government grants related to revenue, they will be recognized as profit and loss of the current period according tothe amount receivable for government grants obtained under fixed quota standards, otherwise, they will be recognizedas profit and loss of the current period when it is actually received.
(3) Accounting treatment
Government grants related to assets shall write off the book value of relevant assets or be recognized as deferredincome. When recognized as deferred income, the government grant related to assets will be period by period credited
to the profits and losses of the current period in a reasonable and systematic manner within the service life of relevantassets (those related to the Company's daily activities shall be recognized as other income; those unrelated to theCompany's daily activities shall be recognized as non-operating revenue).The revenue-related government grants shall be recognized as deferred income if they are used to compensaterelevant expenses or losses in subsequent periods, and they shall be included in profit and loss of the current period(those related to Company's routine activities shall be included in other income; those unrelated to the Company'sroutine activities shall be included in non-operating revenue) or used to offset relevant expenses or losses during therecognition of related expenses or losses; the grants used to compensate related expenses or losses incurred shall beincluded in profit and loss of the current period (those related to Company's routine activities shall be included in otherincome; those unrelated to the Company's routine activities shall be included in non-operating revenue) or used tooffset relevant expenses or losses.The policy-oriented concessional loan discount interests obtained by the Company will be subject to accountingtreatment in the following two circumstances:
① Where the finance allocates the discount interest funds to the lending bank, and the lending bank provides loans tothe Company at the policy preferential interest rate, the Company will take the actually received loan amount as theentry value of the loan, and the relevant borrowing costs shall be calculated according to the loan principal and thepolicy preferential interest rate;
② If the finance directly allocates the discount interest funds to the Company, the Company shall set off thecorresponding discount interest against the relevant borrowing costs.
35. Deferred income tax assets / deferred income tax liabilities
Income tax comprises current income tax and deferred income tax. Except for the income taxes arising from thebusiness combination and the transactions or matters that are directly included in the owner's equity (including othercomprehensive income), the Company will include the current income tax and deferred income tax into the currentprofit or loss.Deferred income tax assets and deferred income tax liabilities will be calculated and recognized according to thedifference (temporary difference) between the tax basis and the book value of assets and liabilities.Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be availableagainst which deductible temporary differences can be utilized. For deductible losses and tax credits that can bereversed in the future period, deferred income tax assets shall be recognized to the extent that it is probable thattaxable income will be available in the future to offset the deductible losses and tax credits.Save as the exceptions, deferred income tax liabilities shall be recognized for the taxable temporary difference.The exceptions where deferred income tax assets and liabilities are not recognized include:
(1) Initial recognition of the goodwill;
(2) Transactions or events that are neither business combinations nor affect profit and taxable income (or deductibleloss) when occurring.Taxable temporary difference related to investment in the subsidiaries, affiliates and joint ventures will be recognizedas deferred income tax liabilities, unless the Company can control the time to reverse such temporary difference andsuch temporary difference is much more unlikely to be reversed in the predictable future. Deductible temporarydifference related to investment in the subsidiaries, affiliates and joint ventures will be recognized as deferred incometax assets when such temporary difference is much more likely to be reversed in the predictable future and is muchmore likely to be obtained to deduct the taxable income of the deductible temporary difference.
On the balance sheet date, the deferred income tax assets and the deferred income tax liabilities will be measured atthe tax rate applicable during the recovery of relevant assets or payment of relevant liabilities as expected according tothe provisions of the tax law.On the balance sheet date, the Company will review the book value of the deferred income tax assets. If no sufficienttaxable income is likely to be obtained to offset the benefits of deferred income tax assets in the future, the book valueof deferred income tax assets shall be written down. The amount written down shall be reversed when it is likely toobtain sufficient taxable income.After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets and repaydebt at the same time, the net amount after offsetting its current income tax assets and current income tax liabilitiesshall be recorded.On the balance sheet date, the deferred income tax assets and the deferred income tax liabilities will be presented bythe net amount after offsetting when the following conditions are fulfilled:
(1) The taxpayer is granted the legal rights to settle current income tax assets and current income tax liabilities on anet basis;
(2) Deferred income tax assets and deferred income tax liabilities are related to income tax to be paid by the sameentity liable for paying tax to the same tax collection and management authority or related to different entities liable forpaying tax, but the relevant entity liable for paying tax is intended to apply net settlement of current income tax assetsand liabilities or, at the same time, obtain assets, repay debt whenever every deferred income tax assets and liabilitieswith importance would be reversed in the future.
36. Lease
Lease means the contract by which the lessor transfers the right to use the assets to the lessee for a given period toobtain the consideration. On the commencement of the contract, the Company will assess whether the contract is alease or contains the lease. If a party to the contract conveys the right to control the use of one or more identifiedassets for a given period to obtain a consideration, this contract is a lease or contains the lease.If a contract contains several individual leases, the Company will split the contract and conduct accounting treatmentof each individual lease separately. If a contact contains both lease and non-lease, the lessee and the lessor will splitthe lease and non-lease parts.If all the following conditions are met, the Company will simplify all the lease options without assessing whether thelease is changed or reassessing the lease classification:
(1) The lease consideration after reduction is less or remains substantially the same compared with the leaseconsideration before reduction, and the lease consideration may either be undiscounted or discounted by the discountrate before reduction;
(2) Other terms and conditions of lease are identified without significant change after taking the qualitative andquantitative factors into full account.
(1) The Company as a lessee
① Right-of-use assets
The Company recognizes the right-to-use assets for the lease other than short-term lease and low-value asset leaseon the commencement of the lease term. The right-to-use assets are initially measured at cost which includes:
a. Initial measurement amount of lease liabilities;b. For the lease payment paid on or before the commencement of the lease term, if there are lease incentives, therelevant amount of lease incentives enjoyed shall be deducted;
c. Initial direct cost incurred by the Company;d. The estimated costs incurred by the Company for dismantling and removing the leased asset, restoring the sitewhere the leased asset is located or restoring the leased asset to the state agreed in the lease terms, but excludingthe cost incurred to produce the inventory.The Company will depreciate the right-to-use assets through the straight-line method. If it can be reasonablyrecognized that the title of the leased asset is acquired at the expiration of the lease term, the Company shall accruedepreciation within the remaining service life of the leased asset; or otherwise, the leased asset shall be depreciatedwithin the shorter of the lease term and the remaining service life of the leased asset.The Company will determine whether the right-of-use assets are impaired and conduct accounting treatment over theidentified impairment loss according to the principles set out in this section Financial Report - V. Significant AccountingPolices and Accounting Estimates - 26. Impairment of long-term assets.
② Lease liabilities
The Company recognizes the lease liabilities for the lease other than short-term lease and low-value asset lease onthe commencement of the lease term. Lease liabilities shall be initially measured at the present value of the unpaidlease payments. Lease payments include:
a. Fixed payment (including actual fixed payment), deducting lease incentives (if any);b. Variable lease payment depending on the index or ratio;c. Predicted payment on the basis of the guaranteed residual value provided by the Company;d. Exercise price of the call option, provided that the Company will exercise such option, as reasonably determined;e. Payment for exercise of the lease termination option, provided that the lease term reflects the Company’s futureexercise of the lease termination option.The interest rate implicit in lease is applied by the Company as the discount rate. If the interest rate implicit in leasecannot be reasonably determined, the Company's interest rate on incremental borrowings is applied as the discountrate.The Company shall calculate the interest expense of the lease liabilities during each period of the lease term at a fixedperiodic interest rate and include it in the current profit or loss or relevant asset cost.The variable lease payment which is not included in the measurement of lease liabilities shall be included in thecurrent profit or loss or relevant asset cost when actually incurred.If any of the following circumstances happens on commencement of the lease term, the Company will remeasure thelease liabilities and adjust the corresponding right-of-use assets, and if the book value of the right-of-use assets hasbeen reduced to zero, but the lease liabilities still need to be further reduced, the difference shall be included in thecurrent profit or loss:
a. When the assessment result of the call option, renewal option or termination option is changed or the actualexercise of the aforesaid option is inconsistent with the original assessment result, and the Company remeasures thelease liabilities at the present value worked out according to the changed lease payment and the revised discount rate;b. When there are changes in the actual fixed payment, the estimated payable amount of guaranteed residual value,or the index or ratio applied to determine the amount of lease payments, the Company remeasures the lease liabilitiesat the present value worked out according to the changed lease payment and the original discount rate. If the changein the lease payment originates from the change in the floating interest rate, the present value will be calculated usingthe revised discount rate.
③ Short-term lease and low-value asset lease
The Company chooses not to recognize the right-of-use assets and lease liabilities for the short-term lease and low-value asset lease, and records relevant lease payment into the current profit or loss or relevant asset cost according tothe straight-line method in each period of the lease term. Short-term lease means the lease of no more than 12
months and excluding the call option on the commencement of the lease term. Low-value asset lease means a leaseof lower value when the single leased asset is brand-new. If the Company sublets or is expected to sublet the leasedassets, the original lease is not a low-value asset lease.
④ Lease change
If the lease is changed and meets all of the following conditions, the Company will conduct accounting treatment withrespect to such lease change as a single lease:
a. Such lease change has expanded the scope of lease by adding the right to use one or more leased assets;b. The increased consideration is equivalent to the amount of the separate consideration for the expanded part of thescope of lease adjusted according to this contract.If the lease change is not taken as a separate lease for accounting treatment, on the effective date of the lease change,the Company will re-apportion the consideration of the changed contract, re-determine the lease term, and remeasurethe lease liabilities at the present value worked out according to the changed lease payment and the revised discountrate.If the lease change results in narrower scope of lease or shorter lease term, the Company will reduce the book valueof the right-of-use assets accordingly, and will include relevant gain or loss from partial or full termination of the leasein the current profit or loss. If other lease changes result in re-measurement of the lease liabilities, the Company willadjust the book value of the right-to-use assets accordingly.
(2) The Company as a lessor
On commencement of the lease term, the Company will divide the lease into financial lease and operating lease.Financial lease means the lease that has substantially transferred almost all the risks and rewards related to the title ofthe leased assets, whether or not the title will be finally transferred. Operating lease means any lease other thanfinancial lease. When the Company serves as a lessor of the sublease, the sublease will be classified on the basis ofthe right-to-use assets resulting from the original lease.
① Accounting treatment of operating lease
The lease receipts for the operating lease will be recognized as the rental income according to the straight-line methodduring each period of the lease term. The initial direct fee related to the operating lease to be incurred by the Companywill be capitalized and will be apportioned and included in the current profit or loss on the same basis as that forrecognition of the rental income in the lease term. The variable lease payments that are not included in the leasereceipts shall be included in the current profit or loss when they actually occur. In case of a change to the operatinglease, the Company will conduct accounting treatment with respect to the changed operating lease as a new lease asof the effective date of the change, and the lease payments received in advance or receivable with respect to the leasebefore the change will be taken as the lease receipts for the new lease.
② Accounting treatment of financial lease
On the commencement of the lease term, the Company will recognize the financial lease receivables for the financiallease, and derecognize the financial lease assets. The Company will take the net lease investment as the entry valueof the financial lease receivables when initially measuring the financial lease receivables. The net lease investment isthe sum of the unguaranteed residual value and the present value of the unreceived lease receipts discountedaccording to the interest rate implicit in lease on the commencement of the lease term.The Company will calculate and recognize the interest income during each period of the lease term at a fixed periodicinterest rate. The derecognition and impairment of the financial lease receivables will be subject to accountingtreatment according to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11.Financial instruments.
The variable lease payments that are not included in the measurement of the net lease investment shall be included inthe current profit or loss when they actually occur.If the financial lease is changed and meets all of the following conditions, the Company will conduct accountingtreatment with respect to such change as a single lease:
a. Such change has expanded the scope of lease by adding the right to use one or more leased assets;b. The increased consideration is equivalent to the amount of the separate consideration for the expanded part of thescope of lease adjusted according to this contract.If the change in the financial lease is not subject to accounting treatment as a single lease, the Company will treat thechanged lease in the following circumstances:
a. If the change takes effect on commencement of the lease term and the lease is classified as operating lease, theCompany will conduct accounting treatment with respect to such lease as a new lease as of the effective date of thelease change, and will take the net lease investment before the effective date of the lease change as the book value ofthe leased asset;b. If the change takes effect on the commencement date of the lease, and such lease is classified as the financiallease, the Company will conduct accounting treatment according to the policy regarding modification or re-negotiationof the contract in this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11.Financial instruments.
(3) Sale and leaseback transaction
The Company evaluates and determines whether the asset transfer in the sale and leaseback transaction belongs to asale in accordance with the provisions of this section Financial Report - V. Significant Accounting Polices andAccounting Estimates - 32. Income.
① Acting as a lessee
If the asset transfer in the sale and leaseback transaction is a sale, the Company as the lessee shall measure theright-of-use asset arising from the sale and leaseback according to the part related to the right of use acquired fromthe leaseback in the original book value of the asset, and only recognize relevant gain or loss on the rights transferredto the lessor; if the asset transfer in the sale and leaseback transaction is not a sale, the Company as the lessee shallcontinue to recognize the transferred asset, and recognize a financial liability equal to the transfer income. Foraccounting treatment of the financial liabilities, refer to this section Financial Report - V. Significant Accounting Policesand Accounting Estimates - 11. Financial instruments.
② Acting as a lessor
If the asset transfer in the sale and leaseback transaction is a sale, the Company as the lessee shall conductaccounting treatment with respect to the asset purchase and conduct accounting treatment with respect to the assetlease according to the policy in the foregoing "(2) The Company as a lessor"; if the asset transfer in the sale andleaseback transaction is not a sale, the Company as the lessor shall derecognize the transferred asset, but recognizea financial asset equal to the transfer income. For accounting treatment of the financial assets, refer to this sectionFinancial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financial instruments.
37. Other significant accounting policies and accounting estimates
(1) Repurchase of the Company's shares
The Company's shares repurchased by the Company for reducing the registered capital or rewarding employees shallbe treated as the treasury shares based on the actual amount paid, and shall be checked and registered at the sametime. If the repurchased shares are canceled, the difference between the actual amount paid for the repurchase andthe total par value of shares calculated based on the par value of the canceled shares and the number of canceledshares will be set off against the capital reserve. If the capital reserve is insufficient, the retained earnings will bewritten off; if the repurchased shares are awarded to the employees of the Company, it shall be categorized as equity-settled share-based payment. When the Company receives the payment made by employees who exercise their rightsto purchase such shares, the amount shall be used to write off the cost of treasury shares delivered to employees andthe capital reserve in the waiting period and meanwhile, the capital reserve (stock premium) shall be adjustedaccording to the difference.
(2) Debt restructuring
① The Company as a creditor
The Company will derecoginize the creditor's rights when its contractual right to collect the cash flow for the creditor'srights is terminated. If the debts are restructured by repaying the debts with assets or converting the debts into equityinterments, the Company will recognize relevant assets within the meaning of their definitions and recognitionconditions.If the debts are restructured by repaying the debts with assets, when initially recognized by the Company foracceptance, the non-financial assets will be measured at cost. The costs of inventories include the fair value of thecreditor's rights abandoned and the taxes, transportation costs, handling charges, insurance premiums and other costsdirectly attributable to such assets, which are incurred to realize the current position and state of such assets. Thecosts of investments in the associates or joint ventures include the fair value of the creditor's rights abandoned and thetaxes and other costs directly attributable to such assets. The costs of investment properties include the fair value ofthe creditor's rights abandoned and the taxes and other costs directly attributable to such assets. The costs of fixedassets include the fair value of the creditor's rights abandoned and the taxes, transportation costs, handling charges,installation costs, professional service fees and other costs directly attributable to such assets, which are incurred forsuch assets to become ready for their intended use. The costs of biological assets include the fair value of thecreditor's rights abandoned and the taxes, transportation costs, insurance premiums and other costs directlyattributable to such assets. The costs of intangible assets include the fair value of the creditor's rights abandoned andthe taxes and other costs directly attributable to such assets, which are incurred for such assets to become ready fortheir intended use. If the creditor converts its creditor’s rights into equity investments in the associates or joint venturesarising from the debt restructuring by converting the debts into equity instruments, the Company will measure its initialinvestment cost according to the fair value of the creditor's rights abandoned and the taxes and other costs directlyattributable to such assets. The difference between the fair value and the book value of the creditor’s rights abandonedshall be included in the current profit or loss.
If the debts are restructured by modifying other terms, the Company will recognize and measure creditor’s rightsrestructured according to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates -
11. Financial instruments.
If the debts are restructured by repaying the debts with several assets or through combination, the Company will firstrecognize and measure the financial assets accepted and creditor’s rights restructured according to this sectionFinancial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financial instruments, thendistribute the net amount derived from deducting the recognized amount of the financial assets accepted and creditor’srights restructured from the fair value of the creditor’s rights abandoned according to the proportion of the fair value ofthe assets other than the financial assets accepted, and on this basis, determine the costs of various assetsrespectively by the aforesaid means. The difference between the fair value and the book value of the creditor’s rightsabandoned shall be included in the current profit or loss.
② The Company as a debtor
The Company will derecognize the debts when the current obligation under the debts is discharged.If the debts are restructured by repaying the debts with assets, the Company will derecognize relevant assets and thedebts repaid within the meaning of their derecognition conditions, and the difference between the book value of thedebts repaid and the book value of the assets transferred shall be included in the current profit or loss.If the debts are restructured by converting the debts into equity interments, the Company will derecognize the debtsrepaid within the meaning of their derecognition conditions. When initially recognized by the Company, the equityinstruments will be measured at its fair value, and if the fair value of the equity instruments cannot be reliablymeasured, at the fair value of the debts repaid. The difference between the book value of the debts repaid and therecognized amount of the equity instruments shall be included in the current profit or loss.If the debts are restructured by modifying other terms, the Company will recognize and measure the debts restructuredaccording to this section Financial Report - V. Significant Accounting Polices and Accounting Estimates - 11. Financialinstruments.If the debts are restructured by repaying the debts with several assets or through combination, the Company willrecognize and measure the equity instruments and debts restructured by the aforesaid means, and the differencebetween the book value of the debts repaid and the sum of the book value of the assets transferred and therecognized amount of the equity instruments and the debts restructured shall be included in the current profit or loss.
38. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
? Applicable □ Not applicable
Unit: RMB
| Content and Reasons for Change in Accounting Policies | Item Names of the Statements Significantly Affected | Amount of Influence |
| The provision of the Accounting Standards for Business Enterprises No.16 that “The | No effect | 0.00 |
accounting treatment of deferred income taxesrelated to the assets and liabilities arising from asingle transaction which shall not be exemptedfrom initial recognition”
As of January 1, 2023, the Company implemented the provision of the Accounting Standards for Business EnterprisesNo.16 promulgated by the Ministry of Finance that “The accounting treatment of deferred income taxes related to theassets and liabilities arising from a single transaction which shall not be exempted from initial recognition”, and suchchange in the accounting policy has no influence on the financial statements of the Company.
(2) Changes in significant accounting estimates
□ Applicable ? Not applicable
(3) The first implementation of new accounting criteria from 2023 to adjust the relevant items of the financialstatements implemented at the beginning of the year for the first time
□ Applicable ? Not applicable
Ⅵ. Taxes
1. Major categories of taxes and tax rates
| Tax Type | Taxation basis | Tax rate |
| VAT | According to the provisions of the tax law, the sales tax shall be calculated on the basis of the income by selling goods and taxable services. After deducting the input tax that is allowed to be deducted from the sales tax in the current period, the difference shall be the value added tax | 13%, 9%, 6%, simple collection rate of 5%, simple collection rate of 3%, 0% and tax-free |
| Urban Maintenance and Construction Tax | Actually paid turnover tax | 7%、5% |
| Enterprise Income Tax | Taxable income | 15%、16.5%、20%、25% |
| Education Surcharges | Actually paid turnover tax | 3% |
| Local Education Surcharges | Actually paid turnover tax | 2% |
If there are multiple taxpayers with different enterprise income tax rates, specify the situation
| Name of taxpayer | Income tax rate |
| Zhejiang Dahua Technology Co., Ltd. | 15% |
| Zhejiang Dahua System Engineering Co., Ltd. | 15% |
| Zhejiang HuaRay Technology Co., Ltd. | 15% |
| Zhejiang Huaxiao Technology Co., Ltd. | 15% |
| Zhejiang Huafei Intelligent Technology CO., LTD. | 15% |
| Zhejiang Huaruijie Technology Co., Ltd. | 15% |
| Zhejiang Huajian Technology Co., Ltd. | 15% |
| Hangzhou Huacheng Software Co., Ltd. | 15% |
| Zhejiang Pixfra Technology Co., Ltd. | 15% |
| Jiangsu Huaruipin Technology Co. Ltd. | 15% |
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhihe Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhitian Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Huayue Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Xinzhi Information Technology Co., Ltd. | 15% |
| Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. | 15% |
| Guangxi Dahua Zhicheng Co., Ltd. | 15% |
| Guangxi Huacheng Technology Co., Ltd. | 15% |
| Guizhou Meitan Dahua Information Technology Co., Ltd. | 15% |
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 20% |
| Guangxi Dahua Technology Co., Ltd. | 20% |
| Zhejiang Huakong Software Co., Ltd. | 20% |
| Dahua Technology (HK) Limited | 16.50% |
| Yunnan Zhili Technology Co., Ltd | 20% |
| Hangzhou Xiaohua Technology CO., LTD. | 20% |
| Chengdu Zhichuang Yunshu Technology Co., Ltd. | 20% |
| Chengdu Huishan Smart Network Technology Co., Ltd. | 20% |
| Guizhou Huayi Shixin Technology Co., Ltd. | 20% |
| Zhejiang Zhoushan Digital Development Operation Co. Ltd. | 20% |
| Tianjin Dahua Information Technology Co., Ltd. | 20% |
| Chengdu Dahua Zhishu Information Technology Service Co., Ltd. | 20% |
| Chengdu Huazhiwei Technology Co., Ltd. | 20% |
| Chengdu Dahua Wisdom Information Technology Co., Ltd. | 20% |
| Nanyang Dahua Intelligent Information Technology Co., Ltd. | 20% |
| Zhejiang Huaqi Intelligent Technology Co., Ltd. | 20% |
| Luoyang Dahua Zhiyu Information Technology Co., Ltd. | 20% |
| Guangdong Huaxiyue Intelligent Technology Co., Ltd. | 20% |
| Guangxi Dahua Yunlian Information Technology Co., Ltd. | 20% |
| Zhejiang Huajie New Energy Operation Service Co., Ltd. | 20% |
| Other domestic companies | 25% |
| Other overseas companies | Applicable to local tax rate |
2. Preferential tax rate
(1) According to the Announcement on the Filing of High-tech Enterprises Certified and Reported by the CertificationBody of Zhejiang Province in 2023 issued by the Office for the Administration of the Certification of National High-techEnterprises on December 28, 2023, the Company was certified as a high-tech enterprise, valid for 3 years. Thecorporate income tax for this year was paid at a reduced rate of 15%.
(2) According to the Announcement on the Filing of the First Batch of High-tech Enterprises of Zhejiang ProvinceCertified in 2021 issued by the Office for the Administration of the Certification of National High-tech Enterprises onJanuary 24, 2022, our subsidiaries Zhejiang HuaRay Technology Co., Ltd. and Zhejiang Wisualarm Technology Co.,Ltd. were certified as high-tech enterprises, valid for 3 years. The corporate income tax for this year was paid at areduced rate of 15%.
(3) According to the Announcement on the Filing of High-tech Enterprises Certified and Reported by the CertificationBody of Zhejiang Province in 2023 issued by the Office for the Administration of the Certification of National High-techEnterprises on December 28, 2023, our subsidiaries Zhejiang Huafei Intelligent Technology Co., Ltd. and ZhejiangPixfra Technology Co., Ltd. were certified as high-tech enterprises, valid for 3 years. The corporate income tax for thisyear was paid at a reduced rate of 15%.
(4) According to the Notice on the Filing and Publicity of High-tech Enterprises Certified by the Certification Body ofZhejiang Province in 2022 issued by the Office for the Administration of the Certification of National High-techEnterprises on December 24, 2022, our subsidiaries Zhejiang Huaruijie Technology Co., Ltd., Zhejiang HuajianTechnology Co., Ltd., Hangzhou Huacheng Software Co., Ltd. and Zhejiang Dahua System Engineering Co., Ltd. werecertified as high-tech enterprises, valid for 3 years. The corporate income tax for this year was paid at a reduced rateof 15%.
(5) According to the Announcement on the Filing of the Second Batch of High-tech Enterprises Certified and Reportedby the Certification Body of Jiangsu Province in 2023 issued by the Office for the Administration of the Certification ofNational High-tech Enterprises on January 4, 2024, our subsidiary Jiangsu Huaruipin Technology Co. Ltd. wascertified as a high-tech enterprise, valid for 3 years. The corporate income tax for this year was paid at a reduced rateof 15%.
(6) According to the Announcement of the Ministry of Finance and the State Taxation Administration on FurtherImplementing the Preferential Income Tax Policies for Micro and Small Enterprises (CaiShui [2022] No. 13) and theAnnouncement of the Ministry of Finance and the State Taxation Administration on the Preferential Income TaxPolicies for Small Low-Profit Enterprises and Individual Industrial and Commercial Households (CaiShui [2023] No. 6),the annual taxable income of the following subsidiaries that is no more than RMB 1 million shall be taxed at a reducedrate of 25% for tax purpose, and the enterprise income tax shall be paid at a rate of 20%; and the annual taxableincome exceeding RMB 1 million but no more than RMB 3 million shall be taxed at a reduced rate of 25% and theenterprise income tax shall be paid at a rate of 20%: Zhejiang Dahua Ju'an Technology Co., Ltd., Guangxi DahuaTechnology Co., Ltd., Zhejiang Huakong Software Co., Ltd., Yunnan Zhili Technology Co., Ltd., Hangzhou XiaohuaTechnology Co., Ltd., Chengdu Zhichuang Yunshu Technology Co., Ltd., Chengdu Huishan Smart NetworkTechnology Co., Ltd., Guizhou Huayi Shixin Technology Co., Ltd., Zhejiang Zhoushan Digital Development OperationCo. Ltd., Tianjin Dahua Information Technology Co., Ltd., Chengdu Dahua Zhishu Information Technology Service Co.,Ltd., Chengdu Huazhiwei Technology Co., Ltd., Chengdu Dahua Wisdom Information Technology Co., Ltd., NanyangDahua Intelligent Information Technology Co., Ltd., Zhejiang Huaqi Intelligent Technology Co., Ltd., Luoyang DahuaZhiyu Information Technology Co., Ltd., Guangdong Huaxiyue Intelligent Technology Co., Ltd., Guangxi DahuaYunlian Information Technology Co., Ltd. and Zhejiang Huajie New Energy Operation Service Co., Ltd.
(7) According to the Notice of the Ministry of Finance, the State Administration of Taxation and the GeneralAdministration of Customs on Tax Policy Issues Concerning Further Implementing the Western China DevelopmentStrategy (CaiShui [2011] No. 58) and the Announcement of the Ministry of Finance, the State Taxation Administrationand the National Development and Reform Commission on Continuing the Enterprise Income Tax Policies for theWestern China Development (CaiShui [2020] No. 23), the following subsidiaries can enjoy preferential tax policiesrelated to the Western China Development Program from 2011 to 2030: Xinjiang Dahua Zhixin Information TechnologyCo., Ltd., Xinjiang Dahua Zhihe Information Technology Co., Ltd., Xinjiang Dahua Zhitian Information Technology Co.,Ltd., Xinjiang Dahua Huayue Information Technology Co., Ltd., Xinjiang Dahua Xinzhi Information Technology Co.,Ltd., Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd., Guangxi Dahua Zhicheng Technology Co., Ltd.,Guangxi Huacheng Technology Co., Ltd. and Guizhou Meitan Dahua Information Technology Co., Ltd. The corporateincome tax for this year was paid at a reduced rate of 15%.
(8) According to the Notice of the Ministry of Finance and the State Administration of Taxation on Value-added TaxPolicies for Software Products (CaiShui [2011] No.100), the sales of software products independently developed byZhejiang Dahua Technology Co., Ltd., Zhejiang Dahua System Engineering Co., Ltd., Hangzhou Xiaohua TechnologyCo., Ltd., Zhejiang Huafei Intelligent Technology Co., Ltd., Jiangsu Huaruipin Technology Co., Ltd., Zhejiang HuaruijieTechnology Co., Ltd., Zhejiang Huajian Technology Co., Ltd., Zhejiang Wisualarm Technology Co., Ltd., ZhejiangPixfra Technology Co., Ltd., Hangzhou Huacheng Software Co., Ltd. and Zhejiang HuaRay Technology Co., Ltd. shall
be subject to a value-added tax at the rate of 13% first, and the actual tax exceeding 3% will be refunded after beingreviewed and approved by the competent tax authorities.
(9) According to the Announcement of the Ministry of Finance and the State Taxation Administration on Clarifying theValue-Added Tax Reduction and Exemption Policies for Small-Scale Value-Added Tax Taxpayers and Other Policies(CaiShui [2023] No. 1), in 2023, the taxpayers from the productive and consumer-oriented service sectors mayincrease 5% and 10% of current deductible input tax, respectively, to offset the taxable amount (hereinafter referred toas “Additional Deduction Policy”) The subsidiaries of the Company, Zhejiang Dahua Security Network OperationService Co., Ltd., Beijing Huayue Shangcheng Information Technology Service Co., Ltd., Shanghai HuashangChengyue Information Technology Service Co., Ltd., Chengdu Dahua Zhilian Information Technology Co., Ltd.,Guangxi Dahua Zhicheng Co., Ltd., Tianjin Dahua Information Technology Co., Ltd. and Xinjiang Dahua ZhiheInformation Technology Co., Ltd. meet the requirements in the Additional Deduction Policy for value-added taxes andhave enjoyed preferential tax policies for additional deduction of input taxes from 2022.
(10) According to the Notice of the Ministry of Finance and the State Taxation Administration on the Additional Value-Added Tax Deduction Policy for Advanced Manufacturing Enterprises (Announcement [2023] No. 43 of the Ministry ofFinance and the State Administration of Taxation), from January 1, 2023 to December 31, 2027, the advancedmanufacturing enterprises are allowed to increase 5% of the current deductible input tax to offset the amount subjectto value-added taxes. Zhejiang HuaRay Technology Co., Ltd. meets the requirements in the Additional DeductionPolicy for value-added taxes for advanced manufacturing enterprises and have enjoyed preferential tax policies foradditional deduction of value-added taxes for advanced manufacturing enterprises from 2023.Ⅶ. Notes to the Items in the Consolidated Financial Statements
1. Cash and bank balances
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash on Hand | 2,642.58 | 2,535.81 |
| Digital Currency | 160,820.00 | |
| Bank Balance | 15,827,819,644.89 | 7,787,399,232.70 |
| Other Cash and Bank Balances | 143,022,007.00 | 242,476,882.26 |
| Deposits with Financial Companies | ||
| Total | 15,971,005,114.47 | 8,029,878,650.77 |
| Including: Total Amount Deposited in Overseas Banks | 930,951,357.54 | 1,259,307,799.53 |
Other notes: The monetary funds restricted for use due to mortgage, pledge or freeze, restricted for withdrawal due tocentralized management and deposited in overseas banks and restricted for repatriation are detailed as follows:
| Item | Closing balance | Balance at the end of the previous year |
| Bid/performance bond | 68,981,082.99 | 110,737,143.60 |
| Frozen funds | 6,862,600.24 | 19,900,398.75 |
| Total | 75,843,683.23 | 130,637,542.35 |
2. Trading Financial Assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss in this period | 1,470,000.00 | 1,470,000.00 |
| Including: Financial Products | 1,470,000.00 | 1,470,000.00 |
| Total | 1,470,000.00 | 1,470,000.00 |
3. Notes Receivable
(1) Disclosure of Notes Receivable
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank Acceptance Notes | 665,341,998.76 | 631,542,296.47 |
| Commercial Acceptance Notes | 147,697,193.99 | 240,759,774.71 |
| Total | 813,039,192.75 | 872,302,071.18 |
(2) Categorical disclosure by methods for provision by bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Notes Receivable with the Bad Debt Provision Accrued Based on Combinations | 834,798,129.64 | 100.00% | 21,758,936.89 | 2.61% | 813,039,192.75 | 911,616,343.99 | 100.00% | 39,314,272.81 | 4.31% | 872,302,071.18 |
| Including: | ||||||||||
| Bank acceptance bill | 672,300,691.46 | 80.53% | 6,958,692.70 | 1.04% | 665,341,998.76 | 638,799,974.81 | 70.07% | 7,257,678.34 | 1.14% | 631,542,296.47 |
| Commercial acceptance bill | 162,497,438.18 | 19.47% | 14,800,244.19 | 9.11% | 147,697,193.99 | 272,816,369.18 | 29.93% | 32,056,594.47 | 11.75% | 240,759,774.71 |
| Total | 834,798,129.64 | 100.00% | 21,758,936.89 | 813,039,192.75 | 911,616,343.99 | 100.00% | 39,314,272.81 | 872,302,071.18 | ||
Bad Debt Provision Accrued Based on Combinations: RMB 21,758,936.89Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Bank Acceptance Notes | 672,300,691.46 | 6,958,692.70 | 1.04% |
| Commercial Acceptance Notes | 162,497,438.18 | 14,800,244.19 | 9.11% |
| Total | 834,798,129.64 | 21,758,936.89 | |
If the bad debt provisions of notes receivable are made according to the general model of expected credit losses:
□ Applicable ? Not applicable
(3) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Opening balance | Amount of Changes in the Current Period | Closing balance | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bank Acceptance Notes | 7,257,678.34 | 298,985.64 | 6,958,692.70 | |||
| Commercial Acceptance Notes | 32,056,594.47 | 17,256,350.28 | 14,800,244.19 | |||
| Total | 39,314,272.81 | 17,555,335.92 | 21,758,936.89 | |||
Significant amount of recovered or reversed bad debt provision in this period:
□ Applicable ? Not applicable
(4) Notes receivable that the Company has pledged at the end of the period
Unit: RMB
| Item | Pledged amount by the end of period |
| Bank Acceptance Notes | 384,608,856.94 |
| Total | 384,608,856.94 |
(5) Notes receivable that the Company has endorsed or discounted at the end of the periodand that have not yet expired on the balance sheet dateUnit: RMB
| Item | Derecognised amount at the end of period | Not derecognised amount at the end of period |
| Bank Acceptance Notes | 39,320,431.95 | |
| Total | 39,320,431.95 |
4. Accounts Receivable
(1) Disclosure by age
Unit: RMB
| Aging | Closing balance | Opening balance |
| Within 1 year (including 1 year) | 14,458,581,851.85 | 13,084,171,203.70 |
| 1 to 2 years | 1,675,541,614.13 | 2,108,343,765.62 |
| 2 to 3 years | 914,682,001.04 | 913,526,456.01 |
| 3 years or above | 2,359,337,149.65 | 2,367,104,303.90 |
| 3 to 4 years | 627,873,130.02 | 1,023,194,700.91 |
| 4 to 5 years | 605,039,214.61 | 728,883,845.46 |
| 5 years or above | 1,126,424,805.02 | 615,025,757.53 |
| Total | 19,408,142,616.67 | 18,473,145,729.23 |
(2) Categorical disclosure by methods for provision by bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Accounts receivables with the bad debt provision accrued based on single item | 467,182,946.91 | 2.41% | 433,667,151.15 | 92.83% | 33,515,795.76 | 591,779,632.41 | 3.20% | 591,779,632.41 | 100.00% | |
| Including: | ||||||||||
| Accounts receivable with insignificant single amount but accrued for | 467,182,946.91 | 2.41% | 433,667,151.15 | 92.83% | 33,515,795.76 | 591,779,632.41 | 3.20% | 591,779,632.41 | 100.00% | |
| separate provision of bad debt | ||||||||||
| Accounts receivables with the bad debt provision accrued based on combinations | 18,940,959,669.76 | 97.59% | 2,697,671,511.49 | 14.24% | 16,243,288,158.27 | 17,881,366,096.82 | 96.80% | 2,469,457,535.32 | 13.81% | 15,411,908,561.50 |
| Including: | ||||||||||
| Aging Analysis Portfolio | 18,940,959,669.76 | 97.59% | 2,697,671,511.49 | 14.24% | 16,243,288,158.27 | 17,881,366,096.82 | 96.80% | 2,469,457,535.32 | 13.81% | 15,411,908,561.50 |
| Total | 19,408,142,616.67 | 100.00% | 3,131,338,662.64 | 16,276,803,954.03 | 18,473,145,729.23 | 100.00% | 3,061,237,167.73 | 15,411,908,561.50 |
Bad Debt Provision Accrued Based on Single Item: RMB 433,667,151.15Unit: RMB
| Name | Opening balance | Closing balance | ||||
| Book balance | Bad debt provision | Book balance | Bad debt provision | Accrued proportion | Reason for making bad debt provision | |
| Customer 1 | 225,140,645.36 | 225,140,645.36 | 225,140,645.36 | 225,140,645.36 | 100.00% | Expected to be unable to recover |
| Customer 2 | 49,001,963.55 | 49,001,963.55 | 49,001,963.55 | 49,001,963.55 | 100.00% | Expected to be unable to recover |
| Customer 3 | 38,693,240.50 | 38,693,240.50 | 38,612,198.42 | 38,612,198.42 | 100.00% | Expected to be unable to recover |
| Customer 4 | 20,596,426.50 | 20,596,426.50 | 100.00% | Expected to be unable to recover | ||
| Customer 5 | 18,790,253.00 | 18,790,253.00 | 18,790,253.00 | 18,790,253.00 | 100.00% | Expected to be unable to recover |
| Customer 6 | 260,153,530.00 | 260,153,530.00 | Expected to be unable to recover | |||
| Other | 115,041,460.0 | 81,525,664.32 | 70.87% | Expected to | ||
| Customers | 8 | be unable to recover | ||||
| Total | 591,779,632.41 | 591,779,632.41 | 467,182,946.91 | 433,667,151.15 |
Bad Debt Provision Accrued Based on Combinations: RMB 2,697,671,511.49Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year (including 1 year) | 14,438,917,770.02 | 721,945,888.49 | 5.00% |
| 1 to 2 years | 1,662,886,767.62 | 166,288,676.76 | 10.00% |
| 2 to 3 years | 889,329,864.90 | 266,798,959.48 | 30.00% |
| 3 to 4 years | 591,304,387.67 | 295,652,193.84 | 50.00% |
| 4 to 5 years | 557,675,433.13 | 446,140,346.50 | 80.00% |
| 5 years or above | 800,845,446.42 | 800,845,446.42 | 100.00% |
| Total | 18,940,959,669.76 | 2,697,671,511.49 | |
If the bad debt provisions of accounts receivable are made according to the general model of expected credit losses:
□ Applicable ? Not applicable
(3) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Opening balance | Amount of Changes in the Current Period | Closing balance | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bad debt provision | 3,061,237,167.73 | 415,017,021.55 | 7,777,603.62 | 338,946,977.97 | 1,809,054.95 | 3,131,338,662.64 |
| Total | 3,061,237,167.73 | 415,017,021.55 | 7,777,603.62 | 338,946,977.97 | 1,809,054.95 | 3,131,338,662.64 |
Significant amount of recovered or reversed bad debt provision in this period:
N/A
(4) Accounts receivable actually written off in this period
Unit: RMB
| Item | Write-off amount |
| Accounts receivable actually written off | 338,946,977.97 |
Important accounts receivable written off:
N/A
(5) Accounts receivable and contract assets of the top five closing balances at the end of theperiod collected by debtorsUnit: RMB
| Name of Unit | Balance of Accounts Receivable at the End of the Period | Balance of Contract Assets at the End of the Period | Balance of Accounts Receivable and Contract Assets at the End of the Period | As a Percentage of Total Other Receivables and Contract Assets at the End of the Period | Balance of Bad Debt Provisions of Accounts Receivable and Provisions for Impairment of Contract Assets at the End of the Period |
| Customer 1 | 831,284,534.60 | 831,284,534.60 | 4.24% | 41,564,226.73 | |
| Customer 2 | 476,390,669.20 | 476,390,669.20 | 2.43% | 23,822,012.23 | |
| Customer 3 | 399,216,383.81 | 399,216,383.81 | 2.04% | 19,960,819.19 | |
| Customer 4 | 392,685,817.67 | 392,685,817.67 | 2.00% | 19,634,290.88 | |
| Customer 5 | 331,966,086.53 | 331,966,086.53 | 1.70% | 200,044,285.91 | |
| Total | 2,431,543,491.81 | 2,431,543,491.81 | 12.41% | 305,025,634.94 |
5. Contract Assets
(1) Contract assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |
| Completed but unsettled assets | 33,413,988.93 | 421,118.95 | 32,992,869.98 | 8,632,619.32 | 100,346.47 | 8,532,272.85 |
| O&M service | 6,198,950.93 | 66,600.03 | 6,132,350.90 | 6,968,929.49 | 71,994.55 | 6,896,934.94 |
| Quality guarantee deposit | 62,344,437.16 | 14,755,441.70 | 47,588,995.46 | 113,734,287.26 | 22,828,089.70 | 90,906,197.56 |
| Total | 101,957,377.02 | 15,243,160.68 | 86,714,216.34 | 129,335,836.07 | 23,000,430.72 | 106,335,405.35 |
(2) Categorical disclosure by methods for provision by bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Bad Debt Provision Based on Combinations | 101,957,377.02 | 100.00% | 15,243,160.68 | 14.95% | 86,714,216.34 | 129,335,836.07 | 100.00% | 23,000,430.72 | 17.78% | 106,335,405.35 |
| Incl | ||||||||||
| uding: | ||||||||||
| Combination of Nature of the Funds | 101,957,377.02 | 100.00% | 15,243,160.68 | 14.95% | 86,714,216.34 | 129,335,836.07 | 100.00% | 23,000,430.72 | 17.78% | 106,335,405.35 |
| Total | 101,957,377.02 | 100.00% | 15,243,160.68 | 14.95% | 86,714,216.34 | 129,335,836.07 | 100.00% | 23,000,430.72 | 17.78% | 106,335,405.35 |
Bad Debt Provision Accrued Based on Combinations: RMB 15,243,160.68Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Combination of Nature of the Funds | 101,957,377.02 | 15,243,160.68 | 14.95% |
| Total | 101,957,377.02 | 15,243,160.68 | |
Bad debt provisions made according to the general model of expected credit losses
□ Applicable ? Not applicable
(3) Provision for bad debts accrued, recovered or reversed in this period
Unit: RMB
| Item | Provisions of this period | Recovered or reversed in this period | Write-off in this period | Causes |
| Completed but unsettled assets | 320,772.48 | |||
| O&M service | 5,394.52 | |||
| Quality guarantee deposit | 8,072,648.00 | |||
| Total | 320,772.48 | 8,078,042.52 | —— |
Significant amount of recovered or reversed bad debt provision in this period:
N/A
6. Receivables Financing
(1) Disclosure of receivables financing
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance bill | 810,713,267.86 | 679,441,917.62 |
| Total | 810,713,267.86 | 679,441,917.62 |
(2) Financing of accounts receivable pledged by the Company at the end of the period
Unit: RMB
| Item | Pledged amount by the end of period |
| Bank acceptance bill | 527,818,073.31 |
| Total | 527,818,073.31 |
(3) Financing of accounts receivable that the Company has endorsed or discounted at the endof the period and that have not yet expired on the balance sheet dateUnit: RMB
| Item | Derecognised amount at the end of period | Not derecognised amount at the end of period |
| Bank acceptance bill | 92,886,786.46 | |
| Total | 92,886,786.46 |
7. Other Receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends Receivable | 5,784,225.02 | 8,519,063.17 |
| Other Receivables | 331,740,463.34 | 393,330,183.71 |
| Total | 337,524,688.36 | 401,849,246.88 |
(1) Dividends Receivable
1) Classification of Dividends Receivable
Unit: RMB
| Project (or investee) | Closing balance | Opening balance |
| Intelbras S.A. | 5,784,225.02 | 8,519,063.17 |
| Total | 5,784,225.02 | 8,519,063.17 |
(2) Other receivables
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening balance |
| Deposits | 148,419,383.42 | 189,076,400.18 |
| Prepaid or advance expense | 129,465,778.21 | 117,681,402.84 |
| Equity Transfer Fund | 44,693,899.47 | 41,929,391.85 |
| Export tax rebate | 26,923.43 | 1,759,198.88 |
| Employee home loan | 89,695,884.00 | 108,572,799.00 |
| Others | 402,441.33 | 14,710,466.36 |
| Total | 412,704,309.86 | 473,729,659.11 |
2) Disclosure by age
Unit: RMB
| Aging | Closing balance | Opening balance |
| Within 1 year (including 1 year) | 175,351,662.59 | 287,714,109.96 |
| 1 to 2 years | 117,075,815.72 | 80,884,486.86 |
| 2 to 3 years | 57,728,030.61 | 44,394,417.54 |
| 3 years or above | 62,548,800.94 | 60,736,644.75 |
| 3 to 4 years | 31,838,007.64 | 28,019,284.25 |
| 4 to 5 years | 17,297,622.38 | 10,600,033.09 |
| 5 years or above | 13,413,170.92 | 22,117,327.41 |
| Total | 412,704,309.86 | 473,729,659.11 |
(3) Categorical disclosure by methods for provision by bad debts
? Applicable □ Not applicableUnit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Bad Debt Provision Based on Combinations | 412,704,309.86 | 100.00% | 80,963,846.52 | 19.62% | 331,740,463.34 | 473,729,659.11 | 100.00% | 80,399,475.40 | 16.97% | 393,330,183.71 |
| Including: | ||||||||||
| Aging Analysis Portfolio | 412,704,309.86 | 100.00% | 80,963,846.52 | 19.62% | 331,740,463.34 | 473,729,659.11 | 100.00% | 80,399,475.40 | 16.97% | 393,330,183.71 |
| Total | 412,704,309.86 | 100.00% | 80,963,846.52 | 19.62% | 331,740,463.34 | 473,729,659.11 | 100.00% | 80,399,475.40 | 16.97% | 393,330,183.71 |
Bad Debt Provision Accrued Based on Combinations: RMB 80,963,846.52Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year (including 1 year) | 175,351,662.59 | 8,767,583.13 | 5.00% |
| 1 to 2 years | 117,075,815.72 | 11,707,581.57 | 10.00% |
| 2 to 3 years | 57,728,030.61 | 17,318,409.18 | 30.00% |
| 3 to 4 years | 31,838,007.64 | 15,919,003.82 | 50.00% |
| 4 to 5 years | 17,297,622.38 | 13,838,097.90 | 80.00% |
| 5 years or above | 13,413,170.92 | 13,413,170.92 | 100.00% |
| Total | 412,704,309.86 | 80,963,846.52 | |
Bad debt provisions made according to the general model of expected credit losses:
Unit: RMB
| Bad debt provision | Phase One | Phase Two | Phase Three | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire extension (without | Expected credit losses for the entire extension (with credit |
| credit impairment) | impairment) | |||
| Balance on January 1, 2023 | 42,812,272.88 | 36,962,447.67 | 624,754.85 | 80,399,475.40 |
| Balance in the current period on January 1, 2023 | ||||
| --Transfer to phase two | -3,023,125.80 | 3,023,125.80 | ||
| --Transfer to phase three | -104,392.42 | -38,426.36 | 142,818.78 | |
| Provisions of this period | 783,901.43 | 998,508.58 | 1,782,410.01 | |
| Reversals in this period | 784,696.20 | 784,696.20 | ||
| Write off in this period | 461,534.82 | 231,451.54 | 44,901.87 | 737,888.23 |
| Other variations | 304,545.54 | 304,545.54 | ||
| Balance as of December 31, 2023 | 40,311,666.81 | 38,930,999.37 | 1,721,180.34 | 80,963,846.52 |
Book balance changes with significant changes in loss provision in the current period
□ Applicable ? Not applicable
4) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Opening balance | Amount of Changes in the Current Period | Closing balance | |||
| Accrued | Recovered or Reversed | Write-off | Others | |||
| Bad debt provision | 80,399,475.40 | 1,782,410.01 | 784,696.20 | 737,888.23 | 304,545.54 | 80,963,846.52 |
| Total | 80,399,475.40 | 1,782,410.01 | 784,696.20 | 737,888.23 | 304,545.54 | 80,963,846.52 |
Significant amount of recovered or reversed bad debt provision in this periodN/A
5) Accounts receivable actually written off in this period
Unit: RMB
| Item | Write-off amount |
| Other accounts receivable actually written off | 737,888.23 |
Other important accounts receivable written off:
N/A
6) Other receivables of the top five closing balances collected by debtorsUnit: RMB
| Name of Unit | Nature of the funds | Closing balance | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Equity Transfer Fund | 44,393,899.47 | 1-2 years | 10.76% | 4,439,389.95 |
| Company 2 | Deposits | 11,832,000.00 | 2-3 years | 2.87% | 3,549,600.00 |
| Company 3 | Prepaid or advance expense | 7,815,138.70 | Within 1 year | 1.89% | 390,756.94 |
| Company 4 | Prepaid or advance expense | 5,500,000.00 | 3-4 Years | 1.33% | 2,750,000.00 |
| Company 5 | Deposits | 5,000,000.00 | 1-2 years | 1.21% | 500,000.00 |
| Total | 74,541,038.17 | 18.06% | 11,629,746.89 |
8. Prepayments
(1) Aging analysis of prepayments is as follows
Unit: RMB
| Aging | Closing balance | Opening balance | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 168,576,768.97 | 89.01% | 98,788,464.16 | 81.18% |
| 1 to 2 years | 11,544,945.31 | 6.10% | 11,055,223.64 | 9.08% |
| 2 to 3 years | 5,759,402.22 | 3.04% | 8,871,438.20 | 7.29% |
| 3 years or above | 3,507,600.49 | 1.85% | 2,976,113.14 | 2.45% |
| Total | 189,388,716.99 | 121,691,239.14 | ||
(2) Advance payment of the top five closing balances by prepayment parties
The advance payment of the top five closing balances by the concentration of prepayment parties was summed up toRMB 108,822,849.38, accounting for 57.46% of the total closing balance of the advance payment.
9. Inventories
Does the Company follow the disclosure requirements in the real estate industry?No
(1) Categories of inventories
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for Impairment of | Book value | Book balance | Provision for Impairment of | Book value | |
| Inventories or Provision for Impairment of Performance Cost | Inventories or Provision for Impairment of Performance Cost | |||||
| Raw materials | 1,817,465,527.90 | 64,749,700.02 | 1,752,715,827.88 | 2,938,477,842.47 | 43,094,661.62 | 2,895,383,180.85 |
| Work-in-progress | 419,964,218.05 | 8,473,870.92 | 411,490,347.13 | 442,498,919.97 | 9,042,428.50 | 433,456,491.47 |
| Finished goods | 2,305,873,410.13 | 86,615,979.53 | 2,219,257,430.60 | 3,045,977,790.56 | 52,576,420.27 | 2,993,401,370.29 |
| Contract performance costs | 727,101,492.76 | 22,396,500.68 | 704,704,992.08 | 756,000,501.25 | 9,044,660.74 | 746,955,840.51 |
| Outsourced work-in-progress | 244,439,946.33 | 244,439,946.33 | 246,175,556.90 | 246,175,556.90 | ||
| Total | 5,514,844,595.17 | 182,236,051.15 | 5,332,608,544.02 | 7,429,130,611.15 | 113,758,171.13 | 7,315,372,440.02 |
(2) Provision for impairment of inventories and provision for impairment of contractperformance costUnit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance | ||
| Accrued | Others | Reversals or write-offs | Others | |||
| Raw materials | 43,094,661.62 | 89,987,465.93 | 68,788,994.97 | -456,567.44 | 64,749,700.02 | |
| Work-in-progress | 9,042,428.50 | 24,046,422.91 | 24,909,530.21 | -294,549.72 | 8,473,870.92 | |
| Finished goods | 52,576,420.27 | 85,227,269.39 | 52,079,752.27 | -892,042.14 | 86,615,979.53 | |
| Contract performance costs | 9,044,660.74 | 23,047,899.27 | 9,696,059.33 | 22,396,500.68 | ||
| Total | 113,758,171.13 | 222,309,057.50 | 155,474,336.78 | -1,643,159.30 | 182,236,051.15 | |
10. Non-current Assets Due within 1 Year
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term accounts receivables due within 1 year | 303,454,116.40 | 476,871,949.75 |
| Total | 303,454,116.40 | 476,871,949.75 |
11. Other Current Assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Not deducted input tax | 555,798,264.68 | 790,981,344.36 |
| Prepaid enterprise income tax | 34,017,571.59 | 27,989,091.94 |
| Return cost receivable | 11,228,032.04 | 8,005,696.54 |
| National debt reverse repurchase | 338,331,000.00 | 520,497,000.00 |
| Issue expenses | 4,933,018.88 | |
| Total | 939,374,868.31 | 1,352,406,151.72 |
12. Long-term Receivables
(1) Long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance | Range of discount rate | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | ||
| Installment Payment for Selling Products | 957,523,390.97 | 10,864,081.27 | 946,659,309.70 | 1,436,256,651.54 | 1,436,256,651.54 | ||
| Including: Unrealized Financing Income | 128,884,735.86 | 128,884,735.86 | 203,616,598.02 | 203,616,598.02 | 3.69%-7.62% | ||
| Total | 957,523,390.97 | 10,864,081.27 | 946,659,309.70 | 1,436,256,651.54 | 1,436,256,651.54 | - | |
(2) Categorical disclosure by methods for provision by bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Bad Debt Provision Based on Combinations | 1,086,408,126.83 | 100.00% | 10,864,081.27 | 1.00% | 1,075,544,045.56 | 1,639,873,249.56 | 100.00% | 1,639,873,249.56 | ||
| Including: | ||||||||||
| Combin | 1,086,4 | 100.00 | 10,864, | 1.00% | 1,075,5 | 1,639,8 | 100.00 | 1,639,8 | ||
| ation of Nature of the Funds | 08,126.83 | % | 081.27 | 44,045.56 | 73,249.56 | % | 73,249.56 | |||
| Total | 1,086,408,126.83 | 100.00% | 10,864,081.27 | 1.00% | 1,075,544,045.56 | 1,639,873,249.56 | 100.00% | 1,639,873,249.56 |
Bad Debt Provision Accrued Based on Combinations: RMB 10,864,081.27Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Combination of Nature of the Funds | 1,086,408,126.83 | 10,864,081.27 | 1.00% |
| Total | 1,086,408,126.83 | 10,864,081.27 | |
(3) Provision for bad debts accrued, recovered or reversed in this period
Unit: RMB
| Category | Opening balance | Amount of Changes in the Current Period | Closing balance | |||
| Accrued | Recovered or Reversed | Write-off | Others | |||
| Bad debt provision | 0.00 | 10,864,081.27 | 10,864,081.27 | |||
| Total | 0.00 | 10,864,081.27 | 10,864,081.27 | |||
Significant amount of recovered or reversed bad debt provision in this period:
N/A
13. Long-term equity investments
Unit: RMB
| The invested entity | Opening balance (book value) | Opening balance of provision for impairment | Decrease/Increase in the current period | Closing balance (book value) | Closing balance of provision for decline in value | |||||||
| Investments increased | Investment decreased | Investment profit and loss recognized under the equity method | Adjustment on other comprehensive income | Other changes in equity | Cash dividends or profit declared to distribute | Provision for impairment accrued | Others | |||||
| Ⅰ. Joint ventures | ||||||||||||
| Ⅱ. Affiliates | ||||||||||||
| Intelbras S.A. | 570,282,566.46 | 145,550,711.48 | 67,287,895.93 | 20,952,913.24 | 9,013,070.41 | 480,079,908.08 | ||||||
| Ruicity | 71,175,718. | 7,055,847.2 | 78,231,566. | |||||||||
| Digital Technology Co., Ltd. | 81 | 9 | 10 | |||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | 650,470,259.18 | 392,262,378.85 | -310,897,828.43 | 2,608,700.63 | 50,081,247.47 | |||||||
| Hangzhou Juhuanyan Information Technology Co., Ltd. | 723,496.39 | 723,496.39 | ||||||||||
| Shaoxing Dahua Security Services Co., Ltd. | 504,375.75 | 504,375.75 | ||||||||||
| Guangdong Zhishi Digital Technology Co., Ltd. | -333,995.11 | 333,995.11 | ||||||||||
| Ningbo Huayan Chuangxi Venture Capital Investment Partnership (Limited Partn | 63,054,968.03 | 4,377,586.77 | 67,432,554.80 |
| ership) | ||||||||||||
| Dezhou Shuzhi Information Technology Co., Ltd. | 3,407,519.63 | 37,238.63 | 3,444,758.26 | |||||||||
| Sichuan Hengji Anhua Internet of Things Technology Co., Ltd. | 1,291,851.54 | -170,006.98 | 1,121,844.56 | |||||||||
| Guangxi FTZ Huaqin Wisdom Park Technology Research Institute Co., Ltd. | 461,529.12 | 136,758.25 | 598,287.37 | |||||||||
| Ningbo Cida Yongshun Intelligent Technology Co., Ltd. | 1,638,200.59 | -474,287.86 | 1,163,912.73 | |||||||||
| Zhejiang Huachuang Vision Technology Co., | 98,812,655.44 | -9,650,504.01 | 6,218,646.42 | 95,380,797.85 |
| Ltd. | ||||||||||||
| Subtotal | 1,461,099,644.55 | 723,496.39 | 538,317,466.08 | -242,631,295.52 | 2,608,700.63 | 56,299,893.89 | 20,952,913.24 | 9,347,065.52 | 727,453,629.75 | 723,496.39 | ||
| Total | 1,461,099,644.55 | 723,496.39 | 538,317,466.08 | -242,631,295.52 | 2,608,700.63 | 56,299,893.89 | 20,952,913.24 | 9,347,065.52 | 727,453,629.75 | 723,496.39 |
The recoverable amount is determined according to the net amount of the fair value less the cost of disposal
□ Applicable ? Not applicable
The recoverable amount is determined according to the present value of the expected future cash flow
□ Applicable ? Not applicable
14. Other Non-current Financial Assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Investment in equity instruments | 478,782,601.67 | 375,902,994.01 |
| Investment in financial products | 1,056,959,784.04 | 555,140,136.32 |
| Total | 1,535,742,385.71 | 931,043,130.33 |
15. Investment Properties
(1) Investment properties measured by cost method
? Applicable □ Not applicableUnit: RMB
| Item | Buildings and constructions | Land use rights | Projects under Construction | Total |
| Ⅰ. Original book value | ||||
| 1. Opening Balance | 505,929,279.97 | 15,815,729.08 | 521,745,009.05 | |
| 2. Increased in the Current Period | 207,345,187.79 | 13,538,219.52 | 220,883,407.31 | |
| (1) Purchase | ||||
| (2) Transfer of fixed assets\intangible assets | 207,345,187.79 | 13,538,219.52 | 220,883,407.31 | |
| (3) Acquisition | ||||
| 3. Decreased in the Current Period | 539,160,477.48 | 29,353,948.60 | 568,514,426.08 | |
| (1) Disposal | ||||
| (2) Transfer to fixed assets/intangible assets | 539,160,477.48 | 29,353,948.60 | 568,514,426.08 | |
| (3) Other transfer-out |
| 4. Closing Balance | 174,113,990.28 | 174,113,990.28 | ||
| Ⅱ. Accumulated Depreciation and Amortization | ||||
| 1. Opening Balance | 96,192,178.83 | 2,517,006.40 | 98,709,185.23 | |
| 2. Increased in the Current Period | 53,434,070.91 | 2,691,276.92 | 56,125,347.83 | |
| (1) Accrual or Amortization | 23,617,545.18 | 354,085.01 | 23,971,630.19 | |
| (2) Transfer of fixed assets\intangible assets | 29,816,525.73 | 2,337,191.91 | 32,153,717.64 | |
| (3) Acquisition | ||||
| 3. Decreased in the Current Period | 105,149,263.46 | 5,208,283.32 | 110,357,546.78 | |
| (1) Disposal | ||||
| (2) Transfer to fixed assets/intangible assets | 105,149,263.46 | 5,208,283.32 | 110,357,546.78 | |
| (3) Other transfer-out | ||||
| 4. Closing Balance | 44,476,986.28 | 44,476,986.28 | ||
| Ⅲ. Impairment Provision | ||||
| 1. Opening Balance | ||||
| 2. Increased in the Current Period | ||||
| (1) Accrual | ||||
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | ||||
| Ⅳ. Book value | ||||
| 1. Closing Balance on Book Value | 129,637,004.00 | 129,637,004.00 | ||
| 2. Opening Balance on Book Value | 409,737,101.14 | 13,298,722.68 | 423,035,823.82 |
(2) Investment properties measured at fair value
□ Applicable ? Not applicable
(3) Investment properties with certificates of title not granted
There are no investment properties with certificates of title not granted at the end of the period.
16. Fixed Assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Fixed Assets | 4,937,180,876.88 | 4,643,617,574.85 |
| Total | 4,937,180,876.88 | 4,643,617,574.85 |
(1) Fixed assets
Unit: RMB
| Item | Housing and building | Machinery and equipment | Means of transport | Electronic and other equipment | Total |
| Ⅰ. Original book value: | |||||
| 1. Opening Balance | 4,094,635,347.73 | 535,141,351.73 | 34,175,953.10 | 1,709,315,308.32 | 6,373,267,960.88 |
| 2. Increased in the Current Period | 815,017,655.45 | 83,600,606.88 | 2,429,358.28 | 227,809,729.62 | 1,128,857,350.23 |
| (1) Purchase | 134,418,249.12 | 83,600,606.88 | 2,429,358.28 | 227,809,729.62 | 448,257,943.90 |
| (2) Transferred From Construction in Progress | 141,438,928.85 | 141,438,928.85 | |||
| (3) Acquisition | |||||
| (4) Transfer of investment properties | 539,160,477.48 | 539,160,477.48 | |||
| 3. Decreased in the Current Period | 209,615,008.35 | 812,130.98 | 8,165,420.42 | 29,507,018.33 | 248,099,578.08 |
| (1) Disposal or Scrapping | 2,269,820.56 | 812,130.98 | 8,165,420.42 | 29,507,018.33 | 40,754,390.29 |
| (2) Transfer to investment real estate | 207,345,187.79 | 207,345,187.79 | |||
| (3) Disposal of subsidiaries | |||||
| 4. Currency Translation Difference | 173,211.10 | 105,849.71 | 307,989.47 | 1,069,325.47 | 1,656,375.75 |
| 5. Closing Balance | 4,700,211,205.93 | 618,035,677.34 | 28,747,880.43 | 1,908,687,345.08 | 7,255,682,108.78 |
| II. Accumulated depreciation | |||||
| 1. Opening Balance | 466,625,531.84 | 164,408,002.72 | 24,578,997.58 | 1,074,037,853.89 | 1,729,650,386.03 |
| 2. Increased in the Current Period | 307,214,921.87 | 52,277,475.99 | 3,232,073.42 | 283,716,623.16 | 646,441,094.44 |
| (1) Accrual | 202,065,658.41 | 52,277,475.99 | 3,232,073.42 | 283,716,623.16 | 541,291,830.98 |
| (2) Transfer of investment properties | 105,149,263.46 | 105,149,263.46 | |||
| 3. Decreased in the Current Period | 30,087,877.28 | 332,279.22 | 6,222,073.02 | 22,008,206.16 | 58,650,435.68 |
| (1) Disposal or Scrapping | 271,351.55 | 332,279.22 | 6,222,073.02 | 22,008,206.16 | 28,833,909.95 |
| (2) Transfer to investment real estate | 29,816,525.73 | 29,816,525.73 | |||
| (3) Disposal of subsidiaries | |||||
| 4. Currency Translation Difference | 38,972.50 | 99,986.14 | 185,100.04 | 736,128.43 | 1,060,187.11 |
| 5. Closing Balance | 743,791,548.93 | 216,453,185.63 | 21,774,098.02 | 1,336,482,399.32 | 2,318,501,231.90 |
| Ⅲ. Impairment Provision | |||||
| 1. Opening Balance | |||||
| 2. Increased in the Current Period | |||||
| (1) Accrual | |||||
| 3. Decreased in the Current Period | |||||
| (1) Disposal or Scrapping | |||||
| 4. Closing Balance | |||||
| Ⅳ. Book value | |||||
| 1. Closing Balance on Book Value | 3,956,419,657.00 | 401,582,491.71 | 6,973,782.41 | 572,204,945.76 | 4,937,180,876.88 |
| 2. Opening Balance on Book Value | 3,628,009,815.89 | 370,733,349.01 | 9,596,955.52 | 635,277,454.43 | 4,643,617,574.85 |
(2) Fixed Assets Leased by Operating Lease
Unit: RMB
| Item | Book value at the end of the period |
| Buildings and constructions | 329,733,097.17 |
| Electronic and other equipment | 113,479,267.18 |
(3) Fixed Assets with Certificates of Title Not Granted
Unit: RMB
| Item | Book value | Reasons for certificates of title not granted |
| Marketable housing at Cisco Smart Technology Park | 107,128,926.00 | In the process of obtaining the real estate certificates |
(4) Impairment Test of Fixed Assets
□ Applicable ? Not applicable
17. Construction in Progress
Unit: RMB
| Item | Closing balance | Opening balance |
| Projects under Construction | 1,008,612,408.49 | 423,535,552.03 |
| Total | 1,008,612,408.49 | 423,535,552.03 |
(1) Construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Phase I, Urban Intelligent Information Industry Construction Project | 37,183,163.71 | 37,183,163.71 | 37,183,163.71 | 37,183,163.71 | ||
| The phase II construction project of the smart manufacturing base in Hangzhou | 16,685,912.78 | 16,685,912.78 | ||||
| Project of Smart IoT Solution R & | 19,100,734.18 | 19,100,734.18 | ||||
| D and Industrialization | ||||||
| New project of Southwest R&D Center of Dahua Co., Ltd. | 263,076,398.23 | 263,076,398.23 | 84,276,952.86 | 84,276,952.86 | ||
| New projects of Southwestern China Operation Center of Dahua | 335,849,207.03 | 335,849,207.03 | 154,424,552.67 | 154,424,552.67 | ||
| Smart IoT Base of Dahua in Henan | 111,780,241.11 | 111,780,241.11 | 36,643,528.49 | 36,643,528.49 | ||
| Construction Project of Smart Product Manufacturing Base of Dahua | 101,525,907.86 | 101,525,907.86 | ||||
| Others | 159,197,490.55 | 159,197,490.55 | 75,220,707.34 | 75,220,707.34 | ||
| Total | 1,008,612,408.49 | 1,008,612,408.49 | 423,535,552.03 | 423,535,552.03 |
(2) Changes in significant construction in progress
Unit: RMB
| Item Name | Budget | Opening balance | Increased in the current period | Transfer amounts in this period | Other amounts decreased in current period | Closing balance | Project accumulative investment as a percentage of the budget | Project Progress | Accumulated capitalized interest amount | Including: capitalized interest amount in the current period | Capitalization rate of the interest in the current period | Capital Source |
| Project of Smart IoT Solution R & D and Industrialization | RMB 912 million | 19,100,734.18 | 41,765,974.21 | 60,866,708.39 | 144.05% (Note 1) | 100.00% | Equity funds/raised funds | |||||
| The phase II construction project of the smart manufacturing | RMB 827 million | 16,685,912.78 | 57,967,128.63 | 74,653,041.41 | 114.00% (Note 2) | 100.00% | Equity funds/raised funds |
| base in Hangzhou | ||||||||||||
| New project of Southwest R&D Center of Dahua Co., Ltd. | RMB 417 million | 84,276,952.86 | 178,799,445.37 | 263,076,398.23 | 68.71% | 68.71% | Equity funds/raised funds | |||||
| New projects of Southwestern China Operation Center of Dahua | RMB 396 million | 154,424,552.67 | 181,424,654.36 | 335,849,207.03 | 92.34% | 92.34% | Equity Fund | |||||
| Construction Project of Smart Product Manufacturing Base of Dahua | RMB 600 million | 101,525,907.86 | 101,525,907.86 | 18.44% | 18.44% | Equity Fund | ||||||
| Total | 274,488,152.49 | 561,483,110.43 | 135,519,749.80 | 700,451,513.12 |
Note 1: Fixed assets of RMB 1,144,353,421.58 were transferred to the project in 2022.Note 2: Fixed assets of RMB 443,849,828.33 were transferred to the project in 2021, and fixed assets of RMB346,497,144.84 were transferred to the project in 2022.
(3) Impairment test of construction in progress
□ Applicable ? Not applicable
18. Right-of-use Assets
(1) Right-of-use assets
Unit: RMB
| Item | Housing and building | Machinery and equipment | Total |
| Ⅰ. Original book value | |||
| 1. Opening Balance | 469,271,896.25 | 8,884,640.73 | 478,156,536.98 |
| 2. Increased in the Current Period | 135,826,421.70 | 135,826,421.70 | |
| 3. Decreased in the Current Period | 90,628,018.17 | 90,628,018.17 | |
| 4. Currency Translation Difference | 4,267,209.05 | 4,267,209.05 | |
| 5. Closing Balance | 518,737,508.83 | 8,884,640.73 | 527,622,149.56 |
| II. Accumulated depreciation | |||
| 1. Opening Balance | 162,419,018.11 | 1,036,541.37 | 163,455,559.48 |
| 2. Increased in the Current Period | 139,557,044.29 | 888,463.92 | 140,445,508.21 |
| (1) Accrual | 139,557,044.29 | 888,463.92 | 140,445,508.21 |
| 3. Decreased in the Current Period | 76,685,796.85 | 76,685,796.85 | |
| (1) Disposal | 76,685,796.85 | 76,685,796.85 | |
| 4. Currency Translation Difference | 1,204,292.16 | 1,204,292.16 | |
| 5. Closing Balance | 226,494,557.71 | 1,925,005.29 | 228,419,563.00 |
| Ⅲ. Impairment Provision | |||
| 1. Opening Balance | |||
| 2. Increased in the Current Period | |||
| (1) Accrual | |||
| 3. Decreased in the Current Period | |||
| (1) Disposal | |||
| 4. Closing Balance | |||
| Ⅳ. Book value | |||
| 1. Closing Balance on Book Value | 292,242,951.12 | 6,959,635.44 | 299,202,586.56 |
| 2. Opening Balance on Book Value | 306,852,878.14 | 7,848,099.36 | 314,700,977.50 |
(2) Impairment test of right-to-use assets
□ Applicable ? Not applicable
19. Intangible Assets
(1) Details of intangible assets
Unit: RMB
| Item | Land use rights | Patent right | Non-patented technology | Software | Trademark | Software copyright | Total |
| Ⅰ. Original book value | |||||||
| 1. Opening Balance | 569,345,909.79 | 68,530,508.70 | 158,597,696.33 | 2,056,299.20 | 4,000,000.00 | 802,530,414.02 | |
| 2. Increased in the Current Period | 70,574,548.60 | 28,260,718.18 | 98,835,266.78 | ||||
| (1) Purchase | 41,220,600.00 | 15,946,818.69 | 57,167,418.69 | ||||
| (2) Internal |
| research and development | |||||||
| (3) Acquisition | |||||||
| (4) Transfer of construction in progress | 12,313,899.49 | 12,313,899.49 | |||||
| (5) Transfer of investment properties | 29,353,948.60 | 29,353,948.60 | |||||
| 3. Decreased in the Current Period | 13,538,219.52 | 13,079,300.22 | 26,617,519.74 | ||||
| (1) Disposal | 13,079,300.22 | 13,079,300.22 | |||||
| (2) Transfer to investment real estate | 13,538,219.52 | 13,538,219.52 | |||||
| 4. Currency Translation Difference | 21,815.00 | 37,499.94 | 20,942.40 | 80,257.34 | |||
| 5. Closing Balance | 626,404,053.87 | 68,530,508.70 | 173,816,614.23 | 2,077,241.60 | 4,000,000.00 | 874,828,418.40 | |
| Ⅱ. Accumulated amortization | |||||||
| 1. Opening Balance | 54,210,434.77 | 53,757,725.67 | 131,322,703.26 | 2,056,299.20 | 4,000,000.00 | 245,347,162.90 | |
| 2. Increased in the Current Period | 18,832,959.57 | 4,771,977.45 | 25,963,058.28 | 49,567,995.30 | |||
| (1) Accrual | 13,624,676.25 | 4,771,977.45 | 25,963,058.28 | 44,359,711.98 | |||
| (2) Transfer of investment properties | 5,208,283.32 | 5,208,283.32 | |||||
| 3. Decreased in the Current Period | 2,337,191.91 | 12,488,194.97 | 14,825,386.88 | ||||
| (1) Disposal | 12,488,194.97 | 12,488,194.97 | |||||
| (2) Transfer to | 2,337,191.91 | 2,337,191.91 |
| investment real estate | |||||||
| 4. Currency Translation Difference | 38,686.57 | 20,942.40 | 59,628.97 | ||||
| 5. Closing Balance | 70,706,202.43 | 58,529,703.12 | 144,836,253.14 | 2,077,241.60 | 4,000,000.00 | 280,149,400.29 | |
| Ⅲ. Impairment Provision | |||||||
| 1. Opening Balance | |||||||
| 2. Increased in the Current Period | |||||||
| (1) Accrual | |||||||
| 3. Decreased in the Current Period | |||||||
| (1) Disposal | |||||||
| 4. Closing Balance | |||||||
| Ⅳ. Book value | |||||||
| 1. Closing Balance on Book Value | 555,697,851.44 | 10,000,805.58 | 28,980,361.09 | 594,679,018.11 | |||
| 2. Opening Balance on Book Value | 515,135,475.02 | 14,772,783.03 | 27,274,993.07 | 557,183,251.12 |
The intangible assets from internal research and development of the Company at the end of this period account for
0.00% of the intangible assets balance.
(2) No land use right with certificates of title not granted at the end of the period
20. Goodwill
(1) Original book value of goodwill
Unit: RMB
| The invested | Opening | Increased in the current period | Decreased in the current period | Closing |
| entity or matters which formed goodwill | balance | Generated from business combination | Disposal | balance | ||
| Dahua Technology Italy S.R.L. | 6,615,294.18 | 6,615,294.18 | ||||
| Total | 6,615,294.18 | 6,615,294.18 |
(2) Impairment provision for goodwill
Unit: RMB
| The invested entity or matters which formed goodwill | Opening balance | Increased in the current period | Decreased in the current period | Closing balance | ||
| Accrued | Disposal | |||||
| Dahua Technology Italy S.R.L. | 0.00 | 0.00 | ||||
| Total | 0.00 | 0.00 | ||||
(3) Information about the asset group or asset group combination where the goodwill islocated
| Name | Composition and basis of the asset group or combination | Operation subsection and basis | Whether it remains the same with the previous year |
| Dahua Technology Italy S.R.L. | The asset group relating to the goodwill formed by acquisition of Dahua Technology Italy S.R.L., that is, the long-term asset group, including fixed assets and intangible assets, formed for Dahua Technology Italy S.R.L. on December 31, 2023. | Yes |
(4) Specific method for determination of the recoverable amount
The recoverable amount is determined according to the net amount of the fair value less the cost of disposal
□ Applicable ? Not applicable
The recoverable amount is determined according to the present value of the expected future cash flow? Applicable □ Not applicableUnit: RMB
| Item | Book value | Recoverable amount | Impairment amount | Years of the forecast period | Key parameters for the forecast | Key parameters for the steady | Basis for determination of key parameters |
| period | period | for the steady period | |||||
| DahuaTechnologyItalyS.R.L. | 96,758,357.72 | 199,959,154.35 | 0.00 | 2024-2028 | In the forecast period, the revenue growth rate is 9%-10%; the discount rate is 15.60% | In the forecast period, the revenue growth rate is 0%; the discount rate is 15.60% | In the steady period, there is no revenue growth, as prudently forecast |
| Total | 96,758,357.72 | 199,959,154.35 | 0.00 |
(5) Fulfillment of performance commitments and impairment of corresponding goodwillPerformance commitments have been made when the goodwill is formed and the reporting period or the previousreporting period is covered by the performance commitment period
□ Applicable ? Not applicable
21. Long-term Deferred Expenses
Unit: RMB
| Item | Opening balance | Increased in the current period | Prepaid Expenses in This Period | Other Amounts Decreased | Closing balance |
| Improvement expenditure of fixed assets leased by operating lease | 73,500,488.41 | 36,967,119.14 | 40,993,188.61 | -488,464.81 | 69,962,883.75 |
| Renovation Cost | 57,125,934.56 | 27,135,437.72 | 18,888,982.08 | 65,372,390.20 | |
| Total | 130,626,422.97 | 64,102,556.86 | 59,882,170.69 | -488,464.81 | 135,335,273.95 |
22. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred income tax assets not written off
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred Income Tax Assets | Deductible temporary difference | Deferred Income Tax Assets | |
| Provision for Impairment of Assets | 2,945,448,093.79 | 561,492,926.21 | 2,926,506,726.22 | 578,958,458.15 |
| Unrealized Profit from Internal Transactions | 1,849,888,966.76 | 436,702,186.90 | 871,706,793.72 | 172,050,495.83 |
| Deductible Losses | 615,050,031.87 | 101,761,861.84 | 819,688,449.21 | 143,540,714.98 |
| Equity incentive | 291,671,905.31 | 45,689,152.55 | 27,100,033.66 | 4,227,763.19 |
| expense | ||||
| Expected Liabilities | 170,920,678.13 | 26,157,016.58 | 192,813,041.57 | 29,194,206.38 |
| Payroll payable | 253,599,826.64 | 41,664,283.10 | 255,864,043.82 | 42,002,714.30 |
| Costs from Tax Increase Due to Absence of Invoice | 557,868,000.15 | 107,970,125.57 | 358,704,786.40 | 75,803,754.22 |
| Changes in fair value gains and losses | 1,458,799.36 | 364,699.84 | 1,458,799.36 | 364,699.84 |
| Book-tax difference of lease Liabilities | 188,753,783.73 | 35,399,648.53 | 167,625,574.63 | 28,803,549.48 |
| Investment in non-monetary assets | 520,408,538.53 | 78,061,280.78 | ||
| Others | 111,452,227.57 | 17,921,647.45 | 113,086,781.94 | 21,087,983.51 |
| Total | 7,506,520,851.84 | 1,453,184,829.35 | 5,734,555,030.53 | 1,096,034,339.88 |
(2) Non-offset deferred income tax liabilities
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred Income Tax Liabilities | Taxable temporary difference | Deferred Income Tax Liabilities | |
| The gross profit of sales by installments | 58,360,423.87 | 10,150,707.92 | 77,645,933.88 | 13,600,068.25 |
| Changes in fair value of financial instruments | 378,324,828.79 | 56,893,999.27 | 273,376,308.00 | 41,006,446.20 |
| Book-tax difference of right-of-use assets | 182,618,578.98 | 34,371,567.43 | 114,223,037.07 | 28,176,354.61 |
| Investment in non-monetary assets | 430,682,928.47 | 64,602,439.27 | ||
| Total | 1,049,986,760.11 | 166,018,713.89 | 465,245,278.95 | 82,782,869.06 |
(3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after OffsetUnit: RMB
| Item | Amount of Deferred Income Tax Assets Offset against Liabilities at the End of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the End of the Period | Amount of Deferred Income Tax Assets Offset against Liabilities at the Start of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the Start of the Period |
| Deferred Income Tax Assets | 165,281,346.70 | 1,287,903,482.65 | 81,614,395.73 | 1,014,419,944.15 |
| Deferred Income Tax Liabilities | 165,281,346.70 | 737,367.19 | 81,614,395.73 | 1,168,473.33 |
(4) Deferred income tax assets or liabilities listed by net amount after offsetUnit: RMB
| Item | Closing balance | Opening balance |
| Deductible temporary difference | 562,186,328.66 | 428,369,185.61 |
| Deductible Losses | 1,660,894,695.64 | 1,228,910,987.48 |
| Total | 2,223,081,024.30 | 1,657,280,173.09 |
(5) Details of unrecognized deferred income tax assets
Unit: RMB
| Year | Closing balance | Opening balance | Notes |
| 2023 | 31,938,173.71 | ||
| 2024 | 123,399,991.24 | 123,444,991.24 | |
| 2025 | 260,522,250.84 | 260,585,329.81 | |
| 2026 | 331,413,381.74 | 331,765,660.29 | |
| 2027 | 476,126,194.63 | 481,176,832.43 | |
| 2028 | 469,432,877.19 | ||
| Total | 1,660,894,695.64 | 1,228,910,987.48 |
23. Other Non-current Assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Contract Assets | 80,729,279.52 | 5,837,202.88 | 74,892,076.64 | 29,115,751.74 | 29,115,751.74 | |
| Prepayments for purchase of engineering equipments | 129,167,069.19 | 129,167,069.19 | 50,986,092.83 | 50,986,092.83 | ||
| Prepayments for acquisition of land | 40,020,000.00 | 40,020,000.00 | ||||
| Prepayments for acquisition of real estate | 5,893,664.25 | 5,893,664.25 | 21,110,059.00 | 21,110,059.00 | ||
| Others | 856,454.41 | 856,454.41 | ||||
| Total | 216,646,467.37 | 5,837,202.88 | 210,809,264.49 | 141,231,903.57 | 141,231,903.57 | |
24. Assets with restricted ownership rights or rights to use
Unit: RMB
| Item | At the End of the Period | At the Start of the Period | ||||||
| Book balance | Book value | Type of restriction | Description of restriction | Book balance | Book value | Type of restriction | Description of restriction | |
| Cash and Bank Balances | 75,843,683.23 | 75,843,683.23 | Guarantee letter security deposit and other restricted | Restricted for use | 130,637,542.35 | 130,637,542.35 | Guarantee letter security deposit and other restricted | Restricted for use |
| funds | funds | |||||||
| Notes receivable and receivables financing | 951,747,362.20 | 951,747,362.20 | Pledge used to issue bank acceptance bills and endorsed or discounted notes not derecognized | Restricted for use | 1,156,827,692.59 | 1,156,827,692.59 | Pledge used to issue bank acceptance bills and endorsed or discounted notes not derecognized | Restricted for use |
| Accounts receivable | 7,238,385.64 | 7,238,385.64 | Non-derecognition of supply chain finance discounting and factoring | Restricted for use | 7,912,141.60 | 7,912,141.60 | Non-derecognition of supply chain finance discounting and factoring | Restricted for use |
| Long-term Receivables | 120,632,081.66 | 120,632,081.66 | Pledge for bank borrowings | Restricted for use | ||||
| Non-current Assets Due within 1 Year | 27,786,159.55 | 27,786,159.55 | Pledge for bank borrowings | Restricted for use | ||||
| Total | 1,034,829,431.07 | 1,034,829,431.07 | 1,443,795,617.75 | 1,443,795,617.75 |
25. Short-term loans
(1) Categories of short-term loan
Unit: RMB
| Item | Closing balance | Opening balance |
| Pledged loans | 400,000,000.00 | |
| Fiduciary loans | 549,800,000.00 | 249,800,000.00 |
| Factoring loans of supply chain finance etc. | 7,238,385.64 | 7,912,141.60 |
| Interest payable for short-term loan | 387,944.54 | 231,476.91 |
| Total | 957,426,330.18 | 257,943,618.51 |
Notes on categories of short-term loan:
The pledged loans are acceptance bills and letters of credit issued between the related parties included in the scope ofconsolidation, and will be listed as short-term loans in the consolidated statements.
(2) Unpaid short-term loans that have been overdue
At the end of the current period, the Group has no unpaid short-term loans that have been overdue.
26. Transactional financial liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Transactional financial liabilities | 61,400.12 | 26,652,319.25 |
| Of which: Derivative financial liabilities | 61,400.12 | 26,652,319.25 |
| Total | 61,400.12 | 26,652,319.25 |
27. Notes payable
Unit: RMB
| Types | Closing balance | Opening balance |
| Commercial acceptance bill | 2,050,859,385.48 | 2,821,289,185.08 |
| Bank acceptance bill | 1,245,435,560.78 | 1,542,808,576.09 |
| Total | 3,296,294,946.26 | 4,364,097,761.17 |
28. Accounts payable
(1) Details of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Payment for purchase of materials | 5,295,784,509.14 | 6,577,743,073.06 |
| Payment for engineering equipments | 519,338,686.41 | 762,534,315.23 |
| Total | 5,815,123,195.55 | 7,340,277,388.29 |
(2) Important accounts payable aged over 1 year
There are no important accounts payable aged over 1 year.
29. Other payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends Payable | 23,667,047.02 | |
| Other Payables | 788,757,099.50 | 1,004,056,999.91 |
| Total | 812,424,146.52 | 1,004,056,999.91 |
(1) Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Equity Incentive Restricted Stock Dividend | 23,667,047.02 | |
| Total | 23,667,047.02 |
(2) Other payables
1) Other payables listed by nature of funds
Unit: RMB
| Item | Closing balance | Opening balance |
| Deposits | 119,727,924.44 | 118,085,781.49 |
| Temporarily borrowed and advance payments | 325,491,021.42 | 230,952,097.15 |
| Restricted share repurchase obligations | 326,740,652.18 | 609,859,632.00 |
| Others | 16,797,501.46 | 45,159,489.27 |
| Total | 788,757,099.50 | 1,004,056,999.91 |
2） Other important payables aged over 1 year or overdueThere are no other important payables aged over 1 year or overdue.
30. Contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Payments for sales of goods | 248,523,384.39 | 378,029,459.81 |
| Pre-payments from construction projects | 606,995,011.21 | 559,859,741.12 |
| Sales of points | 40,987,601.52 | 55,754,785.19 |
| Service expense collected in advance | 298,028,309.92 | 225,904,025.76 |
| Total | 1,194,534,307.04 | 1,219,548,011.88 |
31. Payroll payable
(1) Details of payroll payable
Unit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance |
| Ⅰ. Short-term remuneration | 1,562,938,094.00 | 7,010,504,873.69 | 6,645,977,061.18 | 1,927,465,906.51 |
| Ⅱ. Dimission benefits - defined contribution plan | 2,988,616.11 | 350,360,521.00 | 348,992,178.96 | 4,356,958.15 |
| Ⅲ. Dismissal welfare | 17,276,455.32 | 38,805,593.07 | 53,949,281.93 | 2,132,766.46 |
| Total | 1,583,203,165.43 | 7,399,670,987.76 | 7,048,918,522.07 | 1,933,955,631.12 |
(2) Details of short-term remuneration
Unit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance |
| 1. Wages or salaries, bonuses, allowances and subsidies | 1,265,686,016.61 | 6,169,213,457.32 | 5,804,204,972.24 | 1,630,694,501.69 |
| 2. Staff welfare | 21,457.48 | 126,373,634.97 | 126,395,092.45 | |
| 3. Social insurance contributions | 1,414,489.58 | 203,164,857.12 | 202,804,392.74 | 1,774,953.96 |
| Including: medical insurance | 1,243,067.14 | 193,268,276.22 | 192,959,564.20 | 1,551,779.16 |
| Work injury insurance premium | 171,422.44 | 8,915,352.27 | 8,864,433.03 | 222,341.68 |
| Maternity insurance premium | 981,228.63 | 980,395.51 | 833.12 | |
| 4. Housing funds | 70,886.51 | 400,355,402.94 | 400,305,028.02 | 121,261.43 |
| 5. Labor union and education funds | 295,745,243.82 | 111,397,521.34 | 112,267,575.73 | 294,875,189.43 |
| Total | 1,562,938,094.00 | 7,010,504,873.69 | 6,645,977,061.18 | 1,927,465,906.51 |
(3) Details of defined contribution plans
Unit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance |
| 1. Basic pension insurance | 2,740,907.32 | 334,554,328.00 | 333,343,909.34 | 3,951,325.98 |
| 2. Unemployment insurance | 247,708.79 | 15,806,193.00 | 15,648,269.62 | 405,632.17 |
| Total | 2,988,616.11 | 350,360,521.00 | 348,992,178.96 | 4,356,958.15 |
32. Taxes and fees payable
Unit: RMB
| Item | Closing balance | Opening balance |
| VAT | 363,245,736.32 | 174,205,171.22 |
| Enterprise Income Tax | 762,303,704.91 | 94,127,161.97 |
| Individual income tax | 34,441,288.75 | 27,792,426.06 |
| Urban Maintenance and Construction Tax | 21,936,677.77 | 8,019,521.09 |
| Stamp duty | 10,066,368.59 | 7,984,104.22 |
| Education surcharges (including local education surcharges) | 15,669,021.79 | 5,728,229.41 |
| House property tax | 30,701,891.59 | 8,992,842.44 |
| Others | 5,117,671.36 | 32,291.37 |
| Total | 1,243,482,361.08 | 326,881,747.78 |
33. Non-current liabilities due within 1 year
Unit: RMB
| Item | Closing balance | Opening balance |
| Long-term debt due within one year | 750,000,000.00 | 2,376,950,000.00 |
| Lease liabilities due within 1 year | 116,027,750.99 | 123,421,101.68 |
| Interest payable due within 1 year | 694,277.76 | 2,639,684.05 |
| Other loans due within 1 year | 35,000,000.00 | 55,000,000.00 |
| Total | 901,722,028.75 | 2,558,010,785.73 |
34. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| To-be-transferred sales taxes in installments | 34,104,924.61 | 46,811,489.60 |
| To-be-transferred sales taxes of contract liabilities | 81,757,348.46 | 94,461,157.60 |
| Notes not derecognised | 39,320,431.95 | 24,731,965.07 |
| Total | 155,182,705.02 | 166,004,612.27 |
35. Long-term loans
Unit: RMB
| Item | Closing balance | Opening balance |
| Pledged loans | 77,000,000.00 | |
| Fiduciary loans | 376,825,000.00 | |
| Total | 453,825,000.00 |
36. Lease liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Lease payments | 313,410,607.81 | 343,827,129.39 |
| Less: Derecognized financing expenses | 20,802,807.25 | 24,065,373.44 |
| Less: Lease liabilities due within 1 year | 116,027,750.99 | 123,421,101.68 |
| Total | 176,580,049.57 | 196,340,654.27 |
37. Estimated liabilities
Unit: RMB
| Item | Closing balance | Opening balance | Causes |
| Pending litigation | 27,829,629.48 | 1,111,463.96 | Pending litigation |
| Others | 469,642.57 | 135,647.46 | Loss-making contract |
| Expected after-sales maintenance cost | 178,727,096.75 | 213,524,280.22 | After-sales maintenance |
| Expected return amount after the period | 17,516,258.10 | 12,992,996.29 | Expected sales return |
| Total | 224,542,626.90 | 227,764,387.93 |
38. Deferred income
Unit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance | Causes |
| Government subsidies | 104,663,047.38 | 61,122,500.00 | 13,941,174.36 | 151,844,373.02 | Received government subsidies related to assets |
| Government subsidies | 29,734,600.00 | 14,867,299.98 | 14,867,300.02 | Government subsidies related to income | |
| Total | 104,663,047.38 | 90,857,100.00 | 28,808,474.34 | 166,711,673.04 | -- |
39. Other non-current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| To-be-transferred sales taxes in installments | 119,054,046.66 | 169,084,072.08 |
| Other loans | 35,000,000.00 | |
| Total | 119,054,046.66 | 204,084,072.08 |
40. Share capital
Unit: RMB
| Opening balance | Increased or decreased amount in this period (+/-) | Closing balance | |||||
| Shares newly issued | Bonus shares | Shares converted from capital reserves | Others | Subtotal | |||
| Total shares | 3,033,161,170.00 | 293,103,400.00 | -31,795,580.00 | 261,307,820.00 | 3,294,468,990.00 | ||
Other notes:
(1) According to the Proposal on the Company’s Plan for the Non-public Issuance of Shares in 2021 and otherissuance-related proposals reviewed and approved at the Company’s 12th, 19th, 23rd, 29th and 31st sessions of the7th board of directors and 2020 shareholders’ general meeting as well as the Proposal on Extension of the ValidityPeriod of the Resolutions and Authorizations of the Shareholders' General Meeting on Non-public Issuance of Sharesreviewed and approved by the first interim shareholders' meeting in 2022, the Company issued 293,103,400 ordinaryshares (A shares) in RMB to specific objects and increased the registered capital by RMB 293,103,400.00 uponapproval by the China Securities Regulatory Commission through the Reply on Approving the Non-public Issuance ofShares by Zhejiang Dahua Technology Co., Ltd. (Zheng Jian License [2022] No. 853). The above contribution hasbeen verified through Verification Report Xin Kuai Shi Bao Zi [2023] No. ZF10231 issued by BDO China Shu Lun Pan
CPAs (special general partnership), and the Company has accomplished the industrial and commercial registration ofchanges in June 2023.
(2) According to the resolution of the 42nd session of the 7th board of directors of the Company held on April 27, 2023and the amended Articles of Association and the resolution of the 2022 shareholders’ general meeting of the Company,the Company repurchased and canceled 31,795,580 granted but locked restricted ordinary shares (A shares) in RMBfrom 4,249 incentive objects, reducing the registered capital by RMB 31,795,580.00, and the registered capital afterthe change was reduced to RMB 3,294,468,990.00. The above capital reduction has been verified through VerificationReport Xin Kuai Shi Bao Zi [2023] No. ZF11079 issued by BDO China Shu Lun Pan CPAs (special generalpartnership), and the Company has accomplished the industrial and commercial registration of changes in August2023.
41. Capital reserve
Unit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance |
| Capital premium (capital share premium) | 1,982,401,079.59 | 4,967,342,743.71 | 247,132,716.28 | 6,702,611,107.02 |
| Other capital reserves | 1,967,808,163.66 | 306,389,676.44 | 1,852,682,950.63 | 421,514,889.47 |
| Total | 3,950,209,243.25 | 5,273,732,420.15 | 2,099,815,666.91 | 7,124,125,996.49 |
Other notes, including increases or decreases in this period and their reasons:
(1) The amount of employee service fee that the Company received in exchange by equity payments in this period wasRMB 288,440,579.53, where the capital reserve (other capital reserve) was increased by RMB 242,983,029.13 andthe capital reserve (capital share premium) was increased by RMB 45,457,550.40; in the equity-settled share-basedpayment, minority shareholders enjoyed RMB 57,518,604.78, where the capital reserve (other capital reserve) wasreduced by RMB 41,428,548.80 and the capital reserve (capital share premium) was reduced by RMB 16,090,055.98.The impact amount of the income tax on the part that the amount deductible before tax exceeded the share-basedpayment related cost which the accounting standards allows to recognize, was RMB 7,106,753.42, increasing othercapital reserves.
(2) In this period, the Company repurchased and canceled 31,795,580 granted but locked restricted shares from equityincentive objects, reducing the share capital by RMB 31,795,580.00 and the capital reserve (capital share premium) byRMB 227,656,352.80;
(3) According to the Proposal on the Company’s Plan for the Non-public Issuance of Shares in 2021 and otherissuance-related proposals reviewed and approved at the Company’s 12th, 19th, 23rd, 29th and 31st sessions of the7th board of directors and 2020 shareholders’ general meeting as well as the Proposal on Extension of the ValidityPeriod of the Resolutions and Authorizations of the Shareholders' General Meeting on Non-public Issuance of Sharesreviewed and approved by the first interim shareholders' meeting in 2022, the Company issued 293,103,400 ordinaryshares (A shares) in RMB to specific objects and increased the capital reserve (share capital premium) by RMB4,796,729,184.72 upon approval by the China Securities Regulatory Commission through the Reply on Approving theNon-public Issuance of Shares by Zhejiang Dahua Technology Co., Ltd. (Zheng Jian License [2022] No. 853).
(4) The impact of changes in other owners' equity of the affiliates that the Company should enjoy under the currentequity method increased other capital reserves by RMB 56,299,893.89.
(5) During the disposal of the equities in the affiliates in the current period, the owner's equities which were recognizeddue to changes in other owner's equities of the investees except for net profits and losses and other comprehensiveincome and profit distributions were carried over into the current investment income, reducing the capital reserve(other capital reserve) by RMB 1,811,254,401.83.
(6) In the current period, the capital reserve (share capital premium) was reduced by RMB 3,342,009.84 in total due tothe acquisition and disposal of minority interests of the subsidiaries; the change in the net assets, which amounted toRMB 112,906,008.59, enjoyed by the Company according to its shareholding ratio when the subsidiaries increasedtheir registered capital was included in the capital reserve (share capital premium), .
(7) According to the resolution of the 46th session of the 7th board of directors of the Company held on August 25,2023, the Company repurchased its shares in a centralized competitive bidding with a total amount for repurchase ofnot less than RMB 400 million (inclusive) and not more than RMB 600 million (inclusive), which will be used toimplement subsequent equity incentives or employee stock ownership plans. In the current period, the Companyrepurchased 19,819,601 shares. The total repurchase cost was RMB 420,003,508.93 (including transaction costs ofRMB 44,297.66), and the capital reserve (share premium) was reduced by RMB 44,297.66.
(8) Some employees of the Company indirectly accepted part of the equities from Zhejiang Healnoc Technology Co.,Ltd. controlled by the actual controller, where share-based payment was involved, and the share-based payment fee,which was RMB 12,250,000.00, was included in the capital reserve (share capital premium).
42. Treasury share
Unit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance |
| Restricted shares | 609,859,632.00 | 283,118,979.82 | 326,740,652.18 | |
| Share repurchase | 419,959,211.27 | 419,959,211.27 | ||
| Total | 609,859,632.00 | 419,959,211.27 | 283,118,979.82 | 746,699,863.45 |
Other notes, including increases or decreases in this period and their reasons:
(1) In the current period, the Company repurchased 19,819,601 shares. The total repurchase cost was RMB420,003,508.93 (including transaction costs of RMB 44,297.66), and the treasure shares were increased by RMB419,959,211.27.
(2) In the current period, the Company repurchased 31,795,580 granted but locked restricted shares, reducing theshare capital by RMB 31,795,580.00, reducing the capital reserve (share premium) by RMB 227,656,352.80, andreducing the corresponding treasury shares by RMB 259,451,932.80.
(3) The cash dividends allocated to restricted share holders reduced treasury shares and related liabilities. The cashdividends allocated to related former employees were recovered due to their departure, reducing the treasure sharesby RMB 23,667,047.02 in total.
43. Other comprehensive income
Unit: RMB
| Item | Opening balance | Amount Occurred in the Current Period | Closing balance | |||||
| Before tax balance in this period | Less: recorded into other comprehensive incomes in previous period and transferred to P/L in current period | Less: Recorded into other comprehensive incomes in previous period and transferred to retained earnings in current period | Less: Income Tax Expense | Attributable to the Company after tax | Attributable to the minority shareholders after tax | |||
| I. Other comprehensive income that will be reclassified into P/L | 36,942,339.77 | 29,150,995.25 | 29,050,681.06 | 100,314.19 | 65,993,020.83 | |||
| Currency conversion difference | 36,942,339.77 | 29,150,995.25 | 29,050,681.06 | 100,314.19 | 65,993,020.83 | |||
| Other comprehensive incomes in total | 36,942,339.77 | 29,150,995.25 | 29,050,681.06 | 100,314.19 | 65,993,020.83 | |||
44. Surplus reserves
Unit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance |
| Statutory surplus reserve | 1,553,691,005.92 | 93,543,489.08 | 1,647,234,495.00 | |
| Total | 1,553,691,005.92 | 93,543,489.08 | 1,647,234,495.00 |
Notes on the surplus reserve, including increases or decreases in this period and their reasons:
According to the provisions in the Company Law and the Company's Articles of Association, the Company will take thestatutory surplus reserve at 10% of the net profit of the parent company, which will be no more than 50% of the sharecapital of the parent company.
45. Undistributed profits
Unit: RMB
| Item | Current Period | Previous Period |
| Undistributed Profit before Adjustment at the End of Previous Period | 17,872,654,791.67 | 16,331,012,273.48 |
| Undistributed Profit after Adjustment at the Start of the Period | 17,872,654,791.67 | 16,331,012,273.48 |
| Add: net profit attributable to parent company's owner in current period | 7,361,892,404.52 | 2,324,356,092.20 |
| Less: withdrawal for statutory surplus reserve | 93,543,489.08 | |
| Payable dividends on ordinary shares | 1,817,223,955.97 | 808,528,697.10 |
| Add: Common stock dividends corresponding to repurchase and cancellation of restricted stocks | 7,662,734.78 | 25,815,123.09 |
| Others | 2,608,700.63 | |
| Undistributed Profit at the End of the Period | 23,334,051,186.55 | 17,872,654,791.67 |
46. Operating revenue and operating cost
(1) Operating revenue and operating cost
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period | ||
| Income | Cost | Income | Cost | |
| Main Business | 31,843,580,629.17 | 18,396,945,561.74 | 30,161,716,309.37 | 18,684,304,073.94 |
| Other businesses | 374,737,007.60 | 278,025,361.72 | 403,653,703.27 | 305,493,596.98 |
| Total | 32,218,317,636.77 | 18,674,970,923.46 | 30,565,370,012.64 | 18,989,797,670.92 |
Whether the lower of audited net profit before or after non-recurring gains and losses is negative
□ Yes ? No
(2) Information related to operating revenue and operating cost (by product)
Unit: RMB
| Item | Amount Occurred in the Current Period | |
| Income | Cost | |
Smart IoT Products and Solutions
| Smart IoT Products and Solutions | 26,644,648,182.18 | 14,925,853,403.30 |
| Including: Software Business | 1,797,226,644.00 | 591,429,713.59 |
Innovative Businesses
| Innovative Businesses | 4,906,653,657.98 | 3,169,076,284.13 |
| Others | 667,015,796.61 | 580,041,236.03 |
Total
| Total | 32,218,317,636.77 | 18,674,970,923.46 |
(3) Information related to operating revenue and operating cost (by region)
Unit: RMB
| Item | Amount Occurred in the Current Period | |
| Income | Cost | |
Domestic
| Domestic | 16,891,274,970.99 | 10,462,264,668.17 |
| Overseas | 15,327,042,665.78 | 8,212,706,255.29 |
Total
| Total | 32,218,317,636.77 | 18,674,970,923.46 |
Information about performance of obligations:
The Company fulfills its performance obligations in a timely manner as agreed in the contract and recognizes therelated income when the customer obtains control of the relevant goods, which is mainly divided into fulfilling theperformance obligations at a certain point in time and fulfilling the performance obligations within a certain period oftime.The Company recognizes income from the sales of goods when control of the goods passes, i.e., when the goods aredelivered to the counterparty's designated location, or to the counterparty's designated carrier, or when they aredelivered to the counterparty for acceptance.The Company identifies part of the business as a performance obligation to be fulfilled within a certain period of timeaccording to the nature of the business. The Company shall recognize the income according to the performanceprogress within that period of time, except where the performance progress cannot be reasonably recognized. TheCompany employs the output method or input method to determine the performance progress. If the performanceprogress cannot be reasonably recognized and the costs incurred are expected to be compensated, the income shallbe recognized according to the amount of costs incurred until the performance progress can be reasonably recognized.
47. Taxes and surcharges
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Urban Maintenance and Construction Tax | 106,501,298.77 | 85,046,979.25 |
| Education Surcharges | 76,094,343.54 | 60,753,558.66 |
| House property tax | 59,855,960.89 | 20,430,778.31 |
| Land usage tax | 7,903,136.79 | 1,722,816.00 |
| Vehicle and vessel use tax | 56,476.48 | 57,285.50 |
| Stamp duty | 22,285,309.84 | 17,295,563.62 |
| Others | 3,089,670.74 | 2,390,610.71 |
| Total | 275,786,197.05 | 187,697,592.05 |
48. Administrative expenses
Unit: RMB
| Item | Amount of this period | Amount of Previous Period |
| Labor cost | 742,212,609.53 | 737,894,844.39 |
| Depreciation cost and asset amortization | 159,254,353.46 | 133,589,218.51 |
| Administrative expenses | 90,685,611.32 | 81,062,193.37 |
| Consumables and service fees | 39,845,264.04 | 37,687,414.35 |
| Knowledge resource fee | 147,815,551.33 | 88,112,477.47 |
| Transportation and vehicle expenses | 3,451,347.31 | 3,181,164.59 |
| Traveling expense | 11,774,618.38 | 5,526,857.80 |
| Business entertainment | 11,246,490.69 | 8,796,525.93 |
| Others | 51,143,668.21 | 48,118,127.48 |
| Total | 1,257,429,514.27 | 1,143,968,823.89 |
49. Selling expenses
Unit: RMB
| Item | Amount of this period | Amount of Previous Period |
| Labor cost | 3,290,466,360.63 | 3,054,002,350.17 |
| After-sales service expense | 384,247,693.06 | 347,770,558.29 |
| Transportation and vehicle expenses | 49,041,851.21 | 38,162,453.78 |
| Marketing expense | 457,846,542.52 | 507,623,672.50 |
| Administrative expenses | 150,970,949.50 | 164,392,490.70 |
| Traveling expense | 287,167,778.90 | 242,619,313.30 |
| Business entertainment | 250,873,194.98 | 205,931,581.17 |
| Taxation and insurance expense | 112,356,918.50 | 212,677,239.07 |
| Communication expense | 25,008,755.46 | 24,856,805.07 |
| Knowledge resource fee | 55,724,443.18 | 74,744,704.72 |
| Depreciation cost and asset amortization | 175,742,287.43 | 158,905,072.75 |
| Others | 53,123,450.32 | 83,476,918.09 |
| Total | 5,292,570,225.69 | 5,115,163,159.61 |
50. R&D expenses
Unit: RMB
| Item | Amount of this period | Amount of Previous Period |
| Labor cost | 3,543,375,607.63 | 3,436,548,913.49 |
| Research consumables and service fees | 172,532,981.67 | 216,082,660.80 |
| Depreciation cost and asset amortization | 117,315,005.47 | 95,196,552.16 |
| Traveling expense | 57,860,404.79 | 49,067,671.55 |
| Administrative expenses | 34,045,660.92 | 40,756,648.46 |
| Communication expense | 28,994,641.13 | 25,135,407.16 |
| Others | 13,124,493.61 | 20,217,729.20 |
| Total | 3,967,248,795.22 | 3,883,005,582.82 |
51. Financial expenses
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Interest expense | 95,985,194.10 | 129,841,192.93 |
| Including: interest expenses on lease liabilities | 14,312,541.58 | 13,841,181.48 |
| Less: interest income | 345,537,378.77 | 197,933,592.28 |
| The profit or loss on foreign exchange | -180,137,872.79 | -481,747,756.10 |
| Others | 20,382,067.84 | 38,863,357.47 |
| Total | -409,307,989.62 | -510,976,797.98 |
52. Other incomes
Unit: RMB
| Sources of other incomes | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Government subsidies | 932,712,195.04 | 980,662,878.33 |
| Additional input tax deduction | 134,932.81 | 883,220.53 |
| Refund of individual income tax and service charge | 9,920,044.98 | 7,292,218.35 |
| Total | 942,767,172.83 | 988,838,317.21 |
53. Income from changes in fair value
Unit: RMB
| Source of the income from changes in fair value | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Trading Financial Assets | -1,132,045.17 | |
| Including: gains from changes at fair value of derivative financial instruments | -1,132,045.17 | |
| Transactional financial liabilities | 26,590,919.13 | -26,652,319.25 |
| Other Non-current Financial Assets | 101,037,455.74 | -18,231,213.55 |
| Total | 127,628,374.87 | -46,015,577.97 |
54. Investment income
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Long-term equity investment income measured by equity method | -242,631,295.52 | -399,809,570.81 |
| Investment income from disposal of long-term equity investment | 4,777,818,657.97 | 633,376,394.76 |
| Investment income of transactional financial assets during holding period | 124,950.00 | |
| Investment Income from Disposal Trading Financial Assets | -44,929,416.02 | -18,304,555.76 |
| After losing control, the remaining equity is re-measured at fair value | 58,339,877.68 | |
| Gain on debt restructuring | -16,242,445.24 | -414,996.80 |
| Investment income on other non-current financial assets during the holding period | 11,870,549.61 | 9,173,028.68 |
| Investment income from disposal of | 10,370,120.76 |
| other non-current financial assets | ||
| Investment income from national debt reverse repurchase | 1,256,871.91 | 791,371.25 |
| Profits from recognition termination of financial assets | -1,539,231.44 | -2,527,190.80 |
| Total | 4,495,973,812.03 | 280,749,308.20 |
55. Credit impairment losses
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Bad debt losses of notes receivable | 17,555,335.92 | -257,089.31 |
| Bad debt losses of accounts receivable | -415,017,021.55 | -618,126,859.84 |
| Bad debt losses of other receivables | -997,713.81 | 21,878,004.86 |
| Bad debt losses of long-term accounts receivable | -13,997,717.99 | |
| Total | -412,457,117.43 | -596,505,944.29 |
56. Asset impairment losses
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| I. Impairment Losses on Inventories and Performance Cost | -176,434,382.90 | -96,658,687.52 |
| II. Impairment Losses on Long-term Equity Investment | -723,496.39 | |
| III. Impairment Losses on Contract Assets | 1,920,067.16 | -9,270,865.73 |
| Total | -174,514,315.74 | -106,653,049.64 |
57. Asset disposal income
Unit: RMB
| Sources of the asset disposal income | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Income from disposal of fixed assets | 1,679,018.49 | 1,146,254.67 |
| Income from the disposal of right-of-use assets | 328,779.90 | 1,819,534.10 |
| Total | 2,007,798.39 | 2,965,788.77 |
58. Non-operating income
Unit: RMB
| Item | Amount Occurred in the | Amount Occurred in the | Amount recorded into non- |
| Current Period | Previous Period | recurring profit and loss in current period | |
| Government subsidies | 2,100,000.00 | ||
| Gains and losses of non-current asset retirement | 1,229,426.37 | 1,648,667.29 | 1,229,426.37 |
| Others | 12,299,567.88 | 14,172,637.30 | 12,299,567.88 |
| Total | 13,528,994.25 | 17,921,304.59 | 13,528,994.25 |
59. Non-operating expenses
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period | Amount recorded into non-recurring profit and loss in current period |
| Donations | 1,103,243.16 | 1,796,127.69 | 1,103,243.16 |
| Gains and losses of non-current asset retirement | 2,072,054.17 | 2,030,871.71 | 2,072,054.17 |
| Water conservancy fund | 441,570.13 | 167,592.46 | |
| Others | 29,232,164.80 | 6,841,475.06 | 29,232,164.80 |
| Total | 32,849,032.26 | 10,836,066.92 | 32,407,462.13 |
60. Income tax expense
(1) Income tax expense statement
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Current income tax expense | 895,325,041.21 | 155,717,141.34 |
| Deferred income tax expense | -248,886,869.12 | -130,389,333.38 |
| Total | 646,438,172.09 | 25,327,807.96 |
(2) Adjustment process of accounting profit and income tax expensesUnit: RMB
| Item | Amount Occurred in the Current Period |
| Total Profit | 8,121,705,657.64 |
| Income tax expense calculated at statutory/applicable tax rate | 1,218,255,848.65 |
| Impact by applying different tax rates to subsidiaries | 65,510,669.97 |
| Impact of income tax before adjustment in this period | -31,121,028.44 |
| Impact of the non-deductible costs, expenses and losses | 32,717,362.49 |
| Impact of additional deduction of the research and development expenses | -518,601,976.42 |
| Others | -120,322,704.16 |
| Income tax expense | 646,438,172.09 |
61. Other comprehensive incomes
See Note 43 for details.
62. Items of Cash Flow Statement
(1) Cashes relating to operating activities
Other cash receipts relating to operating activitiesUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Interest Income | 273,381,345.10 | 115,853,521.82 |
| Government subsidies | 994,760,820.70 | 991,467,035.95 |
| Tender and performance guarantee deposit | 123,948,827.72 | 34,276,474.54 |
| Incomings and outgoings and advance payments | 42,723,390.94 | 96,874,605.04 |
| Others | 24,118,990.28 | 13,304,303.72 |
| Total | 1,458,933,374.74 | 1,251,775,941.07 |
Other cash payments relating to operating activitiesUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Administrative expenses | 336,994,816.98 | 355,623,778.96 |
| Communication expense | 79,071,144.89 | 59,345,879.58 |
| Business entertainment | 262,962,826.23 | 216,201,652.45 |
| Traveling expense | 360,761,388.26 | 296,659,094.56 |
| Marketing expense | 446,017,073.08 | 391,397,115.26 |
| Transportation and vehicle expenses | 78,953,292.07 | 44,409,896.02 |
| Knowledge resource fee | 204,781,766.16 | 133,575,452.95 |
| Research and development consumption and external inspection fee | 102,571,135.69 | 100,723,946.02 |
| Taxation and insurance expense | 65,040,612.10 | 77,631,185.38 |
| Tender and performance guarantee deposit | 76,473,405.90 | 86,652,672.09 |
| Incomings and outgoings and advanced payments | 17,324,949.79 | 131,684,066.18 |
| Consumables and service fees | 275,055,483.06 | 248,782,048.70 |
| Others | 38,668,797.11 | 29,828,698.09 |
| Total | 2,344,676,691.32 | 2,172,515,486.24 |
(2) Cashes relating to investing activities
Other cash receipts relating to investing activitiesUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Receipts of cash from forward exchange contracts | 40,049,759.39 | 25,697,487.60 |
| Recovered frozen funds relating to the investment | 9,762,136.70 | |
| Total | 49,811,896.09 | 25,697,487.60 |
Important cash receipts relating to investing activitiesUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Cashes received from equity transfer | 3,505,457,225.01 | 29,000,000.00 |
| Investment recovered from reverse repurchase of treasury bonds | 1,221,761,539.51 | 825,789,959.23 |
| Others | 14,404,556.44 | 1,409,325,099.44 |
| Total | 4,741,623,320.96 | 2,264,115,058.67 |
Other cash payments relating to investing activitiesUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Cash paid for forward exchange contracts | 84,979,175.41 | 44,002,044.90 |
| Paid frozen funds relating to the investment | 1,058,404.69 | 13,993,944.08 |
| Total | 86,037,580.10 | 57,995,988.98 |
Important cash payments relating to investing activitiesN/A
(3) Cashes relating to financing activities
Other cash receipts relating to financing activitiesUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Recovered loan deposits | 453,263.81 | |
| Total | 453,263.81 |
Other cash payments relating to financing activitiesUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Leasing fees paid | 171,319,524.76 | 130,670,138.16 |
| Listing fees paid | 3,312,739.06 | 3,695,037.14 |
| Cashes paid for purchasing minority equity | 14,647,000.00 | 82,140,000.00 |
| Equity repurchase cash paid | 679,455,441.73 | 284,463,142.68 |
| Total | 868,734,705.55 | 500,968,317.98 |
Notes to other cash payments relating to financing activities:
N/AChanges in liabilities generated by financing activities? Applicable □ Not applicableUnit: RMB
| Item | Opening balance | Increased in the current period | Decreased in the current period | Closing balance | ||
| Cash changes | Non-cash changes | Cash changes | Non-cash changes | |||
| Short-term loan | 257,943,618.51 | 1,528,087,858.03 | 11,096,240.93 | 839,701,387.29 | 957,426,330.18 | |
| Long-term loan | 453,825,000.00 | 400,000,000.00 | 853,825,000.00 | |||
| Dividends Payable | 1,809,561,221.19 | 1,785,894,174.17 | 23,667,047.02 | |||
| Lease Liabilities | 196,340,654.27 | 133,919,671.73 | 37,627,066.77 | 116,053,209.66 | 176,580,049.57 | |
| Non-current Liabilities Due within 1 Year | 2,558,010,785.73 | 1,005,547,028.75 | 2,661,835,785.73 | 901,722,028.75 | ||
| Other Payables (Restricted Share Repurchase Obligations) | 609,859,632.00 | 259,451,932.80 | 23,667,047.02 | 326,740,652.18 | ||
| Other Non-current Liabilities | 35,000,000.00 | 35,000,000.00 | ||||
| Total | 4,110,979,690.51 | 1,928,087,858.03 | 2,960,124,162.60 | 5,584,510,346.76 | 1,028,545,256.68 | 2,386,136,107.70 |
63. Supplementary information on Cash Flow Statement
(1) Supplementary information about the Cash Flow Statement
Unit: RMB
| Supplementary information | Amount of this period | Amount of Previous Period |
| 1． Reconciliation of net profit to cash flows from operational activities | ||
| Net Profit | 7,475,267,485.55 | 2,261,850,253.32 |
| Add: provision for impairment of assets | 586,971,433.17 | 703,158,993.93 |
| Depreciation of fixed assets, oil and gas assets, productive biological assets | 564,909,376.16 | 503,479,252.70 |
| Depreciation of Right-of-use Assets | 140,445,508.21 | 132,164,519.81 |
| Amortization of Intangible Assets | 44,713,796.99 | 46,736,670.60 |
| Amortization of long-term deferred expenses | 59,882,170.69 | 39,510,946.43 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (mark "-" for incomes) | -2,007,798.39 | -2,965,788.77 |
| Losses on scrapping of fixed assets (mark "-" for incomes) | 842,627.80 | 382,204.42 |
| Losses on fair value changes (mark "-" for incomes) | -127,628,374.87 | 46,015,577.97 |
| Financial expenses (mark "-" for incomes) | -84,152,678.69 | -367,030,819.99 |
| Losses on investment (mark "-" for incomes) | -4,513,755,488.71 | -283,691,495.80 |
| Decrease on deferred income tax assets (mark "-" for increases) | -188,315,504.30 | -74,076,700.95 |
| Increase on deferred income tax liabilities (mark "-" for decreases) | -65,033,545.41 | -60,610,031.11 |
| Decrease on inventories (mark "-" for increases) | 1,804,686,410.40 | -1,007,449,606.32 |
| Decrease on operational receivables (mark "-" for increases) | -650,869,567.85 | -512,792,543.01 |
| Increase on operational payables (mark "-" for decreases) | -747,867,775.81 | -656,911,190.48 |
| Others | 300,690,579.53 | 285,817,406.71 |
| Net cash flow generated by operating activities | 4,598,778,654.47 | 1,053,587,649.46 |
| 2． Major investing and financing activities that do not involve cash receipts and payment | ||
| Conversion of Debt into Capital | ||
| Convertible corporate bond within 1 year | ||
| Fixed Assets under Finance Lease | ||
| 3． Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 15,880,659,594.95 | 7,878,465,052.63 |
| Less: opening balance of cash | 7,878,465,052.63 | 7,617,576,852.32 |
| Add: closing balance of cash equivalents | ||
| Less: opening balance of cash equivalents | ||
| Net Increase in Cash and Cash Equivalents | 8,002,194,542.32 | 260,888,200.31 |
(2) Composition of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| Ⅰ. Cash | 15,880,659,594.95 | 7,878,465,052.63 |
| Including: cash on hand | 2,642.58 | 2,535.81 |
| Bank deposit for payment at any time | 15,806,616,028.36 | 7,746,722,778.16 |
| Other cash and bank balances for payment at any time | 74,040,924.01 | 131,739,738.66 |
| Ⅲ. Closing balance of cash and cash equivalents | 15,880,659,594.95 | 7,878,465,052.63 |
(3) Monetary funds which are not cash and cash equivalents
Unit: RMB
| Item | Amount of this period | Amount of Previous Period | Why the monetary funds are not cash and cash equivalents |
| Other Cash and Bank Balances | 68,981,082.99 | 110,737,143.60 | Guarantee letter security deposit, restricted for use |
| Bank Balance | 6,862,600.24 | 19,900,398.75 | Frozen funds, restricted for use |
| Bank Balance | 14,501,836.29 | 20,776,055.79 | Unexpired bank deposits and interests, listed in the Cash and Bank Balances |
| Total | 90,345,519.52 | 151,413,598.14 |
64. Notes to the items in the Statement of Changes in Owners' Equity
Matters including names of “Other” items adjusting the balance at the end of the previous year and the adjustedamount:
N/A
65. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Unit: RMB
| Item | Closing balance in foreign currencies | Exchange rate for conversion | Closing Balance Converted into RMB |
| Cash and Bank Balances | |||
| Including: USD | 171,065,224.74 | 7.0827 | 1,211,603,667.27 |
| EUR | 32,733,022.04 | 7.8592 | 257,255,366.82 |
| HKD | 3,525,498,379.15 | 0.9062 | 3,194,891,052.99 |
| INR | 1,092,222,470.45 | 0.0851 | 92,998,397.59 |
| THB | 262,564,074.69 | 0.2074 | 54,445,634.98 |
| PLN | 16,904,647.15 | 1.8107 | 30,609,413.64 |
| Total amount of other currencies | 191,328,295.44 | ||
| Accounts receivable | |||
| Including: USD | 533,716,357.33 | 7.0827 | 3,780,152,844.06 |
| EUR | 118,313,842.79 | 7.8592 | 929,852,153.26 |
| HKD | 3,022,129.24 | 0.9062 | 2,738,725.89 |
| INR | 5,758,609,355.66 | 0.0851 | 490,322,674.10 |
| AED | 117,522,588.14 | 1.9326 | 227,118,277.71 |
| AUD | 46,365,409.19 | 4.8484 | 224,798,049.92 |
| Total amount of other currencies | 740,971,172.52 | ||
| Long-term loan | |||
| Including: USD | |||
| EUR | |||
| HKD | |||
| Accounts Payable | |||
| Including: USD | 103,694,084.74 | 7.0827 | 734,434,093.99 |
| INR | 2,381,510,335.43 | 0.0851 | 202,776,129.43 |
| EUR | 1,359,034.19 | 7.8592 | 10,680,921.51 |
| AED | 2,876,615.98 | 1.9326 | 5,559,204.21 |
| HUF | 198,712,875.49 | 0.0205 | 4,079,466.96 |
| BRL | 2,556,421.34 | 1.4596 | 3,731,454.84 |
| Total amount of other currencies | 15,986,600.17 |
(2) Notes on overseas business entities, including that for the important overseas businessentities, the overseas main premises, functional currency and selection basis shall bedisclosed. If there are changes on its functional currency, the causes for the changes shall bedisclosed as well.
? Applicable □ Not applicableSince the overseas business entity of the Company, Dahua Technology (HK) Limited, does not have autonomy overits business activities, which are the extension of the business activities of the Company, constituting the businessactivities of the Company, RMB shall be used as its functional currency.
66. Lease
(1) The Company as a lessee
? Applicable □ Not applicableVariable lease payments not included in the measurement of lease liabilities
□ Applicable ? Not applicable
Simplified leasing expenses for short-term leases or low-value assets? Applicable □ Not applicable
| Item | Amount of this period | Amount of Previous Period |
| Interest expenses on lease liabilities | 14,312,541.58 | 13,841,181.48 |
| Simplified short-term leasing expenses included in relevant asset cost or the current profit or loss | 59,174,978.85 | 86,310,571.91 |
| Total cash outflows relating to lease | 230,494,503.61 | 216,980,710.07 |
Information on sale and leaseback transaction
N/A
(2) The Company as a lessor
Operating lease as a lessor? Applicable □ Not applicableUnit: RMB
| Item | Rental income | Including: Income relating to variable lease payments not included in the lease receipts |
| Lease of buildings | 41,297,042.90 | |
| Lease of equipment | 103,366,881.74 | |
| Total | 144,663,924.64 |
Financial lease as a lessor
□ Applicable ? Not applicable
Lease receipts undiscounted in each of the five years to come
□ Applicable ? Not applicable
(3) Recognition of profit or loss from financial lease or sale as a manufacturer or distributor
□ Applicable ? Not applicable
VIII. R&D ExpenditureUnit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Labor cost | 3,543,375,607.63 | 3,436,548,913.49 |
| Research consumables and service fees | 172,532,981.67 | 216,082,660.80 |
| Depreciation cost and asset amortization | 117,315,005.47 | 95,196,552.16 |
| Traveling expense | 57,860,404.79 | 49,067,671.55 |
| Administrative expenses | 34,045,660.92 | 40,756,648.46 |
| Communication expense | 28,994,641.13 | 25,135,407.16 |
| Others | 13,124,493.61 | 20,217,729.20 |
| Total | 3,967,248,795.22 | 3,883,005,582.82 |
| Including: Expense-based R&D expenditure | 3,967,248,795.22 | 3,883,005,582.82 |
IX. Changes in the Scope of Consolidation
1. Consolidation not under the common control
(1) Consolidation not under the common control in this period
Unit: RMB
| Name of | Time | Cost for | Percenta | Acquisiti | Acquisiti | Basis for | Income | Net | Cash |
| Acquiree | Point for Equity Acquisition | Equity Acquisition | ge Acquired | on Method | on Date | Determining Acquisition Date | of Acquiree from the Acquisition Date to the End of the Period | Profit of Acquiree from the Acquisition Date to the End of the Period | Flow of Acquiree from the Acquisition Date to the End of the Period |
| Zhejiang Huajian Technology Co., Ltd. | February 24, 2023 | 0.00 | 100.00% | Equity transfer | February 24, 2023 | Transferred | 0.00 | 0.00 |
Other notes:
Zhejiang Huajian Technology Co., Ltd. was established on December 7, 2022. As at the date of this equity transfer,the original shareholder failed to make the contribution or engage in any operation. The Company purchased 100% ofits equities with zero consideration and completed the industrial and commercial change on February 24, 2023.
2. No business consolidation under common control during this period
3. Disposal of subsidiaries
Is there any transaction or matter that results in loss of control over the subsidiaries in the current period
□ Yes ? No
Is there any situation where disposal of investment in subsidiaries is achieved through multiple transactions in variousstages, causing loss of control in this period
□ Yes ? No
4. Changes in the Scope of Consolidation for Other Reasons
Explanations on the changes in the scope of consolidation caused by other reasons (for example, newly establishedsubsidiaries, subsidiaries clearing, etc.) and relevant information:
(1) The Company has established three domestic subsidiaries in this period: Zhejiang Shuhang Intelligent TechnologyCo., Ltd., Guangdong Huaxiyue Intelligent Technology Co., Ltd., and Zhejiang Huajie New Energy Operation ServiceCo., Ltd. Additionally, it has established seven overseas subsidiaries: Dahua Technology Belgium BV, DahuaTechnology Regional Headquarters, Dahua Technology Azerbaijan LLC, Dahua Technology Vietnam CompanyLimited, Huaray Technology Korea Company Limited, HuaRay Technology GmbH, and Dahua Technology Angola S.U.lda. All the aforementioned subsidiaries have been consolidated into the financial reports of the Company from theirrespective establishment dates.
(2) The Company's subsidiary Guizhou Dahua Information Technology Co., Ltd. is canceled in the current period andhas not been included in the scope of consolidation from the date of cancellation.
X. Equity in Other Entities
1. Equity in Subsidiaries
(1) Composition of the enterprise group
| Name of Subsidiaries | Registered Capital | Main Place of Business | Registered Address | Business Nature | Shareholding Percentage | Acquisition Method | |
| Direct | Indirect | ||||||
| Dahua System Engineering | RMB 500,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Dahua Vision Technology | RMB 1,306,810,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Dahua Security Network | RMB 100,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Dahua Ju'an | RMB 10,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Guangxi Dahua Information | RMB 66,800,000 | Youjiang District, Baise | Youjiang District, Baise | Electronics and information | 100.00% | Establishment | |
| Guangxi Yunlian | RMB 20,000,000 | Qingxiu District, Nanning | Qingxiu District, Nanning | Service | 100.00% | Establishment | |
| Hangzhou Xiaohua | RMB 10,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 78.00% (Note 1) | Establishment | |
| Dahua Zhilian | RMB 1,885,800,000 | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 94.1669% (Note 2) | Establishment | |
| Dahua investment management | RMB 1,000,000,000 | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Investment & investment management | 75.00% | Establishment | |
| Guangxi Zhicheng | RMB 109,542,900 | Youjiang District, Baise | Youjiang District, Baise | Electronics and information | 65.00% | Establishment | |
| Hangzhou Huacheng | RMB 77,905,182 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 32.73% |(Note 3) | Establishment | |
| Xinjiang Information | RMB 60,000,000 | Shihezi, Xinjiang | Shihezi, Xinjiang | Electronics and information | 92.00% | Establishment | |
| HuaRay Technology | RMB 78,264,756 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Sci-tech popularization and | 32.58% (Note 4) | Establishment | |
| application services industry | |||||||
| Fuyang Hua'ao | RMB 10,000,000 | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Huafei Intelligent | RMB 50,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 60.50% (Note 5) | Establishment | |
| Guizhou Huayi | RMB 22,500,000 | Guanshanhu District, Guiyang | Guanshanhu District, Guiyang | Electronics and information | 100.00% | Establishment | |
| Xinjiang Zhihe | RMB 38,284,600 | Qira County, Hotan, Xinjiang | Qira County, Hotan, Xinjiang | Electronics and information | 97.00% | Establishment | |
| Guangxi Huacheng | RMB 35,800,000 | Wuzhou, Guangxi | Wuzhou, Guangxi | Electronics and information | 90.00% | Establishment | |
| Meitan Dahua Technology | RMB 10,000,000 | Zunyi, Guizhou | Zunyi, Guizhou | Electronics and information | 100.00% | Establishment | |
| Inner Mongolia Zhimeng | RMB 20,000,000 | New District, Bai County, Chahar Right Wing Back Banner | New District, Bai County, Chahar Right Wing Back Banner | Electronics and information | 95.00% | Establishment | |
| Xinjiang Zhitian | RMB 25,652,600 | Hetian County, Hetian, Xinjiang | Hetian County, Hetian, Xinjiang | Electronics and information | 97.00% | Establishment | |
| Xinjiang Xinzhi | RMB 335,567,200 | Shache County, Kashgar District, Xinjiang | Shache County, Kashgar District, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Xinjiang Huayue | RMB 37,841,300 | Kashgar, Xinjiang | Kashgar, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Tianjin Dahua | RMB 36,000,000 | Tianjin Binhai New Area | Tianjin Binhai New Area | Electronics and information | 100.00% | Establishment | |
| Dahua Zhilong | RMB 39,480,000 | Shuangpai County, Yongzhou City | Shuangpai County, Yongzhou City | Electronics and information | 90.00% | Establishment | |
| Vision Technology | RMB 10,000,000 | Fuyang District, Hangzhou City, Zhejiang Province | Fuyang District, Hangzhou City, Zhejiang Province | Electronics and information | 100.00% | Establishment | |
| Huaxiao Technology | RMB 70,000,000 | Fuyang District, Hangzhou City, Zhejiang Province | Fuyang District, Hangzhou City, Zhejiang Province | Electronics and information | 51.00% | Establishment | |
| Xi'an Dahua | RMB 989,600,000 | Xi'an City, Shaanxi Province | Xi'an City, Shaanxi Province | Electronics and information | 100.00% | Establishment | |
| Huaruipin | RMB 50,000,000 | Wuxi City, Jiangsu Province | Wuxi City, Jiangsu Province | Electronics and information | 51.00% | Establishment | |
| Beijing Huayue | RMB 10,000,000 | Xicheng District, | Xicheng District, | Electronics and | 100.00% | Establishment |
| Beijing | Beijing | information | |||||
| Shanghai Huashang | RMB 1,000,000 | Putuo District, Shanghai | Putuo District, Shanghai | Electronics and information | 100.00% | Establishment | |
| Dahua Jinzhi | RMB 60,000,000 | Wucheng District, Jinhua City, Zhejiang Province | Wucheng District, Jinhua City, Zhejiang Province | Electronics and information | 100.00% | Establishment | |
| Zhoushan Operation | RMB 100,000,000 | Zhoushan City, Zhejiang Province | Zhoushan City, Zhejiang Province | Electronics and information | 58.80% | Establishment | |
| Yunnan Zhili | RMB 50,000,000 | Lijiang City, Yunnan Province | Lijiang City, Yunnan Province | Electronics and information | 90.00% | Establishment | |
| Guangxi Dahua Technology | RMB 100,000,000 | Liuzhou City, Guangxi Zhuang Autonomous Region | Liuzhou City, Guangxi Zhuang Autonomous Region | Electronics and information | 100.00% | Establishment | |
| Huayixin | RMB 80,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Huaruijie | RMB 150,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Automotive electronics | 51.00% | Establishment | |
| Chengdu Zhilian | RMB 600,000,000 | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100.00% | Establishment | |
| Chengdu Zhian | RMB 554,700,000 | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100.00% | Establishment | |
| Chengdu Zhishu | RMB 50,000,000 | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100.00% | Establishment | |
| Chengdu Zhichuang | RMB 15,000,000 | Longquanyi District, Chengdu | Longquanyi District, Chengdu | Electronics and information | 100.00% | Establishment | |
| Chengdu Smart Network | RMB 50,000,000 | Dayi County, Chengdu | Dayi County, Chengdu | Electronics and information | 90.00% | Establishment | |
| Huakong Software | RMB 50,000,000 | Wuyi County, Jinhua City | Wuyi County, Jinhua City | Electronics and information | 100.00% | Establishment | |
| Huacheng Software | RMB 30,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Henan Dahua | RMB 30,000,000 | Zhengzhou, Henan | Zhengzhou, Henan | Electronics and information | 100.00% | Establishment | |
| Huajian | RMB 50,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45.00% (Note 6) | Establishment | |
| Zhengzhou Dahua Zhian | RMB 30,000,000 | Zhengzhou, Henan | Zhengzhou, Henan | Electronics and information | 100.00% | Establishment | |
| Dahua International | RMB 1,000,000 | Singapore | Singapore | Electronics and information | 100.00% | Establishment | |
| Anhui Zhilian | RMB 30,000,000 | Hefei, Anhui | Hefei, Anhui | Electronics and information | 100.00% | Establishment | |
| Anhui Zhishu | RMB 30,000,000 | Hefei, Anhui | Hefei, Anhui | Electronics and | 100.00% | Establishment |
| information | |||||||
| Wuhu Huajian | RMB 10,000,000 | Wuhu, Anhui | Wuhu, Anhui | Electronics and information | 100.00% | Establishment | |
| Changsha Dahua | RMB 100,000,000 | Changsha, Hunan | Changsha, Hunan | Electronics and information | 100.00% | Establishment | |
| Tianjin Huajian | RMB 30,000,000 | Hexi District, Tianjin | Hexi District, Tianjin | Electronics and information | 100.00% | Establishment | |
| Zhejiang Pixfra | RMB 442,140,448 | Xiaoshan District, Hangzhou | Xiaoshan District, Hangzhou | Electronics and information | 75.11% | Establishment | |
| Yiwu Huaxi | RMB 10,000,000 | Yiwu City, Zhejiang Province | Yiwu City, Zhejiang Province | Electronics and information | 100.00% | Establishment | |
| Dahua Operation | RMB 100,000,000 | Xiaoshan District, Hangzhou | Xiaoshan District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Nanyang Intelligent | RMB 10,000,000 | Nanyang City, Henan Province | Nanyang City, Henan Province | Electronics and information | 100.00% | Establishment | |
| Yibin Huahui | RMB 20,000,000 | Yibin City, Sichuan Province | Yibin City, Sichuan Province | Electronics and information | 100.00% | Establishment | |
| Chengdu Huazhiwei | RMB 10,000,000 | Chengdu City, Sichuan Province | Chengdu City, Sichuan Province | Electronics and information | 100.00% | Establishment | |
| IMOU Xi'an | RMB 20,000,000 | Xi'an City, Shaanxi Province | Xi'an City, Shaanxi Province | Electronics and information | 100.00% | Establishment | |
| Luoyang Zhiyu | RMB 10,000,000 | Luoyang City, Henan Province | Luoyang City, Henan Province | Electronics and information | 100.00% | Establishment | |
| Huaqi Intelligence | RMB 100,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Chengdu Information | RMB 20,000,000 | Chongzhou City, Chengdu City | Chongzhou City, Chengdu City | Electronics and information | 100.00% | Establishment | |
| Huajian Technology | RMB 20,000,000 | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Business combination not under common control | |
| Shuhang Intelligent | RMB 10,000,000 | Xiaoshan District, Hangzhou | Xiaoshan District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Huaxiyue | RMB 10,000,000 | Haizhu District, Guangzhou | Haizhu District, Guangzhou | Electronics and information | 100.00% | Establishment | |
| Huajie Operation | RMB 50,000,000 | Xiaoshan District, Hangzhou | Xiaoshan District, Hangzhou | New Energy Operation | 100.00% | Establishment | |
| Dahua Hong Kong | RMB 669,687,347 | Hong Kong | Hong Kong | Electronics and information | 100.00% | Establishment | |
| Dahua USA | USD 600,000 | USA | USA | Electronics and information | 100.00% | Establishment | |
| Dahua Europe | EUR 200,000 | Netherlands | Netherlands | Electronics and information | 100.00% | Establishment |
| Dahua Middle East | AED 1,000,000 | United Arab Emirates | United Arab Emirates | Electronics and information | 100.00% | Establishment | |
| Dahua Mexico | MXN 90,000,000 | Mexico | Mexico | Electronics and information | 100.00% | Establishment | |
| Dahua Chile | CLP 360,000,000 | Chile | Chile | Electronics and information | 100.00% | Establishment | |
| Dahua Colombia | COP 4,616,709,016 | Columbia | Columbia | Electronics and information | 100.00% | Establishment | |
| Dahua Australia | AUD 150,000 | Australia | Australia | Electronics and information | 100.00% | Establishment | |
| Dahua Singapore | USD 220,000 | Singapore | Singapore | Electronics and information | 100.00% | Establishment | |
| Dahua South Africa | ZAR 5,000,000 | South Africa | South Africa | Electronics and information | 100.00% | Establishment | |
| Dahua Peru | PEN 2,200,000 | Peru | Peru | Electronics and information | 100.00% | Establishment | |
| Dahua Brazil | BRL 41,334,811 | Brazil | Brazil | Electronics and information | 100.00% | Establishment | |
| Dahua Russia | RUB 30,000,000 | Russia | Russia | Electronics and information | 100.00% | Establishment | |
| Dahua Canada | CAD 250,000 | Canada | Canada | Electronics and information | 100.00% | Establishment | |
| Dahua Panama | USD 10,000 | Panama | Panama | Electronics and information | 100.00% | Establishment | |
| Dahua Hungary | HUF 303,000,000 | Hungary | Hungary | Electronics and information | 100.00% | Establishment | |
| Dahua Poland | PLN 2,200,000 | Poland | Poland | Electronics and information | 100.00% | Establishment | |
| Dahua Tunisia | USD 89,000 | Tunisia | Tunisia | Electronics and information | 100.00% | Establishment | |
| Dahua Kenya | KES 15,000,000 | Kenya | Kenya | Electronics and information | 100.00% | Establishment | |
| Dahua UK | GBP 100,000 | UK | UK | Electronics and information | 100.00% | Establishment | |
| Dahua Bulgaria | BGN 350,000 | Bulgaria | Bulgaria | Electronics and information | 100.00% | Establishment | |
| Dahua Serbia | RSD 23,000,000 | Serbia | Serbia | Electronics and information | 100.00% | Establishment | |
| Dahua Germany | EUR 150,000 | Germany | Germany | Electronics and information | 100.00% | Establishment | |
| Dahua Malaysia | MYR 1,000,000 | Malaysia | Malaysia | Electronics and information | 100.00% | Establishment | |
| Dahua Korea | KRW 1,500,000,000 | South Korea | South Korea | Electronics and information | 100.00% | Establishment |
| Dahua Indonesia | IDR 2,600,000,000 | Indonesia | Indonesia | Electronics and information | 67.00% | Establishment | |
| Dahua India | INR 234,000,000 | India | India | Electronics and information | 100.00% | Establishment | |
| Dahua Turkey | TRY 840,000 | Turkey | Turkey | Electronics and information | 100.00% | Establishment | |
| Dahua Czech | CZK 5,400,000 | Czech Republic | Czech Republic | Electronics and information | 100.00% | Establishment | |
| Dahua Argentina | ARS 27,288,503 | Argentina | Argentina | Electronics and information | 100.00% | Establishment | |
| Dahua Spain | EUR 150,000 | Spain | Spain | Electronics and information | 100.00% | Establishment | |
| Dahua Kazakhstan | KZT 23,000,000 | Kazakhstan | Kazakhstan | Electronics and information | 100.00% | Establishment | |
| Dahua Denmark | DKK 1,500,000 | Denmark | Denmark | Electronics and information | 100.00% | Establishment | |
| Dahua France | EUR 100,000 | France | France | Electronics and information | 100.00% | Establishment | |
| Dahua Technology Holdings | HKD 10,000,000 | Hong Kong | Hong Kong | Electronics and information | 100.00% | Establishment | |
| Dahua Morocco | MAD 500,000 | Morocco | Morocco | Electronics and information | 100.00% | Establishment | |
| Dahua Italy | EUR 12,000 | Italy | Italy | Electronics and information | 100.00% | Business combination not under common control | |
| Dahua Uzbekistan | UZS 3,200,000,000 | Uzbekistan | Uzbekistan | Electronics and information | 100.00% | Establishment | |
| Dahua Netherlands | EUR 10,000 | Netherlands | Netherlands | Electronics and information | 100.00% | Establishment | |
| Dahua Sri Lanka | LKR 48,000,000 | Sri Lanka | Sri Lanka | Electronics and information | 100.00% | Establishment | |
| Dahua Pakistan | PKR 20,000,000 | Pakistan | Pakistan | Electronics and information | 100.00% | Establishment | |
| Dahua New Zealand | NZD 300,000 | New Zealand | New Zealand | Electronics and information | 100.00% | Establishment | |
| Dahua Thailand | THB 25,000,000 | Thailand | Thailand | Electronics and information | 99.98% | Establishment | |
| Dahua Romania | RON 1,000,000 | Romania | Romania | Electronics and information | 100.00% | Establishment | |
| Dahua Nigeria | NGN 10,000,000 | Nigeria | Nigeria | Electronics and information | 100.00% | Establishment | |
| Dahua Israel | USD 300,000 | Israel | Israel | Electronics and information | 100.00% | Establishment |
Explanations on the fact that the proportion of the shares held by a subsidiary differs from that of voting rights:
(1) The Company previously held 45% equity in Hangzhou Xiaohua Technology Co., Ltd. and accepted 33% equityfrom individual shareholders in 2023. After the change, the Company directly holds 78% equity in Hangzhou XiaohuaTechnology Co., Ltd. and exercises the voting rights according to its equity ratio.
| Dahua Mexico Service | MXN 50,000 | Mexico | Mexico | Electronics and information | 100.00% | Establishment | |
| Huacheng Netherlands | EUR 900,000 | Netherlands | Netherlands | Electronics and information | 100.00% | Establishment | |
| Dahua Japan | JPY 6,000,000 | Japan | Japan | Electronics and information | 100.00% | Establishment | |
| Dahua Qatar | QAR 2,184,000 | Qatar | Qatar | Electronics and information | 100.00% | Establishment | |
| Huacheng Hong Kong | HKD 12,023,000 | Hong Kong | Hong Kong | Electronics and information | 100.00% | Establishment | |
| Dahua Pacific | USD 10,000 | Panama | Panama | Electronics and information | 100.00% | Establishment | |
| Dahua Saudi Arabia | SAR 500,000 | Saudi Arabia | Saudi Arabia | Electronics and information | 100.00% | Establishment | |
| Dahua Bengal | BDT 5,000,000 | Bangladesh | Bangladesh | Electronics and information | 100.00% | Establishment | |
| IMOU Australia | USD 1,000,000 | Australia | Australia | Electronics and information | 100.00% | Establishment | |
| IMOU Vietnam | VND 6,930,000,000 | Vietnam | Vietnam | Electronics and information | 100.00% | Establishment | |
| HuaRay Singapore | USD 100,000 | Singapore | Singapore | Electronics and information | 100.00% | Establishment | |
| HuaRay Korea | KRW 100,000,000 | South Korea | South Korea | Electronics and information | 100.00% | Establishment | |
| HuaRay Germany | EUR 23,000 | Germany | Germany | Electronics and information | 100.00% | Establishment | |
| Dahua Belgium | EUR 100,000 | Belgium | Belgium | Electronics and information | 100.00% | Establishment | |
| Dahua Saudi Arabia | SAR 10,000 | Saudi Arabia | Saudi Arabia | Electronics and information | 100.00% | Establishment | |
| Dahua Azerbaijan | USD 100,000 | Azerbaijan | Azerbaijan | Electronics and information | 100.00% | Establishment | |
| Dahua Vietnam | VND 2,363,600,000 | Vietnam | Vietnam | Electronics and information | 100.00% | Establishment | |
| Dahua Angola | AOA 176,303,000 | Angola | Angola | Electronics and information | 100.00% | Establishment |
(2) Based on the industrial and commercial registration data, the CDB Development Fund holds equity in the Company.According to the cooperation agreement between the Company and CDB Development Fund, CDB DevelopmentFund shall not appoint senior management personnel, such as directors and supervisors, to Dahua Zhilian; regardingits investment, the Company shall pay an annual investment profit of 1.2% to CDB Development Fund throughdividends, repurchase premiums, etc. In addition, the Company shall redeem the CDB Development Fund's equity inDahua Zhilian period by period from 2022 to 2024, using its amount of investment as other non-current liabilities, andreclassifying those due within one year to "non-current liabilities due within one year". The Company effectively holds100% voting rights and equity in Dahua Zhilian.
(3) In 2023, the registered capital of Huacheng Network was increased from RMB 50,000,000 to RMB 77,905,200through capital increase and share expansion several times. Due to the Company's abandonment of the right toincrease capital in the same proportion, the Company's original 51.00% equity was diluted to 32.73%. After the dilutionof equity, the Company is still the largest shareholder of Huacheng Network. Huacheng Network is still a holdingsubsidiary of the Company, and is included in the scope of consolidation of the Company.
(4) In 2023, the registered capital of the holding subsidiary HuaRay Technology was increased from RMB 60,386,500to RMB 78,264,800 through capital increase, share expansion and equity transfer several times. Due to theCompany's abandonment of the right to increase capital in the same proportion and the right of preemption, theCompany's original 42.23% equity was diluted to 32.58%. After the dilution of equity, the Company is still the largestshareholder of HuaRay Technology. The remaining shareholders have a low and dispersed shareholding ratio, andHuaRay Technology is still a holding subsidiary of the Company, and is included the scope of consolidation of theCompany.
(5) In August 2023, the Company acquired 15.00% equity in Huafei Intelligent held by Hangzhou Hua’ao EnterpriseManagement Partnership (Limited Partnership) with a consideration of RMB 13,347,000. After the acquisition of equity,the Company’s original 45.50% equity in Huafei Intelligent was increased to 60.50%, and after the change, theCompany exercises the voting rights according to its equity ratio.
(6) The Company directly holds 45% equity in Zhejiang Huajian Technology Co., Ltd., and as agreed upon, NingboHualing Venture Capital Investment Partnership (Limited Partnership) grants its voting rights of 35% to the Company.The Company effectively holds 80% of the voting rights in Zhejiang Huajian Technology Co., Ltd., which constitutesworking control so as to incorporate it into the scope of consolidation.
2. The transactions that lead to changes in the shareholder's equity in the subsidiaries whilestill has working control over the subsidiary
(1) Explanation of the changes in the shareholder's equity in the subsidiaries
1) In June 2023, the Company acquired the 33.00% equity held by 3 individual shareholders in Hangzhou XiaohuaTechnology Co., Ltd. with a consideration of RMB 3,300,000. After the acquisition of equity, the Company’s original
45.00% equity in Hangzhou Xiaohua Technology Co., Ltd. was increased to 78.00%, and after the change, theCompany exercises the voting rights according to its equity ratio.
2) In August 2023, the Company acquired 15.00% equity in Huafei Intelligent held by Hangzhou Hua’ao EnterpriseManagement Partnership (Limited Partnership) with a consideration of RMB 13,347,000. After the acquisition of equity,
the Company’s original 45.50% equity in Huafei Intelligent was increased to 60.50%, and after the change, theCompany exercises the voting rights according to its equity ratio.
3) In October 2023, the registered capital of the holding subsidiary Pixfra Technology was increased from RMB100,000,000 to RMB 442,140,400 through capital increase and share expansion. The Company’s original 51.00%equity in Pixfra Technology was changed to 75.11%, and after the change, the Company exercises the voting rightsaccording to its equity ratio.
4) In 2023, the registered capital of the holding subsidiary HuaRay Technology was increased from RMB 60,386,500to RMB 78,264,800 through capital increase, share expansion and equity transfer several times. Due to theCompany's abandonment of the right to increase capital in the same proportion and the preemptive right, theCompany's original 42.23% equity was diluted to 32.58%. After the dilution of equity, the Company is still the largestshareholder of HuaRay Technology. The remaining shareholders have a low and dispersed shareholding ratio, andHuaRay Technology is still a holding subsidiary of the Company, and is included the scope of consolidation of theCompany.
5) In 2023, the registered capital of the holding subsidiary Huacheng Network was increased from RMB 50,000,000 toRMB 77,905,200 through capital increase and share expansion several times. Due to the Company's abandonment ofthe right to increase capital in the same proportion, the Company's original 51.00% equity was diluted to 32.73%. Afterthe dilution of equity, the Company is still the largest shareholder of Huacheng Network. Huacheng Network is still aholding subsidiary of the Company, and is included in the scope of consolidation of the Company.
(2) The effect of the transactions on the equity of the minority shareholders and the shareholder's equityattributable to the parent companyUnit: RMB
| Xiaohua Technology | Huafei Intelligent | Xinjiang Information | Pixfra Technology | Huacheng Network | HuaRay Technology | |
| Purchase cost/Disposal consideration | ||||||
| -- Cash | 3,300,000.00 | 13,347,000.00 | ||||
| -- Fair value of non-cash assets | ||||||
| Purchase cost/ Total disposal consideration | 3,300,000.00 | 13,347,000.00 | ||||
| Less: the share of net assets of the subsidiary calculated based on the ratio of equity obtained/disposed | 571,110.85 | 12,733,879.31 | -254,678.93 | -41,017,645.38 | -3,242,181.69 | 157,420,514.59 |
| Difference | 2,728,889.15 | 613,120.69 | 254,678.93 | 41,017,645.38 | 3,242,181.69 | - |
| 157,420,514.59 | ||||||
| Among them: adjust the capital reserve | -2,728,889.15 | -613,120.69 | -254,678.93 | -41,017,645.38 | -3,242,181.69 | 157,420,514.59 |
| Adjusted surplus reserve | ||||||
| Adjusted undistributed profits |
3. Equity in joint venture arrangements or affiliates
(1) Financial summary of non-essential joint ventures and affiliates
Unit: RMB
| Closing balance / amount occurred in the current period | Opening balance / amount occurred in the previous period | |
| Joint ventures: | ||
| The total count of the following items based on the shareholding ratios | ||
| Affiliates: | ||
| Total book value of investments | 727,453,629.75 | 1,461,099,644.55 |
| The total count of the following items based on the shareholding ratios | ||
| --Net profit | -242,631,295.52 | -399,809,570.81 |
| --Other comprehensive income | 9,013,070.41 | -448,230.26 |
| --Total comprehensive income | -233,618,225.11 | -400,257,801.07 |
Note: The affiliate Zhejiang Leapmotor Technology Co., Ltd. has been disposed of in the current period, and theopening balance/amount occurred in the previous period contains the amount of Zhejiang Leapmotor Technology Co.,Ltd.XI. Government Subsidies
1. Government subsidies recognized as the amount receivable at the end of the reportingperiod
□ Applicable ? Not applicable
Reasons for failure to receive the estimated amount of government subsidies at the estimated timepoint
□ Applicable ? Not applicable
2. Liabilities related to government subsidies
? Applicable □ Not applicableUnit: RMB
| Accounting item | Opening balance | The amount of new subsidies in this period | Amount recorded as non-operating revenue in this period | Amount transferred to other income in this period | Other changes in this period | Closing balance | Related to assets/ income |
| Deferred Income | 104,663,047.38 | 61,122,500.00 | 13,941,174.36 | 151,844,373.02 | Related to assets | ||
| Deferred Income | 29,734,600.00 | 14,867,299.98 | 14,867,300.02 | Related to income |
3. Government subsidies recorded into the current profit or loss
? Applicable □ Not applicableUnit: RMB
| Accounting item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Other Incomes | 932,712,195.04 | 980,662,878.33 |
| Non-operating Revenue | 2,100,000.00 |
XII. Risks Relating to Financial Instruments
1. Risks arising from the financial instruments
In the business operation, the Company is facing with various financial risks: credit risk, liquidity risk and market risk(including exchange rate risk, interest rate risk and other price risks).The overall objective of the Company's risk management is to formulate risk management policies that can minimizerisks without affecting the Company's competitiveness and adaptability to changes too much.(I) Credit riskThe credit risk refers to the risk of financial loss to the Company as a result of a counterparty's failure to fulfill itscontractual obligations. The Company is mainly facing with the customer credit risk arising from sales on account.Before signing a new contract, the Company will assess the new customer's credit risk, including external credit ratingand the credibility letter from a bank under some circumstances (if such information is available). The Company hasset a credit limit for sales on account for each customer. Such limit shall be the maximum amount with no additionalapproval needed.The Company ensures that the overall credit risk is within the controllable range through quarterly monitoring of creditratings of existing customers, and monthly review of aging analysis on accounts receivable. When monitoringcustomers' credit risk, the Company groups them according to their credit characteristics. Customers rated as "highrisk" will be placed on the restricted customer list. The Company can provide them with O/A in the future period onlywhen additional approval is obtained. Otherwise they must make relevant payment in advance.
For overseas customers, the Company mainly uses wire transfer as a payment method. According to the creditevaluation of each customer, the Company gives different credit lines and credit account periods, and agrees on thepayment method and account period in the commodity procurement contract between the two parties. After the salesof products, the Company has a dedicated person responsible for tracking, reconciliation, and payment reminding. Inaddition, the Company introduced export credit insurance to ensure that the return risk from overseas customers iswithin controllable range.(II) Liquidity riskLiquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its obligation of settlement by cash orother financial assets.The Company's policy is to ensure that there is sufficient cash to repay the liabilities due. The liquidity risk is under theconcentrated control of the Company's Financial Department. Through monitoring the balance of cash and securitiescashable at any time and rolling forecasting the cash flow in the next 12 months, the Financial Department ensuresthat the Company has sufficient funds to repay its debts under all reasonable predictions.The financial liabilities of the Company are listed as follows based on the undiscounted contractual cash flow:
Unit: RMB
| Item | December 31, 2023 | ||
| Within 1 year | 1 years or above | Total | |
| Short-term loan | 961,559,707.96 | 961,559,707.96 | |
| Notes Payable | 3,296,294,946.26 | 3,296,294,946.26 | |
| Accounts Payable | 5,815,123,195.55 | 5,815,123,195.55 | |
| Other Payables | 812,424,146.52 | 812,424,146.52 | |
| Non-current Liabilities Due within 1 Year | 924,321,195.99 | 924,321,195.99 | |
| Long-term loan | |||
| Lease Liabilities | 187,049,189.60 | 187,049,189.60 | |
| Total | 11,809,723,192.28 | 187,049,189.60 | 11,996,772,381.88 |
| Item | December 31, 2022 | ||
| Within 1 year | 1 years or above | Total | |
| Short-term loan | 260,776,817.68 | 260,776,817.68 | |
| Notes Payable | 4,364,097,761.17 | 4,364,097,761.17 | |
| Accounts Payable | 7,340,277,388.29 | 7,340,277,388.29 | |
| Other Payables | 1,004,056,999.91 | 1,004,056,999.91 | |
| Non-current Liabilities Due within 1 Year | 2,612,356,720.16 | 2,612,356,720.16 | |
| Long-term loan | 12,189,009.07 | 460,171,666.67 | 472,360,675.74 |
| Lease Liabilities | 209,266,176.61 | 209,266,176.61 | |
| Total | 15,593,754,696.28 | 669,437,843.28 | 16,263,192,539.56 |
(III) Market RiskThe market risk of financial instruments refers to the risk of fluctuation at fair value of financial instruments or futurecash flows with the change of market prices, including exchange rate risks, interest rate risks and other price risks.
1. Interest rate risk
The interest rate risk refers to the risk in which the fair value or future cash flow of financial instruments changes dueto the change of market interest rate. The interest rate risk faced with by the Company is mainly from bank loans. TheCompany's assets and liabilities relating to interest rate are respectively bank deposits and short-term loans, whoseinterest rate risk is low.
2. Exchange rate risk
The exchange rate risk refers to the risk in which the fair value or future cash flow of financial instruments changes dueto the change of foreign exchange rate. The Company will try its best to match the revenues with the expenses inforeign currency, to lower the exchange rate risk. In addition, the Company may also sign forward foreign exchangecontracts or currency swap contracts to avoid exchange rate risks.The exchange rate risk faced with by the Company is mainly from financial assets and liabilities in USD. The amountsof assets and liabilities in foreign currencies and converted into RMB are listed as below:
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Cash and Bank Balances | 1,211,603,667.27 | 3,821,528,161.46 | 5,033,131,828.73 | 1,014,793,102.46 | 593,320,421.14 | 1,608,113,523.60 |
| Accounts receivable | 3,780,152,844.06 | 2,615,801,053.40 | 6,395,953,897.46 | 4,171,664,421.39 | 2,134,877,260.22 | 6,306,541,681.61 |
| Accounts Payable | 734,434,093.99 | 242,813,777.12 | 977,247,871.11 | 1,764,995,765.35 | 342,688,103.07 | 2,107,683,868.42 |
| Total | 5,726,190,605.32 | 6,680,142,991.98 | 12,406,333,597.30 | 6,951,453,289.20 | 3,070,885,784.43 | 10,022,339,073.63 |
2. Financial assets
(1) Classification of transfer methods
? Applicable □ Not applicableUnit: RMB
| Transfer method | Nature of financial assets transferred | Amount of financial assets transferred | Derecognition | Basis for judgment of derecognition |
| Endorsement or discounting | Unexpired bank acceptance bills and commercial acceptance bills in the notes receivable | 39,320,431.95 | Not derecognised | The bank acceptance bills and commercial acceptance bills in the notes receivable are accepted by the banks or enterprises with low credit ratings. The recourses of the endorsed or discounted bills will not be impaired, but the credit risks and deferred payment risks related to the notes have not been transferred yet. The notes are therefore not derecognized. |
| Endorsement or discounting | Unexpired bank acceptance bills in the receivables | 92,886,786.46 | Derecognised | The bank acceptance bills in the receivables financing are accepted by the banks with high |
| financing | credit ratings, incurring low credit risks and deferred payment risks, and the interest rate risks related to the notes have been transferred to the banks. It can be judged that the major risks and rewards of the notes title have been transferred and the notes are therefore derecognized. | |||
| Discounting or factoring | Unexpired supply chain finance in the accounts receivable | 7,238,385.64 | Not derecognised | The supply chain finance in the accounts receivable is accepted by enterprises. The recourses of the discounted or factored accounts receivable will not be impaired, but the credit risks and deferred payment risks related to the accounts receivable have not been transferred yet. The accounts receivable are therefore not derecognized. |
| Factoring of accounts receivable | Unexpired accounts receivable | 14,041,249.40 | Derecognised | The accounts receivable transferred in accordance with the non-recourse accounts receivable factoring agreement are derecognised as the majors risks and rewards of their title have been transferred. |
| Total | 153,486,853.45 |
(2) Financial assets derecognised due to transfer
? Applicable □ Not applicableUnit: RMB
| Item | Transfer method of financial assets | Amount of financial assets derecognized | Gains or losses related to derecognition |
| Unexpired bank acceptance bills in the receivables financing | Endorsement/Discounting | 92,886,786.46 | -1,207,777.45 |
| Accounts receivable | Factoring of accounts receivable | 14,041,249.40 | -331,453.99 |
| Total | 106,928,035.86 | -1,539,231.44 |
XIII. Disclosure of Fair Values
1. Fair values of the assets and liabilities at the end of the period
Unit: RMB
| Item | Fair values at period-end | |||
| First level measurement ata fair value | Second level measurement at fair value | Third level measurement at fair value | Total | |
| I. Constant | -- | -- | -- | -- |
| measurement at fair value | ||||
| (I) Trading Financial Assets | 1,470,000.00 | 1,470,000.00 | ||
| 1. Financial assets measured at fair value through profit or loss in this period | 1,470,000.00 | 1,470,000.00 | ||
| (1) Investment in debt instrument | ||||
| (2) Investment in equity instrument | ||||
| (3) Derivative Financial Assets | ||||
| (4) Others | 1,470,000.00 | 1,470,000.00 | ||
| (II) Receivables Financing | 810,713,267.86 | 810,713,267.86 | ||
| (III) Other Non-current Financial Assets | 1,056,959,784.04 | 478,782,601.67 | 1,535,742,385.71 | |
| 1. Financial assets measured at fair value through profit or loss in this period | 1,056,959,784.04 | 478,782,601.67 | 1,535,742,385.71 | |
| (1) Investment in debt instrument | ||||
| (2) Investment in equity instrument | 478,782,601.67 | 478,782,601.67 | ||
| (3) Derivative Financial Assets | ||||
| (4) Others | 1,056,959,784.04 | 1,056,959,784.04 | ||
| 2. Financial assets that are designated to be measured at fair value through profit or loss in this period | ||||
| (1) Investment in debt instrument | ||||
| (2) Others | ||||
| Total assets constantly measured at fair value | 1,869,143,051.90 | 478,782,601.67 | 2,347,925,653.57 | |
| (Ⅳ) Transactional Financial Liabilities | 61,400.12 | 61,400.12 | ||
| Of which: Derivative financial liabilities | 61,400.12 | 61,400.12 | ||
| Total amount of liabilities constantly measured at their fair values | 61,400.12 | 61,400.12 | ||
| II. Non-constant measurement at fair values | -- | -- | -- | -- |
2. For the continuous and non-continuous second-level fair value measurement items, thevaluation techniques adopted and the qualitative and quantitative information of importantparametersThe fair value of the derivative financial assets/derivative financial liabilities is measured and recognized with referenceto different parameters determined by the financial institutions on the basis of the market conditions then existing aswell as the remaining term and transaction term of such transaction.Due to the short remaining term of the receivables financing, the book value is close to the fair value, and the nominalamount is used as the fair value.Other non-current financial assets are valued on the basis of quotations provided by financial institutions.
3. For the continuous and non-continuous third-level fair value measurement items, thevaluation techniques adopted and the qualitative and quantitative information of importantparametersEvaluate the value and net book assets based on the income method and asset-based method.
4. The fair value of financial assets and financial liabilities not measured at fair value
The fair value of financial assets and financial liabilities measured by the Company at amortized cost is equivalent tothe book value.
XIV. Related Parties and Related-party Transactions
1. The Company's Parent Company
| Name of parent company | Registered Address | Business Nature | Registered Capital | Shareholding ratio of the parent company | Proportion of voting rights of the parent company |
| Fu Liquan | The controlling shareholder and actual controller | 31.08% | 31.08% | ||
| Chen Ailing | The actual controller | 2.16% | 2.16% |
The final controllers of the Company are Mr. Fu Liquan and Ms. Chen Ailing.
2. Information about the Company's subsidiaries
For details of subsidiaries of the Company, see Note "X. Equities in Other Entities".
3. Information about the Company's joint ventures and affiliates
For details of significant joint ventures and affiliates of the Company, see Note "X. Equities in Other Entities".Here are the information about other joint ventures and affiliates that have related-party transactions with the Companyin the current period or have balance from related-party transactions with the Company in the previous period:
| Names of joint ventures and affiliates | Relationship with the Company |
| Intelbras S.A. | Affiliate |
| Guangdong Zhishi Digital Technology Co., Ltd. | Affiliate |
| Zhejiang Leapmotor Technology Co., Ltd. and its affiliates (Note 1) | Former affiliate and enterprise where the actual controller has significant influence |
| Ruicity Digital Technology Co., Ltd. | Affiliate |
| Hangzhou Juhuanyan Information Technology Co., Ltd. | Affiliate |
| Dezhou Shuzhi Information Technology Co., Ltd. | Affiliate |
| Zhejiang Huachuang Vision Technology Co., Ltd. | Affiliate |
| Ningbo Cida Yongshun Intelligent Technology Co., Ltd. | Affiliate |
| Guangxi FTZ Huaqin Wisdom Park Technology Research Institute Co., Ltd. | Affiliate |
| Shaoxing Dahua Security Services Co., Ltd. (Note 2) | Former affiliate |
Other notes:
Note 1: "Zhejiang Leapmotor Technology Co., Ltd. and its affiliates" include a total of eight companies that haverelated transactions with the Company, namely Zhejiang Leapmotor Technology Co., Ltd., Leapmotor Automobile Co.,Ltd., Hangzhou Leapmotor Automobile Sales Service Co., Ltd., Zhejiang Lingxiao Energy Technology Co., Ltd.,Zhejiang Leapmotor Automobile Sales Service Co., Ltd., Jinhua Leapmotor New Energy Automotive Parts TechnologyCo., Ltd., Zhejiang Lingsheng Power Technology Co., Ltd. and Shanghai Leapmotor Automobile Marketing ServiceCo., Ltd,.Note 2: Shaoxing Dahua Security Services Co., Ltd. ended its affiliated relationship in March 2023.
4. Information about other related parties
| Names of other related parties | Relationship between the Company and other related parties |
| Zhejiang Huanuokang Technology Co., Ltd. | Enterprise controlled by the actual controller |
| Huayan Capital (Hangzhou) Private Equity Fund Management Co., Ltd. | Enterprise controlled by the actual controller |
| China Mobile Communications Group Co., Ltd. and its affiliates | Shareholders with shareholding proportion over 5% |
| Hangzhou Nuojia Technology Co., Ltd. (Note 1) | Enterprise once controlled by the spouse of senior manager of the Company |
| Zhejiang Zhihua Internet of Things Technology Co., Ltd. (Note 2) | Subsidiary of a former affiliate |
| Company A and other companies under its control | Related parties |
| Lorex Technology Inc. (Note 3) | Enterprise where the actual controller served as a director within 12 months |
| Lorex Corporation (Note 3) | Enterprise where the actual controller served as a director within 12 months |
| Zhejiang Lancable Technology Co., Ltd. (Note 4) | Enterprise where the actual controller served as a director within 12 months |
| Hangzhou Vision Robot Technology Co., Ltd. (Note 4) | Enterprise significantly influenced by the major shareholder of the Company within 12 months |
| Hangzhou Xintu Technology Co., Ltd. (Note 4) | Enterprise controlled by the major shareholder of the Company within 12 months |
| Zhejiang Huayuxin Technology Co., Ltd. | Enterprise controlled by the actual controller |
Other notes:
Note 1: Hangzhou Nuojia Technology Co., Ltd. was a business controlled by the spouse of a senior manager of theCompany. The spouse disposed of shares and lost the control over the business in January 2022, but it was still
recognized as an associated party within 12 months after the disposal, and the associated relationship ended inJanuary 2023. In February 2023, it was changed to “Hangzhou Nuojia Yunlian Technology Co., Ltd.”Note 2: Zhejiang Zhihua Internet of Things Technology Co., Ltd. was a holding subsidiary of Shaoxing Dahua SecurityServices Co., Ltd. and ended its affiliated relationship in March 2023.Note 3: Lorex Technology Inc. and Lorex Corporation were subsidiaries within the scope of consolidation and 100%equity of them was disposed of on December 27, 2022. In consideration that their actual controller was a formerdirector, they were still deemed to maintain an affiliated relationship within 12 months upon disposal and ended theaffiliated relationship in December 2023.Note 4: Zhejiang Lancable Technology Co., Ltd., Hangzhou Vision Robot Technology Co., Ltd. and Hangzhou XintuTechnology Co., Ltd. ended the affiliated relationship in April 2024.
5. Information about related-party transactions
(1) Related-party transactions involving purchase and selling of merchandise and provisionand acceptance of labor services
Merchandise purchase and acceptance of labor servicesUnit: RMB
| Related parties | Content of the related - party transaction | Amount Occurred in the Current Period | Approved transaction limit | Over the transaction limit or not | Amount Occurred in the Previous Period |
| Company A and other companies under its control | Purchase of materials | 220,043,806.51 | No | 426,715,803.76 | |
| Zhejiang Huachuang Vision Technology Co., Ltd. | Purchase of materials | 86,413,751.62 | No | 28,553,150.81 | |
| China Mobile Communications Group Co., Ltd. and its affiliates | Material procurement, acceptance of services | 65,645,012.10 | No | 29,900,094.13 | |
| Ruicity Digital Technology Co., Ltd. | Purchase of materials | 8,967,655.86 | No | 188,679.25 | |
| Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | Material procurement, acceptance of services | 1,228,401.43 | No | 24,065.76 | |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Material procurement, acceptance of services | 174,659.74 | No | 86,820.97 | |
| Zhejiang Huanuokang Technology Co., Ltd. | Material procurement, acceptance of services | 157,371.67 | No | 426,548.59 | |
| Hangzhou Nuojia Technology Co., | Acceptance of services | No | 743,921.51 |
| Ltd. | |||||
| Zhejiang Lancable Technology Co., Ltd. | Purchase of materials | No | 212,400.00 |
Sales of merchandise and provision of servicesUnit: RMB
| Related parties | Content of the related - party transaction | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Intelbras S.A. | Sales of merchandise | 865,178,578.92 | 885,573,057.86 |
| Lorex Corporation | Sales of merchandise | 478,643,886.67 | |
| Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | Sales of merchandise and provision of services | 311,398,339.87 | 380,507,828.89 |
| China Mobile Communications Group Co., Ltd. and its affiliates | Sales of merchandise and provision of services | 196,450,005.15 | 296,167,428.28 |
| Lorex Technology Inc. | Sales of merchandise | 56,585,936.15 | |
| Ruicity Digital Technology Co., Ltd. | Sales of merchandise | 12,502,503.49 | 26,862,367.12 |
| Ningbo Cida Yongshun Intelligent Technology Co., Ltd. | Sales of merchandise and provision of services | 8,905,782.27 | 8,809,463.47 |
| Zhejiang Huachuang Vision Technology Co., Ltd. | Sales of merchandise and provision of services | 4,227,590.71 | 1,820,337.98 |
| Guangdong Zhishi Digital Technology Co., Ltd. | Sales of merchandise | 3,635,895.54 | 13,638,759.40 |
| Dezhou Shuzhi Information Technology Co., Ltd. | Sales of merchandise and provision of services | 2,199,876.09 | 2,177,472.29 |
| Zhejiang Huanuokang Technology Co., Ltd. | Sales of merchandise | 1,100,912.16 | 3,183,710.56 |
| Guangxi FTZ Huaqin Wisdom Park Technology Research Institute Co., Ltd. | Sales of merchandise | 145,836.73 | |
| Company A and other companies under its control | Sales of merchandise | 30,913.16 | 152,369.23 |
| Zhejiang Lancable Technology Co., Ltd. | Sales of merchandise | 22,761.06 | |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Sales of merchandise | 13,761.08 | 20,973.45 |
| Hangzhou Xintu Technology Co., Ltd. | Sales of merchandise and provision of services | 5,424.92 | 4,716.96 |
| Hangzhou Nuojia Technology Co., Ltd. | Sales of merchandise | 1,014,877.85 | |
| Zhejiang Zhihua Internet of Things Technology Co., Ltd. | Sales of merchandise | 1,769.91 |
(2) Related leasing
The Company being the lessor:
Unit: RMB
| Name of the lessee | Type of the leased assets | Rental income confirmed in this period | Rental income confirmed in the previous period |
| Zhejiang Huanuokang Technology Co., Ltd. | Buildings and constructions | 1,875,248.10 | 738,825.30 |
| Zhejiang Huayuxin Technology Co., Ltd. | Buildings and constructions | 738,194.50 | |
| Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | Buildings and constructions | 268,975.94 | 258,595.24 |
| Huayan Capital (Hangzhou) Private Equity Fund Management Co., Ltd. | Buildings and constructions | 93,489.58 | 29,766.33 |
| Zhejiang Huachuang Vision Technology Co., Ltd. | Buildings and constructions | 20,091.73 | |
| Company A and other companies under its control | Transport equipment | 15,486.73 |
The Company being the lessee:
Unit: RMB
| Name of the lessor | Type of the leased assets | Simplified rental expenses for short-term leases and low-value asset leases (if applicable) | Variable lease payments not included in the measurement of lease liabilities (if applicable) | Rent paid | Interest expense on lease liabilities borne | Increased right-of-use assets | |||||
| Amount Occurred in the Current Period | Amount Occurred in the Previous Period | Amount Occurred in the Current Period | Amount Occurred in the Previous Period | Amount Occurred in the Current Period | Amount Occurred in the Previous Period | Amount Occurred in the Current Period | Amount Occurred in the Previous Period | Amount Occurred in the Current Period | Amount Occurred in the Previous Period | ||
| Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | Machinery and equipment | 1,034,915.00 | 1,034,915.00 | 241,040.11 | 266,401.09 | 8,884,640.73 | |||||
(3) Related guarantee
The Company being the guarantor:
Unit: RMB
| Secured parties | Amount guaranteed | Starting date | Maturity date | Guarantee fulfilled completely or not |
| Zhejiang Dahua Vision Technology | 600,000,000.00 | August 12, 2020 | Two years after the maturity of the debts | Yes |
| Co., Ltd. | in the master contract | |||
| Zhejiang Dahua Vision Technology Co., Ltd. | 330,000,000.00 | August 18, 2020 | Two years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 35,000,000.00 | August 1, 2021 | July 31, 2023 | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 900,000,000.00 | September 27, 2021 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | June 10, 2022 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 350,000,000.00 | July 25, 2022 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 220,000,000.00 | October 13, 2017 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. (guarantee currency is US dollar) | 40,000,000.00 | September 21, 2018 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 530,000,000.00 | April 7, 2020 | March 31, 2024 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | August 15, 2020 | Five years upon expiration of debt period of master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 1,000,000,000.00 | February 4, 2021 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 440,000,000.00 | July 26, 2021 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | October 20, 2021 | Three years after the maturity of the debts in the master | No |
| contract | ||||
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | July 22, 2022 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 600,000,000.00 | September 19, 2022 | September 18, 2024 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 400,000,000.00 | June 9, 2023 | From effective date of the Letter of Guarantee to three years after the maturity date of each loan or any other fund raised under the Credit Agreement or the creditor’s rights in the accounts receivable accepted by Hangzhou Branch of China Merchants Bank or the date of each advance payment. If any specific credit is renewed, the period of guarantee is extended to three years after expiration of the renewed period. | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | June 25, 2023 | From the period of guarantee to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 400,000,000.00 | July 24, 2023 | From date of maturity of each principal debt to three years after the date of maturity of the last-to-expire principal debt under the master contract. | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 500,000,000.00 | July 25, 2023 | From effective date of the Maximum Amount Guarantee Contract to three years from the date of maturity of each debt under the Credit Business Agreement. | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 900,000,000.00 | September 26, 2023 | As per every single credit business requested by Dahua Technology as a debtor, from date of execution of the master contract for each credit business to three years after the date of maturity of the debts of the | No |
| debtor under such master contract | ||||
| Zhejiang Dahua Vision Technology Co., Ltd. | 330,000,000.00 | September 26, 2023 | Three years from the date of maturity of the debts of the debtor set out in the master contract for creditor’s rights | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | November 20, 2023 | Three years from the date immediately following the date of honor by Qingchun Branch of Industrial and Commercial Bank of China | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 200,000,000.00 | November 10, 2021 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 80,000,000.00 | March 25, 2022 | December 31, 2023 | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. (guarantee currency is US dollar) | 60,000,000.00 | May 1, 2022 | One years upon expiration of debt period of master contract | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 10,000,000.00 | May 1, 2022 | One years upon expiration of debt period of master contract | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. (guarantee currency is US dollar) | 55,000,000.00 | May 14, 2022 | May 14, 2023 | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 160,000,000.00 | June 10, 2022 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 160,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. (guarantee currency is US dollar) | 22,000,000.00 | November 16, 2022 | May 14, 2023 | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 160,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 300,000,000.00 | March 28, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 165,000,000.00 | July 26, 2021 | Three years after the maturity of the debts in the master | No |
| contract | ||||
| Zhejiang Dahua Zhilian Co., Ltd. (guarantee currency is US dollar) | 5,000,000.00 | December 3, 2021 | December 2, 2024 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 200,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 150,000,000.00 | September 19, 2022 | September 18, 2024 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 160,000,000.00 | June 9, 2023 | From effective date of the Letter of Guarantee to three years after the maturity date of each loan or any other fund raised under the Credit Agreement or the creditor’s rights in the accounts receivable accepted by Hangzhou Branch of China Merchants Bank or the date of each advance payment. If any specific credit is renewed, the period of guarantee is extended to three years after expiration of the renewed period. | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 120,000,000.00 | June 19, 2023 | June 18, 2024 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 350,000,000.00 | June 19, 2023 | June 18, 2024 | No |
| Zhejiang Dahua Zhilian Co., Ltd. (guarantee currency is US dollar) | 12,500,000.00 | July 13, 2023 | July 12, 2024 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 500,000,000.00 | July 24, 2023 | From date of maturity of each principal debt to three years after the date of maturity of the last-to-expire principal debt under the master contract. | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 60,000,000.00 | November 10, 2021 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua System Engineering Co., Ltd. | 40,000,000.00 | June 10, 2022 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua System Engineering Co., Ltd. | 40,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Dahua System Engineering | 50,000,000.00 | July 25, 2022 | Three years after the maturity of the debts | Yes |
| Co., Ltd. | in the master contract | |||
| Zhejiang Dahua System Engineering Co., Ltd. | 10,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 5,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 40,000,000.00 | June 9, 2023 | From effective date of the Letter of Guarantee to three years after the maturity date of each loan or any other fund raised under the Credit Agreement or the creditor’s rights in the accounts receivable accepted by Hangzhou Branch of China Merchants Bank or the date of each advance payment. If any specific credit is renewed, the period of guarantee is extended to three years after expiration of the renewed period. | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 50,000,000.00 | July 25, 2023 | From effective date of the Maximum Amount Guarantee Contract to three years from the date of maturity of each debt under the Credit Business Agreement. | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 1,602,100.00 | September 11, 2023 | One year from execution of the project contract or 6 months in which the system runs stably after going live (whichever is later) | No |
| Dahua Technology (HK) Limited (guarantee currency is US dollar) | 2,000,000.00 | March 25, 2022 | March 25, 2023 | Yes |
| Dahua Technology (HK) Limited (guarantee currency is US dollar) | 2,000,000.00 | April 21, 2023 | April 21, 2024 | No |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guaranteed currency is US dollar) | 1,000,000.00 | September 1, 2021 | December 1, 2023 | Yes |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guaranteed currency is US dollar) | 5,000,000.00 | October 21, 2022 | October 20, 2023 | Yes |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guaranteed currency is US dollar) | 1,000,000.00 | October 18, 2023 | October 20, 2024 | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 50,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 55,000,000.00 | July 26, 2021 | Three years after the maturity of the debts in the master contract | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 65,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Dahua Technology UK Limited (guaranteed currency is GBP) | 1,160,000.00 | August 12, 2020 | Sign the Termination Notice Letter | No |
| Zhejiang Huayixin Technology Co., Ltd. | 10,000,000.00 | April 29, 2022 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Huayixin Technology Co., Ltd. (guarantee currency is US dollar) | 2,000,000.00 | May 16, 2022 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Huayixin Technology Co., Ltd. | 10,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Huayixin Technology Co., Ltd. | 10,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Zhejiang Huayixin Technology Co., Ltd. | 2,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Huayixin Technology Co., Ltd. | 8,000,000.00 | October 21, 2022 | September 18, 2024 | No |
| Zhejiang Fengshi Technology Co., Ltd. | 20,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Fengshi Technology Co., Ltd. | 20,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the | Yes |
| Hangzhou Branch of China Merchants Bank within the credit extension period | ||||
| Zhejiang Fengshi Technology Co., Ltd. | 100,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Fengshi Technology Co., Ltd. | 20,000,000.00 | October 21, 2022 | September 18, 2024 | No |
| Zhejiang Fengshi Technology Co., Ltd. | 20,000,000.00 | June 25, 2023 | From the period of guarantee to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | No |
| Jiangsu Huaruipin Technology Co. Ltd. | 10,000,000.00 | October 20, 2021 | Three years after the maturity of the debts in the master contract | Yes |
| Jiangsu Huaruipin Technology Co. Ltd. | 10,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Jiangsu Huaruipin Technology Co. Ltd. | 10,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Jiangsu Huaruipin Technology Co. Ltd. | 8,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Jiangsu Huaruipin Technology Co. Ltd. | 15,000,000.00 | October 21, 2022 | September 18, 2024 | No |
| Zhejiang Huaxiao Technology Co., Ltd. | 10,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Huaxiao Technology Co., Ltd. | 10,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Zhejiang Huaxiao Technology Co., Ltd. | 2,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Huaxiao Technology Co., Ltd. | 8,000,000.00 | October 21, 2022 | September 18, 2024 | No |
| Xi'an Dahua Zhilian Technology Co., Ltd. | 50,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Xi'an Dahua Zhilian Technology Co., Ltd. | 50,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Xi'an Dahua Zhilian Technology Co., Ltd. | 100,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Xi'an Dahua Zhilian Technology Co., Ltd. | 25,000,000.00 | October 21, 2022 | September 18, 2024 | No |
| Xi'an Dahua Zhilian Technology Co., Ltd. | 50,000,000.00 | June 25, 2023 | From the period of guarantee to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | No |
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | 50,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | 50,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | 30,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | 50,000,000.00 | June 25, 2023 | From the period of guarantee to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | No |
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | 100,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | 80,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | 80,000,000.00 | June 25, 2023 | From the period of guarantee to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | No |
| Changsha Dahua Technology Co., Ltd. | 10,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Changsha Dahua Technology Co., Ltd. | 10,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Changsha Dahua Technology Co., Ltd. | 30,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Changsha Dahua Technology Co., Ltd. | 20,000,000.00 | October 21, 2022 | September 18, 2024 | No |
| Changsha Dahua Technology Co., Ltd. | 10,000,000.00 | June 25, 2023 | From the period of guarantee to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | No |
| Zhejiang Pixfra Technology Co., Ltd. | 5,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note | Yes |
| discounted by the China Merchants Bank within the credit extension period | ||||
| Zhejiang Pixfra Technology Co., Ltd. | 5,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Zhejiang Pixfra Technology Co., Ltd. | 5,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Huafei Intelligent Technology CO., LTD. | 5,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Huafei Intelligent Technology CO., LTD. | 2,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Huajian Technology Co., Ltd. | 5,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Zhejiang Huajian Technology Co., Ltd. | 5,000,000.00 | June 9, 2023 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the Hangzhou Branch of China Merchants Bank within the credit extension period | Yes |
| Zhejiang Huajian Technology Co., Ltd. | 2,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Hangzhou Xiaohua Technology CO., LTD. | 5,000,000.00 | June 10, 2022 | From effective date of the Commitment Letter to three years after the maturity date of each note discounted by the China Merchants Bank within the credit extension period | Yes |
| Hangzhou Xiaohua Technology CO., LTD. | 2,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 5,000,000.00 | August 25, 2022 | August 25, 2025 | No |
| Dahua Technology France Sas (guaranteed currency is EUR) | 145,690.20 | December 7, 2023 | August 31, 2019 | No |
The Company being the secured partyN/A
(4) Asset transfer and debt restructuring of related parties
Unit: RMB
| Related parties | Content of the related - party transaction | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Zhejiang Huachuang Vision Technology Co., Ltd. | Selling of fixed assets | 612,608.16 | |
| Zhejiang Huanuokang Technology Co., Ltd. | Selling of fixed assets | 2,792.34 | 3,078.06 |
| Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | Procurement of fixed assets | 842,105.08 | |
| China Mobile Communications Group Co., Ltd. and its affiliates | Procurement of fixed assets | 1,767,786.05 | |
| Zhejiang Huachuang Vision Technology Co., Ltd. | Procurement of fixed assets | 40,630.42 |
(5) Remuneration to key management personnel
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Salary of key management personnel | 22,009,460.55 | 22,367,156.79 |
(6) Other related-party transactions
(1) On February 17, 2023, the Company convened the 39th meeting of the 7th board of directors and the 27th meetingof the 7th board of supervisors, during which the "Proposal on Capital Increase by Certain Senior Management andCore Employees of the Company and Related Transactions to the Planned Spin-off Subsidiary" was deliberated andapproved. It was agreed that some senior managers and core employees of the Company increased the capital ofRMB 6,049,190 to the holding subsidiary Zhejiang HuaRay Technology Co., Ltd. (hereinafter referred to as “HuaRayTechnology”) (where the registered capital was increased by RMB 1,675,676 and the balance was included in thecapital reserves). 11 natural persons consisting of senior managers including Zhao Yuning, Zhu Jiantang, Xu Zhicheng,Liu Ming, Wu Jian, Li Zhijie, Song Ke and Xu Qiaofen, the supervisor Zheng Jieping and core employees includingHao Chunshan and Chenqiang increased directly the capital by RMB 4,839,353 in total, and the management teamand core employees of the Company increased the capital by RMB 1,209,837 in total through holding shares in theplatforms including Hangzhou Jurui Lingyi Enterprise Management Partnership (Limited Partnership) and HangzhouJurui Lingsan Enterprise Management Partnership (Limited Partnership). After this capital increase, the equity of theCompany in HuaRay Technology is changed from 42.2280% to 41.0878%, and HuaRay Technology is still a holdingsubsidiary of the Company covered by the Company’s consolidated statements.
(2) On March 17, 2023, the Proposal on Capital Increase and Share Expansion in the Holding Subsidiary to IntroduceInvestors and Related Transactions was reviewed and approved at the 40th session of the 7th board of directors heldby the Company. It was agreed that the holding subsidiary of Zhejiang HuaRay Technology Co., Ltd. introducedthrough capital increase and share expansion a total of 8 investors (hereinafter referred to as “Investors”) including
Yibin Lvneng Equity Investment Partnership (Limited Partnership), Wuxi Xinchuang No.1 Venture Capital InvestmentPartnership (Limited Partnership), Hefei Guoxuan High-tech Power Energy Co., Ltd. and Zhu Jiangming. The investorsplanned to inject a total of RMB 260,000,061 yuan in cash into HuaRay Technology (RMB 8,934,710 yuan asadditional registered capital, with the remainder credited to capital surplus), thereby collectively obtaining a 12.58%equity in HuaRay Technology after capital increase. Following this capital increase, the Company's equity stake inHuaRay Technology changed from 41.0878% to 35.9171%. HuaRay Technology continues to be a holding subsidiarywithin the consolidated financial statements of the Company.
(3) On April 7, 2023, the Proposal on Giving up the Holding Subsidiary's Right of First Refusal (ROFR) and Related-party Transactions was reviewed and approved at the 41st meeting of the 7th board of directors held by the Company,where Huashi Investment intended to transfer its 20% equity in Wisualarm Technology to the employee shareholdingplatforms and core management of Wisualarm Technology. The employee shareholding platforms Hangzhou Huaxiao01 Enterprise Management Partnership (Limited Partnership) and Huaxiao 02 Enterprise Management Partnership(Limited Partnership) accepted the 15.5% equity of Huaxiao Technology at a total price of RMB 10,850,000; ZhuJiantang, who is a senior executive of the Company and the chairman of Huaxiao Technology, accepted the 2.4%equity of Huaxiao Technology at a price of RMB 1,680,000; and Wang Feng, who is the CEO of Huaxiao Technology,accepted the 2.10% equity of Huaxiao Technology with a price of RMB 1,470,000. The board of directors agreed togive the ROFR of the above equity.
(4) On April 7, 2023, the Proposal on the Implementation of Equity Incentives and Related-party Transactions of theHolding Subsidiary was reviewed and approved at the 41st session of the 7th board of directors and the 28th sessionof the 7th board of supervisors, where the Company intended to implement an equity incentive for some directors,supervisors and senior executives of the Company and the core employees of the holding subsidiary HangzhouHuacheng Network Technology Co., Ltd. through capital increase in Huacheng Network. In this equity incentive, theincentive objects increased the capital of Huacheng Network by RMB 25,243,400.06 in total directly or indirectlythrough the shareholding platforms (where the registered capital was increased by RMB 7,163,033 and the balancewas included in the capital reserves), where: the director of the Company Zhao Yuning, the supervisor Zheng Jiepingand the senior executives including Liu Ming, Zhu Jiantang, Li Zhijie, Xu Zhicheng, Wu Jian, Song Ke and Xu Qiaofenincreased the capital of Huacheng network by RMB 7,881,049.75 in total (where a new registered capital of RMB2,236,316 was obtained); the core employees of the Company including Hao Chunshan and Chen Qiang increasedthe capital of Huacheng Network by RMB 2,014,624.08 in total (where a new registered capital of RMB 571,667 wasobtained); the chairman of Huacheng Network Ying Yong and the general manager Xie Yun increased the capital ofHuacheng Network by RMB 11,564,937.51 (where a new registered capital of RMB 3,281,651 was obtained); the coreemployees of Huacheng Network increased the capital of Huacheng Network by RMB 3,782,788.71 in total (where anew registered capital of RMB 1,073,399 was obtained) through Hangzhou Chengyi No. 1 Enterprise ManagementPartnership (Limited Partnership) (which is a shareholding entity established with the contributions of core employeesof Huacheng Network, hereinafter referred to as “Employee Shareholding Platform”). The Company gave up thepriority to subscribe for the above new registered capital. Meanwhile, in order to adjust the shareholding form of someincentive objects in Huacheng Network, the Company intended to transfer the contribution of RMB 302,260 indirectlyheld by its directors and senior directors including Zhao Yuning, Zhu Jiantang, Li Zhijie, Xu Zhicheng, Wu Jian, SongKe and Xu Qiaofen in Huacheng Network through Ningbo Huayu Investment Management Partnership Enterprise(Limited Partnership) according to the Management Methods for Business Startup and Investment of Core Employeesto such directors and senior executives for their direct holding at the price of RMB 218,745.56 by which they previouslyobtained such contribution. The board of directors of the Company consented to the decision of Ningbo Huayu totransfer the equity in Huacheng Network to the above directors and senior executives, and gave up the right ofpreemption. Following the completion of this equity incentive implementation, the Company's equity stake in HuachengNetwork changed from 51.00% to 44.61%, while Huacheng Network continues to be a holding subsidiary within theconsolidated financial statements of the Company.
(5) On June 25, 2023, the Proposal on the Capital Increase, Implementation of Equity Incentives and Related-partyTransactions of the Holding Subsidiary was reviewed and approved at the 45th session of the 7th board of directorsand the 32nd session of the 7th board of supervisors, where the Company intended to increase the capital of theholding subsidiary Zhejiang Pixfra Technology Co., Ltd. by RMB 53,986.47 (where the registered capital wasincreased by RMB 28,109.169) by assessing and valuing the imaging business-related asset groups. The executivedirector of Pixfra Technology Jiang Xiaolai and the general manager Yang Zhiqiang directly increased the capital ofPixfra Technology by RMB 1,238,000 and RMB 2,642,500 respectively at a price of RMB 1/registered capital. TheCompany gave up the priority to subscribe for the above new registered capital. After the above transaction wascompleted, the equity of the Company in Pixfra Technology is changed from 51.00% to 75.11%, and the registeredcapital of Pixfra Technology is increased from RMB 100,000,000 to RMB 442,140,448. Pixfra Technology is still a
holding subsidiary of the Company covered by the Company’s consolidated statements.
(6) During the reporting period, the Company repurchased the equity held by the employees in the holding subsidiaryHangzhou Xiaohua Technology Co., Ltd. with the consideration of RMB 1/registered capital based on its businessstrategy and arrangement for Xiaohua Technology, where the Company accepted the 1% equity held by Zuo Pengfeiin Xiaohua at a transaction price of RMB 100,000.
(7) During the reporting period, the Company repurchased the 15% equity held by the employee shareholding platformHangzhou Hua’ao Enterprise Management Partnership (Limited Partnership) at a price of RMB 1.7796/registeredcapital which was the original price for the employees to obtain the equity in the holding subsidiary Zhejiang HuafeiIntelligent Technology Co., Ltd. based on its business strategy and arrangement for Huafei Intelligent, and thetransaction price totaled RMB 13,347,000.
(8) During the reporting period, in consideration of the strategy and actual business development of the holdingsubsidiary Huacheng, Huacheng introduced a capital of RMB 44,200,000 in total from China Mobile Capital HoldingsCo., Ltd. through capital increase and share expansion (where the corresponding new registered capital was RMB9,717,716), and after the capital increase, China Mobile Capital Holdings Co., Ltd. held 12.82% equity in Huacheng.
(9) The Proposal on the Transfer of Equity and Related-party Transactions of the Joint-stock Companies was reviewedand approved at the 3rd session of the 8th board of directors held by the Company on October 26, 2023 and the 3rdinterim shareholders' meeting in 2023 held on November 6, 2023. It was agreed that the Company transferred90,000,000 shares (including 45,000,000 “Fully-tradable” H shares and 45,000,000 domestic shares) of ZhejiangLeapmotor Technology Co., Ltd. to STELLANTIS N.V. at a price of HKD 3,492,900,000, and after the transaction wascompleted, the Company no longer held any shares in Leapmotor.
6. Receivables and payables of the related parties
(1) Receivables
Unit: RMB
| Item Name | Related parties | Closing balance | Opening balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Accounts receivable | Intelbras S.A. | 399,216,383.81 | 19,960,819.19 | 397,867,692.70 | 19,895,705.61 |
| Accounts receivable | China Mobile Communications Group Co., Ltd. and its affiliates | 140,286,722.77 | 15,390,276.69 | 169,771,631.78 | 13,418,528.87 |
| Accounts receivable | Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | 158,504,082.59 | 7,998,998.48 | 125,228,191.88 | 6,287,574.59 |
| Accounts receivable | Zhejiang Huachuang Vision Technology Co., Ltd. | 1,503,214.40 | 75,211.10 | 66,484,746.14 | 6,468,047.41 |
| Accounts receivable | Ruicity Digital Technology Co., Ltd. | 18,610,308.67 | 1,161,880.61 | 18,091,127.92 | 904,556.40 |
| Accounts receivable | Ningbo Cida Yongshun Intelligent Technology Co., Ltd. | 4,955,930.01 | 247,796.50 | 6,944,214.63 | 347,210.73 |
| Accounts | Guangdong | 4,757,349.37 | 267,081.04 | 7,558,397.45 | 377,919.87 |
| receivable | Zhishi Digital Technology Co., Ltd. | ||||
| Accounts receivable | Zhejiang Huanuokang Technology Co., Ltd. | 5,512,687.07 | 766,592.10 | 5,029,172.47 | 319,416.79 |
| Accounts receivable | Company A and other companies under its control | 2,708,124.52 | 1,194,095.64 | 2,703,192.68 | 694,554.83 |
| Accounts receivable | Hangzhou Juhuanyan Information Technology Co., Ltd. | 1,208,000.00 | 344,113.20 | ||
| Accounts receivable | Zhejiang Lancable Technology Co., Ltd. | 15,000.00 | 750.00 | ||
| Accounts receivable | Hangzhou Xintu Technology Co., Ltd. | 81.60 | 4.08 | 81.66 | 4.08 |
| Accounts receivable | Huayan Capital (Hangzhou) Private Equity Fund Management Co., Ltd. | 181.50 | 9.08 | 181.50 | 9.08 |
| Accounts receivable | Hangzhou Nuojia Technology Co., Ltd. | Not applicable (Note 1) | Not applicable (Note 1) | 652,335.00 | 32,616.75 |
| Accounts receivable | Shaoxing Dahua Security Services Co., Ltd. | Not applicable (Note 1) | Not applicable (Note 1) | 50,000.00 | 25,000.00 |
| Accounts receivable | Hangzhou Xunwei Robotics Technology Co., Ltd. | 850.00 | 42.50 | ||
| Accounts receivable | Guangxi FTZ Huaqin Wisdom Park Technology Research Institute Co., Ltd. | 31,200.00 | 1,560.00 | ||
| Accounts receivable | Lorex Corporation | Not applicable (Note 1) | Not applicable (Note 1) | 421,294,479.95 | 22,971,174.01 |
| Accounts receivable | Lorex Technology Inc. | Not applicable (Note 1) | Not applicable (Note 1) | 1,589,271.42 | 87,438.04 |
| Accounts Prepaid | China Mobile Communications Group Co., Ltd. and its affiliates | 473,044.59 | |||
| Accounts Prepaid | Company A and other companies under its control | 685,807.08 | |||
| Contract Assets | China Mobile Communications | 7,708,740.44 | 1,807,246.75 | 7,126,589.32 | 1,219,481.49 |
| Group Co., Ltd. and its affiliates | |||||
| Contract Assets | Ruicity Digital Technology Co., Ltd. | 206,733.38 | 20,141.74 | 481,393.33 | 24,069.67 |
| Other Receivables | China Mobile Communications Group Co., Ltd. and its affiliates | 1,965,652.24 | 265,848.14 | 1,523,267.68 | 401,163.38 |
| Other Receivables | Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | 64,850.00 | 3,242.50 |
Note 1: It ended the affiliated relationship in 2023;
(2) Payables
Unit: RMB
| Item Name | Related parties | Closing balance | Opening balance |
| Accounts Payable | China Mobile Communications Group Co., Ltd. and its affiliates | 38,418,336.92 | 40,781,816.94 |
| Accounts Payable | Zhejiang Huachuang Vision Technology Co., Ltd. | 12,132,312.24 | 4,578,103.79 |
| Accounts Payable | Zhejiang Huanuokang Technology Co., Ltd. | 61,513.26 | 586,402.95 |
| Accounts Payable | Ruicity Digital Technology Co., Ltd. | 9,167,655.86 | 200,000.00 |
| Accounts Payable | Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | 730,299.40 | 19,080.00 |
| Accounts Payable | Zhejiang Lancable Technology Co., Ltd. | 3,970.00 | 175,176.90 |
| Accounts Payable | Hangzhou Nuojia Technology Co., Ltd. | Not applicable (Note 1) | 1,346,249.09 |
| Contract liabilities | China Mobile Communications Group Co., Ltd. and its affiliates | 12,139,953.98 | 7,772,167.32 |
| Contract liabilities | Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | 1,648,066.02 | 491,074.23 |
| Contract liabilities | Hangzhou Xintu Technology Co., Ltd. | 1,362.58 | 1,362.62 |
| Contract liabilities | Dezhou Shuzhi Information Technology Co., Ltd. | 105,185.84 | |
| Contract liabilities | Zhejiang Zhihua Internet of Things Technology Co., Ltd. | Not applicable (Note 1) | 2,830.19 |
| Contract liabilities | Zhejiang Huanuokang Technology Co., Ltd. | 340,855.09 | |
| Contract liabilities | Zhejiang Huayuxin Technology Co., Ltd. | 0.02 | |
| Other Payables | China Mobile Communications Group Co., Ltd. and its affiliates | 5,363,787.00 | 1,070,000.00 |
| Other Payables | Zhejiang Leapmotor Technology Co., Ltd. and its affiliates | 173,520.00 | 173,520.00 |
| Other Payables | Zhejiang Huanuokang Technology Co., Ltd. | 63,070.00 | 63,070.00 |
Note 1: It ended the affiliated relationship in 2023;XV. Share-based Payment
1. Overview of share-based payment
? Applicable □ Not applicableUnit: RMB
| Categories of Objects | Granted in the Current Period | Exercised in the Current Period | Unlocked in the Current Period | Expired in the Current Period | ||||
| Quantity | Amount | Quantity | Amount | Quantity | Amount | Quantity | Amount | |
| Senior managers, other managers and business backbones | 31,795,580.00 | 259,451,932.80 | ||||||
| Total | 31,795,580.00 | 259,451,932.80 | ||||||
Stock options or other equity instruments outstanding at the end of the period? Applicable □ Not applicable
| Categories of Objects | Stock Options Outstanding at the End of the Period | Other Equity Instruments Outstanding at the End of the Period | ||
| Range of Exercise Price | Remaining Period of the Contract | Range of Exercise Price | Remaining Period of the Contract | |
| Senior managers, other managers and business backbones | RMB 16.59/share | 6-30 months | RMB 8.16/share | 6-30 months |
Other notes:
(1) The employees of the Company and its subsidiaries hold the equity of the subsidiary HuaRay Technology throughcapital increase, direct or indirect equity transfers. According to the fair value of the investors recently introduced bythe subsidiary Huaray Technology, the confirmed share-based payment fee is RMB 100,553,280.70.
(2) The employees of the Company and its subsidiaries hold the equity of Huacheng Network through capital increase,direct or indirect equity transfers. According to the fair value of the investors recently introduced by Huacheng Network,the confirmed share-based payment fee is RMB 5,355,507.96.
(3) The employees of the Company and its subsidiaries hold the equity of Pixfra Technology through capital increase,direct or indirect equity transfers. According to the fair value of the investors recently introduced by Pixfra Technology,the confirmed share-based payment fee is RMB 5,071,951.59.
2. Situation of equity-settled share-based payment
? Applicable □ Not applicableUnit: RMB
| The method for determining the fair value of equity instruments on the day of granting | The fair value of the restricted stocks shall be determined based on the stock price and the grant cost of the restricted stocks or stock price of the most recent external investor entry as at the grant date, while the fair value of the stock options shall be determined under the Black-Scholes Model |
| The basis for determining the amount of exercisable equity instruments | Estimated according to equity instruments held by the employees |
| Reason for the significant difference between the estimation of current period and the previous period | N/A |
| The accumulated amount of equity-settled share-based payment counted into the capital reserve | 367,198,819.22 |
| Amount of equity-settled share-based payment confirmed in current period | 288,440,579.53 |
3. Situation of cash-settled share-based payment
□ Applicable ? Not applicable
4. Share-based payment in the current period
? Applicable □ Not applicableUnit: RMB
| Categories of Objects | Equity-settled Share-based Payment | Cash-settled Share-based Payment |
| Senior managers, other managers and business backbones | 288,440,579.53 | |
| Total | 288,440,579.53 |
5. Modification and termination of share-based payment
According to the Proposal on the Company's Stock Option and Restricted Stock Incentive Plan in 2022 (AmendedDraft) and its Abstracts and the Proposal on the Company’s Measures for the Assessment and Administration of theImplementation of the Stock Option and Restricted Stock Incentive Plan in 2022 (Amendment), which had beenreviewed and approved at the 44th session of the 7th board of directors and the 2nd interim shareholder’s meeting ofthe Company in 2023, the Company amended the Company-level performance assessment indicators in the StockOption and Restricted Stock Incentive Plan in 2022.After the amendment, the performance assessment indicators for the stock options and restricted stocks are shown inthe following table:
| Period of Unlocking | Performance Assessment Indicator |
| First period of unlocking | Based on the operating revenue in 2021, the annual revenue growth rate in 2022 was not less than 16%; or based on the net profit in 2021, the net profit growth rate in 2022 was not less than 16% |
| Second period of unlocking | Based on the operating revenue in 2022, the annual revenue growth rate in 2023 was not less than 35%; or based on the net profit in 2022, the net profit growth rate in 2023 was not less than 35% |
| Third period of unlocking | Based on the operating revenue in 2022, the annual revenue growth rate in 2024 was not less than 83%; or based on the net profit in 2022, the net profit growth rate in 2024 was not less than 83% |
Note: “Operating revenue” refers to the operating revenue as applied in the audited consolidated financial statementsof listed companies; “net profit” above refers to the net profit value attributable to the shareholders of the Company asapplied in the audited consolidated financial statements of listed companies for the first period of exercise/unlocking, orthe net profit value attributable to the shareholders of the Company, less the non-recurring gains and losses, asapplied in the audited consolidated financial statements of listed companies for the second and third periods ofexercise/unlocking.In consideration of the factors including changes in the macro market environment, the appropriate proportioncoefficient is set as follows according to the performance accomplishment rate (R) in the current period for theassessment years of 2023 and 2024:
| Performance Accomplishment Rate (R) | R≥100% | 100%〉R≥90% | 90%〉R≥80% | R〈80% |
| Coefficient for R | 1 | 0.9 | 0.8 | 0 |
Note: 1. The performance accomplishment rate (R) in the current period refers to the higher of the accomplishmentrate of operating revenue in the current period or the accomplishment rate of net profit less the non-recurring gainsand losses in the current period.
2. Accomplishment rate of operating revenue in the current period = actual growth rate of operating revenue in thecurrent period/target growth rate of operating revenue in the current period * 100%; accomplishment rate of net profitin the current period = actual growth rate of net profit in the current period/target growth rate of net profit in the currentperiod * 100%.
3. The Company unlocks the restricted stocks held by the incentive objects in the assessment year according to theindicator of the performance accomplishment rate (R), and the specific number of restricted stocks unlocked is asfollows: number of restricted stocks held by the incentive objects in the corresponding assessment year * coefficientfor R; and confirms the number of exercisable stock options held by the incentive objects in the assessment year, andthe specific number of exercisable stock options is as follows: number of stock options held by the incentive objects inthe corresponding assessment year * coefficient for R.
XVI. Commitments and Contingencies
1. Significant commitments
Important commitments on the balance sheet dayAs of December 31, 2023, the Company's pledge information was as follows:
(1) On June 20, 2023, the Company and Hangzhou Branch of Zheshang Bank Co., Ltd. entered into the GuaranteeContract for Pledge of Asset Pool, with the number (33100000) Zheshang Asset Pool Quality (2023) No. 08879 (thecontract term is from June 20, 2023 to January 12, 2024), to provide a guarantee for the Asset Pool BusinessCooperation Agreement signed by the Company together with the subsidiary Zhejiang Dahua Vision Technology Co.,Ltd., the subsidiary Zhejiang Dahua System Engineering Co., Ltd., the subsidiary Zhejiang Fengshi Technology Co.,Ltd., the subsidiary Zhejiang Hangzhou Xiaohua Technology Co., Ltd. and Hangzhou Branch of Zheshang Bank Co.,Ltd. The financing amount for the fund pledge pool cannot be more than RMB 2.5 billion.
Under the notes pool business, as of December 31, 2023, the Company had undue notes receivable of RMB346,067,483.72 (where RMB 340,000,000.00 was related party notes receivable that should be included in the scopeof consolidation), the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. had undue notes receivable of RMB329,676,985.18 (where RMB 154,679.33 was related party notes receivable that should be included in the scope ofconsolidation), and the subsidiary Zhejiang Dahua System Engineering Co., Ltd. had undue notes receivable of RMB119,000.00.Under the pledge, the Company issued the bank acceptance bills in the amount of RMB 9,717,792.00 and thesubsidiary Zhejiang Dahua Vision Technology Co., Ltd. issued the bank acceptance bills in the amount of RMB420,506,020.04.
(2) On June 21, 2023, the subsidiary Zhejiang Dahua Zhilian Co., Ltd. and Hangzhou Branch of Zheshang Bank Co.,Ltd. entered into the Guarantee Contract for Pledge of Asset Pool, with the number (33100000) Zheshang Asset PoolQuality (2023) No. 08817 (the contract term is from June 21, 2023 to January 12, 2024), to provide a guarantee for theAsset Pool Business Cooperation Agreement signed by Zhejiang Dahua Zhilian Co., Ltd. together with HangzhouBranch of Zheshang Bank Co., Ltd. The financing amount for the fund pledge pool cannot be more than RMB 0.5billion.Under the notes pool business, as of December 31, 2023, RMB 279,022,406.34 of undue notes receivable (of whichRMB 100,000,000.00 was related party notes that should be included in the scope of the consolidated financialstatements) of the subsidiary Zhejiang Dahua Zhilian Co., Ltd. was pledged for the issuance of acceptance bills.Under the pledge, the subsidiary Zhejiang Dahua Zhilian Co., Ltd. issued the bank acceptance bills in the amount ofRMB 200,360,503.20.
(3) On June 1, 2022, the Company and Hangzhou Branch of China Merchants Bank Co., Ltd. signed the CreditAgreement for Notes Pool Business (No.: 571XY2022013930), which promised a special credit limit of RMB 1.5 billionfor the notes pool, and allocated the same limit to the subsidiary Zhejiang Dahua Vision Technology Co., Ltd., thesubsidiary Zhejiang Dahua System Engineering Co., Ltd., the subsidiary Hangzhou Huacheng Network TechnologyCo., Ltd., the subsidiary Zhejiang Fengshi Technology Co., Ltd., the subsidiary Zhejiang Huafei Intelligent TechnologyCo., Ltd., the subsidiary Zhejiang Huayixin Technology Co., Ltd., the subsidiary Zhejiang Wisualarm Technology Co.,Ltd.,, the subsidiary Zhejiang Huajian Technology Co., Ltd., the subsidiary Xi'an Dahua Zhilian Technology Co., Ltd.,the subsidiary Zhejiang Dahua Intelligent IoT Operation Service Co., Ltd., and the subsidiary Zhejiang Dahua ZhilianCo., Ltd.Under the notes pool business, the Company had undue notes receivable of RMB 341,468,067.10 as of December 31,2023 (where RMB 335,000,000.00 was related party notes receivable that should be included in the scope ofconsolidation), the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. had undue notes receivable of RMB193,322,790.90 (where RMB 304,460.67 was related party notes receivable that should be included in the scope ofconsolidation), the subsidiary Zhejiang Fengshi Technology Co., Ltd. had undue notes receivable of RMB 151,750.00,the subsidiary Zhejiang Dahua System Engineering Co., Ltd. had undue notes receivable of RMB 2,167,116.73, thesubsidiary Zhejiang Huaxiao Technology Co., Ltd. had undue notes receivable of RMB 623,801.31, the subsidiaryZhejiang Huajian Technology Co., Ltd. has undue notes receivable of RMB 22,903,870.00, and the subsidiaryZhejiang Dahua Intelligent IoT Operation Service Co., Ltd. had undue notes receivable of RMB 470,000.00 pledged forissuing bank acceptance bills.Under the pledge, the subsidiary Hangzhou Huacheng Network Technology Co., Ltd. issued the bank acceptance billsin the amount of RMB 83,435,711.64, the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. issued the bankacceptance bills in the amount of RMB 39,539,772.23, the subsidiary Zhejiang Fengshi Technology Co., Ltd. issuedthe bank acceptance bills in the amount of RMB 247,734,066.84, the subsidiary Zhejiang Huajian Technology Co., Ltd.
issued the bank acceptance bills in the amount of RMB 497,374.83 and the subsidiary Zhejiang Huaxiao TechnologyCo., Ltd. issued the bank acceptance bills in the amount of RMB 122,979.03.
(4) On May 26, 2021, the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. and Bank of Hangzhou Co., Ltd.entered into the Pledge Contract for Maximum Amount of Individual Asset Management (No.:7514ATMG202100073,the contract term is from May 26, 2021 to May 25, 2024), to provide a guarantee for the Asset Management ServiceAgreement signed by the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. and Hangzhou Bank Co., Ltd. Thecredit limit of the notes pool cannot be more than RMB 0.2 billion.Under the notes pool business, as of December 31, 2023, RMB 36,192,984.00 of undue notes receivable of thesubsidiary Zhejiang Dahua Vision Technology Co., Ltd. were pledged for the issuance of acceptance bills.Under the pledge, the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. issued the bank acceptance bills in theamount of RMB 0.
(5) Under the Asset Pool Charge-off Agreement PPHJQZCZ 20230731 No.001 made by and between the Companyand Ping An Bank Limited Hangzhou Branch on August 18, 2023, a special credit line of RMB 1 billion in note poolwas granted and was also allocated to the subsidiary Zhejiang Dahua Vision Technology Co., Ltd., the subsidiaryJiangsu Huaruipin Technology Co., Ltd., the subsidiary Zhejiang Pixfra Technology Co., Ltd. and the subsidiaryChangsha Dahua Technology Co., Ltd.Under the notes pool business, as of December 31, 2023, the Company had undue notes receivable of RMB150,000,000.00 (where RMB 150,000,000.00 was related party notes receivable that should be included in the scopeof consolidation), the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. had undue notes receivable of RMB100,000,000.00 (where RMB 100,000,000.00 was related party notes receivable that should be included in the scopeof consolidation), and the subsidiary Jiangsu Huaruipin Technology Co., Ltd. had undue notes receivable of RMB3,120,396.00, the subsidiary Zhejiang Pixfra Technology Co., Ltd. had undue notes receivable of RMB 1,869,905.04pledged for issuing bank acceptance bills.Under the pledge, the subsidiary Zhejiang Dahua Vision Technology Co., Ltd. issued the bank acceptance bills in theamount of RMB 98,101,540.06, the subsidiary Jiangsu Huaruipin Technology Co., Ltd. issued the bank acceptancebills in the amount of RMB 4,937,925.81, the subsidiary Zhejiang Pixfra Technology Co., Ltd. issued the bankacceptance bills in the amount of RMB 199,795.30 and the subsidiary Changsha Dahua Technology Co., Ltd. issuedthe bank acceptance bills in the amount of RMB 5,190,022.25.
(6) The subsidiary Zhejiang HuaRay Technology Co., Ltd. and Hangzhou Branch of China Merchants Bank Co., Ltd.entered into the Credit Agreement for Notes Pool Business, agreeing on a credit limit of RMB 0.2 billion for notes poolbusiness. Under the notes pool business, as of December 31, 2023, RMB 130,709,513.93 of undue notes receivableof the subsidiary Zhejiang HuaRay Technology Co., Ltd. were pledged for the issuance of acceptance bills. Under thepledge, the subsidiary Zhejiang HuaRay Technology Co., Ltd. issued the bank acceptance bills in the amount of RMB125,850,624.31.
2. Contingencies
(1) Important contingent matters on the balance sheet day
No important contingent matters on the balance sheet day.
(2) If no important contingent matter to be disclosed by the Company, it should also be notedaccordinglyNo important contingent matter needs to be disclosed by the Company.
XVII. Events after the Balance Sheet Date
1. Significant non-adjustments
N/A
2. Distribution of profits
| Number of dividend payout to be distributed per 10 shares (RMB) | 3.82 |
| Profit Distribution Plan | Based on the share capital of 3,274,649,389 shares in which the shares repurchased by the Company have been deducted (19,819,601 shares have been repurchased) as at December 31, 2023, the Company will distribute RMB 3.82 (tax included) to all shareholders for every 10 shares, with a total cash dividend of RMB 1,250,916,066.60 (tax included), and no capital reserves will be capitalized and no bonus share will be given. The undistributed profits will be reserved for future distribution. |
3. Other events after the balance sheet date
On January 3, 2024, the subsidiary Dahua Technology (HK) Limited, Dahua Canada and CENTRAL MOTIONPICTURE USA CORPORATION entered into the Share Acquisition Agreement, in which it was agreed that CENTRALMOTION PICTURE USA CORPORATION accepted 100% equity in Dahua USA at a price of USD 15 million andacquired the inventories owned by Dahua Canada with a value of USD 1 million at a price of USD 1 million. TheCompany completed the corresponding equity and asset transfer procedures in January and from the date of transfer,Dahua USA will be no longer included in the scope of consolidation.XVIII. Other Significant Events
1. Subsection information
(1) Basis for determining the reporting subsection and the accounting policyThe Company determines the operation subsection based on internal organization structure, managementrequirements, internal reporting system, etc. The Company has only one operational subsection, namely the R&D,production, and sales of intelligent IoT products. The accounting policy of the reporting subsection is consistent withthat of the Company.
(2) Financial information of the reporting subsection
Regional subsectionUnit: RMB
| Item | Operating revenue | Operating Cost |
| Domestic | 16,891,274,970.99 | 10,462,264,668.17 |
| Overseas | 15,327,042,665.78 | 8,212,706,255.29 |
| Total | 32,218,317,636.77 | 18,674,970,923.46 |
Product subsectionUnit: RMB
| Item | Operating revenue | Operating Cost |
| Smart IoT Products and Solutions | 26,644,648,182.18 | 14,925,853,403.30 |
| Including: Software Business | 1,797,226,644.00 | 591,429,713.59 |
| Innovative Businesses | 4,906,653,657.98 | 3,169,076,284.13 |
Others
| Others | 667,015,796.61 | 580,041,236.03 |
| Total | 32,218,317,636.77 | 18,674,970,923.46 |
XIX. Notes to Main Items in the Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure by age
Unit: RMB
| Aging | Closing balance | Opening balance |
| Within 1 year (including 1 year) | 6,181,011,320.94 | 4,435,372,460.31 |
| 1 to 2 years | 220,370,669.05 | 288,995,411.49 |
| 2 to 3 years | 205,500,322.81 | 158,183,517.59 |
| 3 years or above | 209,345,603.19 | 89,620,990.72 |
| 3 to 4 years | 139,992,165.49 | 53,215,275.56 |
| 4 to 5 years | 48,597,714.50 | 15,437,090.50 |
| 5 years or above | 20,755,723.20 | 20,968,624.66 |
| Total | 6,816,227,915.99 | 4,972,172,380.11 |
(2) Categorical disclosure by methods for provision by bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Accounts receivables with the bad debt provision accrued based on | 39,711,390.05 | 0.58% | 39,711,390.05 | 100.00% | 38,693,240.50 | 0.78% | 38,693,240.50 | 100.00% | ||
| single item | ||||||||||
| Including: | ||||||||||
| Accounts receivable with insignificant single amount but accrued for separate provision of bad debt | 39,711,390.05 | 0.58% | 39,711,390.05 | 100.00% | 38,693,240.50 | 0.78% | 38,693,240.50 | 100.00% | ||
| Accounts receivables with the bad debt provision accrued based on combinations | 6,776,516,525.94 | 99.42% | 135,569,555.41 | 2.00% | 6,640,946,970.53 | 4,933,479,139.61 | 99.22% | 96,000,623.96 | 1.95% | 4,837,478,515.65 |
| Including: | ||||||||||
| Portfolio 1: Related Parties Portfolio | 5,668,800,812.35 | 83.17% | 5,668,800,812.35 | 3,990,054,640.72 | 80.25% | 3,990,054,640.72 | ||||
| Portfolio 2: Aging Analysis Portfolio | 1,107,715,713.59 | 16.25% | 135,569,555.41 | 12.24% | 972,146,158.18 | 943,424,498.89 | 18.97% | 96,000,623.96 | 10.18% | 847,423,874.93 |
| Total | 6,816,227,915.99 | 100.00% | 175,280,945.46 | 6,640,946,970.53 | 4,972,172,380.11 | 100.00% | 134,693,864.46 | 4,837,478,515.65 |
Bad Debt Provision Accrued Based on Single Item: RMB 39,711,390.05Unit: RMB
| Name | Opening balance | Closing balance |
| Book balance | Bad debt provision | Book balance | Bad debt provision | Accrued proportion | Reason for making bad debt provision | |
| Customer 1 | 38,693,240.50 | 38,693,240.50 | 38,612,198.42 | 38,612,198.42 | 100.00% | Expected to be unable to recover |
| Other Customers | 1,099,191.63 | 1,099,191.63 | 100.00% | Expected to be unable to recover | ||
| Total | 38,693,240.50 | 38,693,240.50 | 39,711,390.05 | 39,711,390.05 |
Bad Debt Provision Accrued Based on Combinations: RMB 135,569,555.41Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 Year | 737,681,101.35 | 36,884,055.08 | 5.00% |
| 1 to 2 years | 169,801,648.93 | 16,980,164.89 | 10.00% |
| 2 to 3 years | 131,736,024.38 | 39,520,807.31 | 30.00% |
| 3 to 4 years | 49,384,226.64 | 24,692,113.32 | 50.00% |
| 4 to 5 years | 8,101,487.38 | 6,481,189.90 | 80.00% |
| 5 years or above | 11,011,224.91 | 11,011,224.91 | 100.00% |
| Total | 1,107,715,713.59 | 135,569,555.41 | |
If the bad debt provisions of accounts receivable are made according to the general model of expected credit losses:
□ Applicable ? Not applicable
(3) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Opening balance | Amount of Changes in the Current Period | Closing balance | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bad debt provision | 134,693,864.46 | 47,376,642.70 | 4,513.91 | 6,785,047.79 | 175,280,945.46 | |
| Total | 134,693,864.46 | 47,376,642.70 | 4,513.91 | 6,785,047.79 | 175,280,945.46 | |
Significant amount of recovered or reversed bad debt provision in this period:
N/A
(4) Accounts receivable actually written off in this period
Unit: RMB
| Item | Write-off amount |
| Accounts receivable actually written off | 6,785,047.79 |
Important accounts receivable written off:
N/A
(5) Accounts receivable and contract assets of the top five closing balances at the end of theperiod collected by debtorsUnit: RMB
| Name of Unit | Balance of Accounts Receivable at the End of the Period | Balance of Contract Assets at the End of the Period | Balance of Accounts Receivable and Contract Assets at the End of the Period | As a Percentage of Total Other Receivables and Contract Assets at the End of the Period | Balance of Bad Debt Provisions of Accounts Receivable and Provisions for Impairment of Contract Assets at the End of the Period |
| Customer 1 | 4,972,055,767.82 | 4,972,055,767.82 | 72.55% | ||
| Customer 2 | 260,115,233.75 | 260,115,233.75 | 3.80% | ||
| Customer 3 | 171,008,953.76 | 4,972,876.68 | 175,981,830.44 | 2.57% | 27,271,001.90 |
| Customer 4 | 102,942,991.14 | 102,942,991.14 | 1.50% | ||
| Customer 5 | 81,501,834.21 | 81,501,834.21 | 1.19% | ||
| Total | 5,587,624,780.68 | 4,972,876.68 | 5,592,597,657.36 | 81.61% | 27,271,001.90 |
2. Other receivables
Unit: RMB
| Item | Closing balance | Opening balance |
| Other Receivables | 11,736,609,900.41 | 13,025,162,686.64 |
| Total | 11,736,609,900.41 | 13,025,162,686.64 |
(1) Other receivables
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening balance |
| Deposits | 42,885,100.54 | 42,975,357.36 |
| Prepaid or advance expense | 55,413,467.31 | 42,425,892.12 |
| Employee home loan | 70,683,455.00 | 84,743,250.00 |
| Incomings and outgoings | 11,602,342,723.04 | 12,872,094,567.04 |
| Others | 401,773.49 | 14,709,388.90 |
| Total | 11,771,726,519.38 | 13,056,948,455.42 |
2) Disclosure by age
Unit: RMB
| Aging | Closing balance | Opening balance |
| Within 1 year (including 1 year) | 11,151,113,722.07 | 11,740,672,677.06 |
| 1 to 2 years | 152,050,338.67 | 880,224,982.17 |
| 2 to 3 years | 103,271,253.97 | 190,441,001.10 |
| 3 years or above | 365,291,204.67 | 245,609,795.09 |
| 3 to 4 years | 156,024,115.87 | 57,005,895.73 |
| 4 to 5 years | 38,468,597.33 | 185,039,868.32 |
| 5 years or above | 170,798,491.47 | 3,564,031.04 |
| Total | 11,771,726,519.38 | 13,056,948,455.42 |
(3) Categorical disclosure by methods for provision by bad debts
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Bad Debt Provision Based on Combinations | 11,771,726,519.38 | 100.00% | 35,116,618.97 | 0.30% | 11,736,609,900.41 | 13,056,948,455.42 | 100.00% | 31,785,768.78 | 0.24% | 13,025,162,686.64 |
| Including: | ||||||||||
| Portfolio 1: Related Parties Portfolio | 11,602,342,723.04 | 98.56% | 11,602,342,723.04 | 12,872,094,567.04 | 98.58% | 12,872,094,567.04 | ||||
| Portfolio 2: Aging Analysis Portfolio | 169,383,796.34 | 1.44% | 35,116,618.97 | 20.73% | 134,267,177.37 | 184,853,888.38 | 1.42% | 31,785,768.78 | 17.20% | 153,068,119.60 |
| Total | 11,771,726,519.38 | 100.00% | 35,116,618.97 | 11,736,609,900.41 | 13,056,948,455.42 | 100.00% | 31,785,768.78 | 13,025,162,686.64 | ||
Bad Debt Provision Accrued Based on Combinations: RMB 35,116,618.97Unit: RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year (including 1 year) | 79,434,455.19 | 3,971,722.76 | 5.00% |
| 1 to 2 years | 35,281,870.59 | 3,528,187.06 | 10.00% |
| 2 to 3 years | 21,337,446.21 | 6,401,233.86 | 30.00% |
| 3 to 4 years | 21,025,938.31 | 10,512,969.16 | 50.00% |
| 4 to 5 years | 8,007,899.55 | 6,406,319.64 | 80.00% |
| 5 years or above | 4,296,186.49 | 4,296,186.49 | 100.00% |
| Total | 169,383,796.34 | 35,116,618.97 | |
Bad debt provisions made according to the general model of expected credit losses:
Unit: RMB
| Bad debt provision | Phase One | Phase Two | Phase Three | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire extension (without credit impairment) | Expected credit losses for the entire extension (with credit impairment) | ||
| Balance on January 1, 2023 | 25,225,412.46 | 6,120,196.70 | 440,159.62 | 31,785,768.78 |
| Balance in the current period on January 1, 2023 | ||||
| --Transfer to phase two | -1,344,040.03 | 1,344,040.03 | ||
| --Transfer to phase three | -22,153.40 | -2,520.00 | 24,673.40 | |
| Provisions of this period | 3,776,967.83 | 1,013,206.77 | 4,790,174.60 | |
| Reversals in this period | 917,816.38 | 917,816.38 | ||
| Write off in this period | 511,508.03 | 11,000.00 | 19,000.00 | 541,508.03 |
| Balance as of December 31, 2023 | 22,429,894.62 | 11,227,684.56 | 1,459,039.79 | 35,116,618.97 |
Book balance changes with significant changes in loss provision in the current period
□ Applicable ? Not applicable
4) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Opening balance | Amount of Changes in the Current Period | Closing balance | |||
| Accrued | Recovered or Reversed | Write-off | Others | |||
| Bad debt provision | 31,785,768.78 | 4,790,174.60 | 917,816.38 | 541,508.03 | 35,116,618.97 | |
| Total | 31,785,768.78 | 4,790,174.60 | 917,816.38 | 541,508.03 | 35,116,618.97 | |
Significant amount of recovered or reversed bad debt provision in this period:
N/A
5) Accounts receivable actually written off in this period
Unit: RMB
| Item | Write-off amount |
| Other accounts receivable actually written off | 541,508.03 |
Other important accounts receivable written off:
N/A
6) Other receivables of the top five closing balances collected by debtors
Unit: RMB
| Name of Unit | Nature of the funds | Closing balance | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Incomings and outgoings | 7,702,205,020.30 | RMB 7,701,619,823.45 within 1 year, RMB 585,196.85 for 1-2 years | 65.43% | |
| Company 2 | Incomings and outgoings | 2,391,792,112.16 | Within 1 year | 20.32% | |
| Company 3 | Incomings and outgoings | 554,210,671.85 | RMB 507,415,321.86 within 1 year, RMB 4,400,100.00 for 1-2 years, RMB 5,100,400.00 for 2-3 years, RMB 37,294,849.99 for 3-4 years | 4.71% | |
| Company 4 | Incomings and outgoings | 392,450,907.34 | RMB 271,440,813.99 within 1 year, RMB 73,400,000.00 for 1-2 years, RMB 47,610,093.35 for 2-3 years | 3.33% | |
| Company 5 | Incomings and outgoings | 205,295,149.55 | RMB 9,080,630.14 within 1 year, RMB 10,170,475.10 for 1-2 years, RMB 8,757,718.98 for 2-3 years, RMB 8,822,249.05 for 3-4 years, RMB 9,052,406.35 for 4-5 years, RMB 159,411,669.93 for five years or above | 1.74% | |
| Total | 11,245,953,861.20 | 95.53% |
3. Long-term equity investment
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiaries | 8,003,642,515.21 | 8,003,642,515.21 | 4,651,487,417.05 | 4,651,487,417.05 | ||
| Investment in affiliates and joint ventures | 188,883,917.03 | 723,496.39 | 188,160,420.64 | 831,485,368.09 | 723,496.39 | 830,761,871.70 |
| Total | 8,192,526,432.24 | 723,496.39 | 8,191,802,935.85 | 5,482,972,785.14 | 723,496.39 | 5,482,249,288.75 |
(1) Investment in subsidiaries
Unit: RMB
| The invested entity | Opening balance (book value) | Opening balance of provision for impairment | Decrease/Increase in the current period | Closing balance (book value) | Closing balance of provision for decline in value | |||
| Investments increased | Investment decreased | Provision for impairment accrued | Others | |||||
| Zhejiang Dahua System Engineering Co., Ltd. | 535,013,130.42 | 9,704,750.46 | 544,717,880.88 | |||||
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 102,150,077.26 | 85,918.92 | 102,235,996.18 | |||||
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 5,100,000.00 | 5,100,000.00 | ||||||
| Guangxi Dahua Information Technology Co., Ltd. | 6,159,547.73 | 62,305.92 | 6,221,853.65 | |||||
| Dahua Technology (HK) Limited | 668,941,112.00 | 746,235.00 | 669,687,347.00 | |||||
| Zhejiang Dahua Vision Technology Co., Ltd. | 1,295,016,312.10 | 6,479,861.97 | 1,301,496,174.07 | |||||
| Guangxi Dahua Yunlian Information Technology Co., Ltd. | 20,002,580.76 | 20,002,580.76 | ||||||
| Hangzhou Xiaohua Technology CO., LTD. | 5,851,433.47 | 3,612,386.32 | 9,463,819.79 | |||||
| Zhejiang Dahua Zhilian | 1,001,657,517.59 | 852,225,070.39 | 1,853,882,587.98 | |||||
| Co., Ltd. | ||||||||
| Zhejiang Dahua Investment Management Co., Ltd. | 62,175,000.00 | 62,175,000.00 | ||||||
| Guangxi Dahua Zhicheng Co., Ltd. | 71,262,264.85 | 80,300.04 | 71,342,564.89 | |||||
| Hangzhou Huacheng Network Technology Co., Ltd. | 30,102,814.35 | 3,350,008.98 | 33,452,823.33 | |||||
| Zhejiang HuaRay Technology Co., Ltd. | 33,919,748.87 | 9,122,776.49 | 43,042,525.36 | |||||
| Hangzhou Fuyang Hua'ao Technology Co., Ltd. | 5,110,520.63 | 21,041.28 | 5,131,561.91 | |||||
| Zhejiang Huafei Intelligent Technology CO., LTD. | 25,619,309.34 | 13,401,499.89 | 39,020,809.23 | |||||
| Guizhou Huayi Shixin Technology Co., Ltd. | 1,800,000.00 | 1,800,000.00 | ||||||
| Zhejiang Fengshi Technology Co., Ltd. | 9,028,975.38 | 47,226.24 | 9,076,201.62 | |||||
| Dahua Technology Holdings Limited | 8,102,000.00 | 8,102,000.00 | ||||||
| Zhejiang Huaxiao Technology Co., Ltd. | 38,317,405.37 | 1,185,790.16 | 39,503,195.53 | |||||
| Xi'an Dahua Zhilian Technology Co., Ltd. | 100,718,798.71 | 890,684,894.39 | 991,403,693.10 | |||||
| Jiangsu Huaruipin Technolog | 17,927,211.61 | 139,029.12 | 18,066,240.73 |
| y Co. Ltd. | ||||||||
| Beijing Huayue Shangcheng Information Technology Service Co., Ltd. | 10,675,125.73 | 311,131.49 | 10,986,257.22 | |||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | 60,000,000.00 | 60,000,000.00 | ||||||
| Shanghai Huashang Chengyue Information Technology Service Co., Ltd. | 1,931,398.93 | 693,288.64 | 2,624,687.57 | |||||
| Zhejiang Zhoushan Digital Development Operation Co. Ltd. | 17,640,000.00 | 17,640,000.00 | ||||||
| Guangxi Dahua Technology Co., Ltd. | 30,000,000.00 | 30,000,000.00 | ||||||
| Yunnan Zhili Technology Co., Ltd | 4,500,000.00 | 4,500,000.00 | ||||||
| Zhejiang Huayixin Technology Co., Ltd. | 41,380,258.10 | -322,352.65 | 41,057,905.45 | |||||
| Zhejiang Huaruijie Technology Co., Ltd. | 52,349,278.69 | 2,410,090.33 | 54,759,369.02 | |||||
| Chengdu Dahua Zhilian Information Technology Co., Ltd. | 50,346,032.57 | 550,621,678.60 | 600,967,711.17 | |||||
| Chengdu Dahua Zhian Informatio | 100,000,000.00 | 454,700,000.00 | 554,700,000.00 |
| n Technology Service Co., Ltd. | ||||||||
| Chengdu Huishan Smart Network Technology Co., Ltd. | 5,800,000.00 | 5,800,000.00 | ||||||
| Zhejiang Huajian Technology Co., Ltd. | 23,520,802.07 | 1,917,792.17 | 25,438,594.24 | |||||
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 2,055.08 | 2,055.08 | ||||||
| Guangxi Huacheng Technology Co., Ltd. | 123,727.03 | 57,404.04 | 181,131.07 | |||||
| Hangzhou Huacheng Software Co., Ltd. | 1,838,147.19 | 2,699,065.42 | 4,537,212.61 | |||||
| Dahua Technology Canada Inc. | 72,864.00 | 72,864.00 | ||||||
| Chengdu Dahua Zhishu Information Technology Service Co., Ltd. | 10,000,000.00 | 10,000,000.00 | ||||||
| Zhengzhou Dahua Zhian Information Technology Co., Ltd. | 30,000,000.00 | 30,000,000.00 | ||||||
| Dahua Technology International Pte. Ltd. | 1,000,000.00 | 1,000,000.00 | ||||||
| Changsha Dahua Technolog | 100,009,858.24 | 19,716.48 | 100,029,574.72 |
| y Co., Ltd. | ||||||||
| Zhejiang Pixfra Technology Co., Ltd. | 50,982,181.36 | 541,528,583.84 | 592,510,765.20 | |||||
| Zhejiang Dahua Intelligent IoT Operation Service Co., Ltd. | 15,285,360.32 | 764,843.20 | 16,050,203.52 | |||||
| Henan Dahua Zhilian Information Technology Co., Ltd. | 54,567.30 | 109,134.60 | 163,701.90 | |||||
| Yibin Huahui Information Technology Co., Ltd. | 26,184.84 | 26,184.84 | ||||||
| Luoyang Dahua Zhiyu Information Technology Co., Ltd. | 10,000,000.00 | 10,000,000.00 | ||||||
| Xi'an IMOU Zhilian Technology Co., Ltd. | 43,251.72 | 43,251.72 | ||||||
| Guangdong Huaxiyue Intelligent Technology Co., Ltd. | 126,189.87 | 126,189.87 | ||||||
| Total | 4,651,487,417.05 | 3,356,655,098.16 | 4,500,000.00 | 8,003,642,515.21 |
(2) Investment in affiliates and joint ventures
Unit: RMB
| The invested entity | Opening balance (book value) | Opening balance of provision for impair | Decrease/Increase in the current period | Closing balance (book value) | Closing balance of provision for declin | |||||||
| Investments increased | Investment decreased | Investment profit and loss recog | Adjustment on other comprehens | Other changes in equity | Cash dividends or profit declared to | Provision for impairment accrued | Others | |||||
| ment | nized under the equity method | ive income | distribute | e in value | ||||||||
| Ⅰ. Joint ventures | ||||||||||||
| Ⅱ. Affiliates | ||||||||||||
| Ruicity Digital Technology Co., Ltd. | 71,175,718.81 | 7,055,847.29 | 78,231,566.10 | |||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | 650,470,259.18 | 392,262,378.85 | -310,897,828.43 | 2,608,700.63 | 50,081,247.47 | |||||||
| Hangzhou Juhuanyan Information Technology Co., Ltd. | 723,496.39 | 723,496.39 | ||||||||||
| Ningbo Huayan Chuangxi Venture Capital Investment Partnership (Limited Partnership) | 63,054,968.03 | 4,377,586.77 | 67,432,554.80 | |||||||||
| Dezhou Shuzhi Inform | 3,407,519.63 | 37,238.63 | 3,444,758.26 | |||||||||
| ation Technology Co., Ltd. | ||||||||||||
| Sichuan Hengji Anhua Internet of Things Technology Co., Ltd. | 1,291,851.54 | -170,006.98 | 1,121,844.56 | |||||||||
| Zhejiang Huachuang Vision Technology Co., Ltd. | 41,361,554.51 | -9,650,504.01 | 6,218,646.42 | 37,929,696.92 | ||||||||
| Subtotal | 830,761,871.70 | 723,496.39 | 392,262,378.85 | -309,247,666.73 | 2,608,700.63 | 56,299,893.89 | 188,160,420.64 | 723,496.39 | ||||
| Total | 830,761,871.70 | 723,496.39 | 392,262,378.85 | -309,247,666.73 | 2,608,700.63 | 56,299,893.89 | 188,160,420.64 | 723,496.39 |
The recoverable amount is determined according to the net amount of the fair value less the cost of disposal
□ Applicable ? Not applicable
The recoverable amount is determined according to the present value of the expected future cash flow
□ Applicable ? Not applicable
4. Operating revenue and operating cost
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period | ||
| Income | Cost | Income | Cost | |
| Main Business | 10,606,267,041.51 | 1,653,964,589.27 | 8,401,027,073.37 | 1,188,553,267.61 |
| Other businesses | 69,647,278.51 | 37,059,643.16 | 57,417,038.00 | 41,482,814.03 |
| Total | 10,675,914,320.02 | 1,691,024,232.43 | 8,458,444,111.37 | 1,230,036,081.64 |
5. Investment income
Unit: RMB
| Item | Amount Occurred in the Current Period | Amount Occurred in the Previous Period |
| Long-term equity investment income calculated by cost method | 1,149,863.64 | |
| Long-term equity investment income measured by equity method | -309,247,666.73 | -455,385,100.70 |
| Investment income from disposal of long-term equity investment | 4,603,860,940.85 | 147,553,843.81 |
| Investment income on other non-current financial assets during the holding period | 11,870,549.61 | 9,173,028.68 |
| Investment income from disposal of other non-current financial assets | 10,370,120.76 | |
| Investment income from national debt reverse repurchase | 1,256,871.91 | 791,371.25 |
| Profits from recognition termination of financial assets | -4,294,983.66 | -4,157,038.98 |
| Gain on debt restructuring | -170,120.71 | |
| Total | 4,314,965,696.38 | -302,194,016.65 |
XX. Supplementary Information
1. Breakdown of non-recurring gains and losses for this period
? Applicable □ Not applicableUnit: RMB
| Item | Amount | Note |
| Gains and losses from disposal of non-current assets | 4,778,983,828.56 | |
| Government subsidies included in the current gains and losses (except for those that are closely related to the regular business operations of the Company, in line with national policies, received according to established standards, and having a continuous impact on the Company's gains and losses) | 199,003,183.46 | |
| Gains or losses from changes in the fair value of financial assets and liabilities, and from the disposal of financial assets and liabilities, held by non-financial enterprises, except for effective hedging businesses related to the regular business operations of the Company. | 103,119,981.50 | |
| Gains or losses from investment or asset management entrusted to | 1,819,647.72 |
| others | ||
| Reversal of the receivables depreciation reserves for separate impairment test | 4,513.91 | |
| Gains or losses from debt restructuring | -16,242,445.24 | |
| Non-Operating Revenue and expenses other than the above | -18,035,840.08 | |
| Other gains and losses items that fit the definition of non-recurring gains and losses | -57,989,909.93 | |
| Less: Impact of income tax | 555,973,378.97 | |
| Impact of minority equity (after tax) | 34,539,315.42 | |
| Total | 4,400,150,265.51 | -- |
Other gains or losses that fit the definition of non-recurring gains or losses:
□ Applicable ? Not applicable
The Company has no other gains or losses that fit the definition of non-recurring gains or losses.Note for the definition of non-recurring gains and losses listed in the No. 1 Explanatory Announcement on InformationDisclosure for Companies Issuance Their Securities to the Public - Non-recurring gains and losses, as recurring gainsand losses.
□ Applicable ? Not applicable
2. Return on net assets and earnings per share
| Profit for the reporting period | Weighted Average ROE | Earnings per share | |
| Basic Earnings per Share (RMB/Share) | Diluted Earnings per Share (RMB/Share) | ||
| Net profit attributable to common shareholders of the Company | 22.43% | 2.31 | 2.31 |
| Net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses | 9.03% | 0.93 | 0.93 |
3. Differences in accounting data between domestic and overseas accounting standards
(1) Differences of net profits and net assets in the financial reports disclosed according to theinternational accounting standards and Chinese accounting standards
□ Applicable ? Not applicable
(2) Differences of net profits and net assets in the financial reports disclosed according to theoverseas accounting standards and Chinese accounting standards
□ Applicable ? Not applicable
(3) Reasons for accounting data differences under domestic and overseas accountingstandards. For difference adjustment on the data already audited by an overseas auditinstitution, name of the audit institution should be noted.
□ Applicable ? Not applicable
Zhejiang Dahua Technology Co., Ltd.Legal representative: Fu Liquan
April 16, 2024