Hangzhou Hikvision Digital Technology Co., Ltd.
2019 Interim ReportJanuary to June 2019
July 20
th
2019
Hikvision 2019 Half Year Report
Section I Important Notes, Contents and DefinitionsThe Board of Directors, Board of Supervisors, directors, supervisors and senior managementof Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as the “Company”)hereby guarantee that the information presented in this report shall be together be wholly liable forthe truthfulness, accuracy and completeness of its contents and free of any false records, misleadingstatements or material omissions, and will undertake individual and joint legal liabilities.Chen Zongnian, the Company's legal representative, Jin Yan, the person in charge of theaccounting work, and Zhan Junhua, the person in charge of accounting department (accountingsupervisor) hereby declare and warrant that the financial statements in this report are authentic,accurate and complete.
All directors have attended the board meeting to review this report.The half year proposal of profit distribution and share distribution from capital reserve passedupon deliberation at the meeting of the Board of Directors (not applicable): The Company will notdistribute cash dividend, distribute bonus share, or distribute shares from capital reserve during thecurrent reporting period.
Note:
This document is a translated version of the Chinese version 2019 Half Year Report (“2019年半年度报告”), and the published announcements in the Chinese version shall prevail. The completepublished Chinese 2019 Half Year Report may be obtained at www.cninfo.com.cn.
Hikvision 2019 Half Year Report
Please read the annual report and pay particular attention to the following risk factors:
1) Risk of technology upgrade: Technologies such as artificial intelligence, big data, cloud
computing, and edge computing are developing rapidly, and technology diffusion is faster. If theCompany cannot follow the changes in the cutting-edge technologies, or fail to realize thebusiness innovation rapidly, the risks of future development uncertainties will increase.
2) Domestic macro-economy fluctuation risk: The Company's domestic business is closely
related to the investment needs of the government, enterprises and institutions. The Companyadjusts its business strategy in response to the changing domestic demands. If the domesticmacro-economy continues to decline, the industry demand will shrink. The Company'sdevelopment will face great pressure; and difficulties and risks in business operation willincrease.
3) Trade protectionism risks in developed countries: The trend of unilateralism and tradeprotection in some of the countries is obviously rising. If the trend of reverse globalization isaggravated, it will affect the Company's business expansion and brand upgrading in overseasdeveloped markets.
4) Risk of global market expansion: The Company’s business covers more than 150 countriesand regions worldwide. If various situations such as foreign exchange rate fluctuation, debtproblem, declining purchasing power, or political conflict occur in the country where ourbusiness is carried out, there might be adverse impact on the Company’s business development.
5) Risk of internal management: The continual expansion of business scale, the continuous
increase of new products and new businesses, the sustained growth in total number ofemployees and the significant rise of internal management complexity have posed challenges tothe Company’s management work and raised higher requirements on the Company'smanagement team. The Company’s sustainable development will face certain risks if themanagement level fails to match up with the Company’s business expansion.
6) Legal compliance risk: The world's multilateral trading system is facing an impact. The local
laws and regulations that business activities need to comply with are more complicated. Theregulation of data worldwide is becoming stricter, and the compliance review of business isbecoming more important. If the Company's legal compliance ability cannot keep up with thesituation, it will bring risks to the Company's operations.
7) Risk of cybersecurity: The Company has always attached importance and taken active
measures to enhance cybersecurity performance of our products and systems, However, withany Internet-connected device, there is still a possibility of deliberate attempts，includingcomputer viruses, malicious software, hacker and similar disruptions to damage our systems orproducts, causing the cybersecurity issues.
8) Risk of exchange rate fluctuation: The Company carries out operations in various countries
Hikvision 2019 Half Year Report
and regions with different currencies. The risk of exchange rate mainly comes from foreignexchange exposures arising out of sales, purchase and financing that not settled in RMB (mainlyin USD) as well as the exchange rate fluctuations, which may probably affect the profitabilitylevel of the Company.
9) Risk of intellectual property (IP) rights: The Company continues to maintain the relativelarge scale of R&D investment, and produces considerable technical achievements, and at thesame time, implements well-organized intellectual property right (IPR) protection measures.However, the risk of intellectual property disputes and the risk of intellectual property rightsviolations still exist.
The above notices might not be all-inclusive of all other potential risks, please pay attention to thepotential investment risks
Hikvision 2019 Half Year Report
CONTENTS
Section I Important Notes, Contents and Definitions ...... 1
Section II Corporate Profile & Key Financial Data ...... 7
Section III Corporate Business Summary ...... 11
Section IV Operation Discussion and Analysis ...... 12
Section V Significant Events ...... 28
Section VI Changes in Shares and Information about Shareholders ...... 48
Section VII Information of Preferred Shares ...... 59
Section VIII Information about Directors, Supervisors, Senior Management ...... 60
Section IX Corporate Bonds ...... 64
Section X Financial Report ...... 65
Section XI Documents Available for Reference ...... 179
Section XII Other Disclosure Information ...... 180
Hikvision 2019 Half Year Report
Definitions
| Term | Definition |
| Reporting Period | From January 1st 2019 to June 30th 2019 |
| Articles of Associations | Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd |
| Hikvision, our Company, the Company | Hangzhou Hikvision Digital Technology Co., Ltd |
| CETHIK | CETHIK Group Co., Ltd. Controlling Shareholder of the Company |
| Innovative Co-investment Partnership | Hangzhou Hikvision Equity Investment Partnership (Limited Partnership) |
| EZVIZ, EZVIZ Network Inc. | Hangzhou EZVIZ Network Ltd. (According to the context, also refers to the corresponding business) |
| Hikvision Robotics | Hangzhou Hikvision Robtics Technology Ltd. (According to the context, also refers to the corresponding business) |
| Hikvision Automotive Technology, Hikvision Automotive Electronics | Hangzhou Hikvision Automotive Electronics Ltd. (According to the context, also refers to the corresponding business) |
| Hikvision Weiying | Hangzhou Hikvision Weiying Sensory Technology Ltd. (According to the context, also refers to the corresponding business) |
| Hikvision Storage; Hikvision Smart Storage | Wuhan HIK Storage Technology Ltd. (According to the context, also refers to the corresponding business) |
| Hikvision Huiying | Hangzhou HIK Huiying Technology Ltd. (According to the context, also refers to the corresponding business) |
| Security Industrial Base (Tonglu) | Located in Tonglu economic development area, Hangzhou, Zhejiang province, purposes for production factories, warehousing logistics center. Initially disclosed in Announcement about the Company’s Investment in Tonglu to Set up Wholly Owned Subsidiary and New Hikvision Security Industry Base (Tonglu) Project(《关于在桐庐投资设立全资子公司及新建海康威视安防产业基地（桐庐）项目的公告》) (NO. 2014-044). |
| Internet Security Industry Base | Located in Binjiang district, Hangzhou, Zhejiang province, purposes for the office building. Initially disclosed in Announcement about the Company’s New Construction of Internet Security Industry Base Project (《关于新建海康威视互联网安防产业基地项目的公告》)(NO. 2014-035). |
| Chongqing Manufacture Base | Located in Chongqing, purposes for manufacturing facility, initially disclosed in Announcement about Resolution of the 20th Meeting of the 3rd Session Board（No：2016-068） |
| Innovative Business | A long investment cycle, business prospects uncertain, has the high risk and uncertainty, in need for direct or indirect investment in exploration, in order for the Company to timely enter into new areas of business. Initially disclosed in Announcement about Management Measures for Core Staff Investment in Innovative Business (《核心员工跟投创新业务管理办法》) (www.cninfo.com.cn). In this report, innovative business also refers to EZVIZ, Hikvision Robtics, Hikvision Automotive Electronics, Hikvision Weiying, Hikvision Storage, Hikvision Huiying and |
Hikvision 2019 Half Year Report
| Term | Definition |
| their related business or products. | |
| Euro Bond | The Company publicly issued the bond with nominal value amounting to Euro 400 million; and the bond was settled, listed and traded on the Irish Stock Exchange on February 18th 2016. The Company completed the bond maturity payment on February 18th 2019. For details, please refer to Announcement on the completion of payment on overseas Eurobonds (《关于境外欧元债券完成到期兑付的公告》) (NO. 2019-011) |
Hikvision 2019 Half Year Report
Section II Corporate Profile & Key Financial DataI. Corporate Information
| Stock abbreviation | HIKVISION | Stock code | 002415 |
| Stock exchange where the shares of the Company are listed | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese (if any) | 杭州海康威视数字技术股份有限公司 | ||
| Abbr. of the Company name in Chinese | 海康威视 | ||
| Name of the Company in English (if any) | HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD | ||
| Abbr. of the Company name in English (if any) | HIKVISION | ||
| Legal representative | Chen Zongnian | ||
| Board Secretary | Securities Affairs Representative | |
| Name | Huang Fanghong | |
| Address | No. 518 WuLianWang Street, Binjiang District, Hangzhou | |
| Tel. | 0571-88075998; 0571-89710492 | |
| Fax | 0571-89986895 | |
| hikvision@hikvision.com |
Hikvision 2019 Half Year Report
IV. Key accounting data and Financial IndicatorsWhether the Company performed a retrospective adjustment or restatement of previous accounting data
√Yes □No
Retrospective adjustment or restatement reasons: business merger under the common control; first implementationof New Financial Instrument Guidelines
Unit: RMB
| The first half of 2019 | The first half of 2018 | YoY Change (%) | ||
| Before adjustments | After adjustments | After adjustments | ||
| Operating income (RMB) | 23,923,273,424.50 | 20,875,758,224.63 | 20,875,758,224.63 | 14.60% |
| Net profits attributable to shareholders of the Company (RMB) | 4,216,755,210.24 | 4,147,395,535.86 | 4,147,395,535.86 | 1.67% |
| Net profits attributable to shareholders of the Company excluding non-recurring gains and losses (RMB) | 4,122,195,529.03 | 4,009,270,961.25 | 4,009,270,961.25 | 2.82% |
| Net cash flows from operating activities (RMB) | -431,063,793.18 | -1,621,193,358.00 | -1,621,193,358.00 | 73.41% |
| Basic earnings per share (RMB/share) | 0.444 | 0.449 | 0.449 | -1.11% |
| Diluted earnings per share (RMB/share) | 0.444 | 0.449 | 0.449 | -1.11% |
| Weighted average ROE | 10.86% | 13.08% | 13.08% | -2.22% |
| At June 30th 2019 | At December 31st 2018 | YoY Change (%) | ||
| Before adjustments | After adjustments | After adjustments | ||
| Total assets (RMB) | 64,344,901,612.62 | 63,484,352,233.42 | 63,465,019,931.22 | 1.39% |
| Net assets attributable to shareholders of the Company (RMB) | 36,515,200,589.68 | 37,590,154,638.46 | 37,567,728,835.78 | -2.80% |
| The total share capital of the Company as of the previous trading day of the annual report disclosure (share) | 9,347,956,306.00 |
| Fully diluted earnings per share (RMB/share) calculated with the latest share capital | 0.451 |
Hikvision 2019 Half Year Report
2. Difference in the financial report of net profits and net assets according to the disclosure of OverseasAccounting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of OverseasAccounting Standards and China Accounting Standards in the reporting period.
3. Explanation of the differences in accounting data under domestic and overseas accounting standards
□ Applicable √ Inapplicable
VI. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Inapplicable
Unit：RMB
| Item | Amount |
| Profit or loss from disposal of non-current assets (including the write-off for the impairment provision of assets) | 810,043.90 |
| The government subsidies included in the current profits and losses (excluding the government subsidy closely related to regular course of business of the Company and government subsidy based on standard quota or quantitative continuous application according to the state industrial policy.) | 90,511,282.83 |
| Net gains and losses from beginning of the reporting period to the merge date for the subsidiary merged involving enterprises under common control | -885,138.65 |
| Profits and losses attributed to change in fair value for held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, and derivative financial liabilities; and investment income from disposal of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, derivative financial liabilities and other debt investments, excluding the effective hedging business related to the regular business operation of the Company. | 9,948,685.74 |
| Other non-operating income and expenditures except the items mentioned above | 29,742,814.57 |
| Less: Impact of income tax | 34,822,486.70 |
| Impact of the minority interests (after tax) | 745,520.48 |
| Total | 94,559,681.21 |
Hikvision 2019 Half Year Report
In the reporting period, the Company did not classify an item as a non-recurring gain/loss according to thedefinition in the <Explanatory Announcement No. 1 on Information Disclosure for Companies Offering TheirSecurities to the Public—Non-recurring Gains and Losses> into a recurrent gain/loss item
Hikvision 2019 Half Year Report
Section III Corporate Business SummaryI. The principal business of the Company during the reporting periodThere was no significant change for the principal business of the Company during the reporting period. Pleaserefer to 2018 Annual Report for details.II. Significant changes in main assets
1. Major Changes in Main Assets
| Major assets | Explanation on Major Changes |
| Equity Assets | No significant change |
| Fixed Assets | No significant change |
| Intangible Assets | Increased by 12.66%, mainly due to increase in intangible asseets for the acquisition of land in the second phase of Chongqing Science and Technology Base. |
| Construction in Progress | Increased by 25.93%, mainly due to increased investment in the construction of Chengdu Science and Technology Base. |
Hikvision 2019 Half Year Report
Section IV Operation Discussion and AnalysisI. OverviewDuring the first half of 2019, the domestic economy was volatile, uncertainty risk in the overseas businessenvironment was rising rapidly, and market demand was under dual impacts of economic and political influences.Facing such complexities in domestic and overseas environment, the Company adhered to its orientation guidedby customer demands and driven by technological innovations to promote growth in scale while enhancingefficiency at the same time.During the reporting period, the Company realized operating revenue of RMB 23.92 billion, representing ayear-over-year growth of 14.60%. Net profit attributable to shareholders of the listed company was RMB 4.22billion, representing a growth of 1.67% as compared to the corresponding period of the previous year. TheCompany’s gross profit margin was 46.33% during the first half of 2019, representing an increase of 1.83% ascompared to the corresponding period of the previous year.
1) Maintaining continuous investments in research and development (R&D) to consolidate the foundationof sustainable developmentWhile continuous investments were made in the research and development of technologies and productsrelating to the traditional security business, the Company accelerated the continuous implementation of thecomputing structure of AI Cloud converging cloud and edge computing, and the data structure for the fusion ofIoT (internet of things) and Information networks, to realize the data interaction between Intelligent IoT andinformation networks, and laid down the development infrastructure for various areas such as deep learning, bigdata, intelligent IoT and data application etc., so as to maintain our market leadership in technological innovationand product innovation.
2) Optimization and reorganization of business structure to realize efficient allocation of resources
Hikvision 2019 Half Year Report
Through optimization and reorganization of the three major business groups of the Company, namely, PBG(Public Business Group), EBG (Enterprise Business Group) and SMBG (Small and Medium Enterprise BusinessGroup), internal resources were effectively coordinated, targeted customized solutions were provided to customersaccording to their different demands. Meanwhile, the Company’s branches were transforming into provincialbusiness centers by upgrading and re-allocating sales, R&D and technical resources to enhance our integratedmarketing capabilities in the regional markets, generating differentiated collaboration with the headquarter toachieve efficient allocation of the Company's overall resources.
3) Maintaining stability while achieving progress in the global market to tackle changes in the business
environment positively
The Company continued to develop overseas channels, reinforce the construction of local operation andservice capabilities, and enhance the Company’s brand influence. Business adjustments were made according tothe specific conditions of various regions. By paying close attention to regions with rapidly rising uncertainty riskin the business environment, positive measures were adopted to secure the stable development of our business.
4) Operating innovative business in an orderly manner to create new landscape of target markets
The Company’s smart home (EZVIZ) business and robotic business continued to make profits, otherinnovative businesses such as automobile electronics and storage business recorded rapid growth, graduallybecoming the new engines for the Company’s long-term development.
5) Making continuous progress in management reform to enhance efficiency in organizational operation
The Company continued to increase resources to enhance the establishment of management system, cultivatean equal, open and transparent business atmosphere, and enhance efficiency in organizational operation whilefocusing on quality and efficiency on an on-going basis. Meanwhile, the Company strengthened the establishmentof human resources by adhering to the “talent-focused, growing together” employment concept, to realize mutualbenefits and win-win between the Company and its employeesII. Core business analysisOverview
Hikvision 2019 Half Year Report
Whether consistent with the overview disclosure under Operation Discussion and Analysis
√ yes □ no
Please refer to details in Section IV Operation Discussion and Analysis-I. Overview
Year-over-Year Changes in Key financial data
Unit：RMB
| 2019 First Half Year | 2018 First Half Year | YoY Change (%) | Note of Change | |
| Operating Income | 23,923,273,424.50 | 20,875,758,224.63 | 14.60% | Operating Income increased with the steady increase of market demands. |
| Operating costs | 12,840,506,333.68 | 11,586,298,826.07 | 10.82% | Increase with the operating income growth |
| Selling expenses | 3,213,260,109.16 | 2,649,393,264.42 | 21.28% | Selling expenses increase with the Company’s continuous increasing investments on domestic and overseas sales network |
| Administrative expenses | 731,110,243.76 | 590,848,451.85 | 23.74% | Increase with the expansion of the Company's business scale |
| Financial expenses | -129,943,427.26 | -158,521,317.81 | 18.03% | Affected by fluctuation in foreign exchange rate, increase in foreign currency exchange losses |
| Income Tax Expenses | 933,920,656.68 | 665,802,758.48 | 40.27% | The profit growth rate of some high-tax subsidiaries is higher than the overall profit growth rate of the Company. |
| R&D investments | 2,504,800,049.71 | 1,912,682,599.24 | 30.96% | The Company continues to increase investments in R&D |
| Net cash flows from Operating Activities | -431,063,793.18 | -1,621,193,358.00 | 73.41% | Increase in collection of accounts receivable for sales |
| Net cash flows from Investment Activities | -684,730,771.16 | 986,123,427.08 | -169.44% | Significant amount of collection of matured principal-guaranteed financial products in 2018 first half year (prior year same period). |
| Net cash flows from Financing Activities | -3,567,621,483.18 | -2,425,626,823.45 | -47.08% | Increase in distribution of dividends |
| Net increase in cash and cash equivalents | -4,769,810,219.18 | -3,062,665,051.63 | -55.74% | Reduced cash inflows from investment activities and increased dividends distribution |
Hikvision 2019 Half Year Report
□ Applicable √ Inapplicable
There is no such case during the reporting period.
Operating income structure
Unit：RMB
| 2019 First Half Year | 2018 First Half Year | YoY Change (%) | |||
| Amount | Proportion to operating income | Amount | Proportion to operating income | ||
| Total operating income | 23,923,273,424.50 | 100% | 20,875,758,224.63 | 100% | 14.60% |
| Classified by industry | |||||
| Video products and video services | 23,923,273,424.50 | 100% | 20,875,758,224.63 | 100% | 14.60% |
| Classified by product | |||||
| Front-end equipment | 11,399,609,062.38 | 47.65% | 10,285,314,406.66 | 49.27% | 10.83% |
| Back-end equipment | 3,196,070,064.43 | 13.36% | 2,994,583,467.04 | 14.34% | 6.73% |
| Central control equipment | 3,486,737,083.16 | 14.58% | 2,798,476,654.30 | 13.41% | 24.59% |
| Constructions | 477,564,284.57 | 2.00% | 1,077,104,977.68 | 5.16% | -55.66% |
| Others | 3,634,923,501.63 | 15.19% | 2,613,813,622.58 | 12.52% | 39.07% |
| Subtotal | 22,194,903,996.17 | 92.78% | 19,769,293,128.26 | 94.70% | 12.27% |
| Smart home business | 1,139,058,349.43 | 4.76% | 725,865,396.10 | 3.48% | 56.92% |
| Other innovative businesses | 589,311,078.90 | 2.46% | 380,599,700.27 | 1.82% | 54.84% |
| Subtotal | 1,728,369,428.33 | 7.22% | 1,106,465,096.37 | 5.30% | 56.21% |
| Classified by region | |||||
| Domestic | 16,980,210,416.78 | 70.98% | 14,580,485,895.05 | 69.84% | 16.46% |
| Overseas | 6,943,063,007.72 | 29.02% | 6,295,272,329.58 | 30.16% | 10.29% |
Hikvision 2019 Half Year Report
Unit: RMB
| Operating income | Operating cost | Gross margin | YoY Change (%) of operating income | YoY Change (%) of operating cost | YoY Change (%) of gross margin | |
| Classified by industry | ||||||
| Video products and video services | 23,923,273,424.50 | 12,840,506,333.68 | 46.33% | 14.60% | 10.82% | 1.83% |
| Classified by product | ||||||
| Front-end equipment | 11,399,609,062.38 | 5,514,282,317.87 | 51.63% | 10.83% | 6.62% | 1.91% |
| Back-end equipment | 3,196,070,064.43 | 1,622,327,866.91 | 49.24% | 6.73% | 0.22% | 3.30% |
| Central control equipment | 3,486,737,083.16 | 1,549,258,451.92 | 55.57% | 24.59% | 17.87% | 2.54% |
| Constructions | 477,564,284.57 | 348,868,121.15 | 26.95% | -55.66% | -62.13% | 12.49% |
| Others | 3,634,923,501.63 | 2,763,848,172.20 | 23.96% | 39.07% | 48.29% | -4.73% |
| Subtotal | 22,194,903,996.17 | 11,798,584,930.05 | 46.84% | 12.27% | 8.34% | 1.93% |
| Smart home business | 1,139,058,349.43 | 699,890,662.72 | 38.56% | 56.92% | 51.45% | 2.23% |
| Other innovative businesses | 589,311,078.90 | 342,030,740.91 | 41.96% | 54.84% | 46.22% | 3.42% |
| Subtotal | 1,728,369,428.33 | 1,041,921,403.63 | 39.72% | 56.21% | 49.69% | 2.63% |
| Classified by region | ||||||
| Domestic | 16,980,210,416.78 | 9,036,080,163.13 | 46.78% | 16.46% | 12.19% | 2.02% |
| Overseas | 6,943,063,007.72 | 3,804,426,170.55 | 45.21% | 10.29% | 7.72% | 1.31% |
Hikvision 2019 Half Year Report
Operating cost structure
Unit: RMB
| Cost Structure | 2019 First Half Year | 2018 First Half Year | YoY Change (%) | ||
| Amount | Proportion to operating cost | Amount | Proportion to operating cost | ||
| Classified by industry | |||||
| Video products and video services | 12,840,506,333.68 | 100% | 11,586,298,826.07 | 100% | 10.82% |
| Classified by product | |||||
| Front-end equipment | 5,514,282,317.87 | 42.95% | 5,171,808,124.76 | 44.64% | 6.62% |
| Back-end equipment | 1,622,327,866.91 | 12.63% | 1,618,843,751.15 | 13.97% | 0.22% |
| Central control equipment | 1,549,258,451.92 | 12.07% | 1,314,431,389.49 | 11.34% | 17.87% |
| Constructions | 348,868,121.15 | 2.72% | 921,303,977.95 | 7.95% | -62.13% |
| Others | 2,763,848,172.20 | 21.52% | 1,863,871,939.74 | 16.09% | 48.29% |
| Subtotal | 11,798,584,930.05 | 91.89% | 10,890,259,183.09 | 93.99% | 8.34% |
| Smart home business | 699,890,662.72 | 5.45% | 462,125,654.34 | 3.99% | 51.45% |
| Other innovative businesses | 342,030,740.91 | 2.66% | 233,913,988.64 | 2.02% | 46.22% |
| Subtotal | 1,041,921,403.63 | 8.11% | 696,039,642.98 | 6.01% | 49.69% |
| Classified by region | |||||
| Domestic | 9,036,080,163.13 | 70.37% | 8,054,514,491.59 | 69.52% | 12.19% |
| Overseas | 3,804,426,170.55 | 29.63% | 3,531,784,334.48 | 30.48% | 7.72% |
Hikvision 2019 Half Year Report
Explanations on relevant data changed for more than 30% on a year-over-year base
√Applicable □Inapplicable
| YoY Change (%) of operating income | YoY Change (%) of operating cost | Note on YoY change (%) above 30% | ||
| Classified by product | ||||
| Constructions | -55.66% | -62.13% | Reduced revenue & cost of PPP projects in the current reporting period | |
| Others | 39.07% | 48.29% | Revenues from products such as intelligent buildings and purchased goods are growing rapidly | |
| Smart home business | 56.92% | 51.45% | The smart home business is developing rapidly, with revenue and cost increasing simultaneously | |
| Other innovative businesses | 54.84% | 46.22% | Other innovative businesses are growing rapidly | |
Hikvision 2019 Half Year Report
IV. Analysis of assets and liabilities
1. Material changes of asset items
Unit：RMB
| June 30th 2019 | December 31st 2018 | YoY Change (%) | Note of significant change | |||
| Amount | Percentage of total assets | Amount | Percentage of total assets | |||
| Cash and bank balances | 21,845,904,274.19 | 33.95% | 26,559,675,452.93 | 41.85% | -7.90% | Payment for purchases and increase in year-end bonus |
| Accounts receivable | 19,126,324,207.05 | 29.72% | 16,619,441,281.18 | 26.19% | 3.53% | Increase as sales revenue grows |
| Inventory | 8,611,208,963.08 | 13.38% | 5,725,104,153.41 | 9.02% | 4.36% | Inventory increases caused by increase in stocking due to incrase in sales and production scale |
| Long-term equity investment | 167,086,688.94 | 0.26% | 163,301,844.56 | 0.26% | 0.00% | No significant change |
| Fixed assets | 5,316,389,046.77 | 8.26% | 5,082,415,160.10 | 8.01% | 0.25% | No significant change |
| Construction in process | 523,989,072.99 | 0.81% | 416,092,413.42 | 0.66% | 0.15% | Increase in construction investment on Chengdu Science and Technology Base |
| Short-term loans | 4,552,318,503.27 | 7.07% | 3,465,655,688.29 | 5.46% | 1.61% | Increase in demands for temporary capital turnover |
| Long-term loans | 4,631,400,000.00 | 7.20% | 440,000,000.00 | 0.69% | 6.51% | Increase in foreign currency loans for long-term asset investment |
Hikvision 2019 Half Year Report
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB
| Item | Opening balance | Profit or loss from change in fair value during the period | Accumulated fair value changes booked into equity | Difference on translation of financial statements dominated in foreign currency | Provision for decline in value during the current period | Newly added during the current reporting period | Sales during the period | Closing balance |
| Financial Assets | ||||||||
| 1. Derivative financial assets | 1,860,050.59 | 586,934.12 | 193,575.54 | 2,640,560.25 | ||||
| 2. Other non-current financial assets | 290,966,813.00 | 2,153,238.50 | 2,884,220.00 | 296,004,271.50 | ||||
| 3. Receivables for financing | 2,247,357,583.28 | 14,124,975.09 | -874,492,085.86 | 1,386,990,472.51 | ||||
| Subtotal of financial assets | 2,540,184,446.87 | 2,740,172.62 | 14,124,975.09 | 193,575.54 | - | -871,607,865.86 | - | 1,685,635,304.26 |
| Financial Liabilities | 290,998.43 | -873,778.16 | 188,092.96 | 1,352,869.55 | ||||
| Item | Closing Book Value | Reasons for being restricted |
| Monetary fund | 584,702,759.48 | Various cash deposits and other restricted funds |
| Receivables for financing | 112,443,816.82 | Pledge for issuance of bank acceptance |
| Accounts receivable | 95,000,000.00 | Pledge for short-term borrowings |
| Long-term receivables | 460,793,612.55 | Pledge for long-term borrowings |
Hikvision 2019 Half Year Report
| Item | Closing Book Value | Reasons for being restricted |
| Total | 1,252,940,188.85 |
| Investment during the first half of 2019 (RMB) | Investment during the first half of 2018 (RMB) | Fluctuation (%) |
| 794,447,793.06 | 945,650,502.12 | -15.99% |
| Project name | Invest method | Fixed assets investment or not | Project industry | Investment during the current reporting period | Cumulative amount of investment by the end of reporting period | Source of funds | Project schedule |
| Hangzhou Innovation Industry Base | Self-built | YES | Video product and video service | 0.00 | 50,840,516.83 | Loan | 4.96% |
| Chengdu Science and Technology Base Project | Self-built | YES | Video product and video service | 53,291,108.38 | 59,868,555.12 | Self-fund | 4.43% |
| Chongqing Science and Technology Base Project-phase 2 | Self-built | YES | Video product and video service | 5,324,733.35 | 7,582,145.40 | Self-fund | 1.00% |
| Xi’an Science and Technology Base Project | Self-built | YES | Video product and video service | 1,667,334.41 | 3,331,402.09 | Loan | 0.29% |
| Wuhan Science and Technology Base Project | Self-built | YES | Video product and video service | 2,698,113.21 | 4,339,622.64 | Self-fund | 0.17% |
Hikvision 2019 Half Year Report
| Project name | Invest method | Fixed assets investment or not | Project industry | Investment during the current reporting period | Cumulative amount of investment by the end of reporting period | Source of funds | Project schedule |
| Wuhan Intelligence Industry Base Project | Self-built | YES | Video product and video service | 934,836.51 | Self-fund | 0.04% | |
| Total | -- | -- | -- | 62,981,289.35 | 126,897,078.59 | -- | -- |
| Category | Initial investment cost | Current profits or losses on the changes in fair value | Accumulated fair value changes included in equity | Purchase during the reporting period | Amount sold during the reporting period | Cumulative investment income | Closing balance | Source of funds |
| Derivative instruments | 1,013,306,062.25 | -286,844.04 | 314,008,941.68 | 8,082,291.28 | 460,004,441.68 | Company's own funds | ||
| Other non-current financial assets | 290,966,813.00 | 2,153,238.50 | 2,884,220.00 | 296,004,271.50 | Company's own funds | |||
| Receivables for financing | 2,247,357,583.28 | 14,124,975.09 | 1,386,990,472.51 | Company's own funds | ||||
| Total | 3,551,630,458.53 | 1,866,394.46 | 14,124,975.09 | 316,893,161.68 | 8,082,291.28 | 2,142,999,185.69 | -- |
Hikvision 2019 Half Year Report
7. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund
8. Non-fundraising investment in significant projects during the reporting period
□ Applicable √ Inapplicable
During the reporting period, there was no such case as non-fundraising investment in significant projects.
VI. Disposal of significant assets and equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
During the reporting period, there was no disposal of significant assets
2. Sale of significant equity:
□ Applicable √ Inapplicable
Hikvision 2019 Half Year Report
VII. Analysis of major subsidiaries and investees
√ Applicable □ Inapplicable
Information about major subsidiaries, and investees that contribute above 10% of the Company’s Net Profit
Unit：RMB
| Company name | Company type | Principal business | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Hangzhou Hikvision System Technology. Co., Ltd. | Subsidiary | Manufacturing: video surveillance system; Technology development and service: computer system integration, electronic product, communication product, transmission and display equipment, big data and IoT software and hardware products, intelligent systems, real-time communication systems, servers and supporting software and hardware products; Service: the installation of electric security engineering; steel structure engineering contracting and construction, electronic engineering; the design, construction and maintenance of intelligent system (based on qualification for operation); sales of its self-produced products, import and export goods and technology. | 600 million | 3,562,290,529.42 | 1,531,065,156.88 | 745,333,628.81 | 19,814,109.05 | 17,909,378.40 |
| Hangzhou Hikvision Science and Technology Co. Ltd. | Subsidiary | Technology development, technology consulting, results transferring; computer software, electronic product, communication product, digital security product, fire-control products; production and wholesale: security electronic product and its auxiliary equipment, intelligent hardware electronic product, explosion-proof electrics, security electronic product and its auxiliary equipment, intelligent hardware electronic product, explosion-proof electrics, fire-control products, IC card and IC card RW device, mobile phone, cordless phone, handheld wireless police terminal, hand held mobile police termina; import and export business. | 1000 million | 32,403,612,964.35 | 3,209,849,943.70 | 22,292,486,713.77 | 678,426,841.30 | 512,891,418.64 |
Hikvision 2019 Half Year Report
Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
| Company name | Equity acquisition and disposal method during the reporting period | Impact on overall production results |
| Hangzhou Kuangxin Technology Ltd. | Business merger not involving enterprises under the common control | Business development |
| Hangzhou EZVIZ Science and Technology Ltd. | Business merger under the common control | Business development |
| Shijiazhuang Hikvision Technology Ltd. | Cash contribution | Business development |
| Zhengzhou Hikvision Digital Technology Ltd. | Cash contribution | Business development |
| Hikvision Central America S.A. | Cash contribution | Expand overseas sales channels |
| Hikvision West Africa Limited | Cash contribution | Expand overseas sales channels |
| Hikvision Technology Egypt JSC | Cash contribution | Expand overseas sales channels |
| Beijing Brainaire Storage Technology Ltd. | Liquidation and Cancellation | Adjustments of organizational framework |
Hikvision 2019 Half Year Report
VIII. Structural entities controlled by the Company
□ Applicable √ Inapplicable
IX. Guidance on the Company’s operational result from January 1
st 2019 to September 30
th2019The estimated year-over-year change (%) range of net profits attributable to shareholders of the Company fromJanuary 1
st
2019 to September 30
th2019 is from 0% to 15%X. Risks of the Company and risk response solutionsDuring the reporting period, there was no major change in risk factors of the Company, please refer to SectionI-Important Notes. The Company has been working hard to identify various risk exposures, actively adopting riskresponse solutions to avoid and reduce risks:
(1) Risk of technology upgrade: The Company continues to maintain R&D investments, investigates frontiertechnologies and keeps its competitiveness in core technology. Through steady and reliable R&D management,the Company has developed an efficient R&D system that addresses market needs, can rapidly respond to marketdemand for products and technologies, and achieve sustainable development.
(2) Domestic macro-economy fluctuation risk: The Company is closely tracking the latest movements in themarco-economy, industrial policies and development of the industry and adjusted the operating strategiesspecifically. While consolidating our existing advantageous markets, we also strive to develop the business andtechnological deployment through active explorations, implementing pilot programs of new businesses and newbusiness modules.
(3) Trade protectionism risks in developed countries: The Company strengthens its understanding andadaptability to the laws, regulations, political environment and economic environment of the regions where weoperate our business, and formulated specific strategies and deployed businesses based on different nations.Meanwhile, we also strive to take precautions actively, make timely judgment and formulate responsive measures.
(4) Risk of global market expansion: The Company continues to increase investments in global marketlocalization, and strengthen the capability of localized sales and marketing. Meanwhile, the Company activelystudies and researches regional laws and regulations and major changes in regional policies in various countriesaround the world, so as to formulate countermeasures in advance and reduce various trade compliance risks thatmight occur.
(5) Risk of internal management: The Company continues to implement management reforms. In the course ofadhering to existing practice and making innovations, we accumulated our experience bit by bit to drive the
Hikvision 2019 Half Year Report
continuous improvements in our corporate organizing capabilities. During the reporting period, the Companycontinued to learn from outstanding enterprises by making reference to successful experience in managementpractice to optimize our organizing capabilities. Meanwhile, our organizing and operating efficiency wasenhanced through internal potential mining, and our internal risk resistance ability was also improved to tacklemarket and future uncertainties.
(6) Legal compliance risk: The Company continues to strengthen the establishment of the compliance riskcontrol system to perform risk supervision and control, as well as follow-up actions, on business timely, in orderto enhance the legal compliance capability of the Company. Meanwhile, awareness on the prevention and controlof compliance risk was firmly established, through better understanding and mastering of national laws,regulations, regional rules and corporate rules and regulations, the orderly operation of business activities wasensured.
(7) Risk of cyber-security: The Company has always been dedicated to enhancing the security of its productand system. The Company built a professional cybersecurity team and established a cybersecurity department, andit has instituted a complete product security assurance system. To ensure continuous improvement to product andsystem security, and provide more secured product and solutions to customers using the Internet/IoT applications,the Company has built cybersecurity demand, cybersecurity design, cybersecurity development, and cybersecuritytesting into its product development procedure.
(8) Risk of foreign exchange fluctuation: The Company pays attention to risk management of foreignexchange risk, and manages foreign exchange risk by means of centralized management of foreign currency funds,purchase and payment on hedging products under the premise of ensuring safety and liquidity. For foreignexchange risk exposure, the Company actively applies financial hedging tools, not for the purpose of speculation,to realize reasonable risk management.
(9) Risk of intellectual property (IP) rights: The Company has established a full-time IP rights team toconduct daily management and protection of IP rights, such as trademarks and patents. Through various legalmeans, such as administrative investigation, court proceedings and so on, the company will accurately combat actsthat violate the company's IP rights.
Hikvision 2019 Half Year Report
Section V Significant Events
I. Annual General Meeting and Extraordinary General Meetings convened during the reporting
period
1. Annual General Meeting convened during the current reporting period
| Meeting | Nature | Proportion of participating investors | Convened Date | Disclosure Date | Disclosure Index |
| 2017 Annual General Meeting of Shareholders | Annual General Meeting of Shareholders | 74.61% | May 10th 2019 | May 11th 2019 | No. 2019-032；www.cninfo.com.cn |
| Commitments | Giver of commitments | Details of commitments | Date of commitments | Term of commitments | Performance |
| Commitments in offering documents or shareholding alterations | CETHIK Group Co., Ltd. | 1. Commitments in non-competition within the industry: In the period as controlling shareholders of the Hikvision, CETHIK and its controlling subsidiaries (excluding Hikvision and its subsidiaries, the same below) will not be engaged in such business that is competitive to Hikvision and its subsidiaries directly or indirectly. | October 29th 2013 | Long-term | Strict performance |
Hikvision 2019 Half Year Report
| Commitments | Giver of commitments | Details of commitments | Date of commitments | Term of commitments | Performance |
| 2. Commitments in decrease and regulation of transactions with related party: Zhejiang Haikang Group Co., Ltd (hereinafter referred to as Haikang Group or actual controller) as the controlling shareholders of Hangzhou Hikvision Digital Technology Co., Ltd (hereinafter referred to as "Hikvision" or "Listed Company") are commited as below for the transactions with Hikvsion: (1) Haikang Group will not make use of the controlling power to offer more favorable conditions to Hikvision than those to any independent third party in any fair market transactions in the cooperation with Hikvision. (2) Haikang Group will not make use of the controlling power to obtain the prior right to complete the transaction with Hikvision. (3) Haikang Group will not deal with Hikvsion in not fair terms comparing to the market prices to prejudice the Company’s interests. For unavoidable related transactions, the Company will observe the principles of justice and fairness to deterimine prices according to the market on the basis of equality, voluntarily. The Company will obey the Articles of Association and other regulatory documents related to the avoiding of issues about related transactions. The related transactions will go through approval procedures in accordance with related rules and complete legal procedures, fulfilling the information disclosure obligations in respect to the related transactions 3. Commitment to the maintenance of the independence of the listed Company 3.1 Commitment to Personnel Independence of the listed Company (1) Commitment that our general manager, deputy general manager, chief financial officer, secretary of the board and other members of senior management shall not assume any positions other than directors and supervisors or get any remuneration in CETHIK and/or any of its controlled entities; (2) Commitment in keeping the |
Hikvision 2019 Half Year Report
| Commitments | Giver of commitments | Details of commitments | Date of commitments | Term of commitments | Performance |
| management of labor, human resources and issues related to remuneration of the listed Company independent from that of CETHIK; 3.2 Commitment to the independence of the asset of the listed Company (1) Commitment to independent and complete asset of the listed Company (2) Commitment free of unlawful use of cash and asset of the listed Company by the controlling shareholders 3.3 Commitment to financial independence of the listed Company (1) Commitment to an independent finance department with a team and accounting system; (2) Commitment to a regulated, independent accounting system and financial management system of the branches and subsidiaries (3) Commitment to maintaining accounts with banks independently of and not sharing any bank account with our controlling shareholders (4) Commitment that the financial staff shall not assume any positions in CETHIK (5) Commitment to paying taxes independently according to the law; (6) Commitment to implementing financial decisions independently 3.4 The Company has set up an independent organizational structure which maintains its independent operations which is independent from that of CETHIK. 3.5 Commitment to business Independence of the listed Company (1) The Company has the asset, personnel, aptitude and management capability for independent and complete business operation. The Company has the ability to operate independently in the market. (2) Commitment in independence in both business and operations 4. Regarding plans for the development and relevant commitment for the listed Company, Haikang Group has committed as below for the subsequent |
Hikvision 2019 Half Year Report
| Commitments | Giver of commitments | Details of commitments | Date of commitments | Term of commitments | Performance |
| development of Hikvsion according to the Securities Acts and relevant laws and rules, 4.1 Currently the Company has no plan to change or make significant adjustments for principal business in the next 12 months; 4.2 Currently the Company has no plan to sell, merge or operate with another Company for the assets and business of the listed Company or its subsidiaries in the next 12 months. 4.3 Currently the Company has no plan to alter the Board of the Directors and senior management and no agreement with other shareholders about the appointment and removal of the directors or senior management. The team of Board of Directors and senior management will remain unchanged for the foreseeable future. 4.4 Currently the Company has no plan to make significant changes to the Articles of Association for the listed Company. 4.5 Currently the Company has no plan to make significant changes to the existing employee recruitment for the listed Company. 4.6 Currently the Company has no plan to make significant changes for the dividend distribution plan for the listed Company. 4.7 Currently the Company has no plan to make significant changes for business and organizational structure for the listed Company. | |||||
| Commitments in Initial Public Offering or re-financing | Hangzhou Weixun Investment Management Limited Partnership（later renamed as Xinjiang Weixun | During Hu Yangzhong, Wu Weiqi, JiangHaiqing, Zhou Zhiping, Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan,、Jiang Yufeng, Liu | May 17th 2010 | Long term | Strict performance |
Hikvision 2019 Half Year Report
| Commitments | Giver of commitments | Details of commitments | Date of commitments | Term of commitments | Performance |
| Investment Management Limited Partnership） | Xiang, Wang Ruihong, Chen Junke’s tenure of the Company’s board of directors, supervisors and senior management personnel, the annual transfer of Hikvision’s total shares should not exceed 25% of total number of shares held under Weixun; within 6 months after abovementioned personnel’s dimission, should not transfer Hikvision’s shares held under Weixun. | ||||
| Hangzhou Pukang Investment Limited Partnership（later renamed as Xinjiang Pukang Investment Limited Partnership） | During Hu Yangzhong, Wu Weiqi, Gong Hongjia’s tenure of the Company’s board of directors, supervisors and senior management personne, the annual transfer of Hikvision’s total shares should not exceed 25% of total number of shares held under Pukang; whithin 6 months after abovementioned personnel’s dimission, should not transfer Hikvision’s shares held under Pukang. | May 17th 2010 | Long term | Strict performance | |
| The Company's directors, supervisors and executive: HuYangzhong,Wu Weiqi, Jiang Haiqing, Zhou Zhiping，Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen Junke | During their tenure of the Company’s board of directors, supervisors and senior management personnel, the annual shares transfer should not exceed 25% of total number of shares held under Weixun; whthin 6 months after their dimission, they should not transfer their shares held under Weixun. | May 17th 2010 | Long term | Strict performance | |
| Directors, executive officers of the Company: Hu Yangzhong, Wu Weiqi | During their tenure of the Company’s board of directors, supervisors and senior management personnel, the annual shares transfer should not exceed 25% of total number of shares held under Pukang; whthin 6 months after their dimission, they should not transfer their shares held under Pukang. | May 17th 2010 | Long term | Strict performance | |
| The Company’s director | During Gong Hongjia’s tenure of the | Long-term | Strict |
Hikvision 2019 Half Year Report
| Commitments | Giver of commitments | Details of commitments | Date of commitments | Term of commitments | Performance |
| Gong Hongjia’s spouse, Chen Chunmei | Company’s board of directors, supervisors and senior management personnel, Chen’s annual shares transfer should not exceed 25% of total number of shares held under Pukang; whthin 6 months after the dimission of Gong Hongjia,Chen should not transfer her shares held under Pukang. | May 17th 2010 | performance | ||
| China Electronics Technology Group Corporation（later renamed as China Electronics Technology Group Co., Ltd.） | To avoid any loss of the Company and other shareholders arising from any competing business, China Electronics Technology Group Corporation, the actual controller of the Company, issued Letters of non-competition on 18 September, 2008. | September 18th 2008 | Long term | Strict performance | |
| Gong Hongjia； Hangzhou Weixun Investment Management Limited Partnership（later renamed as Xinjiang Weixun Investment Management Limited Partnership）； Hangzhou Pukang Investment Limited Partnership（later renamed as Xinjiang Pukang Investment Limited Partnership）；ZheJiang Orient Holdings Co., Ltd. | To avoid any loss of the Company and other shareholders arising from any competing business, Gong Hongjia, Hangzhou WeiXun Investment Management Limited Partnership, ZheJiang Orient Holdings Co., Ltd and Hangzhou KangPu Investment Management Limited Partnership, the promoters of the Company, issued Commitment Letters of non-competition in the same industry on 10 July, 2008. | July 10th 2008 | Long term | Strict performance | |
| Other commitments to the Company's minority shareholders | CETC Investment Holdin Co.,Ltd (CETCIH).; The 52nd Research Institute at China Electronics Technology Group Corporation; China Electronics Technology Group Co., Ltd. | During the effective period of the implementation of CETCIH’s plan to increase the holding of Hikvision (within 6 months from October 23rd 2018) and the statutory period, CETCIH will not reduce its shareholdings of Hikvision | October 23rd 2018 | Within 6 months from October 23rd 2018 | Strict performance |
| CETC Investment Holdin Co.,Ltd (CETCIH).; The 52nd Research Institute at China Electronics Technology Group Corporation; China Electronics Technology | Within six months from the date of completion of the implementation of increasing shareholding of Hikvision plan, CETCIH will not reduce its shareholdings of Hikvision. | April 24th 2019 | Within 6 months from April 24th 2019 | Strict performance |
Hikvision 2019 Half Year Report
| Commitments | Giver of commitments | Details of commitments | Date of commitments | Term of commitments | Performance |
| Group Co., Ltd. | |||||
| Whether the commitments is fulfilled in time | Yes | ||||
Hikvision 2019 Half Year Report
X. Punishments and rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.XI. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Inapplicable
XII. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or other incentiveplans
√Applicable □Inapplicable
1. During the reporting period, the Company completed the third time unlocking, repurchasing andcancelling shares for 2014 Restricted Share Incentive Scheme.On December 3
rd2018, Resolution for the Fulfillment of the Unlocking Conditions of the Third Unlock Periodfor the 2014 Restricted Share Incentive Schemes and the Resolution for the Third Repurchase andCancelation of the Locked shares that Already Granted for 2014 Restricted Share Incentive Schemes wereapproved by the 7
th
meeting of the fourth Board. Authorized by the first extraordinary general meeting for2014, a total of 33,422,536 restricted shares of 1055 grantees were vested and circulated on January 8
th2019.Meanwhile, 509,625 restricted shares held by a portion of grantees not fulfilling the incentive conditions wererepurchased and cancelled. On June 26
th
2019, repurchase and cancelation process of the restricted shares wascomplete.For details, please refer to in the Indicative Notice of Listing the Unlocked Shares during the Third UnlockingPeriod of 2014 Restricted Share Incentive Schemes (No. 2019-002) and the Notice of the Completion of ThirdRepurchase and Cancelation of Locked Shares that Already Granted for 2014 Restricted Share IncentiveSchemes (No. 2019-035) issued on January 7
th 2019 and June 27
th2019 respectively.
2. During the reporting period, the Company has completed the grants of 2018 Restricted Share Incentive
SchemeOn December 20
th2018, Resolution for Granting Restricted Shares to Planned Grantees for 2018 RestrictedShares Incentive Scheme was approved by the 8
thMeeting of the fourth board. According to the ListedCompany Equity Incentive Measures and other administration or relevant laws, regulations and departmental
Hikvision 2019 Half Year Report
rules and regulated documents, as well as 2018 Restricted Shares Incentive Scheme (edited draft) andauthorizations approved by the 2018 2
nd
extraordinary general meeting, the Company has completed grantingand registration of 2018 Restriced Shares Incentive Sheme, with 6095 granted personnel, and 121,195,458granted shares which were listed on January 18
th
2019.For details, please refer to Indicative Notice of Completion of Granting of 2018 Restricted Share IncentiveSchemes (No. 2019-004) issued on January 17
th2019.
3. During the reporting period, the Company completed the first time unlocking shares for 2016
Restricted Share Incentive Scheme.On December 26
th2018, Resolution for the Fulfillment of the Unlocking Conditions of the First UnlockPeriod for the 2016 Restricted Share Incentive Schemes was approved by the 9
th
meeting of the fourth Board.Authorized by the second extraordinary general meeting for 2016, a total of 30,140,165 restricted shares of2822 grantees were vested and circulated on January 21
st2019.For details, please refer to in the Indicative Notice of Listing the Unlocked Shares during the First UnlockingPeriod of 2016 Restricted Share Incentive Schemes (No. 2019-007) issued on January 18
th
2019.
By the end of the reporting period, the Company has a total of 169,545,580 granted and restricted shares, accountsfor 1.81% of the Company’s total share capital.
Hikvision 2019 Half Year Report
XIII. Significant related-party transaction
1. Related-party transactions arising from routine operation
√ Applicable □ Inapplicable
| Related party | Relationship | Type of related transaction | Content of related transaction | Valuation | Trading Amount （0’000 RMB） | Proportion to the amount of similar transactions. | Approved trading quota (0’000 RMB） | Whether above approved quota | Settlement method | Disclosure date | Disclosure reference |
| Subsidiaries or research institutes of CETC | Under the common control of the Company’s actual controller. | Procurement | Purchase materials, receiving services | Reference market price; Agreed on price | 10,130.72 | 0.59% | 60,000 | No | Payment on delivery | April 20th 2019 | Announcement on projections on 2019 related-party transactions (No：2019-020） |
| Shanghai Fullhan Micro | The Company’s director, Gong Hongjia is the director of the related party | Procurement | Purchase materials, receiving services | Reference market price; Agreed on price | 14,252.68 | 0.84% | 45,000 | No | Payment on delivery | ||
| Wuhu Sensor Technology | A joint venture affiliated business held by the Company | Procurement | Purchase materials, receiving services | Reference market price; Agreed on price | 2,702.91 | 0.16% | 10,000 | No | Payment on delivery | ||
| Maxio Technology and its subsidiaries | A joint venture affiliated business held by the Company | Procurement | Purchase materials, receiving services | Reference market price; Agreed on price | 744.59 | 0.04% | 10,000 | No | Payment on delivery |
Hikvision 2019 Half Year Report
| Subsidiaries or research institutes of CETC | Under the common control of the Company’s actual controller. | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 25,910.03 | 1.08% | 70,000 | No | Payment on delivery |
| Zhejiang Tuxun | The Company's senior executive left his post from the Company in March 2018; the year of 2019 is one year after his departure; therefore, Zhejiang Tuxun remained a related party of the Group in the current reporting period. | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 2.31 | 0.00% | 500 | No | Payment on delivery |
| Wuhu Sensor Technology | A joint venture affiliated business held by the Company | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 26.25 | 0.00% | 2,500 | No | Payment on delivery |
| Hangzhou Comfirmware | The Company’s senior executive, Jia Yonghua, is the director of the related party | Sales | Providing services, selling products, commercial | Reference market price; Agreed on price | 2.39 | 0.00% | 200 | No | Payment on delivery |
Hikvision 2019 Half Year Report
| goods | |||||||||||
| Sanmenxia Xiaoyun Vision Technology Ltd. | A joint venture affiliated business held by the Company | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 597.31 | 0.02% | 0 | No | Payment on delivery | Has not been reviewed, but has been approved by the chairman of the board according to the Company's Related-Party Transaction Management System | |
| Zhiguang Hailian Big Data Technology Ltd. | A joint venture affiliated business held by the Company | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 32.03 | 0.00% | 2,000 | No | Payment on delivery | Announcement on projections on 2019 related-party transactions (No：2019-020） | |
| Jiaxin Haishi JiaAn Zhicheng Technology Ltd. | A joint venture affiliated business held by the Company | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 8.14 | 0.00% | 0 | No | Payment on delivery | Has not been reviewed, but has been approved by the chairman of the board according to the Company's Related-Party Transaction Management System |
Hikvision 2019 Half Year Report
| Maxio Technology (Hangzhou) Ltd. and its subsidiaries | A joint venture affiliated business held by the Company | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 0 | 0.00% | 200 | No | Payment on delivery | Announcement on projections on 2019 related-party transactions (No：2019-020） | |
| Total | -- | 54,409.36 | -- | 200,400 | -- | -- | -- | -- | |||
| Details on significant sales return | None | ||||||||||
| The amount of related party transactions with Sanmenxia Xiaoyun Vision Technology Ltd. and Jiaxin Haishi JiaAn Zhicheng Technology Ltd. has not been reviewed, but has been approved by the chairman of the board according to the Company's Related-Party Transaction Management System. | |
| Reasons on significant difference between trading price and market referencing price (if applicable) | Not applicable |
Hikvision 2019 Half Year Report
2. Related-party transactions regarding purchase and disposal of assets or equity
□Applicable √Inapplicable
No such case in the reporting period.
3. Significant related-party transactions arising from joint investments on external parties
□Applicable √Inapplicable
No such case in the reporting period.
4. Related credit and debt transactions
□ Applicable √Inapplicable
No related-parties’ creditor’s rights or debts during the reporting period.
5. Other significant related party transactions
√Applicable □Inapplicable
On December 3
rd2018, the Resolution on the Commencement of Financial Leasing Related-PartyTransactions between Controlled Subsidiaries of Innovative Business and China Electronics Technology LeasingCo. Ltd. was considered and approved by the Company at the seventh meeting of the fourth session of the Board,pursuant to which consent was given to subsidiaries of innovative business controlled by the Company (includingHangzhou EZVIZ Network Co., Ltd., Hangzhou HIK Robotic Technology Co., Ltd., Hangzhou HIK AutomobileTechnology Co., Ltd., Hangzhou HIK Weiying Sensory Technology Co., Ltd., Wuhan HIK Storage TechnologyCo., Ltd. and Hangzhou HIK Huiying Technology Co., Ltd.) to commence financial leasing related-partytransactions with China Electronics Technology Leasing Co., Ltd. (CETL) in 2019, which mainly coveredfinancial leasing business for machinery and equipment of the Company, and the expected annual total amountwould be capped at RMB 200 million (excluding tax). On January 11
th2019, Hangzhou HIK Weiying SensoryTechnology Co., Ltd., a subsidiary of the Company engaging in innovative business, entered into a financialleasing contract with China Electronics Technology Leasing Co. Ltd. to conduct sale and lease back business withCETL on some of its self-owned equipment, the financing amount was RMB 50 million, the leasing term was 48months, and the leasing interest rate was 3.8% per annum.
On April 19
th
2019, China Electronics Technology HIK Group Co., Ltd. (CETHIK), the parent company ofthe Company, entered into an Entrusted Management Agreement with Hangzhou EZVIZ Network Co., Ltd., a
Hikvision 2019 Half Year Report
subsidiary of the Company. Pursuant to the agreement, CETHIK entrusted EZVIZ Network to exercise de factooperation and management rights in EZVIZ Technology to fully oversee the production, operation andmanagement of EZVIZ Science and Technology. EZVIZ Network would not collect any fixed amount of entrustedmanagement fees from CETHIK, but EZVIZ Network would be entitled to 100% distributable profit of EZVIZScience and Technology under the entrusted management relationship. At the same time, EZVIZ Network wouldpay an amount of capital occupation costs to CETHIK according to a certain fee rate for capital occupation basedon the amount of paid-up capital in EZVIZ Science and Technology (up to a maximum of RMB 20 million). Thus,EZVIZ Network became the de facto controller of EZVIZ Science and Technology.Disclosure website for provisional reports on significant related-party transactions:
| Title of provisional reports | Disclosure date | Disclosure website |
| Announcement on the Commencement of Financial Leasing Related-Party Transactions between Controlled Subsidiaries of Innovative Business and China Electronics Technology Leasing Co. Ltd. (No. 2018-062) | December 4th 2018 | www.cninfo.com.cn |
| Announcement on signing the Entrusted Management Agreement and related-party transactions with the controlling shareholder (Announcement No. 2019-026) | April 19th 2019 | www.cninfo.com.cn |
Hikvision 2019 Half Year Report
2. Significant guarantees
√Applicable □ Inapplicable
Hikvision 2019 Half Year Report
(1) Details of guarantees
Unit: RMB’0000
| Guarantees provided by the Company for subsidiaries | ||||||||
| Guaranteed party | Disclosure date of announcement of the guarantee cap | Guarantee Cap | Actual occurrence date (date of signing agreement) | Actual guaranteed amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for a related party or not |
| Hangzhou Hikvision Science and Technology Ltd. | April 18th 2019 | 700,000 | December 6th 2016 | 480,870.71 | Joint guarantee | 2016/12/06--2020/01/18 | No | Yes |
| Hangzhou Hikvision System Technology Ltd | April 18th 2019 | 80,000 | October 10th 2017 | 11,000.00 | Joint guarantee | 2018/2/2--2020/9/30 | No | Yes |
| Hikvision International co. ltd. | April 18th 2019 | 400,000 | December 27th 2017 | 20,984.66 | Joint guarantee | 2017/10/09--2019/09/20 | No | Yes |
| Hangzhou Haikang Zhicheng Investment and Development Ltd. | April 18th 2019 | 10,000 | July 30th 2018 | 1,200.00 | Joint guarantee | 2018/7/30-2019/7/19 | No | Yes |
| Hangzhou Hikvision Electronics Ltd. | April 18th 2019 | 500,000 | October 19th 2018 | 9,052.01 | Joint guarantee | 2018/10/19-2019/10/19 | No | Yes |
| Mo Yu Hai Shi Electronic Technology Ltd. | April 18th 2019 | 30,000 | March 26th 2019 | 18,560 | Joint guarantee | 2019/3/26-2035/03/26 | No | Yes |
| Yu Tian Hai Shi Mei Tian Electronic Technology Ltd. | April 18th 2019 | 30,000 | March 26th 2019 | 8,000 | Joint guarantee | 2019/3/26-2034/03/26 | No | Yes |
| Pi Shan Hai Shi Yong An Electronic Technology Ltd. | April 18th 2019 | 35,000 | March 26th 2019 | 17,600 | Joint guarantee | 2019/3/26-2040/03/26 | No | Yes |
| Luo Pu Hai Shi Ding Xin Electronic Science and Technology Ltd. | April 18th 2019 | 30,000 | March 26th 2019 | 14,400 | Joint guarantee | 2019/3/26-2035/03/26 | No | Yes |
Hikvision 2019 Half Year Report
| Guarantees provided by the Company for subsidiaries | ||||||||
| Guaranteed party | Disclosure date of announcement of the guarantee cap | Guarantee Cap | Actual occurrence date (date of signing agreement) | Actual guaranteed amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for a related party or not |
| Urumchi HaiShi Xin’An Electronic Technology Ltd. | April 18th 2019 | 50,000 | March 29th 2019 | 16,000 | Joint guarantee | 2019/3/29-2028/06/20 | No | Yes |
| Chongqing Hikvision Science and Technologies Ltd. | April 18th 2019 | 60,000 | Not happened during the reporting period | |||||
| Chongqing Hikvision System Technology Ltd. | April 18th 2019 | 60,000 | Not happened during the reporting period | |||||
| Chengdu Hikvision Digital Technology Ltd. | April 18th 2019 | 50,000 | Not happened during the reporting period | |||||
| Wuhan Hikvision Technology Ltd. | April 18th 2019 | 50,000 | Not happened during the reporting period | |||||
| Wuhan Hikvision Science and Technology Ltd. | April 18th 2019 | 50,000 | Not happened during the reporting period | |||||
| Hikvision Xi’an Xueliang Construction Project Management Ltd. | April 18th 2019 | 67,000 | Not happened during the reporting period | |||||
| Xi’An Hikvision Digital Technology Ltd. | April 18th 2019 | 30,000 | Not happened during the reporting period | |||||
| Pyronix Limited | April 18th 2019 | 10,082 | Not happened during the reporting period | |||||
| Total guarantee cap for subsidiaries approved during the reporting period(B1) | 2,242,082.00 | Total actual guarantee amount for subsidiaries during the reporting period(B2) | 630,380.86 | |||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period(B3) | 2,242,082.00 | Total actual guarantee balance for subsidiaries at the end of the reporting period(B4) | 597,667.38 | |||||
| Total guarantee amount provided by the Company | ||||||||
| Total guarantee cap approved during the reporting period | 2,242,082.00 | Total actual guarantee amount during the reporting period | 630,380.86 | |||||
| Total approved guarantee cap at the end of reporting period | 2,242,082.00 | Total actual guarantee balance at the end of the reporting period | 597,667.38 | |||||
| Portion of the total actual guarantee amount in net assets of the Company | 16.37% | |||||||
| Of which | ||||||||
Hikvision 2019 Half Year Report
| Guarantees provided by the Company for subsidiaries | |||||||||
| Guaranteed party | Disclosure date of announcement of the guarantee cap | Guarantee Cap | Actual occurrence date (date of signing agreement) | Actual guaranteed amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for a related party or not | |
| The balance of guarantee for shareholders, actual controllers and their affiliates. (D) | 0 | ||||||||
| Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset ratio over 70% (E) | 501,855.37 | ||||||||
| Total amount of guarantee exceeding 50% of net assets (F) | 0 | ||||||||
| Total guarantee amount of the above-mentioned 3 kinds of guarantees (D+E+F) | 501,855.37 | ||||||||
Hikvision 2019 Half Year Report
(2) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the reporting period.
3. Other significant contracts
□ Applicable √ Inapplicable
No such case in the reporting period.XV. Social responsibility
1. Significant environmental problems
Whether the Company or the Company’s subsidiaries are critical pollutant enterprises disclosed by nationalenvironmental protection departmentNo
2. Fulfillment of the social responsibility of targeted poverty alleviation
□ Applicable √ Inapplicable
The Company did not conduct any targeted poverty alleviation during the current reporting period and had nofuture arrangement for targeted poverty alleviation.XVI. Other significant events
□ Applicable √ Inapplicable
There was no other significant issues that need to be explained during the current reporting period.XVII. Significant events of the Company’s subsidiaries
□ Applicable √ Inapplicable
Hikvision 2019 Half Year Report
Section VI Changes in Shares and Information about ShareholdersI. Changes in Share Capital
1. Table of changes in share capital
Unit: Share
| Before the change | Changes in the period (+, -) | After the change | |||||||
| Shares | Ratio | New Shares Issued | Bonus share | Share transferred from capital reserve | Others | Sub-total | Shares | Ratio | |
| 1. Shares subject to conditional restriction(s) | 1,313,073,005 | 14.23% | 121,195,458 | -160,318,941 | -39,123,483 | 1,273,949,522 | 13.63% | ||
| 3) Other domestic shares | 274,212,680 | 2.97% | 120,971,358 | -62,791,821 | 58,179,537 | 332,392,217 | 3.56% | ||
| held by domestic natural person | 274,212,680 | 2.97% | 120,971,358 | -62,791,821 | 58,179,537 | 332,392,217 | 3.56% | ||
| 4) Foreign shares | 1,038,860,325 | 11.26% | 224,100 | -97,527,120 | -97,303,020 | 941,557,305 | 10.07% | ||
| held by overseas natural person | 1,038,860,325 | 11.26% | 224,100 | -97,527,120 | -97,303,020 | 941,557,305 | 10.07% | ||
| 2. Shares without restriction | 7,914,197,468 | 85.77% | 159,809,316 | 159,809,316 | 8,074,006,784 | 86.37% | |||
| 1) RMB ordinary shares | 7,914,197,468 | 85.77% | 159,809,316 | 159,809,316 | 8,074,006,784 | 86.37% | |||
| 3. Total | 9,227,270,473 | 100.00% | 121,195,458 | -509,625 | 120,685,833 | 9,347,956,306 | 100.00% | ||
Hikvision 2019 Half Year Report
Reason for the changes in share capital
√ Applicable □ Inapplicable
(1) Grants of 2018 Restricted Share Incentive Scheme
On December 20th 2018, Resolution for Granting Restricted Shares to Planned Grantees for 2018 Restricted Shares Incentive Scheme was approved by the 8
th
meeting of the fourth board. According to the Listed Company Equity Incentive Measures and other administration or relevant laws, regulations and departmentalrules and regulated documents, as well as 2018 Restricted Shares Incentive Scheme (edited draft) and authorizations approved by the 2018 2
nd
extraordinary generalmeeting, the Company has completed granting and registration of 2018 Restriced Shares Incentive Sheme, with 6095 granted personnel, and 121,195,458 grantedshares which were listed on January 18
th2019. The Company’s total capital share increased from 9,227,270,473 shares to 9,348,465,931 shares.
(2) The third time repurchasing and cancelling shares for 2014 Restricted Share Incentive Scheme:
On December 3
rd2018, Resolution for the Third Repurchase and Cancelation of the Locked Shares that Already Granted for 2014 Restricted Share IncentiveSchemes was approved by the 7
th
meeting of the fourth Board. Authorized by the first extraordinary general meeting for 2014, the board agreed to repurchase andcancel a total of 509,625 restricted shares held by a portion of grantees not fulfilling the incentive conditions. On June 26
th2019, repurchase and cancelation processof the restricted shares was complete. The Company’s total share capital decreased from 9,348,465,931 shares to 9,347,956,306.
Approval for changes in share capital
√ Applicable □ Inapplicable
(1) Grants of 2018 Restricted Share Incentive Scheme
On December 20
th
2018, Resolution for Granting Restricted Shares to Planned Grantees for 2018 Restricted Shares Incentive Scheme was approved by the 8
th
Hikvision 2019 Half Year Report
meeting of the fourth board. Authorized by the 2018 2
ndextraordinary general meeting, the board agreed to grant 126,518,281 shares to 6341 grantees as planned in2018 Restricted Shares Incentive Scheme, the granting date was December 20
th2018. In the payment process of capital, part of the grantees partially or completelyrenounce the subscription of the incentive shares, resulted in an actual grantees of 6095 personnels, with 121,195,458 actual granted shares.
(2) The third time repurchasing and cancelling shares for 2014 Restricted Share Incentive Scheme:
On December 3
rd2018, Resolution for the Third Repurchase and Cancelation of the Locked Shares that Already Granted for 2014 Restricted Share IncentiveSchemes was approved by the 7
thmeeting of the fourth Board. Authorized by the first extraordinary general meeting for 2014, the board of directors agreed torepurchase and cancel 509,625 restricted shares held by a portion of grantees not fulfilling the incentive conditions. On June 26
th2019, repurchase and cancelationprocess of the restricted shares was complete. The Company’s total share capital decreased from 9,348,465,931 shares to 9,347,956,306.
Transfer for changes in share capital
√ Applicable □ Inapplicable
(1) Grants of 2018 Restricted Share Incentive Scheme
2018 granted restricted incentive shares were listed on January 18
th2019. The Company’s total capital shares were increased by 121,195,458 shares to9,348,465,931 shares from 9,227,270,473 shares.
(2) The third time repurchasing and cancelling shares for 2014 Restricted Share Incentive Scheme:
On June 26
th
2019, the process of the third time repurchasing and cancelling shares for 2014 Restricted Share Incentive Scheme was complete. The Company’stotal share capital decreased from 9,348,465,931 shares to 9,347,956,306 shares by 509,625 shares.
Hikvision 2019 Half Year Report
Information about the implementation of share repurchase
□Applicable √Inapplicable
Effects of changes in share capital on the basic earnings per share ("EPS"), diluted EPS, net assets per share attributable to common shareholders of the Company,and other financial indexes over the last year and last period
□Applicable √Inapplicable
Other contents that the Company considers necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: Share
| Name of shareholder | Opening restricted shares | Vested in current period | Increased in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| Gong Hongjia | 1,038,792,525 | 97,500,000 | 0 | 941,292,525 | Executives locked shares | According to the relevant provisions of executives shares management |
| Grantees of restricted share incentive plan (consolidated) | 112,422,448 | 63,562,701 | 121,195,458 | 169,545,580 | Restricted incentive equity shares | January 8th 2019 and January 21st 2019 |
| Hu Yangzhong | 136,391,608 | 0 | 151,950 | 136,543,558 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| Wu Weiqi | 8,301,742 | 0 | 137,700 | 8,439,442 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares |
Hikvision 2019 Half Year Report
| Name of shareholder | Opening restricted shares | Vested in current period | Increased in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| Jiang Haiqing | 8,352,661 | 0 | 116,700 | 8,469,361 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | According to the relevant provisions of executives shares management |
| Jia Yonghua | 4,166,433 | 0 | 43,800 | 4,210,233 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| Li Pan | 4,165,551 | 0 | 43,800 | 4,209,351 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| Huang Fanghong | 145,125 | 0 | 74,250 | 219,375 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| Jiang Yufeng | 60,375 | 0 | 109,950 | 170,325 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| He Hongli | 52,575 | 0 | 113,250 | 165,825 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| Fu Baijun | 135,450 | 0 | 136,650 | 272,100 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| Xu Lirong | 59,700 | 0 | 101,850 | 161,550 | Executives locked shares+ partial of the unlocked restricted shares turning into executives locked shares | |
| Wang Qiuchao | 15,000 | 0 | 11,250 | 26,250 | Executives locked shares+ partial of the unlocked |
Hikvision 2019 Half Year Report
| Name of shareholder | Opening restricted shares | Vested in current period | Increased in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| restricted shares turning into executives locked shares | ||||||
| Qu Liyang | 11,812 | 0 | 0 | 11,812 | As taking the Company’s Director position, partial of the shares held were turning into executives locked shares. | |
| Pu Shiliang | 0 | 0 | 130,785 | 130,785 | Partial of the unlocked restricted shares turning into executives locked shares | |
| Jin Duo | 0 | 0 | 16,425 | 16,425 | Partial of the unlocked restricted shares turning into executives locked shares | |
| Cai Changyang | 0 | 0 | 16,425 | 16,425 | Partial of the unlocked restricted shares turning into executives locked shares | |
| Bi Huijuan | 0 | 0 | 22,500 | 22,500 | Partial of the unlocked restricted shares turning into executives locked shares | |
| Jin Yan | 0 | 0 | 26,100 | 26,100 | Partial of the unlocked restricted shares turning into executives locked shares | |
| Total | 1,313,073,005 | 161,062,701 | 122,448,843 | 1,273,949,522 | -- |
Hikvision 2019 Half Year Report
3. Issuance and listing of securities
1. Securities (exclude preferred share) issued during the reporting period
√Applicable □Inapplicable
| Stock and the name of its drivatives | Issuance date | Issuance price (or interest rate) | Issuance amount | Date of listing | Amount that approved for listings | Date of transaction termination |
| Restricted shares | December 20th 2018 | 16.98 RMB | 126,518,281 | January 18th 2019 | 121,195,458 | -- |
| Total number of common shareholders at the end of the reporting period | 298,994 | Total number of preferred shareholders (if any) whose voting rights have been recovered at the end of the reporting period | 0 |
Hikvision 2019 Half Year Report
| Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them | ||||||||
| Name of shareholder | Nature of shareholder | Share- holding percentage (%) | Total shares held at the end of the reporting period | Increase/ decrease during the reporting period | The number of common shares held with trading restrictions | The number of shares held without trading restrictions | Pledged or frozen | |
| Status | Amount | |||||||
| China Electronics Technology HIK Group Co., Ltd. | State-owned corporation | 39.09% | 3,653,674,956 | 0 | 0 | 3,653,674,956 | Pledged | 50,000,000 |
| Gong Hongjia | Overseas individual | 13.43% | 1,255,056,700 | 0 | 941,292,525 | 313,764,175 | Pledged | 476,885,300 |
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | Overseas corporation | 7.19% | 671,737,077 | -141,155,420 | 0 | 671,737,077 | - | - |
| Xinjiang Weixun Investment Management Limited Partnership | Domestic non-state- owned corporation | 4.82% | 450,795,176 | 0 | 0 | 450,795,176 | Pledged | 175,833,000 |
| Xinjiang Pukang Investment Limited Partnership | Domestic non-state- owned corporation | 1.95% | 182,510,174 | 0 | 0 | 182,510,174 | Pledged | 72,570,000 |
| Hu Yangzhong | Domestic Individual | 1.95% | 182,186,477 | 0 | 136,639,858 | 45,546,619 | Pledged | 62,910,469 |
| The 52nd Research Institute at China Electronics Technology Group Corporation | State-owned corporation | 1.93% | 180,775,044 | 0 | 0 | 180,775,044 | - | - |
| CITIC Securities Company Limited | Domestic non-state- owned corporation | 0.93% | 87,171,196 | 5,657,536 | 0 | 87,171,196 | - | - |
| Central Huijin Investment Ltd. | State-owned corporation | 0.70% | 65,818,800 | 0 | 0 | 65,818,800 | - | - |
| Guo Minfang | Domestic Individual | 0.41% | 38,474,700 | 1,712,500 | 0 | 38,474,700 | - | - |
Hikvision 2019 Half Year Report
| Explanation on associated relationship or concerted actions among the above-mentioned shareholders: | China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group Co., Ltd. are all subject to control of China Electronics Technology Group Co. Ltd.. Ms. Chen Chunmei, limited partner of Xinjiang Pukang Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership. Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-concert parties in accordance with the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the Listed Company. | |||
| Particulars about shares held by the Top 10 common shareholders holding shares that are not subject to trading restriction(s) | ||||
| Name of shareholder | Number of common shares without trading restrictions held at the period-end | Type of shares | ||
| Type | Number | |||
| China Electronics Technology HIK Group Co., Ltd. | 3,653,674,956 | RMB ordinary shares | 3,653,674,956 | |
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | 671,737,077 | RMB ordinary shares | 671,737,077 | |
| Xinjiang Weixun Investment Management Limited Partnership | 450,795,176 | RMB ordinary shares | 450,795,176 | |
| Gong Hongjia | 313,764,175 | RMB ordinary shares | 313,764,175 | |
| Xinjiang Pukang Investment Limited Partnership | 182,510,174 | RMB ordinary shares | 182,510,174 | |
| The 52nd Research Institute at China Electronics Technology Group Co. Ltd. | 180,775,044 | RMB ordinary shares | 180,775,044 | |
| CITIC Securities Company Limited | 87,171,196 | RMB ordinary shares | 87,171,196 | |
| Central Huijin Investment Ltd. | 65,818,800 | RMB ordinary shares | 65,818,800 | |
| Hu Yangzhong | 45,546,619 | RMB ordinary shares | 45,546,619 | |
| Guo Minfang | 38,474,700 | RMB ordinary shares | 38,474,700 | |
| Explanation on associated relationship and concerted actions among top ten common shareholders without trading | China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group Co., Ltd. are all subject to control of China Electronics Technology Group Co. Ltd. Ms. Chen Chunmei, limited partner of Xinjiang | |||
Hikvision 2019 Half Year Report
| restrictions, and among top ten common shareholders and top ten common shareholders without trading restrictions | Pukang Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership. Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-concert parties in accordance with the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the Listed Company. |
Hikvision 2019 Half Year Report
III. Particulars about change in controlling shareholder or actual controllerChange of the controlling shareholder during the current reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
No such cases in the current reporting period.
Hikvision 2019 Half Year Report
Section VII Information of Preferred Shares
□ Applicable √ Inapplicable
No existed preferred shares for the Company during the current reporting period.
Hikvision 2019 Half Year Report
Section VIII Information about Directors, Supervisors, Senior ManagementI. Shareholding changes of directors, supervisors, senior management personnel
√Applicable □ Inapplicable
| Name | Title | Tenure status | Shares held at the beginning of the Period (Shares) | Shares increased during the Period (shares) | Shares decreased during the Period (Shares) | Shares held at the end of the Period (Shares) | Number of restricted shares held at the beginning of the period (shares) | Number of restricted shares granted during the period (shares) | Number of restricted shares held at the end of the period (shares) |
| Chen Zongnian | Chairman | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Gong Hongjia | Vice Chairman | Incumbent | 1,255,056,700 | 0 | 0 | 1,255,056,700 | 0 | 0 | 0 |
| Qu Liyang | Director | Incumbent | 15,750 | 0 | 0 | 15,750 | 0 | 0 | 0 |
| Hu Yangzhong | Director, General Manager (CEO) | Incumbent | 182,186,477 | 0 | 0 | 182,186,477 | 248,250 | 0 | 96,300 |
| Wu Weiqi | Director, Standing Deputy General Manager | Incumbent | 11,371,389 | 0 | 0 | 11,371,389 | 226,800 | 0 | 89,100 |
| Cheng Tianzong | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Hikvision 2019 Half Year Report
| Name | Title | Tenure status | Shares held at the beginning of the Period (Shares) | Shares increased during the Period (shares) | Shares decreased during the Period (Shares) | Shares held at the end of the Period (Shares) | Number of restricted shares held at the beginning of the period (shares) | Number of restricted shares granted during the period (shares) | Number of restricted shares held at the end of the period (shares) |
| Lu Jianzhong | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wang Zhidong | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Hong Tianfeng | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cheng Huifang | Supervisor Chairman | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wang Qiuchao | Supervisor | Incumbent | 20,000 | 15,000 | 0 | 35,000 | 0 | 0 | 0 |
| Xu Lirong | Supervisor; person in charge of internal audit | Incumbent | 303,000 | 0 | 0 | 303,000 | 167,550 | 0 | 65,700 |
| Jiang Haiqing | Senior Deputy General Manager | Incumbent | 11,390,882 | 0 | 0 | 11,390,882 | 190,500 | 0 | 73,800 |
| Jia Yonghua | Senior Deputy General Manager | Incumbent | 5,701,244 | 0 | 0 | 5,701,244 | 109,500 | 0 | 65,700 |
| Li Pan | Senior Deputy General Manager | Incumbent | 5,700,068 | 0 | 0 | 5,700,068 | 109,500 | 0 | 65,700 |
| He Hongli | Senior Deputy General Manager | Incumbent | 331,500 | 0 | 0 | 331,500 | 196,050 | 0 | 82,800 |
Hikvision 2019 Half Year Report
| Name | Title | Tenure status | Shares held at the beginning of the Period (Shares) | Shares increased during the Period (shares) | Shares decreased during the Period (Shares) | Shares held at the end of the Period (Shares) | Number of restricted shares held at the beginning of the period (shares) | Number of restricted shares granted during the period (shares) | Number of restricted shares held at the end of the period (shares) |
| Fu Baijun | Senior Deputy General Manager | Incumbent | 390,000 | 105,000 | 0 | 495,000 | 254,550 | 105,000 | 222,900 |
| Cai Changyang | Senior Deputy General Manager | Incumbent | 109,500 | 0 | 0 | 109,500 | 109,500 | 0 | 65,700 |
| Xu Ximing | Senior Deputy General Manager | Incumbent | 0 | 197,000 | 0 | 197,000 | 0 | 197,000 | 197,000 |
| Bi Huijuan | Senior Deputy General Manager | Incumbent | 150,000 | 123,000 | 0 | 273,000 | 150,000 | 123,000 | 213,000 |
| Jiang Yufeng | Senior Deputy General Manager | Incumbent | 325,500 | 0 | 0 | 325,500 | 183,750 | 0 | 67,050 |
| Pu Shiliang | Senior Deputy General Manager | Incumbent | 293,900 | 100,000 | 0 | 393,900 | 243,900 | 100,000 | 189,640 |
| Jin Duo | Senior Deputy General Manager | Incumbent | 109,500 | 0 | 0 | 109,500 | 109,500 | 0 | 65,700 |
| Jin Yan | Senior Deputy General Manager, Person in charge of finance | Incumbent | 174,000 | 110,000 | 0 | 284,000 | 174,000 | 110,000 | 214,400 |
| Huang Fanghong | Senior Deputy General Manager, Board Secretary | Incumbent | 292,500 | 110,000 | 0 | 402,500 | 74,250 | 110,000 | 110,000 |
Hikvision 2019 Half Year Report
| Name | Title | Tenure status | Shares held at the beginning of the Period (Shares) | Shares increased during the Period (shares) | Shares decreased during the Period (Shares) | Shares held at the end of the Period (Shares) | Number of restricted shares held at the beginning of the period (shares) | Number of restricted shares granted during the period (shares) | Number of restricted shares held at the end of the period (shares) |
| Chen Junke | Senior Deputy General Manager | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | 1,473,921,910 | 760,000 | 0 | 1,474,681,910 | 2,547,600 | 745,000 | 1,884,490 |
Hikvision 2019 Half Year Report
Section IX Corporate BondsWhether the Company has publicly issued corporate bonds on stock exchange place, which has not terminated orterminated but fail to collect the full payment before the half year report authorized disclosure date.
□Yes √No
Hikvision 2019 Half Year Report
Section X Financial Report
I. Audit reportWhether audit has been performed on this interim financial report
□ Yes √ No
The Company’s 2019 Half Year Report has not been audited
Hikvision 2019 Half Year Report
At June 30
th2019
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Assets: | |||
| Cash and bank balances | (V)1 | 21,845,904,274.19 | 26,559,675,452.93 |
| Held-for-trading financial assets | (V)2 | 2,640,560.25 | 1,860,050.59 |
| Notes receivable | (V)3 | 365,698,673.52 | 295,598,790.07 |
| Accounts receivable | (V)4 | 19,126,324,207.05 | 16,619,441,281.18 |
| Receivables for financing | (V)5 | 1,386,990,472.51 | 2,247,357,583.28 |
| Prepayments | (V)6 | 657,396,916.33 | 460,304,219.65 |
| Other receivables | (V)7 | 540,162,933.69 | 586,594,721.43 |
| Including: Dividends receivable | (V)7.2 | 17,357,220.31 | - |
| Inventories | (V)8 | 8,611,208,963.08 | 5,725,104,153.41 |
| Non-current assets due within one year | (V)9 | 350,602,927.53 | 380,795,020.47 |
| Other current assets | (V)10 | 976,030,945.94 | 730,720,129.59 |
| Total Current Assets | 53,862,960,874.09 | 53,607,451,402.60 | |
| Non-current Assets: | |||
| Long-term receivables | (V)11 | 841,966,899.45 | 705,512,368.17 |
| Long-term equity investment | (V)12 | 167,086,688.94 | 163,301,844.56 |
| Other non-current financial assets | (V)13 | 296,004,271.50 | 290,966,813.00 |
| Fixed assets | (V)14 | 5,316,389,046.77 | 5,082,415,160.10 |
| Construction in progress | (V)15 | 523,989,072.99 | 416,092,413.42 |
| Intangible assets | (V)16 | 980,053,270.73 | 869,913,050.09 |
| Goodwill | (V)17 | 263,264,328.19 | 212,269,337.23 |
| Long-term deferred expenses | (V)18 | 32,406,169.67 | - |
| Deferred tax assets | (V)19 | 602,529,537.21 | 534,346,941.25 |
| Other non-current assets | (V)20 | 1,458,251,453.08 | 1,582,750,600.80 |
| Total Non-current Assets | 10,481,940,738.53 | 9,857,568,528.62 | |
| Total Assets | 64,344,901,612.62 | 63,465,019,931.22 |
Hikvision 2019 Half Year Report
At June 30
th
2019
Consolidated Balance Sheet - continued
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Liabilities: | |||
| Short-term borrowings | (V)21 | 4,552,318,503.27 | 3,465,655,688.29 |
| Held-for-trading financial liabilities | (V)22 | 1,352,869.55 | 290,998.43 |
| Notes payable | (V)23 | 804,615,788.76 | 463,479,760.54 |
| Accounts payable | (V)24 | 10,137,582,130.28 | 10,301,665,725.20 |
| Receipts in advance | (V)25 | 671,206,927.56 | 641,430,490.22 |
| Payroll payable | (V)26 | 1,255,053,620.27 | 1,921,741,131.63 |
| Taxes payable | (V)27 | 1,600,199,856.93 | 1,418,921,664.57 |
| Other payables | (V)28 | 1,012,155,039.59 | 2,953,454,987.95 |
| Including : Dividends payable | (V)28.2 | 145,445,815.24 | 119,917,640.92 |
| Non-current liabilities due within one year | (V)29 | 15,842,344.30 | 3,178,171,147.16 |
| Other current liabilities | (V)30 | 2,320,850,513.78 | 364,984,759.94 |
| Total Current Liabilities | 22,371,177,594.29 | 24,709,796,353.93 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)31 | 4,631,400,000.00 | 440,000,000.00 |
| Long-term payables | (V)32 | 30,924,471.16 | - |
| Provisions | (V)33 | 84,529,179.89 | 77,625,238.49 |
| Deferred income | (V)34 | 294,503,518.74 | 293,179,089.13 |
| Total non-current liabilities | 5,041,357,169.79 | 810,804,327.62 | |
| Total liabilities | 27,412,534,764.08 | 25,520,600,681.55 | |
| Owners’ Equity | |||
| Share capital | (V)35 | 9,347,956,306.00 | 9,227,270,473.00 |
| Capital reserves | (V)36 | 4,127,737,176.28 | 1,960,939,660.52 |
| Less: Treasury shares | (V)37 | 2,320,850,513.78 | 364,984,759.94 |
| Other comprehensive income | (V)38 | (71,142,360.83) | (76,065,167.67) |
| Surplus reserves | (V)39 | 4,460,712,358.45 | 4,460,712,358.45 |
| Retained earnings | (V)40 | 20,970,787,623.56 | 22,359,856,271.42 |
| Total owners' equity attributable to owner of the Company | 36,515,200,589.68 | 37,567,728,835.78 | |
| Minority equity | 417,166,258.86 | 376,690,413.89 | |
| Total owners' equity | 36,932,366,848.54 | 37,944,419,249.67 | |
| Total liabilities and owners' equity | 64,344,901,612.62 | 63,465,019,931.22 |
Hikvision 2019 Half Year Report
At June 30
th
2019
Balance sheet of the parent company
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Assets: | |||
| Cash and bank balances | 16,830,967,951.30 | 19,192,461,228.22 | |
| Notes receivable | 184,987,466.87 | 121,404,793.77 | |
| Accounts receivable | (XV)1 | 19,304,623,092.71 | 15,204,519,161.71 |
| Receivables for financing | 110,384,318.45 | 228,210,299.95 | |
| Prepayments | 109,880,681.78 | 132,344,929.55 | |
| Other receivables | (XV)2 | 592,770,043.60 | 522,987,955.34 |
| Including:Dividends receivables | (XV)2.2 | 19,907,220.31 | 2,550,000.00 |
| Inventories | 187,764,707.08 | 168,885,723.93 | |
| Other current assets | 31,707,803.15 | 93,661,315.14 | |
| Total Current Assets | 37,353,086,064.94 | 35,664,475,407.61 | |
| Non-current Assets: | |||
| Long-term equity investment | (XV)3 | 4,529,528,742.40 | 4,361,147,395.90 |
| Other non-current financial assets | 293,110,051.50 | 290,956,813.00 | |
| Fixed assets | 2,806,709,795.09 | 2,844,176,300.34 | |
| Construction in progress | 69,557,314.65 | 65,156,482.70 | |
| Intangible assets | 201,596,788.27 | 197,147,608.73 | |
| Deferred tax assets | 134,005,079.74 | 221,779,547.02 | |
| Other non-current assets | 10,748,834.08 | 14,601,579.55 | |
| Total Non-current Assets | 8,045,256,605.73 | 7,994,965,727.24 | |
| Total Assets | 45,398,342,670.67 | 43,659,441,134.85 |
Hikvision 2019 Half Year Report
At June 30
th2019
Balance sheet of the company - continued
Unit: RMB
| Item | Notes | Closing balance | Opening balance (restated) |
| Current Liabilities: | |||
| Short-term borrowings | 600,000,000.00 | ||
| Accounts payable | 275,094,219.09 | 356,787,605.91 | |
| Receipts in advance | 176,830,166.10 | 204,337,524.21 | |
| Payroll payable | 949,285,270.07 | 1,272,626,004.95 | |
| Taxes payable | 1,210,856,933.79 | 987,057,652.70 | |
| Other payables | 3,045,131,065.31 | 2,529,600,057.31 | |
| Including : Dividends payable | 142,995,815.24 | 117,467,640.92 | |
| Non-current liabilities due within one year | - | 3,172,727,888.37 | |
| Other current liabilities | 2,320,850,513.78 | 364,984,759.94 | |
| Total Current Liabilities | 8,578,048,168.14 | 8,888,121,493.39 | |
| Non-current Liabilities: | |||
| Long-term borrowings | 3,126,800,000.00 | - | |
| Provisions | 61,415,503.32 | 52,956,535.09 | |
| Deferred Income | 149,273,043.01 | 186,747,708.01 | |
| Total non-current liabilities | 3,337,488,546.33 | 239,704,243.10 | |
| Total liabilities | 11,915,536,714.47 | 9,127,825,736.49 | |
| Owners’ Equity | |||
| Share capital | 9,347,956,306.00 | 9,227,270,473.00 | |
| Capital reserves | 4,068,508,960.64 | 1,883,262,407.46 | |
| Less: Treasury shares | 2,320,850,513.78 | 364,984,759.94 | |
| Other comprehensive income | (1,015,309.11) | (2,178,538.52) | |
| Surplus reserves | 4,460,712,358.45 | 4,460,712,358.45 | |
| Retained earnings | 17,927,494,154.00 | 19,327,533,457.91 | |
| Total owners' equity | 33,482,805,956.20 | 34,531,615,398.36 | |
| Total liabilities and owners' equity | 45,398,342,670.67 | 43,659,441,134.85 |
Hikvision 2019 Half Year Report
For the reporting period from January 1
st 2019 to June 30
th
2019
Consolidated Income Statement
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Total operating income | (V)41 | 23,923,273,424.50 | 20,875,758,224.63 |
| Less：Total operating costs | (V)41 | 12,840,506,333.68 | 11,586,298,826.07 |
| Business taxes and surcharges | (V)42 | 167,547,905.92 | 177,890,618.60 |
| Selling expenses | 3,213,260,109.16 | 2,649,393,264.42 | |
| Administrative expenses | 731,110,243.76 | 590,848,451.85 | |
| Research and Development (R&D) expenses | 2,504,800,049.71 | 1,912,682,599.24 | |
| Financial expenses | (V)43 | (129,943,427.26) | (158,521,317.81) |
| Including：Interest expenses | 93,002,377.62 | 62,554,282.07 | |
| Interest income | 293,012,529.35 | 201,752,441.15 | |
| Credit impairment losses | (V)44 | 134,526,432.57 | - |
| Impairment losses of assets | (V)45 | 80,143,742.65 | 325,897,698.19 |
| Add: Other Income | (V)46 | 722,566,221.54 | 837,626,393.59 |
| Investment income | (V)47 | 21,224,355.97 | 78,267,116.16 |
| Including: Investment gains (losses) in associated enterprise and joint-venture enterprise | (4,215,155.62) | 2,538,090.69 | |
| Gains (losses) from changes in fair values | (V)48 | 1,866,394.46 | (6,102,548.02) |
| Asset disposal income (loss) | 810,043.90 | 3,763,578.84 | |
| II. Operating profit | 5,127,789,050.18 | 4,704,822,624.64 | |
| Add: Non-operating income | (V)49 | 38,307,078.60 | 73,150,373.86 |
| Less: Non-operating expenses | (V)50 | 8,414,181.91 | 4,584,127.20 |
| III. Total profit | 5,157,681,946.87 | 4,773,388,871.30 | |
| Less: Income tax expenses | (V)51 | 933,920,656.68 | 665,802,758.48 |
| IV. Net profit | 4,223,761,290.19 | 4,107,586,112.82 | |
| 4.1 Classification by continuous operation | |||
| (a) Net profit on continuous operation | 4,223,761,290.19 | 4,107,586,112.82 | |
| (b) Net loss on terminated operation | - | ||
| 4.2 Classification by attribution of ownership | |||
| (a) Profit or loss attributable to minority shareholders | 7,006,079.95 | (39,809,423.04) | |
| (b) Net profit attributable to owners of parent company | 4,216,755,210.24 | 4,147,395,535.86 | |
| V. Other comprehensive income, net of income tax | 5,491,667.93 | (14,284,828.74) | |
| Other comprehensive income attributable to owners of the Company, net of tax | 4,922,806.84 | (12,898,545.71) | |
| (I) Items that will not be reclassified subsequently to profit or loss | - | ||
| (II) Other comprehensive income to be reclassified to profit or loss in subsequent periods | 4,922,806.84 | (12,898,545.71) |
Hikvision 2019 Half Year Report
| Item | Notes | Amount for the current period | Amount for the prior period |
| 1. Gains and losses from changes in fair value of other current assets | 14,124,975.09 | - | |
| 2. Exchange differences arising on conversion of financial statements denominated in foreign currencies | (9,202,168.25) | (12,898,545.71) | |
| Other comprehensive income attributable to minority interests, net of tax | 568,861.09 | (1,386,283.03) | |
| VI. Total comprehensive income | 4,229,252,958.12 | 4,093,301,284.08 | |
| Total comprehensive income attributable to owners of the parent company | 4,221,678,017.08 | 4,134,496,990.15 | |
| Total comprehensive income attributable to minority shareholders | 7,574,941.04 | (41,195,706.07) | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | (XVI)2 | 0.444 | 0.449 |
| (II) Diluted earnings per share | (XVI)2 | 0.444 | 0.449 |
Hikvision 2019 Half Year Report
For the reporting period from January 1
st
2019 to June 30
th
2019
Income statement of the parent company
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Total operating income | (XV)4 | 10,434,243,978.59 | 9,137,644,216.56 |
| Less: Total operating Cost | (XV)4 | 3,079,780,648.92 | 2,610,963,590.76 |
| Business taxes and surcharges | 111,602,431.74 | 122,576,976.71 | |
| Selling expenses | 1,500,387,153.95 | 1,238,887,252.96 | |
| Administrative expenses | 346,843,922.68 | 274,520,392.25 | |
| Research and Development (R&D) expenses | 1,779,985,365.59 | 1,529,377,718.18 | |
| Financial expenses | (74,584,512.33) | (8,819,870.56) | |
| Including : Interest expenses | 61,705,246.69 | 24,990,620.80 | |
| Interest income | 268,165,821.94 | 187,046,767.71 | |
| Impairment losses of assets | (49,569,282.84) | 280,443,036.30 | |
| Credit impairment losses | (653,420,471.92) | ||
| Add: Other income | 635,767,724.45 | 766,533,199.09 | |
| Investment income | (XV)5 | 17,050,928.15 | 68,579,010.57 |
| Including: Investment gain (loss) in associated enterprise and joint-venture enterprise | (2,874,991.72) | 1,630,985.74 | |
| Gains (losses) from changes in fair values | 2,153,238.50 | - | |
| Asset disposal income (loss) | 181,748.65 | 3,744,349.94 | |
| II. Operating profit | 5,048,372,362.55 | 3,928,551,679.56 | |
| Add: Non-operating income | 8,215,858.64 | 40,362,676.29 | |
| Less: Non-operating expenses | 5,237,082.32 | 856,317.26 | |
| III. Total profit | 5,051,351,138.87 | 3,968,058,038.59 | |
| Less: Income tax expenses | 845,566,584.68 | 548,124,895.23 | |
| IV. Net profit | 4,205,784,554.19 | 3,419,933,143.36 | |
| V. Other comprehensive income, net of income tax | 1,163,229.41 | - | |
| VI. Total comprehensive income | 4,206,947,783.60 | 3,419,933,143.36 |
Hikvision 2019 Half Year Report
For the reporting period from January 1
st
2019 to June 30
th
2019Consolidated Cash Flow Statement
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods or rendering of services | 25,100,138,387.74 | 22,109,383,677.92 | |
| Receipts of tax refunds | 1,342,631,486.14 | 1,773,794,015.21 | |
| Other cash receipts relating to operating activities | (V)52(1) | 584,492,082.01 | 450,666,762.39 |
| Sub-total of cash inflows from operating activities | 27,027,261,955.89 | 24,333,844,455.52 | |
| Cash payments for goods purchased and services received | 18,092,259,319.13 | 17,665,339,796.23 | |
| Cash paid to and on behalf of employees | 4,629,022,309.36 | 3,584,062,421.13 | |
| Payments of various types of taxes | 2,602,541,375.69 | 2,477,876,007.17 | |
| Other cash payments relating to operating activities | (V)52(2) | 2,134,502,744.89 | 2,227,759,588.99 |
| Sub-total of cash outflows from operating activities | 27,458,325,749.07 | 25,955,037,813.52 | |
| Net Cash flows from Operating Activities | (V)53(1) | (431,063,793.18) | (1,621,193,358.00) |
| II. Cash flows from Investing Activities: | |||
| Cash receipts from recovery of investments | - | 3,590,000,000.00 | |
| Cash receipts from investment income | 8,076,808.70 | 75,731,655.76 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 84,652,360.44 | 6,667,459.97 | |
| Other cash receipts relating to investing activities | (V)52(3) | - | 1,190,562.94 |
| Sub-total of cash inflows from investing activities | 92,729,169.14 | 3,673,589,678.67 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 730,479,938.23 | 1,573,966,251.59 | |
| Cash paid to acquire investments | 2,884,220.00 | 1,100,000,000.00 | |
| Net cash paid to aquire subsidiaries and other business units | 44,095,782.07 | - | |
| Other cash payments relating to investing activities | (V)52(4) | - | 13,500,000.00 |
| Sub-total of cash outflows from investing activities | 777,459,940.30 | 2,687,466,251.59 | |
| Net cash flows from Investing Activities | (684,730,771.16) | 986,123,427.08 | |
| III. Cash flows from financing activities: | |||
| Cash receipts from capital contributions | 18,220,262.17 | 12,289,000.00 | |
| Including: cash receipts from capital contributions from minority owners of subsidiaries | 18,220,262.17 | 12,289,000.00 | |
| Cash receipts from borrowings | 6,827,958,906.73 | 3,982,689,336.94 | |
| Other cash receipts relating to financing activities | - | - | |
| Sub-total of cash inflows from financing activities | 6,846,179,168.90 | 3,994,978,336.94 | |
| Cash repayments of borrowings | 1,598,774,442.94 | 1,726,234,534.31 | |
| Cash repayments of bonds | 3,079,240,000.00 | - | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 5,704,495,352.39 | 4,687,814,879.75 | |
| Including : Dividends and profits paid by subsidiaries to minority shareholders | 600,000.00 | - | |
| Other cash payments relating to financing activities | (V)52(5) | 31,290,856.75 | 6,555,746.33 |
| Sub-total of cash outflows from financing activities | 10,413,800,652.08 | 6,420,605,160.39 | |
| Net cash flows from Financing Activities | (3,567,621,483.18) | (2,425,626,823.45) | |
| IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | (86,394,171.66) | (1,968,297.26) | |
| V. Net Increase in Cash and Cash Equivalents | (V)53(1) | (4,769,810,219.18) | (3,062,665,051.63) |
| Add: Opening balance of Cash and Cash Equivalents | (V)53(1) | 26,031,011,733.89 | 16,029,185,269.17 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)53(2) | 21,261,201,514.71 | 12,966,520,217.54 |
Hikvision 2019 Half Year Report
For the reporting period from January 1
st 2019 to June 30
th
2019
Cash Flow Statements of the parent company
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Cash flows from Operating Activities:: | |||
| Cash receipts from the sale of goods and the rendering of services | 8,172,744,128.12 | 7,318,348,837.09 | |
| Receipts of tax refunds | 587,302,186.13 | 766,533,199.09 | |
| Other cash receipts relating to operating activities | 363,699,162.54 | 305,846,876.05 | |
| Sub-total of cash inflows from operating activities | 9,123,745,476.79 | 8,390,728,912.23 | |
| Cash payments for goods acquired and services received | 3,620,127,267.15 | 3,109,703,886.15 | |
| Cash payments to and on behalf of employees | 2,711,649,012.33 | 1,929,734,291.07 | |
| Payments of various types of taxes | 1,427,332,880.19 | 1,772,764,658.71 | |
| Other cash payments relating to operating activities | 849,540,447.05 | 1,359,620,072.28 | |
| Sub-total of cash outflows from operating activities | 8,608,649,606.72 | 8,171,822,908.21 | |
| Net Cash flows from Operating Activities | 515,095,870.07 | 218,906,004.02 | |
| II. Cash flows from Investing Activities: | |||
| Cash receipts from recovery of investments | - | 3,550,000,000.00 | |
| Cash receipts from investment income | 2,568,699.00 | 76,942,053.30 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 3,679,476.09 | 8,508,255.52 | |
| Net cash receipts from disposals of subsidiaries and other business units | - | 5,971.53 | |
| Other cash receipts relating to investing activities | 2,561,153,903.93 | 454,032,282.20 | |
| Sub-total of cash inflows from investing activities | 2,567,402,079.02 | 4,089,488,562.55 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 148,098,627.08 | 411,154,554.19 | |
| Cash payments to acquire investments | - | 1,100,000,000.00 | |
| Net cash paid to aquire subsidiaries and other business units | 171,600,000.00 | 630,150,000.00 | |
| Other cash payments relating to investing activities | 45,079,102.37 | 515,046,698.74 | |
| Sub-total of cash outflows from investing activities | 364,777,729.45 | 2,656,351,252.93 | |
| Net Cash flows from Investing Activities | 2,202,624,349.57 | 1,433,137,309.62 | |
| III. Cash flows from Financing Activities | |||
| Cash receipts from borrowings | 3,679,240,000.00 | 700,000,000.00 | |
| Other cash receipts relating to financing activities | - | - | |
| Sub-total of cash inflows from financing activities | 3,679,240,000.00 | 700,000,000.00 | |
| Cash repayments of borrowings | 500,000,000.00 | ||
| Cash repayments of bonds | 3,079,240,000.00 | ||
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 5,643,872,935.64 | 4,643,329,229.19 | |
| Other cash payments relating to financing activities | 2,095,080.00 | 6,555,746.33 | |
| Sub-total of cash outflows from financing activities | 8,725,208,015.64 | 5,149,884,975.52 | |
| Net Cash flows from Financing Activities | (5,045,968,015.64) | (4,449,884,975.52) | |
| IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | (34,135,897.31) | (4,714,994.16) | |
| V. Net increase in cash and cash equivalents | (2,362,383,693.31) | (2,802,556,656.04) | |
| Add: Beginning balance of cash and cash equivalents | 18,998,934,287.59 | 12,304,082,533.11 | |
| VI. Closing Balance of Cash and Cash Equivalents | 16,636,550,594.28 | 9,501,525,877.07 |
Hikvision 2019 Half Year Report
For the reporting period from January 1
st 2019 to June 30
th
2019
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
| Item | Amount for the 2019 first half year | |||||||
| Owner’s Equity Attributable to owners of the Company | Minority interests | Total owners' equity | ||||||
| Share capital | Capital reserves | Less: Treasury share | Other comprehensive income | Surplus reserve | Retained profits | |||
| I. Closing balance of the preceding period | 9,227,270,473.00 | 1,956,139,660.52 | 364,984,759.94 | (49,576,351.10) | 4,460,712,358.45 | 22,360,593,257.53 | 373,981,737.96 | 37,964,136,376.42 |
| Add: Changes in accounting policies | (26,488,816.57) | (26,488,816.57) | ||||||
| Business merger under common control | 4,800,000.00 | (736,986.11) | 2,708,675.93 | 6,771,689.82 | ||||
| II. Opening balance of the current period | 9,227,270,473.00 | 1,960,939,660.52 | 364,984,759.94 | (76,065,167.67) | 4,460,712,358.45 | 22,359,856,271.42 | 376,690,413.89 | 37,944,419,249.67 |
| III. Increase or decrease in the current period | 120,685,833.00 | 2,166,797,515.76 | 1,955,865,753.84 | 4,922,806.84 | (1,389,068,647.86) | 40,475,844.97 | (1,012,052,401.13) | |
| (I) Total comprehensive income | 4,922,806.84 | 4,216,755,210.24 | 7,574,941.04 | 4,229,252,958.12 | ||||
| (II) Owners’ contributions and reduction in capital | 120,685,833.00 | 2,166,797,515.76 | 1,955,865,753.84 | 33,500,903.93 | 365,118,498.85 | |||
| 1. Capital contribution from shareholders | 121,195,458.00 | 1,936,703,418.84 | 2,057,898,876.84 | 23,254,887.07 | 23,254,887.07 | |||
| 2. Share-based payment recognized in owners’ equity | 231,679,551.92 | 10,246,016.86 | 241,925,568.78 | |||||
| 3. Others | (509,625.00) | (1,585,455.00) | (102,033,123.00) | - | 99,938,043.00 | |||
| (III) Profit distribution | (5,605,823,858.10) | (600,000.00) | (5,606,423,858.10) | |||||
| 1. Transfer to surplus reserves | - | |||||||
| 2. Distributions to shareholders | (5,605,823,858.10) | (600,000.00) | (5,606,423,858.10) | |||||
| 3. Others | - | |||||||
| IV. Closing balance of the current period | 9,347,956,306.00 | 4,127,737,176.28 | 2,320,850,513.78 | (71,142,360.83) | 4,460,712,358.45 | 20,970,787,623.56 | 417,166,258.86 | 36,932,366,848.54 |
Hikvision 2019 Half Year Report
For the reporting period from January 1
st
2019 to June 30
th
2019
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
| Item | Amount for 2018 first half year | |||||||
| Owner’s Equity Attributable to owners of the Company | Minority interests | Total owners' equity | ||||||
| Share capital | Capital reserves | Less: Treasury share | Other comprehensive income | Surplus reserve | Retained profits | |||
| I. Closing balance of the preceding period | 9,228,865,114.00 | 1,819,397,715.63 | 744,583,627.22 | (27,677,939.35) | 3,483,742,918.53 | 16,598,328,692.63 | 246,048,563.87 | 30,604,121,438.09 |
| II. Increase or decrease in the current period | (1,594,641.00) | 73,411,691.39 | (62,766,970.33) | (12,898,545.71) | - | (466,239,700.64) | (26,780,702.29) | (371,334,927.92) |
| (I) Total comprehensive income | - | - | - | (12,898,545.71) | - | 4,147,395,535.86 | (41,195,706.07) | 4,093,301,284.08 |
| (II) Owners’ contributions and reduction in capital | (1,594,641.00) | 73,411,691.39 | (6,555,746.33) | - | - | - | 14,415,003.78 | 92,787,800.50 |
| 1. Capital contribution from shareholders | - | - | - | - | - | - | 12,289,000.00 | 12,289,000.00 |
| 2. Share-based payment recognized in owners’ equity | - | 78,372,796.72 | - | - | - | - | 2,126,003.78 | 80,498,800.50 |
| 3. Others | (1,594,641.00) | (4,961,105.33) | (6,555,746.33) | - | - | - | - | - |
| (III) Profit distribution | - | - | (56,211,224.00) | - | - | (4,613,635,236.50) | - | (4,557,424,012.50) |
| 1. Transfer to surplus reserves | - | - | - | - | - | - | - | - |
| 2. Distributions to shareholders | - | - | (56,211,224.00) | - | - | (4,613,635,236.50) | - | (4,557,424,012.50) |
| 3. Others | - | - | - | - | - | - | - | - |
| III. Closing balance of the current period | 9,227,270,473.00 | 1,892,809,407.02 | 681,816,656.89 | (40,576,485.06) | 3,483,742,918.53 | 16,132,088,991.99 | 219,267,861.58 | 30,232,786,510.17 |
Hikvision 2019 Half Year Report
For the reporting period from January 1
st 2019 to June 30
th2019
Statement of Changes in Owners' Equity of the parent company
Unit: RMB
| Item | Amount for 2019 first half year | ||||||
| Share capital | Capital reserves | Less: Treasury share | Other comeprehensive income | Surplus reserve | Retained profits | Total owners' equity | |
| I. Closing balance of the preceding period | 9,227,270,473.00 | 1,883,262,407.46 | 364,984,759.94 | 4,460,712,358.45 | 19,327,533,457.91 | 34,533,793,936.88 | |
| Add: changes in accounting policies | (2,178,538.52) | (2,178,538.52) | |||||
| II. Opening balance of the current period | 9,227,270,473.00 | 1,883,262,407.46 | 364,984,759.94 | (2,178,538.52) | 4,460,712,358.45 | 19,327,533,457.91 | 34,531,615,398.36 |
| III. Increase or decrease in the current period | 120,685,833.00 | 2,185,246,553.18 | 1,955,865,753.84 | 1,163,229.41 | (1,400,039,303.91) | (1,048,809,442.16) | |
| (I) Total comprehensive income | 1,163,229.41 | 4,205,784,554.19 | 4,206,947,783.60 | ||||
| (II) Owners’ contributions and reduction in capital | 120,685,833.00 | 2,185,246,553.18 | 1,955,865,753.84 | 350,066,632.34 | |||
| 1. Capital contribution from shareholders | 121,195,458.00 | 1,936,703,418.84 | 2,057,898,876.84 | - | |||
| 2. Share-based payment recognized in owners’ equity | 250,128,589.34 | 250,128,589.34 | |||||
| 3. Others | (509,625.00) | (1,585,455.00) | (102,033,123.00) | 99,938,043.00 | |||
| (III) Profit distribution | (5,605,823,858.10) | (5,605,823,858.10) | |||||
| 1.Transfer to surplus reserve | |||||||
| 2. Distributions to shareholders | (5,605,823,858.10) | (5,605,823,858.10) | |||||
| 3. Others | |||||||
| III. Closing balance of the current period | 9,347,956,306.00 | 4,068,508,960.64 | 2,320,850,513.78 | (1,015,309.11) | 4,460,712,358.45 | 17,927,494,154.00 | 33,482,805,956.20 |
Hikvision 2019 Half Year Report
| Item | Amount for 2018 first half year | ||||||
| Share capital | Capital reserves | Less: Treasury share | Other comeprehensive income | Surplus reserve | Retained profits | Total owners' equity | |
| I. Opening balance of the current period | 6,102,706,885.00 | 955,687,875.52 | 300,177,750.17 | - | 2,615,437,822.15 | 14,138,569,341.95 | 23,512,224,174.45 |
| II. Increase or decrease in the current period | 3,126,158,229.00 | 693,720,939.82 | 553,329,577.38 | - | - | (3,704,013,060.76) | (437,463,469.32) |
| (I) Total comprehensive income | - | - | - | - | - | 3,100,858,413.44 | 3,100,858,413.44 |
| (II) Owners’ contributions and reduction in capital | 49,869,858.00 | 693,720,939.82 | 645,736,716.54 | - | - | - | 97,854,081.28 |
| 1. Capital contribution from shareholders | 52,326,858.00 | 608,561,358.54 | 660,888,216.54 | - | - | - | - |
| 2. Share-based payment recognized in owners’ equity | - | 97,854,081.28 | - | - | - | - | 97,854,081.28 |
| 3. Others | (2,457,000.00) | (12,694,500.00) | (15,151,500.00) | - | - | - | - |
| (III) Profit distribution | 3,076,288,371.00 | - | (92,407,139.16) | - | - | (6,804,871,474.20) | (3,636,175,964.04) |
| 1.Transfer to surplus reserve | - | - | - | - | - | - | - |
| 2. Distributions to shareholders | - | - | (92,407,139.16) | - | - | (3,728,583,103.20) | (3,636,175,964.04) |
| 3. Others | 3,076,288,371.00 | - | - | - | - | (3,076,288,371.00) | - |
| III. Closing balance of the current period | 9,228,865,114.00 | 1,649,408,815.34 | 853,507,327.55 | - | 2,615,437,822.15 | 10,434,556,281.19 | 23,074,760,705.13 |
st
2019 to June 30
th
2019
I. Basic Information about the CompanyHangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company" or“Hikvision”), is a Sino-foreign equity joint venture company, formerly known as "Hangzhou Hikvision DigitalTechnology Ltd", established on November 30
th2001 in Hangzhou upon the approval letter of Hangzhou High-tech No.604 [2001] issued by Hangzhou High-tech Industrial Development Zone Management Committee. On June 25
th2008,with approval of document No. 598 [2008] issued by the MOFCOM (The Ministry of Commerce of the People'sRepublic of China), the company was renamed as “Hangzhou Hikvision Digital Technology Co., Ltd.”, headquartered inHangzhou, and obtained the business license of enterprise No.91330000733796106P. On May 28
th
2010, the Companywas listed on the Shenzhen Stock Exchange.
On December 23
rd2016, pursuant to the Articles of Association of the Company revised by the resolution of 20thMeeting of the 3rd session Board of Directors authorized by the 2nd extraordinary general meeting in 2016, theCompany granted 52,326,858 restricted incentive shares to the incentive grantees, The Company completed theregistration procedure for business changes on January 20
th
2017, adjusted the Company’s total capital share to6,155,033,743 shares.
On April 27
th2017, authorized by the Company’s first Extraordinary General Meeting in 2014, the Companycompleted procedures of repurchase and cancellation of some of the 2,457,000.00 restricted stocks that did not meet theincentive conditions, and the total share capital of the Company was adjusted to 6,152,576,743 shares.
On May 4
th
2017, 2016 Profit Distribution Scheme was approved on 2016 Annual General Meeting. On May 16
th
2017, based on total capital shares of 6,152,576,743 shares on the date of interest distribution, the company issued bonusshares for 3,076,288,371 shares, which adjusted the Company’s total capital share to 9,228,865,114 shares.
On March 27
th2018, according to the authorization of the Company's first extraordinary shareholders meeting in2014, the Company completed the procedures of repurchase and cancellation of some of the 1,594,641 restricted stocksthat did not meet the incentive conditions, and the share capital of the Company was changed to 9,227,270,473 shares.For details of the share capital, please refer to Notes (V) 31.
On December 20
th 2018, pursuant to the Articles of Association of the Company revised by the resolution of 8
th
Meeting of the fourth session Board of Directors authorized by the 2
nd
extraordinary general meeting in 2018, theCompany granted 121,195,458 restricted incentive shares to the incentive grantees, The Company completed theregistration procedure for business changes on January 17
th2019, adjusted the Company’s total capital share to9,348,465,931 shares.
On May 9
th
2019, authorized by the Company’s first Extraordinary General Meeting in 2014, the Companycompleted procedures of repurchase and cancellation of some of the 509,625 restricted stocks that did not meet theincentive conditions, and the total share capital of the Company was adjusted to 9,347,956,306 shares. For details of the
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2019 to June 30
th
2019
share capital, please refer to Notes (V) 31.
As of June 30
th2019, the Company’s total registered capital is RMB 9, 347,956,306, with total capital shares of9,347,956,306 shares (face value RMB 1per share), of which restricted A-shares were 1,273,949,522 shares, A-shareswithout restriction are 8,074,006,784 shares.
The Company is engaged in other electronic equipment manufacturing business under electronics industry.Business scope of the Company includes development and production of electronic products (including explosion-proofelectrical products, tele-communication equipment and its ancillary equipment, multimedia equipment), fire controlproducts, aircraft, robot, intelligent equipment, auto parts and accessories, and electrical signal equipment for vehicle;sales of self-manufactured products; technical service, electronic technology consulting service, training service(excluding class training), electronic equipment installation, electronic engineering, and design, construction andmaintenance of intelligent systems. For details about business scope of the Company and its subsidiaries, please refer toNote (VII) 1.
The Company’s and consolidated financial reports were approved for issuance by the 11
thmeeting of the fourthsession Board of Directors of the Company on July 19
th2019.
For consolidation scope of the financial statements of the current reporting period, please refer to Note (VII)“Interest in other entities”. For changes in consolidation scope of the financial statements during the current reportingperiod, please refer to “changes in the consolidation scope” in Note (VI).
II. Basis of preparation of financial statementsBasis of preparation of financial statementsThe Company and its subsidiaries (hereinafter referred to as "the Group") have adopted the Accounting Standards forBusiness Enterprises ("ASBE") and relevant provisions issued by the Ministry of Finance ("MoF"). In addition, theGroup has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rulesfor Companies Offering Securities to the Public No. 15－General Provisions on Financial Reporting (revised in 2014).
Going concernThe Group has evaluated its going concern for 12 months going forward starting from June 30
th
2019, and there is nofactor that may cast significant doubt on the entity's ability to continue as a going concern. Therefore, the financialstatements have been prepared on a going concern basis.
st 2019 to June 30
th2019
Bookkeeping base and valuation principlesThe Group measures the accounting elements in accordance with the accrual accounting basis. Except certain financialinstruments are measured by fair value, these financial statements are prepared in accordance with the measurementsbasis of historical costs. If the asset decreases in value, the provision for impairment of assets should be made accordingto relevant regulations.
According to the historical cost measurement, the assets shall be measured as per the amount of cash or cash equivalentpaid at the time of purchase, or the fair value of consideration paid for the purchase of such assets. The liabilities shall bemeasured in accordance with the amount of funds or assets actually received when undertaking current obligations, orthe contract amount when undertaking the current obligations, or the amount of cash or cash equivalents required forpaying back the debts in daily activities.
The fair value is a price received by the market participants from selling asset or transferring liability during orderlytransaction at the measurement date. No matter the fair value is observable or estimated by using valuation technique,the measured and disclosed fair value in the financial statement shall be determined on this basis.
When measuring non-financial assets at fair value, the assets shall be measured considering the ability of marketparticipants to use the assets for optimal use to generate economic benefits, or to sell the assets to other marketparticipants to use the assets for optimal use to generate economic benefits.
For the financial assets measured with transaction price at the initial recognition, and the use of valuation techniquesinvolving unobservable inputs in the subsequent fair value measurement, the valuation technique is corrected in thevaluation process in order to make the initial recognition results confirmed by valuation techniques equal to thetransaction price.
Based on the observable extent of the input value of the fair value, and the importance of such input value to the fairvalue measurement, the fair value measurement is divided into three levels:
? Level 1: The input value is the unadjusted offer of the same assets or liabilities on active market acquired onmeasurement date;? Level 2: The input value is the input value of relevant assets or liabilities observable directly or indirectly in addition tolevel 1 input value;? Level 3: The input value is the non-observable input value of relevant assets or liabilities.
st
2019 to June 30
th2019
III. Significant accounting policies and accounting estimates
1. Statement for Compliance with Accounting Standards for Business Enterprises (ASBE)The financial statements of the Company have been prepared in accordance with ASBE, and present truly andcompletely, the Company's and consolidated financial position as of June 30
th
2019; and the Company's and consolidatedresults of operations, the Company’s and consolidated changes in shareholders' equity, and the Company’s andconsolidated cash flows for the first half year of 2019.
2. Accounting Period
The Group has adopted the calendar year as its accounting year from January 1
st to December 31
steach year.
3. Business Cycle
The business cycle refers to the period from purchase of assets used for processing to realization of cash or cashequivalents. The Group business cycle is usually 12 months.
4. Functional currency
Renminbi (“RMB”) is the currency in the primary economic environments in which the Company and its domesticsubsidiaries are operated. The Company and its domestic subsidiaries take RMB as their functional currency. Overseassubsidiaries of the Company determine their functional currency on the basis of the primary economic environment inwhich it operates. For functional currency of overseas subsidiaries of the Company, see Note (V) 55. The Group adoptsRMB to prepare its financial statements.
5. The accounting treatment of business combinations involving enterprises under common control and businesscombinations not involving enterprises under common controlBusiness combinations are classified into business combinations involving enterprises under common control andbusiness combinations not involving enterprises under common control.
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or parties both before and after the combination, andthat control is not transitory.
Assets and liabilities obtained shall be measured at their respective carrying amounts as recorded by the combiningentities at the date of the combination. The difference between the carrying amount of the net assets obtained and thecarrying amount of the consideration paid for the combination (the aggregate face value of shares issued as consideration)is adjusted to the share premium in capital reserve. If the share premium is not sufficient to absorb the difference, anyexcess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which they areincurred.
5.2 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in which all of thecombining enterprises are not ultimately controlled by the same party or parties before and after the combination.
st
2019 to June 30
th
2019
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurredor assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. The intermediaryexpenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy services, etc. and otherassociated administrative expenses attributable to the business combination are recognized in profit or loss when theyare incurred.
The acquiree’s identifiable assets, liabilities and contingent liabilities, acquired by the acquirer in a business combination,that meet the recognition criteria shall be measured at fair value at the acquisition date.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets,the difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Wherethe cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, theacquirer firstly reassesses the measurement of the fair values of the acquiree’s identifiable assets, liabilities andcontingent liabilities and measurement of the cost of combination. If after that reassessment, the cost of combination isstill less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirer recognizes theremaining difference immediately into profit or loss for the current period.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presentedseparately in the consolidated financial statements.
6. Preparation method of consolidated financial statements
6.1 Preparation method of consolidated financial statements
The scope of consolidated financial statements shall be confirmed based on the control. Control right means that aninvestor may control an investee; the investor may participate in relevant activities of the investee to obtain variablerewards and also be able to use the control rights for the investee to influence its amount of returns. The Group willre-evaluate, if the change of the relevant facts and circumstances leading to the change of the relevant elements involvedin the above definition of control.
The merger of subsidiary starts from the Group obtaining the control power of the subsidiary, and terminates when theGroup loses the control power of the subsidiary.
As for subsidiaries disposed by the Group, operating results and cash flows prior to the disposal date (the date of losingcontrol right) have been properly included in the consolidated profit statement and consolidated cash flow statement.
For a subsidiary acquired through a business combination not involving enterprises under common control, the operatingresults and cash flows from the acquisition date (the date when control is obtained) are included in the consolidatedincome statement and consolidated statement of cash flows.
No matter when the business combination occurs in the reporting period, subsidiaries acquired through a businesscombination involving enterprises under common control are included in the Group's scope of consolidation as if theyhad been included in the scope of consolidation from the date when they first came under the common control of theultimate controlling party. Their operating results and cash flows from the beginning of the earliest reporting period areincluded in the consolidated income statement and consolidated statement of cash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on theuniform accounting policies and accounting periods set out by the Company.
st 2019 to June 30
th2019
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests and presented as"minority equity" in the consolidated balance sheet. The portion of net profits or losses of subsidiaries for the periodattributable to minority interests is presented as "minority interests" in the consolidated income statement below the "netprofit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minorityshareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount are still allocatedagainst minority interests.
Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of control over thesubsidiary is accounted for as equity transactions. The carrying amounts of the total owners' equity attributable to ownerof the Company and minority equity are adjusted to reflect the changes in their relative interests in the subsidiary. Thedifference between the amount by which the minority interests are adjusted and the fair value of the consideration paidor received is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb thedifference, the excess are adjusted against retained earnings.
7. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group'sshort-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value.
8. Conversion of transactions and financial statements denominated in foreign currencies.
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that approximates theactual spot exchange rate on the date of transaction; The exchange rate that approximates the actual spot exchange rateon the date of transaction is calculated according to the middle price of market exchange rate at the beginning of themonth in which the transaction happened.
At the balance sheet date, foreign currency monetary items are translated into [RMB] using the spot exchange rates atthe balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing atthe balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit orloss for the period, except for exchange differences related to a specific-purpose borrowing denominated in foreigncurrency that qualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalizationperiod.
When the consolidated financial statements include foreign operation(s), if there is foreign currency monetary itemconstituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates arerecognized as "exchange differences arising on conversion of financial statements denominated in foreign currencies " inother comprehensive income, and in profit and loss for the period upon disposal of the foreign operation.Foreign currency non-monetary items measured at historical cost are converted to the amounts in functional currency atthe spot exchange rates on the dates of the transactions. Foreign currency non-monetary items measured at fair value arere-converted at the spot exchange rate on the date the fair value is determined. Difference between the re-convertedfunctional currency amount and the original functional currency amount is treated as changes in fair value (includingchanges of exchange rate) and is recognized in profit and loss or as other comprehensive income.
st
2019 to June 30
th2019
8.2 Conversion of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation areconverted from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet aretranslated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items are converted at thespot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflectingthe distribution of profits are translated at exchange rates that approximate the actual spot exchange rates on the dates ofthe transactions; The difference between the converted assets and the aggregate of liabilities and shareholders' equityitems is recognized into other comprehensive income and shareholders’ equity.
The foreign currency cash flows and cash flows of overseas subsidiaries adopt the exchange rate similar to the spot rateat the date of cash flows for conversion. The affected amount of cash and cash equivalents due to the change ofexchange rate, as an adjustment item, shall be separately listed as "the impact of cash and cash equivalents due to thechange of exchange rate" in the cash flow statement.The opening balances and the comparative figures of previous year are presented at the converted amounts of theprevious year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over a foreign operation due todisposal of certain interest in it or other reasons, the Group transfers the accumulated exchange differences arising onconversion of financial statements of this foreign operation attributable to the owners' equity of the Company andpresented under shareholders' equity, to profit or loss in the period in which the disposal occurs.
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, but only adecrease in proportion of overseas business interests, the proportionate share of accumulated exchange differencesarising on conversion of financial statements are re-attributed to minority interests and are not recognized in profit andloss under current period. For partial disposals of equity interests in foreign operations which are associates or jointventures, the proportionate shares of the accumulated exchange differences arising on conversion of financial statementsof foreign operations is reclassified to profit or loss under current period.
9. Financial Instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to a contract of financialinstrument.
For the purchase or sale of a financial asset in conventional manner, the asset to be received and the liability to beassumed will be recognized on the trading day, or the asset sold will be derecognized on the trading day.
Financial assets and financial liabilities are measured by fair value upon initial recognition. For financial assets andfinancial liabilities at fair value through profit and loss, the relevant trading costs will be directly charged to profit andloss of the current period. For other types of financial assets and financial liabilities, the relevant trading costs will bebooked into the initial recognition amount. Upon initial recognition of accounts receivable which have no materialfinancing components or have not taken into consideration the financing components in contracts with a term notexceeding one year according to Accounting Standards for Business Enterprise No. 14 – Revenue (“Revenue Standard”),such initial amount is measured by the transaction price as defined under the Revenue Standard.
Effective interest rate method refers to the method of calculating the amortized cost of financial asset or financialliability and apportioning interest income or interest expenses to each accounting period.
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2019 to June 30
th2019
Effective interest rate refers to the interest rate used for discounting the estimated future cash flows of a financial asset ora financial liability for an expected subsisting period into the balance of book value of the financial asset or theamortized cost of the financial liability. When determining the effective interest rate, the expected cash flows areestimated on the basis of considering all contractual terms of the financial asset or financial liability (such as earlyrepayment, extended term, call option or other similar option) but without considering the expected credit loss.
The amortized cost of a financial asset or a financial liability refers to the initial recognition amount of such financialasset or financial liability, less the repaid amount of principal, plus or minus the accrued amortized amount calculated byamortization of the difference between the initial recognition amount and the amount on maturity by using the effectiveinterest rate method, and then deducts the accrued provision for losses (only applicable to financial assets).
9.1 Classification and Measurement of Financial Assets
After initial recognition, the Group will adopt amortized cost, fair value through other comprehensive income, or fairvalue through profit and loss for subsequent measurement depending on different categories of financial assets.
The Group will classify a financial asset into a financial asset measured by amortized cost if the cash flows generated ona particular date as provided under the contractual terms of a financial asset are only confined to interest payments basedon the principal and the outstanding amount of principal, and the Group’s business model of managing such financialasset aims at receiving the contractual cash flows. This category of financial assets mainly includes monetary funds, billsreceivables and accounts receivable, other receivables and long-term receivables.
The Group will classify a financial asset into a financial asset measured by fair value through other comprehensiveincome if the cash flows generated on a particular date as provided under the contractual terms of a financial asset areonly confined to interest payments based on the principal and the outstanding amount of principal, and the Group’sbusiness model of managing such financial asset aims at receiving the contractual cash flows as well as the sale of suchfinancial asset. This category of financial assets mainly includes financial assets with a maturity of more than one yearfrom the date of acquisition and which are presented under other debt investments, financial assets maturing within oneyear (inclusive) from the balance sheet date and which are presented under non-current assets maturing within one year,as well as financial assets with a maturity of less than one year (inclusive) at the time of acquisition and which arepresented under other current assets.
Financial assets at fair value through profit and loss include financial assets which are classified as financial assets at fairvalue through profit and loss and financial assets designated at fair value through profit and loss, which are presented asheld-for-trading financial assets. If such financial assets have a maturity of more than one year from the balance sheetdate (or without a fixed maturity) and which are expected to be held for more than one year, they will be presented underother non-current financial assets.
? Financial assets which do not satisfy the conditions of being classified as financial assets measured at amortizedcost or as financial assets at fair value through other comprehensive income, they will be classified as financial assets atfair value through profit and loss.
? At the time of initial recognition, in order to eliminate or substantially reduce mismatch in accounting, the Groupmay irrevocably designate a financial asset as a financial asset measured at fair value with changes through profit andloss.
At the time of initial recognition, the Group may, on the basis of a single financial asset, irrevocably designate aninvestment in an equity instrument held for non-trading purpose recognized or without consideration in a businessmerger not under common control as a financial asset at fair value through other comprehensive income. This type offinancial assets is presented as investment in other equity instruments.
Financial assets which have satisfied one of the following conditions indicate that such financial assets are held fortrading purpose by the Group:
? The purpose of acquiring the relevant financial asset is mainly for sale in recent period.
st 2019 to June 30
th
2019
? At the time of initial recognition, the relevant financial asset is a part of an identifiable portfolio of financialinstruments under collective management, and there is objective evidence showing a recent and actual existence ofshort-term profitable mode.
? The relevant financial assets are derivatives, excluding derivatives which satisfy the definition under financialguarantee contracts and derivatives which are designated as effective hedging instruments.
9.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost adopt the effective interest rate method for subsequent measurementaccording to amortized cost, the profit or loss when impairment occurs or upon derecognition will be accounted in profitand loss of the current period.
The Group recognizes interest income by using effective interest rate method for financial assets measured at amortizedcost. The Group determines interest income by multiplying the balance of book value of financial assets with theeffective interest rate except under the following circumstances:
? For acquired or generated financial assets which incurred credit impairment already, their interest income will bedetermined by using the amortized cost of such financial asset calculated with the credit adjusted effective interest rate.
? For acquired or generated financial assets which have not incurred credit impairment but incur credit impairment inthe subsequent period, the Group will determine their interest income by using the amortized cost of such financialassets multiplied with the effective interest rate in the subsequent period. If such financial asset ceases to have creditimpairment due to improvement in credit risk in the subsequent period, and such improvement may be related to acertain event occurred after the application of the aforesaid rule, then the Group should change to multiply the effectiveinterest rate with the balance of book value of such financial asset instead to determine the interest income.
9.1.2 Classified as financial asset at fair value through other comprehensive income
The impairment loss or profit, or interest income calculated by using the effective interest rate method, relating tofinancial asset at fair value through other comprehensive income should be accounted in the profit and loss of the currentperiod, and other changes in fair value of such financial assets will be accounted in other comprehensive income. Theamount charged by such financial asset to the profit and loss of each period is deemed to be equal to the amount whichhas been measured by amortized cost and charged to the profit and loss of each period. Upon derecognition of suchfinancial asset, the accumulated profit or loss previously charged to other comprehensive income will be reversed fromother comprehensive income and charged to profit and loss of the current period.
9.1.3 Financial asset designated at fair value through other comprehensive income
After investment in equity instrument held for non-trading purpose has been designated as financial asset at fair valuethrough other comprehensive income, the changes in fair value of such financial asset will be recognized in othercomprehensive income. Upon derecognition of such financial asset, the accumulated profit or loss charged to othercomprehensive income will be reversed from other comprehensive income and charged to retained earnings. During theperiod when such investment in equity instruments for non-trading purpose are held by the Group, the right to receivedividends by the Group has been established, and economic benefits related to dividends are likely to flow into theGroup, and if the amount of dividends may be measured reliably, the dividend income is recognized and accounted inthe profit and loss of the current period.
9.1.4 Financial asset at fair value through profit and loss
For financial asset at fair value through profit and loss, subsequent measurement will be calculated at fair value, theprofit or loss arising from changes in fair value and the dividend and interest income relating to such financial asset willbe accounted in the profit and loss of the current period.
9.2 Impairment of Financial Assets
For financial assets measured at amortized cost, the Group will handle impairment on the basis of expected credit loss
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and recognize loss provision.
For other financial instruments, other than acquired or generated financial assets which have incurred credit impairmentalready, the Group will assess on each balance sheet date the changes in credit risk of the relevant financial instrumentssince initial recognition. If the credit risk of such financial asset has significantly increased after initial recognition, theGroup will calculate its loss provision based on the amount equivalent to the expected credit loss for the entire subsistingperiod. If the credit risk of such financial asset since initial recognition has not increased significantly, the Group willcalculate its loss provision according to the expected credit loss amount of such financial asset for the next 12 months.The amount of increase or reversal in the provision for credit loss, apart from financial assets classified as financial assetat fair value through other comprehensive income, is accounted in the profit and loss of the current period. For financialasset classified as measured at fair value through other comprehensive income, the Group will recognize its credit lossprovision in other comprehensive income and charged the impairment loss or gain to the profit and loss of the currentperiod, and will not decrease the book value of such financial asset presented in the balance sheet.
The Group has calculated the loss provision equivalent to the expected credit loss amount for the entire subsisting periodof the financial instrument in the preceding accounting period, but at the balance sheet date of the current period, suchfinancial instrument is no longer under the condition of significant increase in credit risk since initial recognition, theGroup calculates the loss provision for such financial instrument on the balance sheet date of the current periodaccording to an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provisionreversal amount will be counted as impairment gain and booked into the profit and loss of the current period.
9.2.1 Significant increase in credit risk
The Group uses available and reasonable forward-looking information with justification, by comparing the default riskof the financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirmwhether the credit risk of the financial instrument has significantly increased after initial recognition.
The Group considers the following factors when assessing whether the credit risk has significantly increased:
(1) Whether a significant change has been caused to the internal price indicator due to changes in credit risk.
(2) If an existing financial instrument is generated or issued on the balance sheet date as a new financial instrument,whether the interest rate or other terms of such financial instrument has changed significantly (such as more stringentcontractual terms, an increase in collateral or security or a higher yield, etc.).
(3) Whether the external market indicators of credit risk for the same financial instrument or similar financialinstruments with the same expected subsisting period have changed significantly. Such indictors include: credit spread,swap price of credit default by borrower, the length of duration and shortfall of fair value of financial asset below itsamortized cost, and other market information relevant to the borrower (such as price changes in the debt instrument orequity instrument of the borrower).
(4) Whether the external credit rating of financial instrument has actual or expected significant changes.
(5) Whether the actual or expected internal credit rating of the debtor has been downgraded.
(6) Whether adverse changes have occurred in the business, finance or economic conditions which are expected tocause significant changes in the capability of the debtor to perform debt repayment obligations.
(7) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(8) Whether the credit risk of other financial instruments issued by the same debtor has significantly increased.
(9) Whether significant adverse changes have occurred in the supervision, economic or technical environment in whichthe debtor operates.
(10) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guaranteeor credit enhancement provided by third parties. Such changes are expected to reduce the debtor’s economic motivationof repayment according to contractual term or influence the probability of default.
(11) Whether significant changes have occurred in the economic motivation which will lower the expectation ofrepayment by the borrower according to the contractual term.
(12) Whether significant changes have occurred in the expected performance and repayment behavior of the debtor.
(13) Whether changes have occurred in the Group’s credit management method for financial instruments.
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9.2.2 Financial assets which have incurred credit impairment already
When one or more events which will have adverse effect on the expected future cash flows from the financial asset ofthe Group have occurred, such financial asset will become a financial asset which have incurred credit impairmentalready. The evidence of credit impairment occurred in a financial asset includes the following observable information:
(1) Material financial difficulties have occurred in the issuer or debtor;
(2) Breach of contract by the debtor, such as default or overdue in the payment of interest or repayment of principal;
(3) Due to economic or contractual considerations relating to financial difficulties of the debtor, the creditor has grantedconcession to the debtor under no other circumstances;
(4) The debtor is likely to go bankrupt or carry out other financial restructuring;
(5) The financial difficulties of the issuer or debtor have caused the disappearance of the active market for the financialasset;
(6) The purchase or generation of a financial asset at a large discount, such discount reflects the fact of occurrence ofcredit loss.
9.2.3 Confirmation of expected credit loss
The Group adopts the impairment matrix based on the composition of receivables to confirm the credit loss of therelevant financial instrument. The common features of credit risk used by the Group include: credit risk rating, date ofinitial recognition, remaining contractual period, industry in which the debtor operates and geographical location of thedebtor, etc.
The Group confirms the expected credit loss of the relevant financial instrument according to the following method:
? In respect of a financial asset, the credit loss is the present value of the difference between the contractual cashflows receivable and the cash flows expected to receive by the Group.? In respect of a financial guarantee contract, the credit loss is the present value of the difference between Group’sexpected payment amount for the compensation made to the contract holder due to the occurrence of credit loss and theamount expected to be received by the Group from such contract holder, debtor or any other parties.? In respect of financial assets with credit impairment on the balance sheet date but they are not acquired or generatedfinancial assets with credit impairment, the credit loss represents the difference between the balance of the book value ofsuch financial asset and the present value of the estimated future cash flows discounted by the original effective interestrate.
The factors reflected by the method used for calculating expected credit loss of financial instruments by the Groupinclude: an unbiased weighted average amount determined by assessing a series of probable outcomes; time value ofcurrency; reasonable and justifiable information relating to past events, prevailing conditions and forecast of futureeconomic conditions obtained on the balance sheet date without incurring unnecessary additional cost or effort.
9.2.4 Write-off on financial asset
When the Group ceases to have reasonable expectation on the possible collection of all or part of the contractual cashflows from the financial asset, the balance of book value of such financial asset will be written off directly. Such awrite-off constitutes a de-recognition of the relevant financial asset.
9.3 Transfer of financial asset
A financial asset that fulfills one of the following conditions will be de-recognized: (1) termination of contractual rightsto receive cash flows from the financial asset; (2) upon transfer of such financial asset and transfer of substantially allthe risks and rewards in respect of the ownership of such financial asset to the transferee; (3) upon transfer of suchfinancial asset, though the Group has not transferred nor retained substantially all the risks and rewards in respect of theownership of such financial asset, yet it has not retained the control over such financial asset.
If the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership of suchfinancial asset, and has retained the control over such financial asset, then such transferred financial asset will continueto be recognized, and the relevant liabilities will continue to be recognized, according to the level of the Group’s
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continuous involvement in such transferred financial asset. The relevant liabilities will be measured by the Groupaccording to the following method:
? If the transferred financial asset is measured by amortized cost, the book value of the relevant liabilities isequivalent to the book value of the transferred asset of continuous involvement less the amortized cost of the rightsretained by the Group (if the Group has retained the relevant rights due to transfer of the financial asset) and plus theamortized cost of the obligations undertaken by the Group (if the Group has undertaken the relevant obligations due totransfer of the financial asset), and the relevant liabilities are not designated as financial liabilities at fair value throughprofit and loss of the current period.
? If the transferred financial asset is measured by fair value, the book value of the relevant liabilities is equivalent tothe book value of the transferred asset of continuous involvement less the fair value of the rights retained by the Group(if the Group has retained the relevant rights due to transfer of the financial asset) and plus the fair value of theobligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of the financialasset), and the fair value of the rights and obligations shall be measured at the fair value on a separate basis.
For full transfer, which satisfies the conditions of derecognition, of the financial assets, the difference between the sumof the book value of the transferred financial assets as at the date of derecognition and the consideration received fromsuch transfer and the accumulated amount of change in fair value originally included in other comprehensive income,which corresponds to the amount in respect of derecognition, shall be recognized in the profit and loss for the currentperiod. If the transfer of the financial assets by the Group is designated as investment in equity instrument held fornon-trading purpose measured at fair value through other comprehensive income, the accumulated gains or lossespreviously included in other comprehensive income shall be transferred out from other comprehensive income and beincluded in retained earnings.
For transfer in part, which satisfies the conditions of derecognition, of the financial assets, the book value of the entirefinancial assets before the transfer shall be shared between the derecognized portion and the continuous recognitionportion at their respective relative fair value on the date of transfer, and the difference between the sum of theconsideration received from derecognition and the accumulated amount of change in fair value originally included inother comprehensive income, which corresponds to the amount in respect of derecognition, and the book value of thederecognized portion as at the date of derecognition shall be included in the profit and loss of the current period. If thetransfer of the financial assets by the Group is designated as investment in equity instrument for non-trading purposemeasured at fair value through other comprehensive income, the accumulated gains or losses previously included inother comprehensive income shall be transferred out from other comprehensive income and be included in retainedearnings.
For full transfer, which does not satisfy the conditions of derecognition, of the financial assets, the Group will continueto recognize the entire financial assets transferred and the consideration received will be recognized as financialliabilities.
9.4 Classification of financial liabilities and equity instruments
Pursuant to the contractual terms of the issued financial instruments and the substantive economic condition as reflected,but not in legal terms only, combined with the definitions of financial liabilities and equity instruments, the Group hasclassified such financial instruments or the components thereof as financial liabilities or equity instruments upon initialrecognition.
9.4.1 Classification and measurement of financial liabilities
Financial liabilities are classified into financial liabilities at fair value through profit and loss of the current period andother financial liabilities upon initial recognition.
9.4.1.1 Financial liabilities at fair value through profit and loss of the current period
Financial liabilities at fair value through profit and loss of the current period comprise of financial liabilities held fortrading purpose (including derivatives of financial liabilities) and financial liabilities designated as measured at fairvalue through profit and loss of the current period. Except for derivatives of financial liabilities, which are presentedseparately, financial liabilities at fair value through profit and loss of the current period are presented as financial
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2019 to June 30
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liabilities held for trading.
Financial liabilities that fulfill one of the following conditions suggest that the Group assumes such financial liabilitiesfor trading purpose:
? Assumption of the relevant financial liabilities is mainly for the purpose of the recent repurchases.? The relevant financial liabilities, upon initial recognition, are part of a portfolio of identifiable financial instrumentsunder centralized management, and available objective evidence shows the recent and actual existence of ashort-term profit-making model.? The relevant financial liabilities are derivatives, except derivatives which satisfy the definition of financial
guarantee contract and derivatives designated as effective hedging instruments.
Financial liabilities can be designated, upon initial recognition, by the Group as financial liabilities at fair value throughprofit and loss of the current period, provided that they have satisfied one of the following conditions: (1) suchdesignation can eliminate or substantially reduce accounting mismatches; (2) managing and evaluating the performanceof portfolios of financial liabilities, or portfolios of financial assets and financial liabilities, on fair value basis andreporting internally to key personnel of the Group on this basis in accordance with the risk management or investmentstrategies specified in formal written documents of the Group; (3) hybrid contracts, with embedded derivatives, havesatisfied the conditions.
Financial liabilities held for trading purpose use fair value for subsequent measurement, gains or losses arise fromchanges in fair value and the dividends or interest expenses relating to such financial liabilities are accounted in theprofit and loss of the current period.
For financial liabilities designated at fair value through profit and loss of the current period, changes in fair value of suchfinancial liabilities caused by changes in the Group’s own credit risks shall be included in other comprehensive income,and other changes in fair value shall be included in the profit and loss of the current period. On derecognition of suchfinancial liabilities, the accumulated amount of changes in fair value as a result of changes in our own credit riskincluded previously in other comprehensive income shall be transferred to retained earnings. Dividends or interestexpenses relating to such financial liabilities shall be included in the profit and loss of the current period. If handling theeffect of changes in credit risk of such financial liabilities according to the aforesaid method would cause or magnify theaccounting mismatches in profit and loss, the Group will include all gains or losses of those financial liabilities(including the amount affected by changes in their own credit risk) in the profit and losses of the current period.
9.4.1.2 Other financial liabilities
Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities or financialguarantee contracts as a result of continuous involvement in transferred financial assets, the other financial liabilities willbe classified as financial liabilities measured at amortized cost, subsequent measurement will be based on amortized cost,gains or losses on derecognition or amortization will be accounted in the profit and loss of the current period.
If the Group and the counterparty have revised or renegotiated the contract, this has not resulted in the derecognition offinancial liabilities measured at amortized cost for subsequent measurement, but has caused changes in the contractualcash flows, then the Group should recalculate the book value of such financial liabilities, and the relevant gains or lossesshall be accounted in the profit and loss of the current period. The recalculated book value of such financial liabilitieswill be determined by the Group by discounting the cash flows from the renegotiated or revised contract with theoriginal effect interest rate of the financial liabilities. All costs or expenses incurred in the revision or renegotiation of thecontract will be reflected in the adjusted book value of financial liabilities after such revision, and will be amortizedduring the remaining period of the revised financial liabilities.
9.4.1.2.1 Financial guarantee contract
Financial guarantee contract refers to a contract that requests the issuer to provide a specific amount of compensation tothe contract holder who suffers losses when a specific debtor fails to repay the debt on due date according to the initial orrevised terms of the debt instrument. In respect of financial liabilities which are not designated at fair value throughprofit and loss of the current period, or in respect of financial guarantee contract for financial liabilities arising fromtransfer of financial assets not complying with derecognition conditions or continuous involvement in the transferredfinancial assets, the measurement after initial recognition will be based on the amount of provision for losses, or the
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st 2019 to June 30
th2019
balance of initial recognized amount after deducting the accumulated amortized amount confirmed in accordance withthe relevant provisions of the Revenue Standard, whichever the higher.
9.4.2 Derecognition of financial liabilities
When the existing obligations of a financial liability have been wholly or partially discharged, such financial liability orsuch part of it will be derecognized. When the Group (as borrower) and the lender enter into an agreement to undertakenew financial liabilities for replacing the original financial liabilities, if substantive difference exists in the contractualterms between the new financial liabilities and the original financial liabilities, the Group should derecognize theoriginal financial liabilities while at the same time recognizes the new financial liabilities.
When a financial liability is wholly or partially derecognized, the difference between the book value of the derecognizedportion and the consideration paid (including non-cash asset transferred out or new financial liabilities undertaken) willbe accounted in the profit and loss of the current period.
9.4.3 Equity instrument
Equity instrument refers to a contract which can prove the ownership of remainder interest in assets after deducting allliabilities of the Group. The Group issues (including refinances), repurchases, sells or cancels equity instruments fortreatment of changes in equity. The Group will not recognize changes in the fair value of equity instruments. Tradingexpenses relating to equity transactions will be deducted from equity.
The Group’s distribution to holder of equity instrument is treated as profit distribution, the share dividends paid out willnot affect the total equity of shareholders.
9.5 Derivatives and embedded derivatives
Derivatives include foreign exchange forward contract, currency exchange rate swap contract, interest rate swap contractand foreign exchange option contract, etc. Derivatives are measured at fair value initially on the date of signing therelevant contract and will be measured at fair value for subsequent measurement.
For a hybrid contract constituted by an embedded derivative and a master contract, if the master contract is in respect ofa financial asset, the Group will not split the embedded derivative from the hybrid contract, but will consider such hybridcontract as a whole unit to which the accounting standards and rules for classification of financial assets are applicable.
If the master contract included in the hybrid contract is not in respect of a financial asset, and fulfills the followingconditions at the same time, the Group will split the embedded derivative from the hybrid contract to be treated as aseparate subsisting derivative.
(1) The economic characteristics and risks of the embedded derivative are not closely connected to the economic
characteristics and risks of the master contract.
(2) A separate instrument containing the same terms as the embedded derivative fits the definition of a derivative.
(3) The hybrid contract is not measured at fair value and changes in fair value are accounted through profit and loss ofthe current period.
If an embedded derivative is split from the hybrid contract, the accounting treatment adopted by the Group for themaster contract within the hybrid contract will be in accordance with the applicable accounting standards and rules. Ifthe Group is unable to measure the fair value of the embedded derivative reliably according to the terms and conditionsof the embedded derivative, the fair value of such embedded derivative will be determined by the difference between thefair value of the hybrid contract and the fair value of the master contract. After adoption of the above method, if the fairvalue of such embedded derivative is still unable to be measured separately on the acquisition date or subsequentbalance sheet date, the Group will designate the entire hybrid contract as a financial instrument measured at fair valuethrough profit and loss of the current period.
9.6 Offsetting between financial assets and financial liabilities
When the Group has legal right to offset the amounts of recognized financial assets and financial liabilities, and such
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legal right is enforceable currently, while at the same time the Group plans to perform netting settlement, or to liquidatethe financial asset and repay the financial liability at the same time, the amount after offsetting between the financialasset and financial liability will be presented in the balance sheet. Save as said above, the financial asset and financialliability are presented separately in the balance sheet without offsetting each other.
10. Receivables
Receivables include notes receivable, accounts receivable, receivables for financing, other receivables, and long-termreceivables. Please refer to Note 9 of this section for details on the method of determination and accounting treatment forexpected credit loss of receivables of the Group, starting from January 1
st2019 onwards.
11. Inventories
11.1 Categories of inventories
The Group's inventories mainly include finished goods or commodities held for sale in the daily activities, completedoutstanding assets formed in the construction contract, products in the production process, materials and supplies used inthe production process or in the process of proving labor service. Inventories are initially measured at cost. Cost ofinventories comprises all costs of purchase, costs of conversion and other expenditures incurred in bringing theinventories to their present location and condition.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the mobile weighted average method.
11.3 Basis for determining net realizable value of inventories
The inventory is according to cost and net realizable value low metering on the date of balance sheet. When the netrealizable value is lower than cost, withdraw inventory falling price reserves. The net realizable value refers to theamount derived by deducting the potential cost, estimated selling expense and relative taxes to the completion date fromthe estimated sales price of inventory in daily activities. When determining net realizable value of inventories, take theobtained conclusive evidence as basis and consider the purposes of holding inventories and influence of events after thebalance sheet date.
Provision for decline in value of inventories is made based on the excess of cost of inventory over its net realizable valueon an item-by-item basis.
After provision for inventory depreciation reserves is made, if the factors resulting in the write-down of inventoryimpairment have disappeared and causing the net realizable value higher than its book value, such inventory impairmentprovision are recovered and reversed, and the reversed amount recorded in profits and losses of the current period.
11.4 Inventory count system
The perpetual inventory system is maintained for stock system.
11.5 Amortization method for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method.
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12. Long-term Equity Investment
12.1 Basis for determining joint control and significant influence over investee
Control is the power to govern an entity through participating in relevant activities of the investee; the investor is able toobtain variable benefits from its activities, and at same time, to use the control rights on the investee to influence theamount of returns. Joint control means that joint control for certain arrangement in accordance with relevant agreements;activities relevant to the arrangement cannot be decided until obtaining the unanimous consent of parties sharing controlright. Significant influence is the power to participate in the financial and operating policy decisions of the investee butis not control or joint control over those policies. When determining whether an investing enterprise is able to exercisecontrol or significant influence over an investee, the effect of potential voting rights of the investee, such as currentconvertible debts, current executable warrants, etc., held by the investing enterprises or other parties shall be considered.
12.2 Determination of initial investment cost
For a long-term equity investment acquired through a business combination involving enterprises under common control,the shares of merged party's book value of owners' equity in the final controlling party consolidated financial statementsobtained on the merger date shall be considered as the initial investment cost of long-term equity investment. Thedifferences between the initial investment cost of long-term equity investment and the paid cash, the transferrednon-cash assets and the book value of the assumed debts are adjusted against the capital surplus; if the capital surplus isnot sufficient to be offset, the remaining balance is adjusted against retained earnings. In the case of issued equitysecurities treated as consolidation consideration, share of book value of owner's equity of merged party in the finalcontrolling party consolidated financial statements is regarded as initial investment cost of long-term equity investmentson the date of consolidation; capital reserve shall be adjusted in accordance with taking total nominal value of issuedshare as capital share, the difference between the initial investment cost of long-term equity investments and total bookvalue of issued shares; In case the capital reserve is not enough for writing down, the retained earnings shall be adjusted.
For a long-term equity investment acquired through business combination not involving enterprises under commoncontrol, and the merging cost confirmed on the purchased date are regarded as the initial investment cost.
The intermediate expenses made by the combining party or purchaser for audit, legal service, assessment and othermanagement related expenses during the business merger should be included into the current profit and loss as ithappens.
Conduct initial measurement according the cost for other equity investment other than the long-term equity investmentformed in business merger. In case that the investor may post a significant impact on the investee or execute joint controlbut not constitute the control right, long-term equity investment cost is the sum of fair value of original-held equityinvestment plus newly-added investment cost in accordance with No. 22 Accounting Standards for BusinessEnterprises----Recognition and Measure of the Financial Instruments.
12.3 Subsequent measurement and recognition of profit or loss
12.3.1 Long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in the Company's financialstatements. A subsidiary is an investee that is controlled by the Group.The long-term equity investment accounted by the cost method shall be measured at its initial investment cost. If thereare additional investments or disinvestments, the long-term equity investment cost shall be adjusted. Income from theinvestment in the current period shall be recognized in accordance with the cash dividends or profits declared and issuedby the investee.
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
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2019
12.3.2 Long-term equity investment accounted for using the equity method
The Group accounts for investment in associates and joint ventures using the equity method. An associate is an entityover which the Group has significant influence and a joint venture is an entity over which the Group can only exercisejoint control along with other investors on the investee’s net assets.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group’s shareof the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initialinvestment cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’sidentifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the costof the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of theinvestee for the period as investment income or loss and comprehensive income for the period, meanwhile, the bookvalue of the long-term equity investment shall be adjusted; The Company shall accordingly reduce the book value of thelong-term equity investment in terms of the part that shall be enjoyed according to the profit or cash dividends declaredby the invested unit to be distributed; For other changes in the owners' equity of the invested unit other than net profitsand losses, other comprehensive incomes and the profit distribution, the book value of long-term equity investment shallbe adjusted and be included into the capital reserves. The Company shall, on the ground of the fair value of allidentifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profitsand losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting policies andaccounting periods adopted by the invested unit are different from those adopted by the Company, the adjustment shallbe made for the financial statements of the invested unit in accordance with the accounting policies and accountingperiods of the Company to recognize the investment income and other comprehensive incomes. For the transactionincurred between the group and associated enterprises and joint ventures, invested or sold assets don't constitute abusiness, the part that doesn't achieve internal transaction profit or loss or belongs to the group calculated according tothe enjoyed ratio will be offset, and the profit or loss on investment will be confirmed on this basis. But for theunrealized loss arising from the internal transaction between the group and the invested unit, if such transaction loss isdefined as the impairment loss of the transferred asset, they cannot be offset.
When the Company determines the net loss of the invested unit which shall be shared, it is necessary to write-down thebook value of the long-term equity investment and other long-term equities substantially constituting the net investmentof the invested unit to zero as a limit. Besides, if the group is obliged to bear extra loss for the invested unit, it shall benecessary to determine provisions and record them to current investment loss in compliance with obligations expected tobe assumed. If the invested unit realizes any net profits later, the group shall, after the amount of its attributable share ofprofits offsets its attributable share of the un-confirmed losses, resume recognizing its attributable share of profits.
12.4 Disposal of long-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually received and the carryingamount is recognized in profit or loss for the period.
13. Fixed Assets
13.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others,or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognized onlywhen it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset canbe measured reliably. Fixed assets are initially measured at cost.
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
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th2019
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable thateconomic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measuredreliably. Meanwhile the carrying amount of the replaced part is derecognized. Other subsequent expenditures arerecognized in profit or loss in the period in which they are incurred.
13.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one inwhich it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of eachcategory of fixed assets are as follows:
| Class | Depreciation period (years) | Residual value rate (%) | Annual depreciation rate (%) |
| Buildings and Constructions | 20 years | 10 | 4.5 |
| General-purpose equipment | 3-5 years | 10 | 18.0-30.0 |
| Special-purpose equipment | 3-5 years | 10 | 18.0-30.0 |
| Transportation vehicles | 5 years | 10 | 18.0 |
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14. Construction in Process
Construction in progress is measured at its actual costs. The actual costs include various construction expendituresduring the construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs.Construction in progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready forintended use.
15. Borrowing Costs
Borrowing costs directly attributable to the acquisition & construction or production of assets eligible for capitalizationshall be capitalized when assets expenditure, borrowing costs and necessary construction or production for bringingassets to expected conditions for use or marketing have taken place; when construction or production of assets ready forcapitalization reach to expected conditions for use or marketing, capitalization shall be ceased. Other borrowingexpenses are recognized as expenses in the current period.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actualinterest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowedfunds before being used on the asset or any investment income on the temporary investment of those funds. Where fundsare borrowed under general-purpose borrowings, the Group determines the amount of interest to be capitalized on suchborrowings by applying a capitalization rate to the weighted average of the excess of cumulative expenditures on theasset over the amounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interestrates applicable to the general-purpose borrowings. During the capitalization period, exchange differences related to aspecific-purpose borrowing denominated in foreign currency are all capitalized. Exchange differences in connection withgeneral-purpose borrowings are recognized in profit or loss in the period in which they are incurred.
16. Intangible Assets
16.1 Intangible Assets Valuation Method and Service Life
Intangible assets include land use right, intellectual property (IP) and application software, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available for use, itsoriginal cost is amortized over its estimated useful life using the straight-line method. The useful life and predicted netresidual value of various intangible assets are shown as follows:
| Class | Service life (year) | Salvage value rate (%) |
| Land use right | 40 or 50 years | - |
| IP Right | 10 Years | - |
| Application Software | 5-10 years | - |
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2019
16.2 Internal Research and Development Expenditure
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is recognized asintangible asset. Expenditure during development phase that does not meet the following conditions is recognized inprofit or loss for the period.
(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale;
(2) The Group has the intention to complete the intangible asset and use or sell it;
(3) The Group can demonstrate the ways in which the intangible asset will generate economic benefits, including theevidence of the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to beused internally, the usefulness of the intangible asset;
(4) The availability of adequate technical, financial and other resources to complete the development and the ability touse or sell the intangible asset; and
(5) The expenditure attributable to the intangible asset during its development phase can be reliably measured.If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes allof them in profit or loss for the period.
17. Long-term Assets Impairment
The Group assesses at each balance sheet date whether there is any indication that the long-term equity investment, fixedassets, construction in process and intangible assets with a finite useful life may be impaired. If there is any indicationthat such assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefiniteuseful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether thereis any indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of anindividual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverableamount is determined by the higher of 1) net amount of fair value of the asset or asset group deducted by the disposalexpenses; or 2) the present value of the expected future cash flows of the asset or asset group.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted for as animpairment loss and is recognized in profit or loss for the period.
Goodwill impairment test shall be conducted at the end of each year at least. Goodwill impairment test shall beconducted in accordance with the concerned asset group or asset portfolio. That is to allocate the book value of goodwillto the asset group or asset portfolio that is expected to benefit from the synergies of the combination in a reasonable wayfrom the date of purchasing. When recoverable amount of apportion-included asset group or asset portfolio of goodwillis less than book value of goodwill, impairment loss shall be recognized. Firstly, amount of impairment loss shall beapportioned to the book value of goodwill of the said asset group or asset portfolio, and then book value of other assets,except for goodwill, in asset group or asset portfolio shall be abated in proportion.
Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.
st 2019 to June 30
th
2019
18. Employee compensation
18.1 Accountant Arrangement Method of Short-term Remuneration
During accounting period when the Group's employees provide services, actual short-term remuneration shall berecognized as the liabilities and current profit and loss or relevant asset cost. The Group’s employee benefits and welfareare included into current profit and loss or relevant asset cost according to actual amount occurred during the period. Ifthe employee benefits and welfare is non-monetary, it shall be measured according to its fair value.
During the accounting period that the employees service the Group, the Group pays social insurance premiums such asmedical insurance premium, industrial injury insurance premium, maternity insurance premium and housingaccumulation fund for its employees, as well as labor union expenditure and employee education expenses calculatedand withdrawn according to the regulations, corresponding employee remuneration amount shall be calculated anddetermined in accordance with specified calculation and withdrawal basis and proportion to recognize correspondingliabilities and included into the current profit and loss or relevant asset cost.
18.2 Accountant Arrangement Method of Post-employment Benefits
All post-employment benefits shall be considered as the defined contribution plan.
In the accounting period when the employee serves for the Group, the deposited amount calculated based on definedcontribution plan shall be recognized as liabilities and included in the current profit and loss or relevant asset cost.
18.3 Accountant Arrangement Method of the Termination Benefits
Where the Group provides termination benefits, the employee remuneration liabilities caused by such terminationbenefits will be determined as the following date, whichever is earlier, and will be included in the current profit and loss:
1) When the Group cannot unilaterally withdraw the termination benefits provided due to labor relation cancellation planor employee lay-off suggestion; or 2）when the Group determines costs or expenses in relation with the restructuring ofthe paid termination benefits.
19. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as products qualityassurance, etc. And it is probable that an outflow of economic benefits will be required to settle the obligation, and theamount of the obligation can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation atthe balance sheet date, taking into account factors pertaining to a contingency such as the risks, uncertainties and timevalue of money. Where the effect of the time value of money is material, the amount of the provision is determined bydiscounting the related future cash outflows.
20. Share-based Payment
Share-based payment refers to a transaction in which the Group grants the equity instruments or undertakes theequity-instrument-based liabilities in return for services from employees. The Group's share-based payment is anequity-settled share-based payment.
st
2019 to June 30
th2019
A share-based payment is a transaction which the Group grants equity instruments, or incurs liabilities for amounts thatare determined based on the price of equity instruments, in return for services rendered by employees. The Group'sshare-based payments are equity-settled share-based payments.
20.1 Equity-settled share-based payments
Grants to employees are equity-settled share-based payments.
Equity-settled share-based payments in exchange for services rendered by employees are measured at the fair value ofthe equity instruments granted to employees at the grant date. Such amount is recognized as related costs or expenses ona straight-line basis over the vesting period, with a corresponding increase in capital reserve.
At each balance sheet date during the vesting period, the Group makes the best estimate according to the subsequentlatest information of change in the number of employees who are granted with options that may vest, etc. and revises thenumber of equity instruments expected to vest. The effect of the above estimate is recognized as related costs orexpenses, with a corresponding adjustment to capital reserve.]
20.2. Accounting treatment related to implementation, modification and termination of share-based paymentarrangement
In case the Group modifies a share-based payment arrangement, if the modification increases the fair value of the equityinstruments granted, the Group will include the incremental fair value of the equity instruments granted in themeasurement of the amount recognized for services received. If the modification increases the number of the equityinstruments granted, the Group will include the fair value of additional equity instruments granted in the measurement ofthe amount recognized for services received. The increase in the fair value of the equity instruments granted is thedifference between fair value of the equity instruments before and after the modification on the date of the modification.If the Group modifies the terms or conditions of the share-based payment arrangement in a manner that reduces the totalfair value of the share-based payment arrangement, or is not otherwise beneficial to the employee, the Group willcontinue to account for the services received as if that modification had not occurred, other than a cancellation of someor all the equity instruments granted.If cancellation of the equity instruments granted occurs during the vesting period, the Group will account for thecancellation of the equity instruments granted as an acceleration of vesting, and recognize immediately the amount thatotherwise would have been recognized over the remainder of the vesting period in profit or loss for the period, with acorresponding recognition in capital reserve. When the employee or counterparty can choose whether to meet thenon-vesting condition but the condition is not met during the vesting period, the Group treats it as a cancellation of theequity instruments granted.
21. Revenue
21.1 Revenue from sale of goods
Revenue from sale of goods is recognized when (1) the Group has transferred to the buyer the significant risks andrewards of ownership of the goods; (2) the Group retains neither continuing managerial involvement to the degreeusually associated with ownership nor effective control over the goods sold; (3) the amount of revenue can be measuredreliably; (4) it is probable that the associated economic benefits will flow to the Group; and (5) the associated costsincurred or to be incurred can be measured reliably.
st
2019 to June 30
th2019
21.2 Revenue from rendering of services
Revenue from rendering of services is recognized when (1) the amount of revenue can be measured reliably; (2) it isprobable that the associated economic benefits will flow to the enterprise; (3) the stage of completion of the transactioncan be determined reliably; and (4) the associated costs incurred or to be incurred can be measured reliably. Revenuefrom rendering of services is recognized using the percentage of completion method at the balance sheet date. The stageof completion of a transaction for rendering for services is determined based on the proportion that costs incurred to datebear to the estimated total costs of the transaction.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue isrecognized only to the extent of the costs incurred that will be recoverable, and the costs incurred are recognized asexpenses for the period. When it is not probable that the costs incurred will be recovered, revenue is not recognized.
21.3 Construction Contract
Where the outcome of a construction contract can be estimated reliably, contract revenue and costs are recognized usingthe percentage of completion method at the balance sheet date.
The stage of completion of a contract is determined using the proportion that completed contract work bears to theestimated total contract work.
Where the outcome of a construction contract cannot be estimated reliably, (1) if contract costs are expected to berecoverable, contract revenue is recognized to the extent of contract costs that are expected to be recoverable; andcontract costs are recognized as expenses in the period in which they are incurred; (2) if contract costs are not expectedto be recoverable, they are recognized as expenses immediately when incurred and contract revenue is not recognized.When the uncertainties that prevented the outcome of the construction contract from being estimated reliably no longerexist, revenue and expenses associated with the construction contract are recognized using the percentage of completionmethod.
If the estimated total contract costs exceed total contract revenue, the expected loss is recognized immediately as anexpense for the period.
The cumulative costs incurred and cumulative gross profits (or losses) recognized for contracts in progress and theprogress billings are offset and the net amount is presented in the balance sheet. Where the aggregate of cumulative costsincurred and cumulative gross profits (or losses) recognized exceed the progress billings for contracts in progress, thesurplus is shown as inventory. Where the progress billings for contracts in progress exceed the aggregate of cumulativecosts incurred and cumulative gross profits (or losses) recognized, the surplus is shown as receipts in advance.
For participation in public infrastructure construction using the Build-Operate-Transfer (BOT) model, the Grouprecognizes revenue and expenses associated with the construction services rendered during the construction period inaccordance with Accounting Standard for Business Enterprises No.15 – Construction Contracts. When the constructionof the public infrastructure is completed, the Group recognizes revenue and expenses associated with subsequentoperations and services in accordance with Accounting Standard for Business Enterprises No. 14 – Revenue.
22. Governmental Subsidy
22.1 Judgment basis and Accountant treatment of government subsidy related to assets
The government subsidies for Chongqing Manufacture Base construction and etc. are used for constructions and formslong-term assets in other ways, and therefore are categorized as government subsidy related to assets.
st 2019 to June 30
th
2019
A government grant related to an asset is recognized as deferred income or writing down book value of related assets.For government grants recognized as deferred income, it should be evenly amortized to profit or loss over the useful lifeof the related asset.
22.2 Judgment basis and accountant treatment of government subsidy related to incomeThe Group receives government subsidies including subsidies for Core Electronic Devices, High-end Universal Chipand Basic Software Product Projects, Value-Added-Tax rebate (VAT rebate), subsidies for special projects, and taxrefunds, etc., which are not used for constructions and forms long-term assets in other ways, and therefore arecategorized as government subsidy related to income.
For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred insubsequent periods, the grant is recognized as deferred income, and recognized in profit or loss over the periods in whichthe related costs or losses are recognized. If the grant is a compensation for related expenses or losses already incurred,the grant is recognized immediately in profit or loss for the period.
For government subsidies related to the Group’s daily operations shall be booked into other income or offsetting relatedexpenses; for those not related to the Group’s daily operations, shall be booked into non-operating income/expense.
23. Deferred Income Tax Assets / Deferred Income Tax Liabilities
The income tax expenses include current income tax and deferred income tax.
23.1. Current Income Tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at theamount expected to be paid (or recovered) according to the requirements of tax laws.
23.2 Deferred Income Tax Assets and Deferred Income Tax Liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between thenil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determinedaccording to tax laws, deferred tax assets and liabilities are recognized through the balance sheet liability method.
Deferred tax is generally recognized for all temporary differences. Deferred tax assets for deductible temporarydifferences are recognized to the extent that it is probable that taxable profits will be available against which thedeductible temporary differences can be utilized. However, for temporary differences associated with the initialrecognition of goodwill and the initial recognition of an asset or liability arising from a transaction (not a businesscombination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction,no deferred tax asset or liability is recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it isprobable that future taxable profits will be available against which the deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries,except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporarydifferences associated with such investments are only recognized to the extent that it is probable that there will be
st
2019 to June 30
th
2019
taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in theforeseeable future.
On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at theapplicable tax rates in the period in which the related assets are recovered or the related liabilities are recovered inaccordance with the tax laws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise fromtransactions or events that are directly recognized in other comprehensive income or in shareholders' equity, in whichcase they are recognized in other comprehensive income or in shareholders' equity; and when they arise from businesscombinations, in which case they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probablethat sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Suchreduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
23.3 Offset of Income Tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assetsand settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a netbasis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets anddeferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity ordifferent taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize theassets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets orliabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a netbasis.
24. Lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards ofownership to the lessee. All other leases are classified as operating leases.
24.1 Accounting treatment of operating Lease
24.1.1 The Group as lessee under operating leases
Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are eitherincluded in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged toprofit or loss for the period. Contingent rents are charged to profit or loss in the period in which they are actuallyincurred.
24.1.2 The Group as lessor under operating leases
Rental income from operating leases is recognized in profit or loss on a straight-line basis over the term of the relevantlease. Initial direct costs with more than an insignificant amount are capitalized when incurred, and are recognized inprofit or loss on the same basis as rental income over the lease term. Other initial direct costs with an insignificant
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st 2019 to June 30
th2019
amount are charged to profit or loss in the period in which they are incurred. Contingent rents are charged to profit orloss in the period in which they actually arise.
24.2. Accounting treatment of the finance lease
24.2.1 The Group as lessee under finance leases
For relevant accounting treatment, refer to Note (III) 13.3 Identification basis, valuation and depreciation method offinance lease of fixed assets.
Unrecognized finance charges are recognized as finance charge for the period using the effective interest method overthe lease term. Contingent rents are credited to profit or loss in the period in which they are actually incurred. The netamount of minimum lease payments less unrecognized finance charges is separated into long-term liabilities and theportion of long-term liabilities due within one year for presentation.
24.2.2 The Group as lessor under finance leases
At the commencement of the lease term, the aggregate of the minimum lease receivable at the inception of the lease andthe initial direct costs is recognized as a finance lease receivable, and the unguaranteed residual value is recorded at thesame time. The difference between the aggregate of the minimum lease receivable, the initial direct costs and theunguaranteed residual value, and the aggregate of their present values is recognized as unearned finance income.
Unearned finance income is recognized as finance income for the period using the effective interest method over thelease term. Contingent rents are credited to profit or loss in the period in which they are actually incurred.
The net amount of financial lease receivables less unearned finance income is separated into long-term debts receivableand the portion of long-term debts receivable due within one year for presentation.
25. Repurchase of the Company’s shares
The consideration and transaction costs paid to repurchase the Company’s shares are deducted from shareholders' equity.No gain or loss is recognized in profit or loss in such repurchase.
26. Important judgments while applying accounting policy, and key assumptions and uncertainty factors appliedfor accounting estimateDuring the process of using accounting policy described in note (III), due to the uncertainty in operation activities, thegroup should judge, estimate and assume the book value of the report items which may not be metered reliably. Thesejudgments, estimates and assumptions are based on the historical experience of the Group's management and otherrelated factors. Differences may exist between the actual results and the Group’s estimate.
The Group regularly reviews the above judgments, assumptions and estimations on the basis of continuous operation. Ifthe changes of accounting estimate only influence current period, the influence amount will be affirmed during thechanging period; if it influences the current period and subsequent periods, the influence amount will be recognized inthe current period and future period.
- Key assumptions and uncertainties used in accounting estimate
st
2019 to June 30
th2019
On balance sheet date, key assumptions and uncertainties for performing accounting estimates on book value of assetsand liabilities in subsequent future periods are:
Impairment of the fixed assets
At the balance sheet date, the Group will review whether fixed assets have signs that impairment is likely to occur. Whenthe signs indicate that the carrying amount cannot be repurchased, then the impairment test shall be implemented. Theimpairment occurred when the book value of asset or asset group is higher than the recoverable amount, which is the netamount of fair value minus the disposal expenses or the present value of expected future cash flows (whichever ishigher). The net amount of fair value minus disposal expenses is determined by deducting the incremental cost whichdirectly belongs to the assets disposal referring to the price of sales agreement of similar assets in fair transaction or theobservable market price. When predicting present value of future cash flows, management team must estimate thepredicted future cash flows of the said asset or asset portfolio, and shall select proper discount rate to confirm the presentvalue of future cash flows. Based on the above procedure, the Group's management team deems that it is not necessaryto withdraw provision of fixed assets impairment.
Useful life and predicted net residual value of fixed asset
The Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixedassets with similar properties and functions, the estimation of predicted net residual value is the amount obtainedcurrently by the Group from the assets after deducting the anticipated disposal expense based on the anticipated statusassuming the conditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. TheGroup shall conduct the review on the predicted service life and predicted net residual value of fixed assets at leastannually. For the current reporting period, the Group's management did not see signs either indicating a shortened orextended useful life of the Group’s fixed asset or indicating a change in predicted net residual value.
Impairment of accounts receivables
When there is a clear evidence to make the accounts receivables collection in doubt, then the Group will calculate andwithdraw the impairment provision to the accounts receivables. Because the Group's management needs to judge thehistoric conditions of receivable collection, aging, debtor's financial condition and overall economic environment whenconsidering the impairment provision, there are uncertainties related to the calculation of impairment provision.Although there is no reason to believe that the estimation applied when calculating the impairment provision of accountsreceivables will have significant changes in the future, the book value and impairment loss of accounts receivables willchange when the future actual result is different from the anticipated and original estimations.
Accrued liabilities of product quality warranty
Accrued liabilities of product quality assurance are an estimation made by the Group according to the predicted repairand replacement cost of relevant products. The estimation considers the product claim rate trend, historic defect rate,industry practice and other major estimations. The management deems that the current estimation on accrued liabilitiesof product quality warranty is reasonable, however, the Group will continue to review the conditions of product repairs,and will conduct adjustment if any sign indicating the need to make adjustments on accounting estimates.
Impairment provision for inventories
Inventories are measured at the lower of cost and net realizable value. The Group will regularly conduct acomprehensive stocktaking to review the impairment circumstances on outmoded and dull inventory if any; in addition,the Group's management will regularly review the impairment circumstance of inventory with long storage time
st
2019 to June 30
th2019
according to the inventory aging list. The review procedure includes the comparison between book value of outmoded,dull inventory and inventory with long storage time and its corresponding net realizable value in order to determinewhether to withdraw provisions on the outmoded, dull inventory and inventory with long storage time. Based on theabove procedure, the Group's management deems that the full provision amounts have been withdrawn for the outmoded,dull inventory and inventory with long storage time
Assets from deferred income tax
The realization of deferred income tax assets mainly depends on the actual future profits and the effective tax rate oftemporary difference in the future applicable years. If the actual profit in the future is less than the estimation, or actualtax rate is lower than the estimation, then the confirmed deferred income tax assets will be reversed and confirmed in theincome statement during the corresponding period. If the actual profit in the future is more than the estimation, or actualtax rate is higher than the estimation, then the corresponding deferred income tax assets will be adjusted and confirmedin the income statement during the corresponding period.
Long-term equity investment impairment
The Group judges whether there is any possibility of impairment of long-term equity investments on the balance sheetdate. When there is an indication that the carrying amount is not recoverable, the impairment test is carried out, and theimpairment provision is measured at the lower of the carrying amount and the recoverable amount. The recoverableamount of an asset or asset group is determined by the higher of the fair value of the asset or asset group less thedisposal expense and the present value of the estimated future cash flows of the asset or asset group. When estimatingthe present value of future cash flows, management needs to estimate the future cash flows of the asset or asset groupand select an appropriate discount rate to determine the present value of future cash flows. When calculating the netamount for the fair value less disposal costs to sell, the fair value is the price that the market participant can receivewhen selling an asset in an orderly transaction that occurs on the measurement date. If the reassessed recoverableamount is lower than the current estimate, the difference will affect the book value of the asset during the change.
Goodwill impairment
When performing impairment test on goodwill, the predicted present value of future cash flows of relevant asset groupor asset group portfolio included the goodwill need to be calculated, the future cash flows of relevant asset group or assetgroup portfolio need to be estimated, and the proper pretax rate that fairly reflects the current market time value ofmoney and specific asset risk need to be determined. When the future actual result is different from the originalestimation, the goodwill impairment loss will alter.
st
2019 to June 30
th
2019
27. Significant alternation in accounting policy and accounting estimations
27.1 Significant changes in accounting policies
| Changes in accounting policies and reasons | Approval Procedures | Notes |
| New Standards for Financial Instruments The Group has implemented the Accounting Standards for Business Enterprise No. 22 – Recognition and Measurement of Financial Instruments, the Accounting Standards for Business Enterprise No. 23 – Transfer of Financial Assets, the Accounting Standards for Business Enterprise No. 24 – Hedging Accounting and the Accounting Standards for Business Enterprise No. 37 – Presentation of Financial Instruments (hereinafter referred to as “New Standards for Financial Instruments”) revised in 2017 by the Ministry of Finance, effective from January 1st 2019. In the classification and measurement of financial assets, the New Standards for Financial Instruments require the classification of financial assets based on their characteristics of contractual cash flows and the business models for management of such assets by enterprises into the three main categories of “financial assets measured at amortized cost”, “financial assets at fair value through other comprehensive income” and “financial assets at fair value through profit and loss of current period”, and cancel the categories of loans and receivables, investment held to maturity and available-for-sale financial assets in the former standards for financial instruments. Investments in equity instruments are generally classified into financial assets at fair value through profit and loss of current period, and investments in equity instruments for non-trading purpose are also allowed to be designated as financial assets at fair value through other comprehensive income, but such designation is irrevocable, and at the time of disposal, the accumulated amount of fair value changes previously included in other comprehensive income must not be transferred to profit and loss of current period. In respect of value impairment, the New Standards for Financial Instruments relating to impairment requirements are applicable to financial assets measured at amortized cost, financial assets at fair value through other comprehensive income, lease receivables and financial guarantee contracts. The New Standards for Financial Instruments require the adoption of the expected credit loss model to recognize the provision for credit loss for replacing the former model of credit loss occurred. The new impairment model adopts a three-stage model depending on whether credit risk of the relevant project has increased significantly after initial recognition, provision for credit loss is made according to the expected credit loss within 12 months or the expected credit loss during the entire subsisting period. All receivables and long-term receivables of the Group generated from transactions governed by the Revenue Standard and finance lease receivables of the Group generated from transactions governed by the Accounting Standards for Business Enterprise No. 21 - Leases should make provision for losses according to the equivalent amount of expected credit loss in the entire subsisting period. Recognition and measurement of financial instruments prior to January 1st 2019 were inconsistent with the New Standards for Financial Instruments, the Group has made retrospective adjustments according to the requirements of the New Standards for Financial Instruments. The Group will not adjust the data involved in financial statements for comparison in preceding periods which are not consistent with the requirements of the New Standards for Financial Instruments. The difference between the original book value of financial instruments and the new book value on the date of implementation | Such alternations in accounting policy were approved by the Group at board of director general meeting. | None |
st
2019 to June 30
th2019
of the New Standards for Financial Instruments will be accounted under retained earnings or other comprehensive income on January 1
st2019. Fordetails on the effects of adoption of the New Standards for Financial Instruments by the Group on January 1
st
2019, please refer to Notes (III) 27.2.
Amendments to the format of financial statements
The Group began to implement the Circular on Revising and Issuing the Format of General Enterprise Financial Statements for the Year of 2019(Finance and Accounting [2019] No. 6) promulgated by the Ministry of Finance on April 30
th
2019 (hereinafter referred to as "Finance and AccountingNo. 6") in the preparation of its interim financial statements for the first half year of 2019. Finance and Accounting No. 6 made amendments to theformat of general enterprise financial statements by dividing the “accounts receivable and notes receivable” item into "accounts receivable" and“notes receivable" and dividing the "accounts payable and notes payable" item into "accounts payable" and "notes payable" and clarified or revised thepresentation contents of the items of "other receivables", “non-current assets due within one year”, “other payables”, "deferred income", “R&Dexpenditure”, "interest income" under “financial expenses”, "other income", "assets disposal income", "non-operating income" and "non-operatingexpenses". For enterprises that have implemented the New Standards for Financial Instruments, a new item of "receivables for financing" shall beadded to reflect the notes receivable and accounts receivable measured at fair value through other comprehensive income under the New Standards forFinancial Instruments; and a new item of "gains on derecognition of financial assets measured at amortized cost" shall be added to reflect the gains orlosses arising from the derecognition of financial assets measured at amortized costs due to transfers, etc. For the changes in the items mentionedabove, the Company adopted retrospective adjustment method to reflect changes in accounting treatments and made retrospective adjustments to thedata of the comparable accounting periods.
st 2019 to June 30
th2019
27.2. Adjustment to relevant items in financial statement at the beginning of the year of first implementation upon first implementation of the New Standards for FinancialInstruments
Consolidated Balance Sheet
Unit: RMB
| Book value presented according to former standard for financial instruments as at December 31st 2018 | Reclassification | Re-measurement | Book value presented according to the New Standards for Financial Instruments as at January 1st 2019 | |
| Financial assets held for trading (Note 1) | - | 1,860,050.59 | 1,860,050.59 | |
| Financial assets at fair value through profit and loss of current period (Note 1) | 1,860,050.59 | (1,860,050.59) | - | |
| Notes receivable and accounts receivable (Note 2) | 19,188,886,471.10 | (2,273,846,399.85) | 16,915,040,071.25 | |
| Receivables for financing (Note 2) | - | 2,273,846,399.85 | (26,488,816.57) | 2,247,357,583.28 |
| Other comprehensive income (Note 2) | (49,576,351.10) | (26,488,816.57) | (76,065,167.67) | |
| Available-for-sale financial assets (Note 3) | 290,966,813.00 | (290,966,813.00) | - | |
| Other non-current financial assets (Note 3) | - | 290,966,813.00 | 290,966,813.00 | |
| Held-for-trading financial liabilities (Note 4) | - | 290,998.43 | 290,998.43 | |
| Financial liabilities at fair value through profit and loss of current period (Note 4) | 290,998.43 | (290,998.43) | - |
st 2019 to June 30
th
2019
Balance Sheet of Parent Company
Unit: RMB
| Book value presented according to former standard for financial instruments as at December 31st 2018 | Reclassification | Re-measurement | Book value presented according to the New Standards for Financial Instruments as at January 1st 2019 | |
| Notes receivable and accounts receivables (Note 2) | 15,556,312,793.95 | -230,388,838.47 | 15,325,923,955.48 | |
| Receivables for financing (Note 2) | - | 230,388,838.47 | -2,178,538.52 | 228,210,299.95 |
| Other comprehensive income (Note 2) | - | -2,178,538.52 | -2,178,538.52 | |
| Available-for-sale financial assets (Note 3) | 290,956,813.00 | -290,956,813.00 | - | |
| Other non-current financial assets (Note 3) | - | 290,956,813.00 | 290,956,813.00 |
st
2019 to June 30
th
2019
IV. Taxes
1. Major categories of taxes and tax rates
| Category of tax | Basis of tax computation | Tax rate |
| Enterprise income tax | Taxable income | 25% (Note 1) |
| VAT | For the taxable product sales revenue or taxable labor revenue, the Company and its domestic subsidiaries are ordinary Value-added Tax payers; the VAT payable is the balance of input tax after deducting the deductible output tax. | 6%, 9%, 10%, 13%, 16% and simple collection rate of 3% for housing leases (Note 2) |
| City maintenance and construction tax | Actual payable turnover tax | 7%, 5% |
| Education surcharges | Actual payable turnover tax | 3% |
| Local education surcharges | Actual payable turnover tax | 2% |
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st 2019 to June 30
th2019
valid for 3 years from 2018 to 2020. Therefore, the enterprise income rate shall be calculated and paid on the basisof a reduced tax rate of 15% in the current reporting period.Note 2: In accordance with the Notice on Software Product Value-added Tax Policy (Finance and Taxation [2011] No.100) of Ministry of Finance and State Administration of Taxation (SAT), as for the self-developed software product salesof the Company and the Company’s wholly-owned subsidiaries such as Hangzhou System, as well as the Company’sjoint-venture subsidiaries such as Hangzhou EZVIZ Software Ltd., Wuhan HIK Storage Technology Ltd., HangzhouRobotic Technology, Hangzhou HIK Huiying Technology Ltd., and and Hangzhou HIK Automotive Software Ltd., theVAT shall be calculated and paid with tax rate of 17% at first, then the portion with actual tax bearing excess 3% shall berefunded after State Administration of Taxation (SAT) reviews.
According to Finance and Tax [2018] No. 32, since May 1
st
2018, taxpayers are subject to VAT taxable sales or importedgoods, and the VAT rate is adjusted from 17%, 11% and 6% to 16%, 10% and 6% respectively.
According to the Ministry of Finance, the State Administration of Taxation, and the General Administration of CustomsAnnouncement No. 39 of 2019, since April 1
st2019, taxpayers are subject to VAT taxable sales or imported goods, andthe VAT rate is adjusted from 16%, 10% and 6% to 13%, 9%, and 6%, respectively.
st 2019 to June 30
th2019
V. Notes to items in the consolidated financial statements
1. Cash and bank balances
| Closing Balance | Opening Balance | |||||
| Item | Foreign currency amount | Exchange rate for conversion | RMB amount | Foreign currency amount | Exchange rate for conversion | RMB amount |
| Cash： | ||||||
| RMB | - | - | 54,053.78 | - | - | 79,737.43 |
| USD | 16,054.34 | 6.8747 | 110,368.80 | 24,087.34 | 6.8632 | 165,316.26 |
| EUR | 6,544.88 | 7.8170 | 51,161.29 | 9,765.86 | 7.8473 | 76,635.60 |
| GBP | 8,393.42 | 8.7113 | 73,117.59 | 8,927.97 | 8.6762 | 77,460.86 |
| INR | 1,382,411.14 | 0.0996 | 137,688.15 | 2,000,830.71 | 0.0980 | 196,081.41 |
| Total other currencies | 34,933.94 | 26,423.01 | ||||
| Bank balance： | ||||||
| RMB | 15,463,156,315.39 | - | - | 20,225,134,883.25 | ||
| USD | 728,446,874.56 | 6.8747 | 5,007,853,728.56 | 707,524,091.98 | 6.8632 | 4,855,879,348.05 |
| EUR | 26,630,893.16 | 7.8170 | 208,173,691.81 | 51,833,430.49 | 7.8473 | 406,752,479.11 |
| GBP | 5,588,032.55 | 8.7113 | 48,679,027.97 | 4,918,810.45 | 8.6762 | 42,676,583.25 |
| INR | 3,807,571,836.65 | 0.0996 | 379,234,154.93 | 3,438,377,221.94 | 0.0980 | 336,960,967.75 |
| Total other currencies | 123,700,026.04 | 123,468,631.32 | ||||
| Other currency funds: | ||||||
| RMB | 612,457,170.42 | - | - | 530,958,544.17 | ||
| USD | 83,009.20 | 6.8747 | 570,663.34 | 5,130,938.50 | 6.8632 | 35,214,593.87 |
| EUR | 145,077.33 | 7.8170 | 1,134,069.50 | 140,937.52 | 7.8473 | 1,105,979.01 |
| INR | 120,306.02 | 0.0996 | 11,982.48 | 119,281.00 | 0.0980 | 11,689.54 |
| Total other currencies | 472,120.20 | 890,099.04 | ||||
| Total | 21,845,904,274.19 | 26,559,675,452.93 | ||||
| Including: deposited in overseas banks | 840,871,524.98 | 1,071,979,704.80 | ||||
st 2019 to June 30
th2019
Details of other currency funds:
| Closing Balance | Opening Balance | |||||
| Item | Foreign currency amount | Exchange rate for conversion | RMB amount | Foreign currency amount | Exchange rate for conversion | RMB amount |
| Capitals with limitations： | ||||||
| Deposits for letter of Credit in RMB | - | - | - | 60,199,342.63 | ||
| Bank acceptance bill | 167,772,399.32 | - | - | 52,522,279.43 | ||
| Deposits for letter of guarantee | 43,336,331.48 | - | - | 41,428,996.22 | ||
| Deposits for letter of Credit in EUR | 134,856.10 | 7.8170 | 1,054,170.14 | 137,209.86 | 7.8473 | 1,076,726.94 |
| Deposits for letter of Credit in USD | - | - | - | 5,133.88 | 6.8632 | 35,234.78 |
| Tax Operation Margin for India | 120,306.02 | 0.0996 | 11,982.48 | 119,281.00 | 0.0980 | 11,689.54 |
| Other security deposit | 977,076.06 | - | - | 1,380,799.75 | ||
| Other capitals with limitations | 371,550,800.00 | - | - | 372,008,649.75 | ||
| Subtotal | 584,702,759.48 | 528,663,719.04 | ||||
| Capitals without limitations: | ||||||
| Other currency funds in USD | 83,009.20 | 6.8747 | 570,663.34 | 5,127,923.38 | 6.8632 | 35,193,900.56 |
| Deposit in Alipay, Tenpay, etc. | - | - | 29,292,683.76 | - | - | 4,280,539.59 |
| Other currency funds in EUR | 10,221.23 | 7.8170 | 79,899.36 | 3,727.66 | 7.8473 | 29,252.07 |
| Other capitals without limitations | - | 13,494.37 | ||||
| Subtotal | 29,943,246.46 | 39,517,186.59 | ||||
| Total | 614,646,005.94 | 568,180,905.63 | ||||
| Item | Closing Balance | Opening Balance |
| Held-for-trading financial assets | 2,640,560.25 | 1,860,050.59 |
| Including: derivative financial assets | 2,640,560.25 | 1,860,050.59 |
| Total | 2,640,560.25 | 1,860,050.59 |
| Category | Closing Balance | Opening Balance |
| Commercial acceptance bill | 365,698,673.52 | 295,598,790.07 |
| Total | 365,698,673.52 | 295,598,790.07 |
st
2019 to June 30
th
2019
3.2 At the end of the current reporting peirod, the Group has no pledged commercial acceptance bills, and the pledgeinformation of bank acceptance bills is detailed in Notes (V) 6.
3.3 Notes receivable discounted or endorsed by the Group at the closing of the reporting period
Unit：RMB
| Category | Derecognized amount by June 30th 2019 | Amount not derecognized by June 30th 2019 |
| Commercial acceptance bill | 32,316,962.85 | 105,737,777.22 |
| Total | 32,316,962.85 | 105,737,777.22 |
st 2019 to June 30
th2019
4. Accounts Receivable
4.1 Disclosure of accounts receivable by categories
Unit: RMB
| Category | Closing Balance | Beginning Balance | ||||||||
| Carrying amount | Bad debt provision | Book Value | Carrying amount | Bad debt provision | Book Value | |||||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | Amount | Proportion (%) | Amount | Proportion (%) | Amount | |
| Provision for bad debts on a single basis | - | - | - | - | - | |||||
| Provision for bad debts by portfolios | 20,503,230,751.59 | 100.00 | 1,376,906,544.54 | 6.72 | 19,126,324,207.05 | 17,878,831,244.30 | 100.00 | 1,259,389,963.12 | 7.04 | 16,619,441,281.18 |
| Total | 20,503,230,751.59 | 100.00 | 1,376,906,544.54 | 6.72 | 19,126,324,207.05 | 17,878,831,244.30 | 100.00 | 1,259,389,963.12 | 7.04 | 16,619,441,281.18 |
| Item | Closing Balance | ||
| Accounts receivable | Bad debt provision | Proportion (%) | |
| Not overdue | 11,153,958,310.65 | 57,764,473.10 | 0.52 |
| Within 1 year after the overdue | 7,758,195,937.46 | 506,717,605.22 | 6.53 |
| 1-2 years after the overdue | 1,035,602,701.71 | 325,372,890.33 | 31.42 |
| 2-3 years after the overdue | 319,658,430.98 | 251,236,205.10 | 78.60 |
| Over 3 years after the overdue | 235,815,370.79 | 235,815,370.79 | 100.00 |
| Subtotal | 20,503,230,751.59 | 1,376,906,544.54 | 6.72 |
st
2019 to June 30
th
2019
4.2 Provision, re-collection, or reverse of the bad debt allowance in the current reporting period
In the current reporting period, the Company recorded a bad debt allowance of RMB 115,422,011.62, including anincrease of bad debt provision amount of RMB 1,402,922.12 due to business merger not under common control; baddebt allowance balance increased for RMB 1,583,673.90 due to conversion of financial reports prepared in foreigncurrency. No reversal of bad debts during the current reporting period.
4.3 Actual write-off of account receivable during current reporting period
In the current reporting period, the amount of accounts receivable write-off is RMB 892,026.22.
4.4 Top five debtors based on corresponding closing balance of account receivables
Unit: RMB
| Name of the Party | Relationship with the Company | Book balance of accounts receivable | Closing balance for bad debt provision | Proportion (%) |
| Related party A | Related Party | 601,193,815.03 | 40,861,661.66 | 2.93 |
| Company A | Third party | 468,243,597.23 | 1,404,730.79 | 2.28 |
| Company B | Third party | 102,730,820.78 | 12,314,635.91 | 0.50 |
| Company C | Third party | 80,489,565.50 | 6,181,050.06 | 0.39 |
| Company D | Third party | 76,426,646.65 | 1,192,179.44 | 0.37 |
| Total | 1,329,084,445.19 | 61,954,257.86 | 6.47 |
| Item | Closing Balance | Opening Balance |
| Notes receivable | 1,386,990,472.51 | 2,247,357,583.28 |
| Total- | 1,386,990,472.51 | 2,247,357,583.28 |
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 1,386,990,472.51 | 2,247,357,583.28 |
| Total- | 1,386,990,472.51 | 2,247,357,583.28 |
| Item | Pledged amounts at the end of the reporting period |
| Bank acceptance bill | 112,443,816.82 |
| Total- | 112,443,816.82 |
| Item | Derecognized amount by June 30th 2019 (note) | Amount not derecognized by June 30th 2019 |
| Bank acceptance bill | 1,192,931,667.52 | - |
| Total- | 1,192,931,667.52 | - |
st 2019 to June 30
th2019
Note: As the main risks and re turns such as interest rate risk associated with these bank acceptance bills have beentransferred to the bank or other parties, the Group derecognises the bank acceptance bills that have been discountedor endorsed.
5.4 At the end of the reporting period, the Group transferred the notes to the accounts receivable due to thefailure of the drawer to perform.
Unit: RMB
| Item | Amounts transferred to accounts receivable at the end of the reporting period |
| Bank acceptance bill | 182,412,538.00 |
| Total- | 182,412,538.00 |
| Aging | Closing Balance | Opening Balance | ||
| Carrying amount | Proportion (%) | Carrying amount | Proportion (%) | |
| Within 1 year | 625,081,109.57 | 95.08 | 371,339,135.76 | 80.67 |
| 1-2 years | 29,588,062.23 | 4.50 | 87,446,891.75 | 19.00 |
| 2-3 years | 1,879,650.44 | 0.29 | 1,219,965.56 | 0.27 |
| Over 3 years | 848,094.09 | 0.13 | 298,226.58 | 0.06 |
| Total | 657,396,916.33 | 100.00 | 460,304,219.65 | 100.00 |
st 2019 to June 30
th2019
7. Other receivables
7.1 Other receivables by categories
Unit: RMB
| Item | Closing Balance | Opening Balance |
| Dividends receivable | 17,357,220.31 | - |
| Other receivables | 522,805,713.38 | 586,594,721.43 |
| Total | 540,162,933.69 | 586,594,721.43 |
| Invested Unit | Closing Balance | Opening Balance |
| CETC subsidiary | 17,357,220.31 | - |
| Total | 17,357,220.31 | - |
| Item | Closing Balance | Opening Balance |
| Other receivables for interim payments | 299,752,349.98 | 354,225,077.10 |
| Guarantee deposits | 190,541,715.53 | 185,672,767.89 |
| Tax rebates for export | 2,036,475.05 | 30,189,439.56 |
| Investment intention fund | - | 20,000,000.00 |
| Others | 61,680,569.87 | 66,275,963.49 |
| Total | 554,011,110.43 | 656,363,248.04 |
st 2019 to June 30
th
2019
(2) Provision for bed debts
Unit: RMB
| bed debts allowance | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (credit impairment has not incurred) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
| Balance on January 1st 2019 | 32,130,352.16 | 33,789,810.13 | 3,848,364.32 | 69,768,526.61 |
| During the current reporting period, balance of other receivables on January 1st 2019 | ||||
| --transferred to stage 2 | (3,155,230.17) | 3,155,230.17 | - | |
| -transferred to stage 3 | (2,022,195.18) | 2,022,195.18 | - | |
| -transferred back stage 2 | ||||
| -transferred back to stage 1 | ||||
| Provision in the current reporting period | 3,240,716.85 | 3,240,716.85 | ||
| Reversal during the current reporting period | 17,312,840.23 | 25,458,668.65 | 42,771,508.88 | |
| Resale during the current reporting peirod | ||||
| Wrtie-off during the current reporting period | ||||
| Other changes | 912,352.50 | 28,203.01 | 27,106.96 | 967,662.47 |
| Balance on June 30th 2019 | 12,574,634.26 | 9,492,379.48 | 9,138,383.31 | 31,205,397.05 |
st 2019 to June 30
th2019
(5) Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
| Entities | Nature | Carrying amount | Aging | Proportion of total (%) | Bad debt Provision |
| Tax authorities | Guarantee deposits | 9,444,600.00 | Not overdue | 1.70 | 59,500.98 |
| The company E | Guarantee deposits | 8,895,785.00 | Within 1 year after overdue | 1.61 | 418,105.54 |
| The company F | Guarantee deposits | 7,901,632.36 | Not overdue | 1.43 | 49,780.28 |
| The company G | Guarantee deposits | 6,858,813.80 | Within 2-3 years after overdue | 1.24 | 2,195,506.30 |
| The company H | Temporary payments for receivables | 6,469,840.96 | Within 2-3 years after overdue | 1.17 | 2,070,996.09 |
| Total | 39,570,672.12 | 7.15 | 4,793,889.19 |
| Category | Closing Balance | Opening Balance | ||||
| Carrying amount | Provision for decline in value of inventories | Book value | Carrying amount | Provision for decline in value of inventories | Book value | |
| Raw materials | 3,022,239,098.32 | 31,075,530.00 | 2,991,163,568.32 | 1,558,519,309.65 | 4,736,249.82 | 1,553,783,059.83 |
| Work-in-progress | 502,293,785.36 | 502,293,785.36 | 415,593,344.57 | - | 415,593,344.57 | |
| Finished goods | 5,060,108,008.37 | 330,386,767.71 | 4,729,721,240.66 | 3,868,735,444.19 | 316,870,213.78 | 3,551,865,230.41 |
| Completed but unsettled assets formed by construction contracts | 388,030,368.74 | 388,030,368.74 | 203,862,518.60 | - | 203,862,518.60 | |
| Total | 8,972,671,260.79 | 361,462,297.71 | 8,611,208,963.08 | 6,046,710,617.01 | 321,606,463.60 | 5,725,104,153.41 |
st 2019 to June 30
th
2019
(2) Provision for decline in value of inventories
Unit: RMB
| Category | Opening balance | Increase in the current period | Decrease in the current period | Effect of foreign currency exchange difference | Closing Balance | |
| Reversals | write-offs | |||||
| Raw materials | 4,736,249.82 | 27,170,557.35 | 831,277.17 | 31,075,530.00 | ||
| Finished goods | 316,870,213.78 | 52,973,185.30 | 39,583,873.67 | 127,242.30 | 330,386,767.71 | |
| Subtotal | 321,606,463.60 | 80,143,742.65 | 40,415,150.84 | 127,242.30 | 361,462,297.71 | |
| Item | Amount |
| Accumulated occurred costs of construction | 4,153,190,521.94 |
| Accumulated booked gross profit margin | 202,630,340.55 |
| Less: estimated losses | - |
| Settled amounts | 2,782,911,966.21 |
| Completed but unsettled assets formed by construction contracts | 1,572,908,896.28 |
| Including: other non-current assets (Note (V) 20) | 1,184,878,527.54 |
| Inventories | 388,030,368.74 |
| Item | Closing Balance | Opening Balance |
| Long-term receivables due within one year (Note (V) 11) | 350,602,927.53 | 380,795,020.47 |
| Total | 350,602,927.53 | 380,795,020.47 |
st 2019 to June 30
th2019
10. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible VAT input | 800,572,524.73 | 608,169,769.69 |
| Withhold and remit individual income tax | 1,156,658.18 | 71,402,966.15 |
| Prepaid corporate income tax | 101,657,006.65 | 31,542,797.57 |
| Prepaid tariff | 48,278,692.39 | 12,880,594.90 |
| Others | 24,366,063.99 | 6,724,001.28 |
| Total | 976,030,945.94 | 730,720,129.59 |
| Item | Closing balance | Opening balance | Range of discount rate | ||||
| Carrying amount | Provision for decline in value | Book value | Carrying amount | Provision for decline in value | Book value | ||
| Financial leases receivables | 113,106,711.00 | 15,423,196.78 | 97,683,514.22 | 100,574,420.65 | - | 100,574,420.65 | 0.43%-6.05% |
| Including: Unrealized income from financing | 1,737,332.21 | - | 1,737,332.21 | 4,218,121.83 | - | 4,218,121.83 | - |
| Installments for selling goods | 1,138,098,328.96 | 43,212,016.20 | 1,094,886,312.76 | 985,732,967.99 | - | 985,732,967.99 | 4.24%-6.45% |
| Including: Unrealized income from financing | 247,642,473.77 | - | 247,642,473.77 | 167,871,990.88 | - | 167,871,990.88 | - |
| Less: Non-current assets due within one year (Note (V) 9) | 402,464,403.37 | 51,861,475.84 | 350,602,927.53 | 380,795,020.47 | - | 380,795,020.47 | - |
| Total | 848,740,636.59 | 6,773,737.14 | 841,966,899.45 | 705,512,368.17 | - | 705,512,368.17 | - |
st
2019 to June 30
th2019
12. Long-term equity investment
Unit: RMB
| The invested entity | Opening Balance | Increase/Decrease in the current reporting period | Closing Balance | Closing balance for impairment provision | |||||||
| Additional Investments | Investment reduction | Investment Profit (Loss) recognized under the equity Method | Adjustment: Other comprehensive income | Other Changes in equity | Declaration of cash dividends or profit distribution | Impairment provision | others | ||||
| Associated Companies | |||||||||||
| Wuhu Sensor Technology Ltd. | 41,771,440.45 | - | 348,945.40 | - | - | - | - | - | 42,120,385.85 | - | |
| Maxio Technology (Hangzhou) Ltd. | 106,651,173.63 | - | (3,080,885.99) | - | - | - | - | - | 103,570,287.64 | - | |
| Zhiguang Hailian Big Data Technology Ltd. | 10,000,000.00 | - | (1,375,582.93) | - | - | - | - | - | 8,624,417.07 | - | |
| Sanmenxia Xiaoyun Vision Technology Ltd. | 4,879,230.48 | - | (107,632.10) | - | - | - | - | - | 4,771,598.38 | - | |
| Jiaxin HaiShi JiaAn Zhicheng Technology Ltd. (Note 1) | 8,000,000.00 | - | 8,000,000.00 | ||||||||
| Subtotal | 163,301,844.56 | 8,000,000.00 | (4,215,155.62) | - | - | - | - | - | 167,086,688.94 | - | |
| Total | 163,301,844.56 | 8,000,000.00 | - | (4,215,155.62) | - | - | - | - | - | 167,086,688.94 | - |
st 2019 to June 30
th2019
13. Other non-current financial assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Financial assets measured at fair value through profit or loss | 296,004,271.50 | 290,966,813.00 |
| Total | 296,004,271.50 | 290,966,813.00 |
| Items | Building and construction | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
| Total original carrying amount | |||||
| 1. Opening balance | 4,657,871,649.90 | 480,490,219.61 | 1,093,093,470.72 | 78,724,224.02 | 6,310,179,564.25 |
| 2. Increase in the current reporting period | 134,393,110.43 | 107,700,780.84 | 268,470,350.04 | 9,792,206.10 | 520,356,447.41 |
| 1) purchase | 133,240,882.63 | 106,095,953.28 | 255,854,439.15 | 9,579,361.27 | 504,770,636.33 |
| 2) transferred from construction in progress | 1,152,227.80 | 12,615,910.89 | 13,768,138.69 | ||
| 3) business merger not under common control | 1,604,827.56 | 212,844.83 | 1,817,672.39 | ||
| 3.Decrease in the current reporting period | 4,731,074.20 | 10,678,125.63 | 23,592,496.67 | 2,049,441.19 | 41,051,137.69 |
| 1) disposal or write-off | 4,731,074.20 | 10,678,125.63 | 23,592,496.67 | 2,049,441.19 | 41,051,137.69 |
| 4. Effect of foreign currency exchange difference | 384,806.85 | 728,180.03 | 902,308.45 | 54,654.18 | 2,069,949.51 |
| 5.Closing Balance | 4,787,918,492.98 | 578,241,054.85 | 1,338,873,632.54 | 86,521,643.11 | 6,791,554,823.48 |
| Accumulated depreciation | |||||
| 1. Opening balance | 549,468,936.19 | 131,087,047.49 | 504,998,831.89 | 42,209,588.58 | 1,227,764,404.15 |
| 2. Increase in the current reporting period | 108,564,039.09 | 44,594,052.12 | 111,288,494.18 | 4,893,534.95 | 269,340,120.34 |
| (1) provided | 108,564,039.09 | 43,665,309.84 | 111,288,494.18 | 4,855,622.00 | 268,373,465.11 |
| (2) business merger not under common control | 928,742.28 | 37,912.95 | 966,655.23 | ||
| 3.Decrease in the current reporting period | 1,028,408.84 | 6,872,583.31 | 13,261,482.33 | 1,298,238.35 | 22,460,712.83 |
| (1) disposal or write-off | 1,028,408.84 | 6,872,583.31 | 13,261,482.33 | 1,298,238.35 | 22,460,712.83 |
| 4. Effect of foreign currency exchange difference | 38,202.81 | 328,370.41 | 128,641.33 | 26,750.50 | 521,965.05 |
| 5.Closing balance | 657,042,769.25 | 169,136,886.71 | 603,154,485.07 | 45,831,635.68 | 1,475,165,776.71 |
| Provision for decline in value | |||||
| 1.Opening balance | - | - | - | - | - |
| 2.Increase in the current reporting period | - | - | - | - | - |
| 3. Decrease in the current reporting period | - | - | - | - | - |
| 4.Closing balance | - | - | - | - | - |
| Total book value | |||||
| 1. Closing balance | 4,130,875,723.73 | 409,104,168.14 | 735,719,147.47 | 40,690,007.43 | 5,316,389,046.77 |
| 2. Opening balance | 4,108,402,713.71 | 349,403,172.12 | 588,094,638.83 | 36,514,635.44 | 5,082,415,160.10 |
st 2019 to June 30
th2019
(3) As of June 30
th
2019, the Group had not leased any fixed asset through financial leasing.
(4) As of June 30
th2019, the Group had not rent out any fixed asset through operating leasing
(5) Fixed assets of which certificates of title have not been granted as of June 30
th2019.
Unit: RMB
| Item | Carrying amount | Reason for certificates of title not granted |
| Office building for branches | 33,245,492.77 | In the process of obtaining the real estate certificates |
| Total | 33,245,492.77 |
st 2019 to June 30
th2019
15. Construction in progress
(1) Details of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision | Book value | Carrying amount | Provision | Book value | |
| Public Security Monitoring Site Project | 300,739,645.62 | 300,739,645.62 | 291,404,089.32 | - | 291,404,089.32 | |
| Hangzhou Innovation Industrial Base | 50,840,516.83 | 50,840,516.83 | 50,840,516.83 | - | 50,840,516.83 | |
| Others | 172,408,910.54 | 172,408,910.54 | 73,847,807.27 | - | 73,847,807.27 | |
| Total | 523,989,072.99 | 523,989,072.99 | 416,092,413.42 | - | 416,092,413.42 | |
| Item | Budget (RMB 0,000) | Opening balance | Increase in the current reporting period | Transferred to fixed assets during the current reporting period | Effect of foreign currency exchange difference | Other Reductions | Closing balance | Amount invested as a proportion of budget amount (%) | Construction in Progress (%) | Accumulated capitalized interest and profit/loss on exchange (Note 1) | Including: capitalized interest and profit/loss on exchange for the current reporting period | Capitalization rate for interest in the current reporting period (%) | Source of funds |
| Hangzhou Innovation Industry Base | 102,600.00 | 50,840,516.83 | - | - | 50,840,516.83 | 4.96% | 4.96% | (5,817,000.63) | (5,817,000.63) | 0.85% | Loan | ||
| Chengdu Science and Technology Base Project | 135,100.00 | 6,577,446.74 | 53,291,108.38 | - | - | 59,868,555.12 | 4.43% | 4.43% | - | - | - | Self- financing | |
| Chongqing Science and Technology Base project- phase 2 | 76,200.00 | 2,257,412.05 | 5,324,733.35 | - | - | 7,582,145.40 | 1.00% | 1.00% | - | - | - | Self- financing |
st 2019 to June 30
th
2019
Note 1：This amount is calculated by interest expense for specific foreign currency borrowings, less interest income for unused borrowing fund and profit/loss on exchange ratedifference.
As of June 30
th2019, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
| Xi’an Science and Technology Base project | 113,400.00 | 1,664,067.68 | 1,667,334.41 | - | - | 3,331,402.09 | 0.29% | 0.29% | - | - | - | Loan | |
| Wuhan Science and Technology Base project | 254,200.00 | 1,641,509.43 | 2,698,113.21 | - | - | 4,339,622.64 | 0.17% | 0.17% | - | - | - | Self- financing | |
| Wuhan Intelligent Industry Base project | 238,700.00 | 934,836.51 | - | - | 934,836.51 | 0.04% | 0.04% | - | - | - | Self- financing | ||
| Others | - | 352,176,624.18 | 58,568,282.80 | 13,768,138.69 | 115,226.11 | 397,091,994.40 | - | - | - | - | - | Self- financing | |
| Total | 920,200.00 | 416,092,413.42 | 121,549,572.15 | 13,768,138.69 | 115,226.11 | 523,989,072.99 | - | - | (5,817,000.63) | (5,817,000.63) | - | - |
st 2019 to June 30
th
2019
16. Intangible assets
(1) Details of Intangible assets
Unit: RMB
| Item | Land use right | Intellectual property right | Application Software | Total |
| Total original carrying amount | ||||
| 1.Opening balance | 775,589,326.13 | 39,270,797.88 | 233,126,120.86 | 1,047,986,244.87 |
| 2. Increased | 109,591,327.57 | 3,689,474.92 | 43,962,562.09 | 157,243,364.58 |
| (1) Purchase | 109,591,327.57 | 3,689,474.92 | 43,962,562.09 | 157,243,364.58 |
| 3.Decreased | 1,411,310.92 | 20,785,015.91 | 22,196,326.83 | |
| (1)Disposal or write-off | 1,411,310.92 | 20,785,015.91 | 22,196,326.83 | |
| 4.Effect of foreign currency exchange difference | (3,142.98) | 76,453.87 | 73,310.89 | |
| 5.Closing balance | 885,180,653.70 | 41,545,818.90 | 256,380,120.91 | 1,183,106,593.51 |
| Total accumulated amortization | ||||
| 1.Opening balance | 34,866,723.64 | 19,201,069.47 | 124,005,401.67 | 178,073,194.78 |
| 2.Increased | 9,376,915.85 | 5,951,088.58 | 24,900,453.98 | 40,228,458.41 |
| (1)Provided | 9,376,915.85 | 5,951,088.58 | 24,900,453.98 | 40,228,458.41 |
| 3.Decreased | 1,161,021.85 | 14,118,905.15 | 15,279,927.00 | |
| (2)Disposal or write-off | 1,161,021.85 | 14,118,905.15 | 15,279,927.00 | |
| 4.Effect of foreign currency exchange difference | (2,308.55) | 33,905.14 | 31,596.59 | |
| 5. Closing balance | 44,243,639.49 | 23,988,827.65 | 134,820,855.64 | 203,053,322.78 |
| Provision for decline in value | ||||
| 1.Opening balance | - | - | - | - |
| 2.Increased | - | - | - | - |
| 3. Decreased | - | - | - | - |
| 4.Closing balance | - | - | - | - |
| Total booklue | ||||
| Closing book value | 840,937,014.21 | 17,556,991.25 | 121,559,265.27 | 980,053,270.73 |
| Opening book value | 740,722,602.49 | 20,069,728.41 | 109,120,719.19 | 869,913,050.09 |
| The invested entity | Opening balance | Increased | Decreased | Effect of foreign currency exchange difference | Closing balance |
| Business combination not involving enterprises under common control | Disposal | ||||
| ZAO Hikvision | 67,349.64 | - | - | - | 67,349.64 |
| Beijing Brainaire Storage Technology Ltd. | 42,695,573.44 | - | 42,695,573.44 | - | - |
| Henan HuaAn Intelligence Development Ltd. and its subsidiaries | 61,322,871.63 | - | - | - | 61,322,871.63 |
| Hundure Technology (Shanghai) Ltd. | 13,774,405.88 | - | - | - | 13,774,405.88 |
| Hangzhou Haikang Zhicheng Investment and Development Ltd. | 12,573.42 | - | - | - | 12,573.42 |
| Secure Holdings Limited (SHL) | 137,092,136.66 | - | - | 137,557.45 | 137,229,694.11 |
| Hangzhou Kuangxin Technology Ltd. | 50,857,433.51 | - | 50,857,433.51 | ||
| Total | 254,964,910.67 | 50,857,433.51 | 42,695,573.44 | 137,557.45 | 263,264,328.19 |
st
2019 to June 30
th2019
(2) Provision of impairment in goodwill
Unit: RMB
| Invested Company | Opening balance | Increased | Decrease | Effect of foreign currency exchange difference | Closing Balance |
| Provision | Disposal | ||||
| Beijing Bangnuo Storage Technology Ltd. | 42,695,573.44 | - | 42,695,573.44 | - | - |
| Total | 42,695,573.44 | - | 42,695,573.44 | - | - |
| Invested unit | Opening Balance | Increased | Amortized | Difference of foreign currency translation | Closing balance |
| Decoration costs | - | 38,281,263.77 | 6,022,357.25 | 147,263.15 | 32,406,169.67 |
| Total | - | 38,281,263.77 | 6,022,357.25 | 147,263.15 | 32,406,169.67 |
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for impairment losses of assets | 1,620,597,908.94 | 360,596,486.51 | 1,364,242,526.16 | 322,143,179.09 |
| Payroll payables | 220,173,893.79 | 33,026,084.07 | 220,173,893.79 | 33,026,084.07 |
| Share-based compensation | 371,748,374.24 | 56,618,631.41 | 115,893,666.94 | 18,240,425.31 |
| Provisions | 61,415,503.32 | 9,212,325.50 | 52,956,535.09 | 7,943,480.27 |
| Expenditure without invoice | - | - | 113,835,410.80 | 17,075,311.62 |
| Unrealized profit from inter-group transactions | 943,471,294.14 | 141,520,694.12 | 892,163,728.04 | 133,824,559.21 |
| Changes in the fair value of derivative financial instruments | 1,061,871.12 | 265,467.78 | 275,080.00 | 68,770.00 |
| Deferred income | 149,273,043.01 | 22,390,956.44 | 186,747,708.01 | 28,012,156.20 |
| Total | 3,367,741,888.56 | 623,630,645.83 | 2,946,288,548.83 | 560,333,965.77 |
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Changes in the fair value of derivative financial instruments | 780,509.66 | 195,127.42 | 1,482,366.03 | 370,591.51 |
| Difference in fixed asset depreciation | 139,027,372.75 | 20,854,105.90 | 170,081,176.39 | 25,512,176.46 |
| Difference in amortization of intangible assets | 345,835.30 | 51,875.30 | 695,043.70 | 104,256.55 |
| Total | 140,153,717.71 | 21,101,108.62 | 172,258,586.12 | 25,987,024.52 |
st 2019 to June 30
th
2019
(3) Deferred tax assets or deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Offset amount at the end of the reporting period | Deferred tax assets or liabilities at the net amount after offset | Offset amount at the beginning of the reporting period | Deferred tax assets or liabilities at the net amount after offset | |
| Deferred tax assets | 21,101,108.62 | 602,529,537.21 | 25,987,024.52 | 534,346,941.25 |
| Deferred tax liabilities | 21,101,108.62 | - | 25,987,024.52 | - |
| Item | Closing balance | Opening balance |
| Completed but unsettled assets formed by construction contracts (Note (V) 8) | 1,184,878,527.54 | 1,253,407,742.28 |
| Prepayments for equipment | 253,382,792.72 | 196,992,554.09 |
| Prepayments for acquisition of land | - | 98,000,000.05 |
| Prepayments for infrastructure | 18,113,312.57 | 32,759,311.95 |
| Prepayments for purchase of property | 1,876,820.25 | 1,590,992.43 |
| Total | 1,458,251,453.08 | 1,582,750,600.80 |
| Item | Closing balance | Opening balance |
| Guaranteed loans | 4,283,318,403.27 | 3,166,655,588.29 |
| Fiduciary loan | 229,000,100.00 | 247,000,100.00 |
| Pledged loans | 40,000,000.00 | 52,000,000.00 |
| Total | 4,552,318,503.27 | 3,465,655,688.29 |
| Item | Closing balance | Opening balance |
| Held-for-trading financial liabilities | 1,352,869.55 | 290,998.43 |
| Including: derivative financial liabilities | 1,352,869.55 | 290,998.43 |
| total | 1,352,869.55 | 290,998.43 |
| Item | Closing balance | Opening balance |
| Bank acceptance Bill | 804,615,788.76 | 463,479,760.54 |
| Total | 804,615,788.76 | 463,479,760.54 |
st 2019 to June 30
th
2019
24. Accounts payable
(1) List of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Payments for goods | 10,033,591,909.69 | 10,208,299,054.08 |
| Payables on equipment | 103,990,220.59 | 93,366,671.12 |
| Total | 10,137,582,130.28 | 10,301,665,725.20 |
| Item | Closing balance | Opening balance |
| Advanced receipts from sales of goods | 599,648,171.35 | 449,150,259.60 |
| Advanced receipts from construction contracts | 71,558,756.21 | 192,280,230.62 |
| Total | 671,206,927.56 | 641,430,490.22 |
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 1.Short-term remuneration | 1,915,387,271.72 | 3,896,371,264.08 | 4,559,035,610.81 | 1,252,722,924.99 |
| 2. Termination benefits – defined contribution scheme | 6,353,859.91 | 229,879,226.76 | 233,902,391.39 | 2,330,695.28 |
| Total | 1,921,741,131.63 | 4,126,250,490.84 | 4,792,938,002.20 | 1,255,053,620.27 |
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 1.Wages or salaries, bonuses, allowances and subsidies | 1,794,117,599.34 | 3,447,213,054.70 | 4,127,468,839.05 | 1,113,861,814.99 |
| 2.Staff welfare | 893,122.46 | 35,140,520.15 | 35,144,546.34 | 889,096.27 |
| 3.Social insurance contributions | 3,234,424.54 | 177,576,873.54 | 174,753,743.38 | 6,057,554.70 |
| Including: medical insurance | 2,987,488.56 | 158,945,880.66 | 155,907,571.93 | 6,025,797.29 |
| Injury insurance | 57,403.50 | 4,994,132.64 | 5,034,220.61 | 17,315.53 |
| Maternity insurance | 189,532.48 | 13,636,860.24 | 13,811,950.84 | 14,441.88 |
| 4.Housing funds | 47,610.40 | 176,198,436.10 | 176,139,560.00 | 106,486.50 |
| 5.Labor union and education fund | 117,094,514.98 | 60,242,379.59 | 45,528,922.04 | 131,807,972.53 |
| Subtotal | 1,915,387,271.72 | 3,896,371,264.08 | 4,559,035,610.81 | 1,252,722,924.99 |
st 2019 to June 30
th
2019
(3) Defined contribution scheme (Note)
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Basic pension insurance | 6,270,825.40 | 222,692,998.59 | 226,648,564.08 | 2,315,259.91 |
| Unemployment insurance | 83,034.51 | 7,186,228.17 | 7,253,827.31 | 15,435.37 |
| Subtotal | 6,353,859.91 | 229,879,226.76 | 233,902,391.39 | 2,330,695.28 |
| Item | Closing balance | Opening balance |
| Enterprise income tax | 1,182,087,347.08 | 1,085,546,102.66 |
| Value-added tax | 225,631,618.80 | 242,237,174.61 |
| Personal income tax | 119,443,111.57 | 25,773,726.70 |
| City construction and maintenance tax | 14,833,402.30 | 26,667,741.79 |
| Education surcharges | 6,426,831.81 | 11,563,769.42 |
| Local education surcharges | 4,276,028.61 | 7,686,512.17 |
| Others | 47,501,516.76 | 19,446,637.22 |
| Total | 1,600,199,856.93 | 1,418,921,664.57 |
| Item | Closing balance | Opening balance |
| Dividend payable | 145,445,815.24 | 119,917,640.92 |
| Other payables | 866,709,224.35 | 2,833,537,347.03 |
| Total | 1,012,155,039.59 | 2,953,454,987.95 |
| Item | Closing balance | Opening balance |
| Dividends of restricted shares | 142,995,815.24 | 117,467,640.92 |
| Dividends of ordinary shares | 2,450,000.00 | 2,450,000.00 |
| Total | 145,445,815.24 | 119,917,640.92 |
st 2019 to June 30
th2019
28.3 Other payables
(1) List of other payables according to the nature of the payment
Unit: RMB
| Item | Closing balance | Opening balance |
| Share incentive funds | - | 2,057,898,876.84 |
| Accrued expenses | 248,984,068.03 | 297,778,297.42 |
| Guarantee and deposit fees | 263,244,589.61 | 212,959,951.64 |
| Collection and payment on behalf | 155,621,968.24 | 124,191,240.27 |
| Unexpired commercial acceptance bills that were endorsed | 105,737,777.22 | 94,097,879.36 |
| Other expense payable | 93,120,821.25 | 46,611,101.50 |
| Total | 866,709,224.35 | 2,833,537,347.03 |
| Item | Closing balance | Opening balance |
| Bonds Payable due within one year | - | 3,172,727,888.37 |
| Long-term borrowings due within one year (Note (V) 31) | 1,344,620.38 | 2,984,575.25 |
| Long-term payables due within one year | 14,497,723.92 | 2,458,683.54 |
| Total | 15,842,344.30 | 3,178,171,147.16 |
| Item | Closing balance | Opening balance |
| Subscription payment of restricted shares | 2,320,850,513.78 | 364,984,759.94 |
| Total | 2,320,850,513.78 | 364,984,759.94 |
| Item | Closing balance | Opening balance |
| Pledged loan (Note 1) | 1,315,600,000.00 | 251,000,000.00 |
| Fiduciary loan | 3,127,144,620.38 | 1,984,575.25 |
| Other borrowing (Note 2) | 190,000,000.00 | 190,000,000.00 |
| Less：Long-term loans due within one year (Note (V) 29) | 1,344,620.38 | 2,984,575.25 |
| Total | 4,631,400,000.00 | 440,000,000.00 |
st
2019 to June 30
th2019
As of June 30
th
2019, RMB 144,000,000.00 of the pledged loan was obtained by the Group with all the rights andbenefits pledged under the LuoPu Security Protection and Prevention Control System-- PPP Project Agreement; thematurity date is March 26
th2035, the annual interest rate is 4.445%.
As of June 30
th
2019, RMB 185,600,000.00 of the pledged loan was obtained by the Group with all the rights andbenefits pledged under the MoYu Security Protection and Prevention Control System-- PPP Project Agreement; thematurity date is March 26
th2035, the annual interest rate is 4.445%.
As of June 30
th
2019, RMB 176,000,000.00 of the pledged loan was obtained by the Group with all the rights andbenefits pledged under the PiShan Security Protection and Prevention Control System-- PPP Project Agreement; thematurity date is March 26
th
2040, the annual interest rate is 4.445%.
As of June 30
th2019, RMB 80,000,000.00 of the pledged loan was obtained by the Group with all the rights and benefitspledged under the YuTian Safe City-- PPP Project Agreement; the maturity date is March 26
th2034, the annual interestrate is 4.445%.
As of June 30
th
2019, RMB 160,000,000.00 of the pledged loan was obtained by the Group with all the rights andbenefits pledged under the Urumqi High-tech Zone (New Urban Area) Safe City & Surveillance system for SocialComprehensive Management -- PPP Project Agreement; the maturity date is June 20
th2018, the annual interest rate is
4.41%.
Note 2: During 2016, the Group entered into an agreement with CDB Development Fund(国开发展基金, as "CDBDF")to jointly inject capital into Hikvision Electronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group.Pursuant to the capital injection agreement, CDBDF would not participate in senior management personnel such asdirectors, and it would either take part in decision-making or make significant influence on Hangzhou Electronics. TheGroup shall pay a 1.2% annualized return to CDBDF through dividends or interest payments, and the Group is requiredto redeem the CDBDF's equity investment in the current reporting period by installments each year from 2021 to 2024.Therefore, the capital injection by CDBDF is treated as a long-term loan. As of June 30
th
2019, CDBDF has aggregatelyinvested RMB 190 million (December 31
st2018: RMB 190 million).
st
2019 to June 30
th2019
32. Long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Payables for financial leasing | 45,422,195.08 | - |
| Less: Long-term payables due within one year | 14,497,723.92 | - |
| Total | 30,924,471.16 | - |
| Item | Closing balance | Opening balance |
| Product warranty | 84,529,179.89 | 77,625,238.49 |
| Total | 84,529,179.89 | 77,625,238.49 |
| Item | Opening balance | Increase in current reporting period | Decrease in current reporting period | Closing balance | Details |
| Cloud storage service income | 58,690,626.37 | 104,893,206.51 | 75,927,333.87 | 87,656,499.01 | Note 1 |
| Government Subsidies | 234,488,462.76 | 44,940,400.00 | 72,581,843.03 | 206,847,019.73 | Note 2 |
| Total | 293,179,089.13 | 149,833,606.51 | 148,509,176.90 | 294,503,518.74 |
| Liability Items | Opening Balance | Increase in current reporting period | Amounts booked into other income during the current reporting period | Other changes | Closing Balance | Related to assets/related to incomes |
| Projects of core electronic devices, high-end universal chips and basic software products | 131,567,063.01 | - | 42,105,200.00 | - | 89,461,863.01 | Related to incomes |
| Chongqing Manufacture Base construction | 47,975,445.00 | 1,209,465.00 | - | 46,765,980.00 | Related to assets | |
| Other special subsidies | 31,969,350.94 | 5,840,000.00 | 24,764,150.94 | - | 13,045,200.00 | Related to incomes |
| Other special subsidies | 22,976,603.81 | 39,100,400.00 | 4,503,027.09 | - | 57,573,976.72 | Related to assets |
| Subtotal | 234,488,462.76 | 44,940,400.00 | 72,581,843.03 | - | 206,847,019.73 |
st 2019 to June 30
th2019
35. Share capital
Unit: RMB
| Opening balance | Changes for the period | Closing balance | |||||
| New issue of shares (Note 1) | Bonus issue | Transfer from Capital Reserve (Note 2) | Others (Note 2) | Subtotal | |||
| 2019.06.30 | |||||||
| Total shares | 9,227,270,473.00 | 121,195,458.00 | - | - | (509,625.00) | 120,685,833.00 | 9,347,956,306.00 |
| Item | Opening balance | Increase in the current reporting period (Note 1) | Decrease in the current reporting period (note 2) | Closing balance |
| 2019.06.30 | ||||
| Share premium | 1,833,717,545.39 | 1,936,703,418.84 | 20,034,492.42 | 3,750,386,471.81 |
| Other capital reserves | 127,222,115.13 | 250,128,589.34 | 377,350,704.47 | |
| Total | 1,960,939,660.52 | 2,186,832,008.18 | 20,034,492.42 | 4,127,737,176.28 |
| Item | Opening Balance | Increase in the current reporting period (Note 1) | Decrease in the current reporting period (Note 2) | Closing balance |
| 2019.06.30 | ||||
| Restricted shares incentive scheme | 364,984,759.94 | 2,057,898,876.84 | 102,033,123.00 | 2,320,850,513.78 |
| Total | 364,984,759.94 | 2,057,898,876.84 | 102,033,123.00 | 2,320,850,513.78 |
st 2019 to June 30
th2019
Note 1：The increase of treasury shares during the current reporting period was due to granting 121,195,458 shares RMBcommon shares to 6,095 grantees, with issuing price of RMB 16.98 per share on December 20
th2018. Please refer toNote (V) 35-Note 1.
Note 2: During the current reporting period, the decreased amounts of treasury shares includes a decrease of RMB2,007,387.00 due to the repurchase and cancellation of 509,625 restricted RMB ordinary shares of 2014 Restricted ShareIncentive Scheme; a decrease of RMB 100,025,736.00 due to provision of cash dividend allocated to restrictedshareholders.
38. Other comprehensive income
Unit: RMB
| Item | Opening balance | Change for the current reporting period | Closing balance | ||||
| The before-income-tax amount incurred during the current reporting period | Less: transfer to current period P/L from previous other comprehensive income | Less: income tax expense | Attributable to the owner of the Company (after tax) | Attributable to minority interest (after tax) | |||
| 2019.06.30 | |||||||
| Other incomes that may be reclassified subsequently to profit or loss | (76,065,167.67) | 8,207,012.71 | 2,715,344.78 | - | 4,922,806.84 | 568,861.09 | (71,142,360.83) |
| Included: Effect on conversion of financial statements denominated in foreign currencies | (49,576,351.10) | (8,583,151.62) | - | - | (9,202,168.25) | 619,016.63 | (58,778,519.35) |
| Changes in fair value of Receivables for financing | (26,488,816.57) | 16,790,164.33 | 2,715,344.78 | 14,124,975.09 | (50,155.54) | (12,363,841.48) | |
| Other comprehensive income | (76,065,167.67) | 8,207,012.71 | 2,715,344.78 | - | 4,922,806.84 | 568,861.09 | (71,142,360.83) |
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 2019.06.30 | ||||
| Statutory surplus reserves | 4,460,712,358.45 | - | - | 4,460,712,358.45 |
| Total | 4,460,712,358.45 | - | - | 4,460,712,358.45 |
| Item | First half year of 2019 | First half year of 2018 |
| Retained Earnings at the close of previous reporting period before adjustment | 22,360,593,257.53 | 16,598,328,692.63 |
| Business merger involving enterprises under common control | (736,986.11) | - |
| Adjusted retained earnings at the beginning of the period | 22,359,856,271.42 | 16,598,328,692.63 |
| Add: Net profit attributable to owners of the Company for the current period | 4,216,755,210.24 | 4,147,395,535.86 |
| Less: Dividends on ordinary shares payable (Note) | 5,605,823,858.10 | 4,613,635,236.50 |
| Retained earnings at the end of the period | 20,970,787,623.56 | 16,132,088,991.99 |
st
2019 to June 30
th
2019
41. Operating income/operating cost
Unit: RMB
| Item | First half year of 2019 | First half year of 2018 | ||
| Revenue | Cost | Revenue | Cost | |
| Operating income | 23,693,888,435.21 | 12,727,511,306.82 | 20,666,389,810.48 | 11,489,340,600.25 |
| Other operating income | 229,384,989.29 | 112,995,026.86 | 209,368,414.15 | 96,958,225.82 |
| Total | 23,923,273,424.50 | 12,840,506,333.68 | 20,875,758,224.63 | 11,586,298,826.07 |
| Items | First half year of 2019 | First half year of 2018 |
| City construction and maintenance tax | 81,858,061.74 | 88,734,456.82 |
| Education surcharges | 36,071,455.51 | 38,163,736.90 |
| Local education surcharges | 23,308,866.59 | 25,421,753.02 |
| Real estate tax | 11,123,190.25 | 11,677,622.92 |
| Tax on use of land | 1,340,324.67 | 2,797,148.26 |
| Stamp duty | 11,130,199.34 | 9,553,973.80 |
| Vehicle and vessel tax | 98,624.36 | 155,796.31 |
| Others | 2,617,183.46 | 1,386,130.57 |
| Total | 167,547,905.92 | 177,890,618.60 |
| Items | First half year of 2019 | First half year of 2018 |
| Interest expenses | 102,317,635.94 | 81,772,282.07 |
| Less：Interest income | 300,644,265.63 | 217,425,369.68 |
| Effect on changes in foreign exchange | 52,456,277.58 | (105,663,396.52) |
| Less﹕Foreign exchange differences on specific loan and the capitalized specific loan interests | (5,817,000.63) | (66,624,255.04) |
| Including: interest expenses | 9,315,258.32 | 19,218,000.00 |
| Interest income | (7,631,736.28) | (15,672,928.53) |
| Differences on foreign exchange | (7,500,522.67) | (70,169,326.51) |
| Others | 10,109,924.22 | 16,170,911.28 |
| Total | (129,943,427.26) | (158,521,317.81) |
| Items | First half year of 2019 | First half year of 2018 |
| Bad debt loss of accounts receivable | 115,422,011.62 | - |
| Bad debt loss of other receivables | (39,530,792.03) | - |
| Bad debt loss of long-term receivables | 58,635,212.98 | |
| Total | 134,526,432.57 | - |
| Items | First half year of 2019 | First half year of 2018 |
| Bad debt | - | 204,167,685.48 |
| Inventory devaluation | 80,143,742.65 | 121,730,012.71 |
| Total | 80,143,742.65 | 325,897,698.19 |
st 2019 to June 30
th
2019
46. Other income
Unit: RMB
| Item | First half year of 2019 | First half year of 2018 | Amounts booked into current year non-recurring gains and losses |
| VAT Rebates | 632,531,286.98 | 816,616,027.70 | |
| Special subsidies | 84,928,005.35 | 21,010,365.89 | 84,928,005.35 |
| Tax refunds | 5,106,929.21 | - | 5,106,929.21 |
| Total | 722,566,221.54 | 837,626,393.59 | 90,034,934.56 |
| Item | First half year of 2019 | First half year of 2018 |
| Long-term equity investment losses based on equity method | (4,215,155.62) | 2,538,090.69 |
| Investment income (losses) on disposal of held-for-trading financial assets | 8,082,291.28 | (2,018,145.43) |
| Investment incomes for available-for-sale financial assets during the holding period | - | 12,256,000.00 |
| Investment income of other non-current financial assets during the holding period | 17,357,220.31 | - |
| Investment income redeemed on matured financial products | - | 65,491,170.90 |
| Total | 21,224,355.97 | 78,267,116.16 |
| Sources of gains/losses from changes in fair values | First half year of 2019 | First half year of 2018 |
| Held-for-trading financial assets | 2,740,172.62 | 16,449,323.23 |
| Including: Profits (losses) on the changes in fair value of derivative financial instruments | 586,934.12 | 16,449,323.23 |
| Income from changes in fair value arising from equity instruments | 2,153,238.50 | - |
| Held-for-trading financial liabilities | (873,778.16) | (22,551,871.25) |
| Including: Profits (losses) on the changes in fair value of derivative financial instruments | (873,778.16) | (22,551,871.25) |
| Total | 1,866,394.46 | (6,102,548.02) |
| Item | First half year of 2019 | First half year of 2018 | The amount booked into current period non-recurring profits and looses |
| Special subsidies | 471,298.57 | 11,134,607.89 | 471,298.57 |
| Tax refund | 5,049.70 | 258,553.39 | 5,049.70 |
| Fines and confiscations | 18,790,241.63 | 46,529,147.77 | 18,790,241.63 |
| Others | 19,040,488.70 | 15,228,064.81 | 19,040,488.70 |
| Total | 38,307,078.60 | 73,150,373.86 | 38,307,078.60 |
st 2019 to June 30
th2019
50. Non-operating expenses
Unit: RMB
| Item | First half year of 2019 | First half year of 2018 | Amount recorded into the current period non-recurring profits (losses) |
| Local water conservancy construction fund | 326,266.15 | 436,280.16 | - |
| Others | 8,087,915.76 | 4,147,847.04 | 8,087,915.76 |
| Total | 8,414,181.91 | 4,584,127.20 | 8,087,915.76 |
| Item | First half year of 2019 | First half year of 2018 |
| Current income tax | 989,900,141.38 | 717,290,286.21 |
| Deferred income tax | (68,182,595.96) | (51,487,527.73) |
| Previous year's income tax filing and payment difference | 12,203,111.26 | - |
| Total | 933,920,656.68 | 665,802,758.48 |
| Item | First half year of 2019 | First half year of 2018 |
| Interest income | 300,644,265.63 | 217,425,369.68 |
| Government subsidies | 123,235,083.95 | 95,168,090.18 |
| Others | 160,612,732.43 | 138,073,302.53 |
| Total | 584,492,082.01 | 450,666,762.39 |
| Item | First half year of 2019 | First half year of 2018 |
| Office expenses and business expenses | 358,952,495.22 | 321,731,198.63 |
| Advertising and Selling services | 546,661,309.37 | 513,332,986.75 |
| R&D expense | 467,463,033.83 | 437,739,763.84 |
| Shipping and transportation expense | 348,864,517.36 | 296,718,288.88 |
| Travelling expense | 211,860,989.63 | 174,690,476.79 |
| Deposits to restricted monetary funds | 56,039,040.44 | 345,798,801.19 |
| Rental expense | 105,938,464.34 | 74,995,187.54 |
| Others | 38,722,894.70 | 62,752,885.37 |
| Total | 2,134,502,744.89 | 2,227,759,588.99 |
| Item | First half year of 2019 | First half year of 2018 |
| Receipts of financing leases | - | 1,190,562.94 |
| Total | - | 1,190,562.94 |
st 2019 to June 30
th2019
(4) Other cash payments related to investing activities
Unit: RMB
| Item | First half year of 2019 | First half year of 2018 |
| Cash payments for investment intention funds | - | 13,500,000.00 |
| Total | - | 13,500,000.00 |
| Item | First half year of 2019 | First half year of 2018 |
| Repurchase of restricted shares | 31,290,856.75 | 6,555,746.33 |
| Total | 31,290,856.75 | 6,555,746.33 |
| Supplementary information | First half year of 2019 | First half year of 2018 |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 4,223,761,290.19 | 4,107,586,112.82 |
| Add: Impairment of assets | 214,670,175.22 | 325,897,698.19 |
| Fixed assets depreciation | 269,340,120.34 | 196,191,929.39 |
| Amortization of intangible assets | 40,228,458.41 | 27,572,243.92 |
| Long-term deferred expenses amortization | 6,022,357.25 | |
| Losses (Gains) on disposal of fixed assets, intangible assets and other long-term assets | (810,043.90) | (3,763,578.84) |
| Retirement losses on fixed assets, intangible assets and other long-term assets | 4,464,360.56 | 415,906.30 |
| Losses (Gains) from changes in fair value | (1,866,394.46) | 6,102,548.02 |
| Financial expenses | 157,920,883.55 | 40,310,003.53 |
| Investment income | (21,224,355.97) | (78,267,116.16) |
| Share-based payment based on equity settlement | 250,128,589.34 | 80,498,800.50 |
| Changes in other fund | (56,039,040.44) | (345,798,801.19) |
| Decrease (Increase) in deferred income tax assets | (68,182,595.96) | (51,896,405.74) |
| Decrease (Increase) in inventories | (2,953,673,953.50) | (689,070,559.38) |
| Decrease (Increase) in operating receivables | (2,693,537,605.46) | (1,903,396,501.38) |
| Increase (Decrease) in operating payables | 196,409,532.04 | (3,414,162,059.42) |
| Increase (Decrease) in deferred income | 1,324,429.61 | 80,586,421.44 |
| Net cash flows from operating activities | (431,063,793.18) | (1,621,193,358.00) |
| 2. Significant investing and financing activities not involving cash receipts and payments: | ||
| 3. Net changes in cash and cash equivalents: | ||
| Ending balance of cash | 21,261,201,514.71 | 12,966,520,217.54 |
| Less: Opening balance of cash | 26,031,011,733.89 | 16,029,185,269.17 |
| Add: Ending balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase (decrease) in cash and cash equivalents | (4,769,810,219.18) | (3,062,665,051.63) |
st 2019 to June 30
th
2019
(2) Constituents of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash | 21,261,201,514.71 | 26,031,011,733.89 |
| Including: Cash on hand | 461,323.55 | 621,654.57 |
| Bank deposit for payment at any time | 21,230,796,944.70 | 25,990,872,892.73 |
| Other monetary capital for payment at any time | 29,943,246.46 | 39,517,186.59 |
| Cash equivalents | - | - |
| Closing balance of cash and cash equivalents | 21,261,201,514.71 | 26,031,011,733.89 |
| Item | Book value at the end of the period | Cause of restriction |
| Monetary fund(s) | 584,702,759.48 | Various guarantee deposits and other restricted funds |
| Receivables for financing | 112,443,816.82 | Pledged for issuing bank acceptance bill |
| Accounts receivable | 95,000,000.00 | Pledged for short-term borrowings |
| Long-term receivables | 460,793,612.55 | Pledged for long-term borrowings |
| Total | 1,252,940,188.85 |
| Item | Balance in foreign currency at the end of the reporting period | Exchange rate for conversion | Balance of RMB converted at the end of the reporting period |
| Monetary funds | |||
| Including: USD | 718,849,745.73 | 6.8747 | 4,941,876,346.97 |
| EUR | 18,673,522.27 | 7.8170 | 145,970,923.58 |
| GBP | 80,511.82 | 8.7113 | 701,362.62 |
| Accounts receivable | |||
| Including: USD | 298,568,766.83 | 6.8747 | 2,052,570,701.33 |
| EUR | 8,223,025.42 | 7.8170 | 64,279,389.71 |
| Short-term borrowing | |||
| Including: GBP | 9,564,405.23 | 8.7113 | 83,318,403.28 |
| Accounts Payable | |||
| Including: USD | 401,649,483.01 | 6.8747 | 2,761,219,700.85 |
| Long-term borrowings | |||
| Including: EUR | 400,000,000.00 | 7.8170 | 3,126,800,000.00 |
st 2019 to June 30
th
2019
(2) Details of Overseas Operational Entities
| Name of overseas subsidiaries | Main overseas operational office | Recording Currency | Basis of selection |
| HDT International Ltd. | Hongkong | HKD | Selection based on local economic environment |
| Hikvision Europe BV | Netherlands | EUR | Selection based on local economic environment |
| Prama Hikvision Indian Private Limited | India | INR | Selection based on local economic environment |
| Hikvision Uk Limited | UK | GBP | Selection based on local economic environment |
| Hikvision Italy (S.R.L.) | Italy | EUR | Selection based on local economic environment |
| Hikvision International Co., Limited | Hongkong | HKD | Selection based on local economic environment |
| Hikvision Australia PTY Ltd. | Australia | AUD | Selection based on local economic environment |
| Hikvision Spain, S.L. | Spain | EUR | Selection based on local economic environment |
| Hikvision France SAS | France | EUR | Selection based on local economic environment |
| Hikvision Singapore Pte. Ltd | Singapore | SGD | Selection based on local economic environment |
| Hikvision South Africa (Pty) Ltd. | South Africa | ZAR | Selection based on local economic environment |
| Hikvision FZE | Dubai | USD | Selection based on local economic environment |
| Hikvision Poland Spolka Z ograniczona Odpowiedzialnoscia. | Poland | PLN | Selection based on local economic environment |
| Hikivision do Brasil Comercio de Equipamentos de Seguran?a Ltda. | Brazil | BRL | Selection based on local economic environment |
| Hikvision LLC | Russia | RUB | Selection based on local economic environment |
| EZVIZ Inc. | USA | USD | Selection based on local economic environment |
| Cooperative Hikvision Europe U.A. | Netherlands | USD | Selection based on local economic environment |
| Hikvision Korea Limited | Korea | KRW | Selection based on local economic environment |
| Hikvision Colombia SAS | Columbia | COP | Selection based on local economic environment |
| Hikvision Kazakhstan limited liability partnership | Kazakhstan | KZT | Selection based on local economic environment |
| Pyronix Ltd | UK | GBP | Selection based on local economic environment |
| Microwave Solutions Limited | UK | GBP | Selection based on local economic environment |
| Secure Holdings limited | UK | GBP | Selection based on local economic environment |
| Hikvision Turkey Technology And Security Systems Commerce Corporation | Turkey | TRY | Selection based on local economic environment |
| ZAO Hikvision | Russia | RUB | Selection based on local economic environment |
| Hikvision Hungary Limited | Hungary | HUF | Selection based on local economic environment |
| Hikvision New Zealand Limited | New Zealand | NZD | Selection based on local economic environment |
| Hikvision Czech s.r.o. | Czech | CZK | Selection based on local economic environment |
| Hikvision Deutschland GmbH | Germany | EUR | Selection based on local economic environment |
| Hikvision Kenya (Pty) Ltd | Kenya | KES | Selection based on local economic environment |
| LLC Hikvision Tashkent | Uzbekistan | UZS | Selection based on local economic environment |
| Hikvision (Malaysia) SDN. BHD | Malaysia | MYR | Selection based on local economic environment |
| Hikvision USA,Inc. | USA | USD | Selection based on local economic environment |
| Hikvision Canada INC. | Canada | CAD | Selection based on local economic environment |
| Hikvision Mexico S.A.de C.V. | Mexico | MXN | Selection based on local economic environment |
| Hikvision Panama Commercial S.A. | Panama | USD | Selection based on local economic environment |
| Hikvision Pakistan (SMC-Private) Limited | Pakistan | PKR | Selection based on local economic environment |
| Hikvision Peru Closed Stock Company | Peru | PEN | Selection based on local economic environment |
| Hikvision Technology Israel Ltd. | Israel | ILS | Selection based on local economic environment |
| Hikvision Central America S.A. | Panama | USD | Selection based on local economic environment |
| Hikvision West Africa Limited | Nigeria | NGN | Selection based on local economic environment |
| Hikvision Technology Egypt JSC | Egypt | EGP | Selection based on local economic environment |
st
2019 to June 30
th
2019
56. Government Subsidies
(1) Categories
Unit: RMB
| Category | Amount | Financial Report Items | Amount booked in current profit and loss |
| VAT Rebate | 632,531,286.98 | Other Income | 632,531,286.98 |
| Special subsidies | 56,815,263.75 | Deferred income / Other income/ Non-operating income | 12,817,460.89 |
| Tax Refund | 5,111,978.91 | Other income/ Non-operating income | 5,111,978.91 |
| Total | 694,458,529.64 | 650,460,726.78 |
st
2019 to June 30
th2019
VI. Changes in consolidation scope
1. Business mergers not involving enterprises under the common control
(1) Business mergers not involving enterprises under common control during the current reporting period
Hangzhou Kuangxin Technology Ltd. (“KuangxinTechnology”)
On June 4
th2019, the Company signed Equity Transfer and Capital Increase Agreement for Hangzhou Kuangxin Technology Ltd. with 13 independent third parties, and agreed toacquire 68.89% equity of Kuangxin Technology held by 13 independent third parties for RMB 62 million. At the same time, the Company increased capital of RMB 50 million toKuangxin Technology. After the capital increase, the Company will hold 80% equity of Kuangxin Technology in total. As of June 30
th
2019, the Company has paid RMB 49.6 millionin equity transfer and RMB 20 million in capital increase.
Unit: RMB
| Name of the acquiree | Time of equity acquisition | Equity acquisition cost | Equity acquisition ratio (%) | Equity acquisition method | Date of acquisition | Basis for determining the acquisition date | Income of acquiree from acquisition data to the end of the reporting period | Net profit (loss) of acquiree from acquisition data to the end of the reporting period |
| Kuangxin Technology | June 2019 | 62,000,000.00 | 68.89 | Cash Payments | June 21st 2019 | Equity delivery date for obtaining control of the purchased party |
| Cost of business merger | Kuangxin Technology |
| - Cash | 62,000,000.00 |
st 2019 to June 30
th
2019
(3) Acquiree’s book value of assets and liabilities at the date of acquisition
Unit: RMB
| Kuangxin Technology | ||
| On the date of acquisition | January 1st 2019 | |
| Assets： | ||
| Cash and bank balances | 13,504,217.93 | 26,795,498.61 |
| Accounts receivable | 10,398,039.06 | 19,457,420.19 |
| Prepayments | 253,271.03 | 344,141.46 |
| Other receivables | 2,863,363.74 | 2,937,887.49 |
| Inventories | 12,701,841.10 | 4,718,567.01 |
| Other current assets | 300,000.00 | - |
| Fixed assets | 851,017.16 | 689,608.72 |
| Liabilities： | ||
| Short-term borrowings | 2,400,000.00 | |
| Accounts payable | 1,001,307.08 | 4,272,007.92 |
| Advance receipts | 2,611,594.30 | 1,313,556.60 |
| Payroll payable | - | 2,689,961.13 |
| Tax payable | 808,638.58 | 1,887,263.53 |
| Other payables | 20,275,777.64 | 20,174,258.47 |
| Net assets (liabilities) | 16,174,432.42 | 22,206,075.83 |
| less：minority interests | - | |
| Net assets (liabilities) acquired | 16,174,432.42 | 22,206,075.83 |
st 2019 to June 30
th2019
On April 19
th2019, the Company's parent company, China Electronics Technology HIK Group Co., Ltd. (CETHIK) signed an entrusted management agreement with HangzhouEZVIZ Network Co., Ltd. ("EZVIZ Network"), a subsidiary of the Company. According to the agreement, CETHIK entrusted EZVIZ Network to exercise the actual operation andmanagement rights of EZVIZ Science and Technology, and is fully responsible for the production, operation and management of EZVIZ Science and Technology. EZVIZ Networkdoes not charge a fixed entrusted management fee from CETHIK. Rather, the EZVIZ Network enjoys 100% of the distributable profits of EZVIZ Science and Technology under theentrusted management relationship. At the same time, the EZVIZ Network uses the amount of paid-in capital of EZVIZ Science and Technology (maximum not exceeding RMB 20million) as the base, and pays the capital occupation fee to CETHIK according to a certain capital occupancy rate. EZVIZ Network became the actual controller of EZVIZ Scienceand Technology.
Unit：RMB
| Name of the acquiree | Equity acquisition ratio (%) | Basis for Business merger under common control | Date of acquisition | Basis for determining date of acquisition | Income of acquiree from beginning of the year to the date of acquisition | Net profit of acquiree from beginning of the year to the date of acquisition | Income of acquiree from beginning of the prior year to the date of acquisition in prior comparative period | Net profit of acquiree from beginning of the prior year to the date of acquisition in prior comparative period |
| EZVIZ Science and Technology | 60% | Before and after the merger, the controlling shareholder of the Group and EZVIZ Science and Technology is HIKCET, and the control is not temporary. | April 19th 2019 | Date when the merger actually obtained control of the merged party | - | (885,138.65) | - | - |
| Cost of business merger | EZVIZ Science and Technology |
| - Cash | 0.00 |
st 2019 to June 30
th2019
(3) Acquiree’s book value of assets and liabilities at the date of acquisition
Unit: RMB
| EZVIZ Science and Technology | ||
| On the date of acquisition | January 1st 2019 | |
| Assets： | ||
| Cash and bank balances | 6,088,546.19 | 7,272,741.70 |
| Other receivable | 162,643.61 | 14,928.43 |
| Other assets | 68,499.44 | 37,316.45 |
| Liabilities： | ||
| Advance receipts | 53,287.00 | |
| Payroll payable | 54,165.26 | 133,027.59 |
| Tax payable | 1,040.12 | |
| Other payables | 324,645.69 | 420,269.17 |
| Net assets (liabilities) | 5,886,551.17 | 6,771,689.82 |
| less：minority interests | - | |
| Net assets (liabilities) acquired | 5,886,551.17 | 6,771,689.82 |
| Company Name | Time of establishment | Registered capital | Amount of contribution of the Company | Ratio of contribution (%) |
| Shijiazhuang Hikvision Science and Technology Ltd. (Shijiazhuang Hikvision) (Note 1) | Feburary 2019 | RMB 50 million | RMB 50 million | 100 |
| Zhengzhou Hikvision Digital Technology Ltd. (Zhengzhou Hikvision) (Note 1) | June 2019 | RMB 80 million | RMB 80 million | 100 |
| Hikvision Central America S.A. (Central American subsidiary) (Note 1) | Feburary 2019 | USD 120,000 | USD 120,000 | 100 |
| Hikvision West Africa Limited (Nigerian Subsidiary) (Note 1) | Feburary 2019 | NGN 28.80 million | NGN 28.80 million | 100 |
| Hikvision Technology Egypt JSC (Egyptian Subsidiary) (Note 1) | May 2019 | USD 100,000 | USD 100,000 | 100 |
| Company Name | Date of equity disposition | Proportion of shareholding (%) |
| Beijing Brainaire Storage Technology Ltd. | March 2019 | 100 |
st
2019 to June 30
th2019
VII. Interest in other entities
1. Equity in subsidiaries
(1) Composition of the corporate group
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Hangzhou Hikvision System Technology Ltd. | Hangzhou | Hangzhou, Zhejiang | System integration, Technology development | 100.00 | - | Establishment |
| Hangzhou Hikvision Science and Technology Ltd. | Hangzhou | Hangzhou, Zhejiang | manufacture | 100.00 | - | Establishment |
| Hangzhou Hikvision Security Equipment Leasing Services Ltd. | Hangzhou | Hangzhou, Zhejiang | Finance lease | 100.00 | - | Establishment |
| Chongqing Hikvision System Technology Ltd. | Chongqing | Chongqing | System integration | 100.00 | - | Establishment |
| Hikvision USA, Inc. | USA | Los Angeles | Sales | 100.00 | - | Establishment |
| HDT International Ltd. | Hong Kong | Hong Kong | Sales | 95.00 | 5.00 | Establishment |
| Prama Hikvision Indian Private Limited | India | Mumbai | Sales | 58.00 | - | Business combination not involving enterprises under common control |
| Hikvision Europe BV | Europe | Amsterdam | Sales | - | 100.00 | Establishment |
| Hikvision FZE | Dubai | Dubai | Sales | 100.00 | - | Establishment |
| Hikvision Singapore Pte. Ltd | Singapore | Singapore | Sales | 100.00 | - | Establishment |
| Chongqing Hikvision Science and Technology Ltd. | Chongqing | Chongqing | Manufacture | 100.00 | - | Establishment |
| Hangzhou Fuyang Hik Baotai Security Technology Services Ltd. (Note 1) | Hangzhou | Hangzhou, Zhejiang | Construction | - | 51.00 | Establishment |
| Hikvision South Africa (Pty) Ltd. | South Africa | South Africa | Sales | 100.00 | - | Establishment |
| Hikvision Italy S.R.L. | Italy | Milan | Sales | - | 100.00 | Establishment |
| Hikvision do Brasil Comercio de Equipamentos de Seguran?a Ltda. | Brazil | Brazil | Sales | 95.00 | 5.00 | Establishment |
| Hikvision Australia PTY Ltd. | Australia | Australia | Sales | 100.00 | - | Establishment |
| Hikvision International Co., Limited | Hong Kong | Hong Kong | Sales | 100.00 | - | Establishment |
| Hikvision France SAS | France | France | Sales | - | 100.00 | Establishment |
| Hikvision Spain,S.L. | Spain | Spain | Sales | - | 100.00 | Establishment |
| Shanghai Goldway Intelligent Traffic System Ltd. | Shanghai | Shanghai | Manufacture | 100.00 | - | Business combination not involving enterprises under common control |
| ZAO Hikvision | Russia | St. Peterburg | Sales | - | 100.00 | Business combination not involving enterprises under common control |
| Beijing Brainaire Storage Technology Ltd. (Note 2) | Beijing | Beijing | Manufacture | 100.00 | - | Business combination not involving enterprises under common control |
| Henan Hua’an Intelligence Development Ltd. | Zhengzhou | Zhengzhou | Construction | 51.00 | - | Business combination not involving enterprises under common control |
st
2019 to June 30
th2019
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Henan Hua’an Security Services Ltd. (Note 3) | Zhengzhou | Zhengzhou | Services | - | 45.90 | Business combination not involving enterprises under common control |
| Hundure Technology (Shanghai) Ltd. | Shanghai | Shanghai | Manufacture | 100.00 | - | Business combination not involving enterprises under common control |
| Hikvision Uk Limited | UK | UK | Sales | - | 100.00 | Establishment |
| Hikvision Poland Spolka Z Ograniczona Odpowiedzialnoscia | Poland | Poland | Sales | - | 100.00 | Establishment |
| Hangzhou Hikvision Electronics Ltd.（Note 4） | Hangzhou | Hangzhou | Manufacture | 71.30 | - | Establishment |
| Cooperative Hikvision Europe U.A. | Netherlands | Netherlands | Sales | 99.00 | 1.00 | Establishment |
| Hikvision Canada Inc. | Canada | Canada | Sales | 100.00 | - | Establishment |
| Hikvision LLC | Moscow | Moscow | Sales | 100.00 | - | Establishment |
| Hikvision Korea Limited | Korea | Korea | Sales | 100.00 | - | Establishment |
| Hangzhou EZVIZ Network Ltd. | Hangzhou | Hangzhou | Technology development | 60.00 | - | Establishment |
| EZVIZ Inc. | USA | Los Angeles | Sales | - | 60.00 | Establishment |
| Hangzhou Haikang Zhicheng Investment Development Ltd | Hangzhou | Hangzhou | System integration | 80.00 | - | Business combination not involving enterprises under common control |
| Hangzhou Hikvision Robtics Technology Ltd. | Hangzhou | Hangzhou | Technology development | 60.00 | - | Establishment |
| Hangzhou Hikvision Investment Management Ltd. | Hangzhou | Hangzhou | Investment Management | 100.00 | - | Establishment |
| Hangzhou Hik Automotive Technology Ltd. | Hangzhou | Hangzhou | Technology development | 60.00 | - | Establishment |
| Hangzhou Hikvision Communication Technology Ltd. | Hangzhou | Hangzhou | Technology development | 70.00 | - | Establishment |
| Hangzhou Hikvision Weiying Sensory Technology Ltd. | Hangzhou | Hangzhou | Technology development | 60.00 | - | Establishment |
| Hikvision Turkey Technology And Security Systems Commerce Corporation | Turkey | Istanbul | Sales | 100.00 | - | Establishment |
| Hikvision Colombia SAS | Columbia | Santa Fe Bogota | Sales | 100.00 | - | Establishment |
| Hikvision Kazakhstan limited liability partnership | Kazakhstan | Astana | Sales | 100.00 | - | Establishment |
| Secure Holding Limited | British | Sheffield | Manufacture | - | 100.00 | Business combination not involving enterprises under common control |
| Pyronix Limited | British | Sheffield | Manufacture | - | 100.00 | Business combination not involving enterprises under common control |
| Microwave Solutions Limited | British | Sheffield | Manufacture | - | 100.00 | Business combination not involving enterprises under common control |
| Tianjin Hikvision System Technology Ltd. | Tianjin | Tianjin | Construction | 100.00 | - | Establishment |
st 2019 to June 30
th2019
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Hikvision Hungary Limited | Hungary | Hungary | Sales | - | 100.00 | Establishment |
| Hikvision New Zealand Limited | New Zealand | Auckland | Sales | - | 100.00 | Establishment |
| Wuhan HIK Storage Technology Ltd. | Wuhan | Wuhan,Hubei | Technology Development | 60.00 | - | Establishment |
| Urumqi Hai Shi Xin An Electronic Technology Ltd. | Urumqi | Urumqi, Xinjiang | Construction | - | 90.00 | Establishment |
| Hangzhou Ximu Intelligent Technology Ltd. | Hangzhou | Hangzhou, Zhejiang | Manufacture | - | 60.00 | Business combination involving enterprises under common control |
| LLC Hikvision Tashkent | Uzbekistan | Tashkent | Sales | 100.00 | - | Establishment |
| Hikvision Kenya (Pty) Ltd | Kenya | Kenya | Sales | - | 100.00 | Establishment |
| Hangzhou HIK Automotive Software Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology Development | - | 60.00 | Establishment |
| Hangzhou Intelligent Technology Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology Development | - | 60.00 | Establishment |
| Wuhan HIK Storage Software Ltd. | Wuhan | Wuhan, Hubei | Technology development | - | 60.00 | Establishment |
| Chengdu Hikvision Digital Technology Ltd. | Chengdu | Chengdu | Technology development | 100.00 | - | Establishment |
| MoYuHaiShi Electronic Technology Ltd. | Hetian | Moyu | Construction | - | 85.00 | Establishment |
| Hangzhou EZVIZ Software Ltd. | Hangzhou | Hangzhou | Technology development | - | 60.00 | Establishment |
| PiShanHaiShi YongAn Electronic Technology Ltd. | Hetian | Pishan | System integration | - | 90.00 | Establishment |
| Henan Haikang Hua’anBaoQuan Electronics Ltd. | Zhengzhou | Zhengzhou | Construction | 51.00 | - | Establishment |
| Hikvision Czech s.r.o. | Czech | Czech | Sales | - | 100.00 | Establishment |
| Hikvision (Malaysia) SDN. BHD | Malaysia | Malaysia | Sales | - | 100.00 | Establishment |
| Hikvision Deutschland GmbH | Germany | Germany | Sales | - | 100.00 | Establishment |
| Hikvision Xi’an Xueliang Construction Project Management Ltd. | Xi’an | Xi’an, Shanxi | Construction | 99.00 | Establishment | |
| Luo Pu District Hai Shi Ding Xin Electronic Technology Ltd. | Hetian | Xinjiang Hetian | System integration | - | 90 | Establishment |
| Yu Tian Hai Shi Mei Tian Electronic Technology Ltd. | Hetian | Xinjiang Hetian | System integration | 98 | Establishment | |
| Xi’An Hikvision Digital Technology Ltd. | Xi’An | Xi’An | Technology development | 100.00 | - | Establishment |
| Wuhan Hikvision Technology Ltd. | Wuhan | Wuhan, | Technology | 100.00 | - | Establishment |
st 2019 to June 30
th
2019
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Hubei | development | |||||
| Wuhan Hikvision Science and Technology Ltd. | Wuhan | Wuhan, Hubei | Sales | 100.00 | - | Establishment |
| Wuhan Hikvision Fire Control Technology Ltd. | Wuhan | Wuhan, Hubei | Sales | 100.00 | - | Establishment |
| Hainan Hikvision System Technology Ltd. | Hainan | Hainan | System integration | 100.00 | - | Establishment |
| Hangzhou HIK Huiying Technology Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology development | 60.00 | - | Establishment |
| Hikvision Mexico S.A.de C.V. | Mexico | Mexico | Sales | 100.00 | Establishment | |
| Guizhou Hikvision Transportation Big Data Ltd. | Guiyang | Guiyang, Guizhou | Technology development | 55.00 | Establishment | |
| Xinjiang CET Yihai Information Technology Ltd. | Urumqi | Urumqi, Xinjiang | System integration | 60.00 | Establishment | |
| Hikvision Panama Commercial S.A | Panama | Panama | Sales | 100.00 | Establishment | |
| Hikvision Pakistan (SMC-Private) Limited | Pakistan | Pakistan | Sales | 100.00 | Establishment | |
| Hikvision Peru Closed Stock Company | Peru | Peru | Sales | 95.00 | 5.00 | Establishment |
| Hikvision Technology Israel Ltd. | Israel | Israel | Sales | 100.00 | Establishment | |
| Nanjing Hikvision Digital Technology Ltd. | Nanjing | Nanjing, Jiangsu | Sales | 100.00 | Establishment | |
| Shijiazhuang Hikvision Science and Technology Ltd. | Shijiazhuang | Shijiazhuang | Technology development | 100.00 | Establishment | |
| Zhengzhou Hikvision Digital Technology Ltd. | Zhengzhou | Zhengzhou | Sales | 100.00 | Establishment | |
| Hikvision Central America S.A. | Panama | Panama | Sales | 100.00 | Establishment | |
| Hikvision West Africa Limited | Nigeria | Nigeria | Sales | 94.00 | 6.00 | Establishment |
| Hikvision Technology Egypt JSC | Egypt | Egypt | Sales | 100.00 | Establishment | |
| Hangzhou EZVIZ Science and Technology Ltd. (Note 5) | Hangzhou | Hangzhou | Sales | - | - | Business merger under the common control |
| Hangzhou Kuangxin Technology Ltd. | Hangzhou | Hangzhou | Technology development | 80.00 | Business merger not involving enterprises under the common control | |
st
2019 to June 30
th2019
2. Equity in joint ventures or associates
(1) Aggregated financial information of insignificant joint-ventures or associates
Unit：RMB
| Closing balance / Amount for first half of 2019 | Opening balance / Amount for first half of 2018 | |
| Associates： | ||
| The aggregate carrying amount of investments in associates | 182,900,000.00 | 174,900,000.00 |
| The aggregate amount of the following items calculated based on the Company’s equity share percentage of the associates | ||
| --Net gains (losses) and total comprehensive gains (losses) | (4,215,155.62) | 2,538,090.69 |
st 2019 to June 30
th2019
procurement, sales, financing and other major business activities in local currencies such as USD, EUR, GBP, RUB, andetc.
As of June 30
th
2019, except for monetary items of foreign currencies set out in Note (V) 55, the Group mainlyadopted the functional currency of each of its subsidiary to present the balance of its assets and liabilities. The foreignexchange risks arising from assets and liabilities denominated in USD and EUR (which has been converted into RMB)as follows may generate significant impact on the operating results of the Group.
Unit: RMB
| Currencies | Assets | Liabilities | ||
| Closing balance | Opening balance | Closing balance | Opening balance | |
| USD | 7,001,761,983.07 | 7,053,425,866.47 | 2,771,060,113.18 | 1,526,559,782.05 |
| EUR | 209,150,894.81 | 391,028,998.28 | 3,126,800,000.00 | 3,172,727,888.37 |
| Change in foreign exchange rates | First half of 2019 | First half of 2018 | ||
| Effect on profit | Effect on shareholders’ equity | Effect on profit | Effect on shareholders’ equity | |
| 5% appreciation of USD against functional currency | 211,535,093.49 | 211,535,093.49 | 270,837,502.92 | 270,837,502.92 |
| 5% depreciation of USD against functional currency | (211,535,093.49) | (211,535,093.49) | (270,837,502.92) | (270,837,502.92) |
| 5% appreciation of EUR against functional currency | (145,882,455.26) | (145,882,455.26) | (128,835,381.10) | (128,835,381.10) |
| 5% depreciation of EUR against functional currency | 145,882,455.26 | 145,882,455.26 | 128,835,381.10 | 128,835,381.10 |
st
2019 to June 30
th2019
On the basis of the above assumptions, where all other variables are held constant, the reasonably possible changes inthe interest rate may have the following before-tax effect on the current net profit or loss and shareholders’ equity:
Unit: RMB
| Change in interest rate | The first half of 2019 | The first half of 2018 | ||
| Effect on net profits | Effect on shareholders’ equity | Effect on net profits | Effect on shareholders’ equity | |
| Borrowing rate increases by 50 bps | (45,925,315.62) | (45,925,315.62) | (26,662,904.00) | (26,662,904.00) |
| Borrowing rate decreases by 50 bps | 45,925,315.62 | 45,925,315.62 | 26,662,904.00 | 26,662,904.00 |
| June 30th 2019 | ||||
| Within one year | 1-5 years | More than five years | Total | |
| Non-derivative financial liabilities | ||||
| Short-term borrowings | 4,590,865,798.75 | - | - | 4,590,865,798.75 |
| Notes payable | 804,615,788.76 | - | - | 804,615,788.76 |
| Accounts payable | 10,137,582,130.28 | 10,137,582,130.28 | ||
| Other payables | 1,010,873,086.51 | - | - | 1,010,873,086.51 |
| Other current liabilities | 2,320,850,513.78 | - | - | 2,320,850,513.78 |
| Long-term borrowings | 133,054,542.13 | 3,541,079,149.50 | 1,745,443,894.44 | 5,419,577,586.07 |
| Long-term payables | 14,497,723.92 | 30,924,471.16 | - | 45,422,195.08 |
st 2019 to June 30
th
2019
Derivative financial liabilities
| Derivative financial liabilities | ||||
| Forward foreign exchange contracts- settled in the gross amount | ||||
| - Cash inflow | 253,763,441.68 | - | - | 253,763,441.68 |
| - Cash outflow | 255,051,132.38 | - | - | 255,051,132.38 |
| - Net cash outflow | (1,287,690.70) | - | - | (1,287,690.70) |
| Items | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Continuous fair value measurement | - | 1,388,278,163.21 | 296,004,271.50 | 1,684,282,434.71 |
| 1. Held-for-trading Financial Assets | - | 2,640,560.25 | - | 2,640,560.25 |
| -- Derivative financial assets | - | 2,640,560.25 | - | 2,640,560.25 |
| 2. Receivables for financing | - | 1,386,990,472.51 | 1,386,990,472.51 | |
| 3. Other non-current financial assets | 296,004,271.50 | 296,004,271.50 | ||
| Total assets measured continuously at fair value | - | 1,389,631,032.76 | 296,004,271.50 | 1,685,635,304.26 |
| (II) Held-for-trading Financial Liabilities | 1,352,869.55 | 1,352,869.55 | ||
| - Derivative financial liabilities | - | 1,352,869.55 | - | 1,352,869.55 |
| Total liabilities measured continuously at fair value | - | 1,352,869.55 | - | 1,352,869.55 |
| Fair value at June 30th 2019 | Estimation technique | Inputs | |
| Forward Foreign Exchange Contracts (Assets) | 2,504,060.25 | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparties |
| Foreign Exchange Option Contracts (Assets) | 136,500.00 | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparties |
| Forward Foreign Exchange Contracts (Liabilities) | 19,369.55 | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparties |
| Foreign Exchange Option Contracts (Liabilities) | 1,333,500.00 | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparties |
| Receivables for financing | 1,386,990,472.51 | Discounted cash flow approach | Discount rate |
| Other non-current financial assets | Amount |
| Book value on December 31st 2018 | - |
| Impact of implementing new financial instrument guidelines | 290,966,813.00 |
| Book value on January 1st 2019 | 290,966,813.00 |
| Increase in the current reporting period | 2,884,220.00 |
| Changes in fair value booked into other comprehensive income during the current reporting period | 2,153,238.50 |
| Book value on June 30th 2019 | 296,004,271.50 |
st 2019 to June 30
th2019
4. The third level of fair value measurement item, the valuation techniques and important parameters used
Unit: RMB
| Fair value on June 30th 2019 | Valuation techniques | Inputs | |
| Other non-current financial assets | 296,004,271.50 | Income approach/Asset-based approcah | Future cash flows, Discount rate/ Book value of net assets |
| Name | Place of registration | Nature of business | Registered capital | Shareholding ratio of parent company in the Company (%) | Percentage of voting rights of parent company to the Company (%) |
| China Electronics Technology HIK Group Co., Ltd. (CETHIK) | Hangzhou, Zhejiang | Industrial investment | RMB 660 million | 39.09 | 39.09 |
| Name | Relationship |
| Gong Hongjia | Director of the company, holds 13.60% of the share of the Company |
| Shanghai Fullhan Microelectronics Co., Ltd. (Shanghai Fullhan Micro) | Gong Hongjia or his relative(s) serve(s) as the director(s) |
| Zhejiang Tuxun Technology Co.,Ltd. (Zhejiang Tuxun) | The Group’s senior management serve(s) as director(s) of this company (Note 1) |
| Confirmware Technology(Hangzhou) Co., Ltd. (Hangzhou Confirmware) | The Group’s senior management serve(s) as director(s) of this company |
| Wuhu Sensor Technology Co., Ltd. (Wuhu SensorTech) | Associated company of the Group |
| Maxio Technology (Hangzhou) Ltd. and its subsidiaries (Maxio Technology and its subsidiaries) | Associated company of the Group |
| Zhiguang Hailian Big Data Technology Ltd. (Zhiguang Hailian) | Associated company of the Group |
| Jiaxin Haishi JiaAn Zhicheng Technology Ltd. (Haishi JiaAn) | Associated company of the Group |
st 2019 to June 30
th
2019
Name
| Name | Relationship |
| Sanmenxia Xiaoyun Vision Technology Ltd. (Xiaoyun Vision Technology) | Associated company of the Group |
| Subsidiaries of CETE (Note 2) | Under common control of the ultimate controlling party of the Company |
| Related party | Transaction type | Amount for the first half of 2019 | Amount for the first half of 2018 |
| Subsidiaries of CETE | Purchase of materials and receiving of services | 101,307,210.65 | 153,495,293.67 |
| Shanghai Fullhan Micro | Purchase of materials and receiving of services | 142,526,819.64 | 120,432,833.93 |
| Wuhu SensorTech | Purchase of materials and receiving of services | 27,029,115.54 | 19,486,211.82 |
| Maxio Technology and its subsidiaries | Purchase of materials and receiving of services | 7,445,856.29 | 44,208,712.51 |
| Total | 278,309,002.12 | 337,623,051.93 |
| Related party | Transaction content | Amount for the first half of 2019 | Amount for the first half of 2018 |
| Subsidiaries of CETE | Sales of products and rendering of services | 259,100,324.49 | 237,165,349.46 |
| Zhejiang Tuxun | Sales of products and rendering of services | 23,144.73 | 964,627.62 |
| Wuhu Sensor Tech | Sales of products and rendering of services | 262,495.39 | 36,416.97 |
| Hangzhou Confirmware | Sales of products and rendering of services | 23,854.33 | 524,591.79 |
| Maxio Technology and its subsidiaries | Sales of products and rendering of services | 39,051.29 | |
| Xiaoyun Vision Technology | Sales of products and rendering of services | 5,973,121.16 | |
| Zhiguang Hailian | Sales of products and rendering of services | 320,293.75 | |
| Haishi JiaAn | Sales of products and rendering of services | 81,415.93 | |
| Total | 265,784,649.78 | 238,730,037.13 |
st 2019 to June 30
th
2019
Related Party
| Related Party | Content of related party transaction | Amount occurred in the first half of 2019 | Balance at the end of the current period | Amount occurred in the first half of 2018 | Opening Balance |
| Subsidiaries of CETE (Note) | Deposit into fixed deposits | 4,000,000,000.00 | - | 4,000,000,000.00 | |
| Subsidiaries of CETE (Note) | Deposit into call deposits | - | (500,000,000.00) | - | |
| Total | 4,000,000,000.00 | (500,000,000.00) | 4,000,000,000.00 |
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Bad debt provision | Carrying balance | Bad debt provision | ||
| Accounts receivable | Subsidiaries of CETE | 831,990,000.63 | 57,224,483.79 | 707,471,470.74 | 38,564,084.85 |
| Accounts receivable | Zhejiang Tuxun | 21,000.02 | 1,344.00 | 345,738.04 | 17,286.90 |
| Accounts receivable | Hangzhou Confirmware | 25,780.00 | 244.91 | 298,619.99 | 15,611.00 |
| Accounts receivable | Zhiguang Hailian | 1,350,254.80 | 73,069.31 | 986,160.75 | 49,308.04 |
| Accounts receivable | Haishi JiaAn | 92,000.00 | 874.00 | ||
| Accounts receivable | Xiaoyun Vision Technology | 5,187,206.40 | 331,981.21 | ||
| Total | 838,666,241.85 | 57,631,997.22 | 709,101,989.52 | 38,646,290.79 | |
| Receivables for financing | Subsidiaries of CETE | 33,908,101.00 | - | 60,983,163.83 | - |
| Receivables for financing | Hangzhou Confirmware | - | - | 150,000.00 | - |
| Total | 33,908,101.00 | - | 61,133,163.83 | - | |
| Prepayments | Subsidiaries of CETE | 22,331,546.07 | - | 13,328,415.31 | - |
| Prepayments | Maxio Technology and its subsidiaries | 3,000,000.00 | - | - | - |
| Total | 25,331,546.07 | - | 13,328,415.31 | - | |
| Dividends receivable | Subsidiaries of CETE | 17,357,220.31 | - | - | - |
| Toal | 17,357,220.31 | - | - | - | |
st 2019 to June 30
th2019
(2) Payables to related parties
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Accounts payable | Subsidiaries of CETE | 143,735,603.12 | 166,845,140.44 |
| Accounts payable | Shanghai Fullhan Micro | 94,398,988.47 | 106,744,509.28 |
| Accounts payable | Wuhu Sensor Tech | 6,772,567.03 | 5,944,535.61 |
| Accounts payable | Maxio Technology and its subsidiaries | 912,352.49 | - |
| Total | 245,819,511.11 | 279,534,185.33 | |
| Notes Payable | Shanghai Fullhan Micro | 16,954,977.00 | 13,838,900.00 |
| Total | 16,954,977.00 | 13,838,900.00 | |
| Receipts in advance | Subsidiaries of CETE | 13,147,432.28 | 2,306,953.47 |
| Total | 13,147,432.28 | 2,306,953.47 | |
| Other payables | Subsidiaries of CETE | 63,304,901.58 | 63,683,807.94 |
| Other payables | Shanghai Fullhan Micro | 100,000.00 | 100,000.00 |
| Other payables | Wuhu Sensor Tech | 50,000.00 | 50,000.00 |
| Other payables | Zhejiang Tuxun | 39,290.00 | 9,290.00 |
| Total | 63,494,191.58 | 63,843,097.94 |
st
2019 to June 30
th
2019
(I) The closing price of the subject shares of the Company for one trading day prior to publication of thesummary Share Incentive Scheme draft;(II) The average closing price of the subject shares of the Company for 30 trading days prior to publication ofthe summary Share Incentive Scheme draft;(III) The average price of the subject shares of the Company for 20 trading days prior to publication of thesummary Share Incentive Scheme draft; or(IV) The unit nominal value of the subject shares of the Company.
Each batch of restricted shares shall not be unlocked unless fulfilling, each time, by the Company its unlockperformance criteria (including net asset yield and operating income growth rate), and by grantees’ individualperformance criteria simultaneously. Where, during any year of the unlocking period, any one or more unlockcriteria for the Company or individuals is or are not fulfilled, such portion of subject shares shall be cancelled,and no grantees shall be entitled to make another application for unlocking those subject shares in the futureyears. The cancelled restricted shares will be repurchased by the Company based on the grant price.
On August 23
rd2012, after consideration and approval by the general meeting, the Company granted 8,611,611restricted shares to grantees at a grant price of RMB 10.65 per share (“2012 Share Incentive Scheme”). TheLock-up Period of the Subject Shares shall last for a period of 24 months commencing on the grant date, duringwhich the Subject Shares granted to grantees under the scheme shall be subject to lock-up and shall not betransferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares(including Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by thescheme being satisfied, apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 monthsfollowing the grant date and the number of shares to be unlocked shall be 1/3 of the aggregate number of theSubject Shares granted; the second unlocking period shall be the 36 to 48 months following the grant date andthe number of shares to be unlocked shall be 1/3 of the aggregate number of the Subject Shares granted; thethird unlocking period shall be the 48 to 60 months following the grant date and the number of shares to beunlocked shall be 1/3 of the aggregate number of the Subject Shares granted. As of December 31
st2016, the2012 restricted incentive shares scheme had been completed.
On October 24
th2014, after consideration and approval by the general meeting, the Company granted52,910,082 restricted shares to grantees at a grant price of RMB 9.25 per share (“2014 Share IncentiveScheme”). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on thegrant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up andshall not be transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restrictedshares (including Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by thescheme being satisfied, apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 monthsfollowing the grant date and the number of shares to be unlocked shall be 40% of the aggregate number of theSubject Shares granted; the second unlocking period shall be the 36 to 48 months following the grant date andthe number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted; thethird unlocking period shall be the 48 to 60 months following the grant date and the number of shares to beunlocked shall be 30% of the aggregate number of the Subject Shares granted. As of June 30
th
2019, therestricted stock granted in 2014 has all vested.
On December 23
rd2016, after consideration and approval by the general meeting, the Company granted52,326,858 restricted shares to grantees at a grant price of RMB 12.63 per share (“2016 Share IncentiveScheme”). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on thegrant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up andshall not be transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restrictedshares (including Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by thescheme being satisfied, apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 monthsfollowing the grant date and the number of shares to be unlocked shall be 40% of the aggregate number of theSubject Shares granted; the second unlocking period shall be the 36 to 48 months following the grant date andthe number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted; thethird unlocking period shall be the 48 to 60 months following the grant date and the number of shares to beunlocked shall be 30% of the aggregate number of the Subject Shares granted.
On December 20
th 2018, authorized by the 2
ndextraordinary general meeting of 2018 and reviewed by the boardof directors, the Company granted 121,195,458 restricted shares to grantees at a grant price of RMB 16.98 pershare (“2018 Share Incentive Scheme”). The Lock-up Period of the Subject Shares shall last for a period of 24
st
2019 to June 30
th2019
months commencing on the grant date, during which the Subject Shares granted to grantees under the schemeshall be subject to lock-up and are not transferable. The Unlocking Period shall be the 24 to 60 monthsfollowing the grant of restricted shares (including Lock-up Period), during which grantees may, subject tounlocking conditions stipulated by the scheme being satisfied, apply for unlocking in 3 tranches: the firstunlocking period shall be the 24 to 36 months following the grant date and the number of shares to be unlockedshall be 40% of the aggregate number of the Subject Shares granted; the second unlocking period shall be the 36to 48 months following the grant date and the number of shares to be unlocked shall be 30% of the aggregatenumber of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months following thegrant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Sharesgranted. The restricted shares of 2018 equity incentives have completed the share registration work in January2019.
Unit: share
| 2014 Share Incentive Scheme | First half of 2019 | First half of 2018 |
| Total of equity instruments outstanding at the beginning of the reporting period | 33,932,161 | |
| Total of equity instruments granted during the current reporting period | - | |
| Total of equity instruments vested during the current reporting period | - | |
| Total of equity instruments forfeited during the current reporting period (Note) | - | |
| Total of equity instruments outstanding at the end of the reporting period | 33,932,161 | |
| The exercise price (ex-rights) of the outstanding Share-based payments of the Company at the end of the reporting period and the remaining period of the contract | RMB 4.11 per share and 16 months |
| 2016 Share Incentive Scheme | First half of 2019 | First half of 2018 |
| Total of equity instruments outstanding at the beginning of the reporting period | 45,404,512 | 78,490,287 |
| Total of equity instruments granted (share dividend) during the current reporting period | - | - |
| Total of equity instruments vested during the current reporting period | - | - |
| Total of equity instruments forfeited during the current reporting period | - | - |
| Total of equity instruments outstanding at the end of the reporting period | 45,404,512 | 78,490,287 |
| The exercise price (ex-rights) of the outstanding Share-based payments of the Company at the end of the reporting period and the remaining period of the contract | RMB 8.42 per share and 30 months | RMB 8.42 per share and 42 months |
st 2019 to June 30
th
2019
Unit: share
| 2018 Share Incentive Scheme | First half of 2019 | First half of 2018 |
| Total of equity instruments outstanding at the beginning of the reporting period | 121,195,458 | - |
| Total of equity instruments granted (share dividend) during the current reporting period | - | - |
| Total of equity instruments vested during the current reporting period | - | - |
| Total of equity instruments forfeited during the current reporting period | - | - |
| Total of equity instruments outstanding at the end of the reporting period | 121,195,458 | - |
| The exercise price (ex-rights) of the outstanding Share-based payments of the Company at the end of the reporting period and the remaining period of the contract | RMB 16.98 per share and 54 months | Not applicable |
| 2014 Share Incentive Scheme | 2016 Share Incentive Scheme | 2018 Share Incentive Scheme | |
| Method of determine the fair value of equity instruments at the grant date | Determined based on stock price at the grant date and the costs of restricted shares during Lock-up Period | Determined based on stock price at the grant date and the costs of restricted shares during Lock-up Period | Determined based on stock price at the grant date and the costs of restricted shares during Lock-up Period |
| Recognition basis of the number of the equity instruments qualified for vesting | Determined based on the results estimation of each vesting period | Determined based on the results estimation of each release period | Determined based on the results estimation of each release period |
| Reasons of the significant difference between the estimates of the current reporting period with that of the prior year | None | None | None |
| Accumulative amount of share-based payment through equity settlement and further included in the capital reserve | 363,191,911.52 | 298,596,674.16 | 215,330,306.80 |
| Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | - | 34,798,282.54 | 215,330,306.80 |
| Closing balance | Opening balance | |
| Contracted but not yet recognized in financial statements | ||
| - Commitment on construction of long-term assets | 11,128,833 | 10,420,984 |
| Total | 11,128,833 | 10,420,984 |
| Closing balance | Opening balance | |
| Minimum lease payments under non-cancellable operating leases: | ||
| First year subsequent to the balance sheet date | 170,118 | 182,124 |
| Second year subsequent to the balance sheet date | 134,508 | 139,759 |
st 2019 to June 30
th2019
| Closing balance | Opening balance | |
| Third year subsequent to the balance sheet date | 79,287 | 98,017 |
| Subsequent years | 104,658 | 117,099 |
| Total | 488,571 | 536,999 |
| Item | First half of 2019 | ||
| Operating income | Operating cost | ||
| Video Surveillance Products | Front-end equipment | 11,399,609,062.38 | 5,514,282,317.87 |
| Back-end equipment | 3,196,070,064.43 | 1,622,327,866.91 | |
| Central control equipment | 3,486,737,083.16 | 1,549,258,451.92 | |
| Constructions | 477,564,284.57 | 348,868,121.15 | |
| Other products | 3,405,538,512.34 | 2,650,853,145.34 | |
| Innovative Business Products | Smart home business products | 1,139,058,349.43 | 699,890,662.72 |
| Other innovative business products | 589,311,078.90 | 342,030,740.91 | |
| Total | 23,693,888,435.21 | 12,727,511,306.82 | |
| Item | First half of 2018 | ||
| Operating income | Operating cost | ||
| Video Surveillance Products | Front-end equipment | 10,285,314,406.66 | 5,171,808,124.76 |
| Back-end equipment | 2,994,583,467.04 | 1,618,843,751.15 | |
| Central control equipment | 2,798,476,654.30 | 1,314,431,389.49 | |
| Constructions | 1,077,104,977.68 | 921,303,977.95 | |
| Other products | 2,404,445,208.43 | 1,766,913,713.92 | |
| Innovative Business Products | Smart home business products | 725,865,396.10 | 462,125,654.34 |
| Other innovative business products | 380,599,700.27 | 233,913,988.64 | |
| Total | 20,666,389,810.48 | 11,489,340,600.25 | |
st 2019 to June 30
th2019
External revenue by geographical area & non-current assets by geographical locationUnit: RMB
| Item | First half of 2019 | First half of 2018 |
| External revenue generated in domestic area | 16,980,210,416.78 | 14,580,485,895.05 |
| External revenue generated in overseas area | 6,943,063,007.72 | 6,295,272,329.58 |
| Total | 23,923,273,424.50 | 20,875,758,224.63 |
| Item (Note) | First half of 2019 | First half of 2018 |
| Non-current assets in domestic area | 8,122,529,602.39 | 7,810,496,315.84 |
| Non-current assets in overseas area | 451,823,739.04 | 352,944,245.80 |
| Total | 8,574,353,341.43 | 8,163,440,561.64 |
st 2019 to June 30
th
2019
XV. Notes to major items of financial statements of the parent company
1. Accounts receivable
(1) Accounts receivable disclosed by categories:
Unit: RMB
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Bad debt provision | Book value | Carrying balance | Bad debt provision | Book value | |||||
| Amount | Percentage (%) | Amount | Percentage (%) | Amount | Amount | Percentage (%) | Amount | Percentage (%) | Amount | |
| Provision for bad debts on a single basis | - | - | - | - | - | - | - | - | - | - |
| Provision for bad debts by portfolios | 19,667,012,137.66 | 100.00 | 362,389,044.95 | 1.84 | 19,304,623,092.71 | 16,178,600,865.87 | 100.00 | 974,081,704.16 | 6.02 | 15,204,519,161.71 |
| Total | 19,667,012,137.66 | 100.00 | 362,389,044.95 | 1.84 | 19,304,623,092.71 | 16,178,600,865.87 | 100.00 | 974,081,704.16 | 6.02 | 15,204,519,161.71 |
st 2019 to June 30
th2019
Provision for bad debts by portfolios
Unit: RMB
| Item | Closing Balance | ||
| Accounts receivable | Bad debt provision | Proportion (%) | |
| Not overdue | 14,972,028,362.85 | 13,208,474.39 | 0.09 |
| Within 1 year after the overdue | 4,240,258,687.37 | 89,724,009.52 | 2.12 |
| 1-2 years after the overdue | 250,050,280.76 | 71,739,425.55 | 28.69 |
| 2-3 years after the overdue | 73,811,638.64 | 56,853,967.45 | 77.03 |
| Over 3 years after the overdue | 130,863,168.04 | 130,863,168.04 | 100.00 |
| Subtotal | 19,667,012,137.66 | 362,389,044.95 | 1.84 |
| Company name | Relationship with the Company | Carrying balance | Closing balance of bad debt provision | Proportion of closing balance of accounts receivables in total (%) |
| Subsidiary A | Subsidiary | 16,093,104,192.72 | - | 81.83 |
| Company H | Related party | 121,513,170.76 | 4,722,623.41 | 0.62 |
| Company I | Third party | 54,250,159.88 | 38,991,016.57 | 0.28 |
| Subsidiary J | Third party | 48,111,883.80 | 6,038,002.89 | 0.24 |
| Company K | Third party | 45,216,426.73 | 619,681.64 | 0.23 |
| Total | 16,362,195,833.89 | 50,371,324.51 | 83.20 |
| Category | Closing balance | Opening Balance |
| Dividends receivable | 19,907,220.31 | 2,550,000.00 |
| Other receivables | 572,862,823.29 | 520,437,955.34 |
| Total | 592,770,043.60 | 522,987,955.34 |
| Invested company | Closing balance | Opening Balance |
| Subsidiaries of CETE (Note 1) | 17,357,220.31 | - |
| Hikvision’s subsidiaries (Note 2) | 2,550,000.00 | 2,550,000.00 |
| Total | 19,907,220.31 | 2,550,000.00 |
st 2019 to June 30
th2019
2.3 Other receivables
(1) Other receivables by nature of the payment
Unit: RMB
| Nature | Closing balance | Opening balance |
| Temporary borrowing | 299,491,225.10 | 254,412,122.73 |
| Temporary payments for receivables | 219,676,383.68 | 235,499,619.96 |
| Guarantee deposit | 54,330,779.17 | 59,549,614.46 |
| Investment deposit | - | 20,000,000.00 |
| Others | 8,850,875.37 | 2,190,850.93 |
| Total | 582,349,263.32 | 571,652,208.08 |
| bed debts allowance | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (credit impairment has not incurred) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
| Balance on January 1st 2019 | 26,367,866.55 | 13,449,401.91 | 11,396,984.28 | 51,214,252.74 |
| During the current reporting period, balance of other receivables on January 1st 2019 | ||||
| --transferred to stage 2 | (503,876.10) | 503,876.10 | - | |
| -transferred to stage 3 | (470,788.51) | 470,788.51 | - | |
| -transferred back stage 2 | ||||
| -transferred back to stage 1 | ||||
| Provision in the current reporting period | ||||
| Reversal during the current reporting period | 21,016,032.65 | 11,966,599.08 | 8,745,180.98 | 41,727,812.71 |
| Resale during the current reporting peirod | ||||
| Wrtie-off during the current reporting period | ||||
| Other changes | ||||
| Balance on June 30th 2019 | 4,847,957.80 | 1,515,890.42 | 3,122,591.81 | 9,486,440.03 |
st 2019 to June 30
th2019
(3) Bad debt provision provided, recovered or reversed during the current reporting period
The amount of bad debt reversed in the current reporting period was RMB 41,727,812.71, and the baddebt provision was nil in the current reporting period.
(4) The actual write-off of other receivables for the current reporting period.
The write-off of other receivables in the current reporting period was nil.
(5) Top 5 debtors of other receivables in terms of closing balance
Unit：RMB
| The name of entity | Nature | Closing balance | Aging | Percentage to total other receivables (%) | Bad debt provision |
| Subsidiary B | Internal Payment | 123,130,850.47 | Not overdue | 21.14 | - |
| Subsidiary C | Internal Payment | 70,108,555.81 | Not overdue | 12.04 | - |
| Subsidiary D | Internal Payment | 36,256,568.58 | Not overdue | 6.23 | - |
| Subsidiary E | Internal Payment | 9,444,600.00 | Within 2 years after overdue | 1.62 | - |
| Subsidiary F | Internal Payment | 8,830,098.77 | Not overdue | 1.52 | - |
| Total | 247,770,673.63 | 42.55 | - |
Hikvision 2019 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2019 to June 30
th
2019
3. Long-term equity investment
Unit: RMB
| Item | Closing Balance | Opening Balance | ||||
| Carrying Balance | Provisions | Book Value | Carrying Balance | Provisions | Book Value | |
| Investment in subsidiaries | 4,414,995,394.22 | - | 4,414,995,394.22 | 4,317,555,407.77 | 73,816,351.77 | 4,243,739,056.00 |
| Inestments in associated enterprises and joint ventures | 114,533,348.18 | - | 114,533,348.18 | 117,408,339.90 | - | 117,408,339.90 |
| Total | 4,529,528,742.40 | - | 4,529,528,742.40 | 4,434,963,747.67 | 73,816,351.77 | 4,361,147,395.90 |
| Name of investee | Opening balance | Increase during the current reporting period | Decrease during the current reporting period | Closing balance | Write-off of impairment provision during the current reporting period | Blance of impairment loss provision at the end of the current reporting period |
| Hangzhou Hikvision System Technology Ltd. | 745,219,821.80 | 29,255,195.50 | - | 774,475,017.30 | - | - |
| Hangzhou Hikvision Security Equipment Leasing Services Ltd. | 200,000,000.00 | - | 200,000,000.00 | - | - | |
| Shanghai Goldway Intelligent Traffic System Ltd. | 23,000,000.00 | - | 23,000,000.00 | - | - | |
| Chongqing Hikvision System Technology Ltd. | 700,000,000.00 | - | 700,000,000.00 | - | - | |
| Hundure Technology (Shanghai) Ltd. | 37,247,790.28 | - | 37,247,790.28 | - | - |
st
2019 to June 30
th2019
Name of investee
| Name of investee | Opening balance | Increase during the current reporting period | Decrease during the current reporting period | Closing balance | Write-off of impairment provision during the current reporting period | Blance of impairment loss provision at the end of the current reporting period |
| Hangzhou EZVIZ Network Ltd. | 6,641,675.60 | 2,438,926.30 | - | 9,080,601.90 | - | - |
| Hangzhou Haikang Zhicheng Investment and Development Ltd. | 24,000,000.00 | - | 24,000,000.00 | - | - | |
| Hangzhou Hik Robotic Technology Ltd. | 87,402,825.23 | 5,930,871.14 | - | 93,333,696.37 | - | - |
| Hangzhou Hikvision Investment Management Ltd. | 100,000.00 | - | 100,000.00 | - | - | |
| Hangzhou Hik Automotive Technology Ltd. | 140,813,518.12 | 822,908.50 | - | 141,636,426.62 | - | - |
| Hangzhou Hik Automotive Software Ltd. | 1,589,417.56 | 3,610,714.74 | - | 5,200,132.30 | - | - |
| Tianjin Hikvision System Technology Ltd. | 10,000,000.00 | - | 10,000,000.00 | - | - | |
| Hangzhou Hikvision Communication Technology Ltd. | 7,000,000.00 | - | 7,000,000.00 | - | - | |
| Hangzhou Hik Weiying SensoryTechnology Ltd. | 60,000,000.00 | 529,975.68 | - | 60,529,975.68 | - | - |
| Wuhan Hik Storage Technology Ltd. | 60,000,000.00 | 1,076,479.42 | - | 61,076,479.42 | - | - |
| Hangzhou Haikang Intelligent Technology Ltd | 438,438.67 | 2,222,253.04 | - | 2,660,691.71 | - | - |
| Chengdu Hikvision Digital Technology | 300,000,000.00 | - | 300,000,000.00 | - | - |
st 2019 to June 30
th2019
Name of investee
| Name of investee | Opening balance | Increase during the current reporting period | Decrease during the current reporting period | Closing balance | Write-off of impairment provision during the current reporting period | Blance of impairment loss provision at the end of the current reporting period |
| Ltd. | ||||||
| HDTINTERNATIONALLIMITED | 87,786.14 | - | 87,786.14 | - | - | |
| PramaHikvisonIndiaPVT. | 1,585,696.80 | - | 1,585,696.80 | - | - | |
| HikvisionInternationalCo.,Limited | 79,423.52 | - | 79,423.52 | - | - | |
| HikvisionAustralia | 2,866,850.00 | - | 2,866,850.00 | - | - | |
| HikvisionSingapore | 1,900,590.00 | - | 1,900,590.00 | - | - | |
| HikvisionSouthAfrica | 1,578,650.00 | - | 1,578,650.00 | - | - | |
| HikvisionFZE | 1,870,351.40 | - | 1,870,351.40 | - | - | |
| HIKVISIONDOBRASIL | 4,579,750.50 | - | 4,579,750.50 | - | - | |
| LIMITEDLIABILITYCOMPANY | 647,249.19 | - | 647,249.19 | - | - | |
| HikvisionCoop. | 65,485.53 | - | 65,485.53 | - | - | |
| HIKVISIONKOREALIMITED | 1,535,850.00 | - | 1,535,850.00 | - | - | |
| HIKVISIONCOLOMBIASAS | 1,337,440.00 | - | 1,337,440.00 | - | - | |
| HIKVISIONKAZAKHSTANLIMI | 4,758.69 | - | 4,758.69 | - | - | |
| HIKVISIONTURKEYTECHNOLO | 1,148,115.83 | - | 1,148,115.83 | - | - | |
| HIKVISIONTASHKENT | 833,014.00 | - | 833,014.00 | - | - | |
| Chongqing Hikvision Science and Technology Ltd. | 100,000,000.00 | 558,181.18 | - | 100,558,181.18 | - | - |
st
2019 to June 30
th2019
Name of investee
| Name of investee | Opening balance | Increase during the current reporting period | Decrease during the current reporting period | Closing balance | Write-off of impairment provision during the current reporting period | Blance of impairment loss provision at the end of the current reporting period |
| HIKVISIONUSAINC. | 1,546,160.00 | - | 1,546,160.00 | - | - | |
| HikvisionCanadaInc | 994,442.54 | - | 994,442.54 | - | - | |
| Henan Hua’An Bao Quan Intelligent Development Ltd. | 67,475,000.00 | - | 67,475,000.00 | - | - | |
| Henan Hik Hua’An Bao Quan Electronics Ltd. | 510,000.00 | - | 510,000.00 | - | - | |
| Hangzhou Hikvision Science and Technology Ltd. | 1,020,741,963.29 | 12,488,445.94 | - | 1,033,230,409.23 | - | - |
| Hangzhou Hikvision Electronics Ltd. | 397,745,645.00 | 3,401,248.58 | - | 401,146,893.58 | - | - |
| Beijing Brainaire Storage Ltd. | 95,878,126.85 | 95,878,126.85 | - | 95,878,126.85 | - | |
| Xi’An Hikvision Digital Technology Ltd. | 50,000,000.00 | - | 50,000,000.00 | - | - | |
| Hangzhou EZVIZ Software Ltd. | 3,739,571.23 | 8,188,668.34 | - | 11,928,239.57 | - | - |
| Wuhan Hikvision Technology Ltd. | 12,600,000.00 | - | 12,600,000.00 | - | - | |
| Wuhan Hikvision Science and Technology Ltd. | 65,250,000.00 | - | 65,250,000.00 | - | - | |
| Hangzhou Huiying Technology Ltd. | 48,000,000.00 | 794,244.94 | - | 48,794,244.94 | - | - |
| Xinjiang CET Yihai Information Technology Ltd. | 24,000,000.00 | - | 24,000,000.00 | - | - |
st 2019 to June 30
th
2019
Name of investee
| Name of investee | Opening balance | Increase during the current reporting period | Decrease during the current reporting period | Closing balance | Write-off of impairment provision during the current reporting period | Blance of impairment loss provision at the end of the current reporting period |
| Guizhou Haikang Transportation Big Data Ltd. | 5,500,000.00 | - | 5,500,000.00 | - | - | |
| Nanjing Hikvision Digital Technology Ltd.. | 10,000,000.00 | 10,000,000.00 | ||||
| Hangzhou Kuangxin Technology Ltd. | 112,000,000.00 | 112,000,000.00 | ||||
| Total | 4,317,555,407.77 | 193,318,113.30 | 95,878,126.85 | 4,414,995,394.22 | 95,878,126.85 | - |
st 2019 to June 30
th
2019
(2) Inestments in associated enterprises and joint ventures
Unit：RMB
| Name of investee | Opening balance | Increase/Decrease during the current reporting period | Closing Balance | Blance of impairment loss provision at the end of the current reporting period | |||||||
| Additional Investments | Reduce Investments | Investment income recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | Declared cash dividends or profits | Provision for impairment | Others | ||||
| 1.Joint Ventures | |||||||||||
| 2.Associated Enterprises | |||||||||||
| Wuhu Sensor Tech Intelligent Technology Ltd. | 41,771,440.45 | - | - | 348,945.40 | - | - | - | - | - | 42,120,385.85 | - |
| Maxio Technology (Hangzhou) Ltd. | 65,636,899.45 | - | - | (1,848,354.19) | - | - | - | - | - | 63,788,545.26 | - |
| Zhiguang Hailian Big Data Technology Ltd. | 10,000,000.00 | - | - | (1,375,582.93) | - | - | - | - | - | 8,624,417.07 | - |
| Subtotal | 117,408,339.90 | - | - | (2,874,991.72) | - | - | - | - | - | 114,533,348.18 | - |
| Total | 117,408,339.90 | - | - | (2,874,991.72) | - | - | - | - | - | 114,533,348.18 | - |
st 2019 to June 30
th
2019
4. Operating income and operating cost
Unit：RMB
| Item | The first half of 2019 | The first half of 2018 | ||
| Income | Cost | Income | Cost | |
| Operating income | 8,967,800,195.36 | 2,954,372,023.48 | 8,256,611,162.57 | 2,472,684,680.13 |
| Other operating income | 1,466,443,783.23 | 125,408,625.44 | 881,033,053.99 | 138,278,910.63 |
| Total | 10,434,243,978.59 | 3,079,780,648.92 | 9,137,644,216.56 | 2,610,963,590.76 |
| Item | The first half of 2019 | The first half of 2018 |
| Cash dividends measured by cost method | 1,400,000.00 | - |
| Long-term equity investment losses (income) measured by equity method | (2,874,991.72) | 1,630,985.74 |
| Investment loss on disposal of long-term equity investment | 0.56 | (9,994,028.47) |
| Investment gains for available-for-sale financial assets during the holding period | - | 12,256,000.00 |
| Investment income of other non-current financial assets during the holding period | 17,357,220.31 | - |
| Gain on disposal of held-for-trading financial assets | 1,168,699.00 | - |
| Investment income from redemption of bank finance products upon expiry | - | 64,686,053.30 |
| Total | 17,050,928.15 | 68,579,010.57 |
| Item | Amount | Description |
| Profit or loss from disposal of non-current assets | 810,043.90 | / |
| The government subsidies included in the current profits and losses (excluding the government subsidy closely related to regular course of business of the Company and government subsidy based on standard quota or quantitative continuous enjoyment according to the state industrial policy) | 90,511,282.83 | / |
| Net profit or loss of the subsidiary from the beginning of the reporting period to the merger date, for business combination involving enterprises under common control | (885,138.65) | / |
| Held- for-trading financial assets, profits and losses from change in fair value of held-for-trading financial liabilities, and investment income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets excluding the effective hedging business related to the regular business operation of the Company | 9,948,685.74 | / |
st 2019 to June 30
th2019
| Item | Amount | Description |
| Other non-operating income and expense except the items mentioned above | 29,742,814.57 | / |
| Impact of income tax | (34,822,486.70) | / |
| The impact of minority equity | (745,520.48) | / |
| Total | 94,559,681.21 | / |
| Profit for the reporting period | Weighted average return on net assets (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the Company | 10.86% | 0.444 | 0.444 |
| Net profit excluding non-recurring items of profit or loss attributable to ordinary shareholders of the Company | 10.61% | 0.434 | 0.434 |
Hikvision 2019 Half Year Report
Section XI Documents Available for Reference
1. The financial report was signed by the Company's legal representative.
2. The financial report was signed and sealed by the person in charge of the Company, the person incharge of accounting work and person in charge of accounting organization.
3. Original copy of all the Company's documents and announcements were published on thenewspapers designated by CSRC within the reporting period.
The above documents are completely placed at the Company's board of directors’ office.
Hikvision 2019 Half Year Report
Section XII Other Disclosure InformationI. Other major social security issuesWhether there is any other major social security issues for the listed compay and its subsidiaries
□Yes √No □Not applicable
Whether the company was administratively punished during the reporting period
□Yes √No □Not applicable
II. Non-operating capital occupation of listed companies by the controlling shareholder and its related
parties
□Applicable√Not applicable
During the reporting period, there was no non-operating capital occupation of the Company by the controllingshareholder and its related parties.
III. Reception of activities including research, communication and interviews during the report period
√ Applicable □ Inapplicable
(1) Reception of research activities during the reporting period.
| Time of reception | Location of reception | Method of reception | Type of reception object | Index of basic situation of the research |
| From January 1st 2019 to January 11th 2019 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From January 1st 2019 to January 11th 2019 |
| From January 14th 2019 to January 31st 2019 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From January 14th 2019 to January 31st 2019 |
| From February 15th 2019 to March 1st 2019 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From February 15th 2019 to March 1st 2019 |
| From March 4th 2019 to March 19th 2019 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From March 4th 2019 to March 19th 2019 |
| April 20th 2019 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | CNINF, Investor Relations Activity Record: April 20th 2019 |
Hikvision 2019 Half Year Report
| Time of reception | Location of reception | Method of reception | Type of reception object | Index of basic situation of the research |
| May 10th 2019 | Headquarters meeting room of the Company | Site Research | Institutional investors; individuals | CNINF, Investor Relations Activity Record: May 10th 2019 |
| April 22nd 2019 to May 17th 2019 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From April 22nd 2019 to May 17th 2019 |
| May 20th 2019 to June 3rd 2019 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From May 20th 2019 to June 3rd 2019 |
| June 4th 2019 to June 21st 2019 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From June 4th 2019 to June 21st 2019 |
| Time of conference | Location | Conference Name | Type of reception object | Method of reception |
| January 2019 | Shanghai | UBS 19th Greater China Conference 2019 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| January 2019 | Beijing | Morgan Stanley 2019 China New Economy Summit | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| January 2019 | Shenzhen | 17th Annual dbAccess China Conference 2019 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| February 2019 | Hongkong | Macquarie A-Share Technology Stock Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| March 2019 | Taibei | Bank of America Merrill Lynch Asia TMT Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| April 2019 | Hangzhou | Haitong Securities 2019 Spring Corporate Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2019 | Shenzhen | GuoTaiJunAn 2019 Mid-Year Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2019 | Shenzhen | HSBC 6th China Annual China Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2019 | Shenzhen | CICC High-Technology Forum | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2019 | Hongkong | Goldman Sachs Technet Conference | All kinds of | One-on-One, One-on-multi, small group |
Hikvision 2019 Half Year Report
| Time of conference | Location | Conference Name | Type of reception object | Method of reception |
| Asia Pacific 2019 | investors | Meetings, and etc. | ||
| May 2019 | Shanghai | Guojin Securities 2019 Mid-Year Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2019 | Shanghai | Huatai Securities 2019 Mid-Year Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2019 | Singapore | Nomura Investment Forum Asia 2019 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2019 | Beijing | Morgan Stanley’s Fifth China Summit | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2019 | London-Edinburgh | 2019 United Kingdom NDR-Via CLSA | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2019 | Shanghai | Merchants Securities 2019 Capital Market Summit | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| Number of daily research received (Site and telephone conference, times) | 127 |
| Number of institutional investors received (ppl) | 1580 |
| Number of individual investors received (ppl) | 39 |
| Number of investor relations conference participated | 16 |