Hangzhou Hikvision Digital Technology Co., Ltd.
2020 Interim ReportJanuary to June 2020
July 25
th2020
Hikvision 2020 Half Year Report
Section I Important Notes, Contents and DefinitionsThe Board of Directors, Board of Supervisors, directors, supervisors and senior management ofHangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as the “Company”) herebyguarantee that the information presented in this report shall be together be wholly liable for thetruthfulness, 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 of the Company have attended the board meeting to review this report.The half year proposal of profit distribution or share distribution from capital reserve passed upondeliberation 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 2020 Half Year Report (“2020年半年度报告”), and the published announcements in the Chinese version shall prevail. The completepublished Chinese 2020 Half Year Report may be obtained at www.cninfo.com.cn.
Hikvision 2020 Half Year Report
Please read the annual report and pay particular attention to the following risk factors:
1) Global COVID-19 epidemic risk: Amidst the sustained transmission of COVID-19 epidemic around theworld, and the heightened uncertainties in economic development, if the epidemic situation in the areawhere the Company's business is located intensifies, the Company's business operations may be adverselyaffected.
2) Global business risks: The Company operates in more than 150 countries and regions around the world.As the potential risks of pandemic, debt issues, political conflicts, and exchange rate fluctuations invarious countries around the world are difficult to eliminate, the Company’s overseas business operationsmay be adversely affected.
3) Legal and 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 very complicated. The worldwide dataprotection regulations are stricter, which require higher compliance requirements. If the Company'scompliance ability cannot keep up with the situation, it will bring risks to the Company's operations.
4) Risk of exchange rate fluctuation: The Company carries out operations in various countries and regionswith different currencies, mainly settled in non-RMB currency (mainly in USD). Exchange ratefluctuations could have impact on foreign exchange exposures arising out of sales, purchase and financing,which can likely affect the profitability level of the Company.
5) Supply chain risks: The global supply system is suffering from an array of adverse impacts. TheCompany has been making efforts to enhance arrangements for our supply chain and optimize inventoryadjustments and controls. However, if systemic risks arise in the global supply chain, the Company’soperating capabilities may be affected.
6) Risk of technology upgrade: Technologies such as artificial intelligence (AI), big data, cloud computing,and edge computing are developing rapidly, facing accelerating technology iterations. If the Company isunable to adapt to the changes in cutting-edge technologies, or fails to quickly realize business innovation,the risks of ongoing uncertainties will increase.
7) Risk of internal management: The continual expansion of business scale, the continuous increase ofnew products and new businesses, the continuous growth in total number of employees, and the significantrise of internal management complexity have posed challenges to the Company’s management work andraised higher requirements on the Company's management capability. The Company’s sustainable
Hikvision 2020 Half Year Report
development will face certain risks if the management level fails to proportionally address the Company’sbusiness expansion.
8) Capital risk arising from the decline in customers’ ability to pay: The liquidity of different business
links is subject to economic conditions. Despite the cash reserves accumulated from the Company’shistorically healthy operation and low financing costs, accounts receivable of the Company will beadversely affected once liquidity risks increase.
9) Risk of cybersecurity: The Company has always attached importance and taken active measures toenhance cybersecurity performance of our products and systems, However, in the context of Internetapplications, there is still a possibility of deliberate attempts，including computer viruses, malicioussoftware, hacker and others to intentionally attack our systems or products, causing cybersecurity issues.10) Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale ofR&D investment, and produces considerable technical milestones. At the same time, the Companyimplements well-organized intellectual property right (IPR) protection measures. However, the risk ofintellectual property disputes and the risk of intellectual property rights violations still exist.
The above notices might not be all-inclusive of all other potential risks. Please pay attention to potential investmentrisks
Hikvision 2020 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 ...... 10
Section IV Discussion and Analysis on Business Operation ...... 11
Section V Significant Events ...... 27
Section VI Changes in Shares and Information about Shareholders ...... 42
Section VII Information of Preferred Shares ...... 51
Section VIII Information about Convertible Corporate Bonds ...... 52
Section IX Information about Directors, Supervisors, Senior Management ...... 53
Section X Corporate Bonds ...... 55
Section XI Financial Report ...... 56
Section XII Documents Available for Reference ...... 180
Section XIII Other Disclosure Information ...... 181
Hikvision 2020 Half Year Report
Definitions
| Term | Definition |
| Reporting Period | From January 1st 2020 to December 31th 2020 |
| Articles of Associations | Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd |
| Hikvision, our Company, the Company | Hangzhou Hikvision Digital Technology Co., Ltd |
| CETC | China Electronics Technology Group Ltd., the actual controller of the Company |
| CETHIK | CETHIK Group Co., Ltd. Controlling Shareholder of the Company |
| Innovative Co-investment Partnership | Hangzhou Hikvision Equity Investment Partnership (Limited Partnership) |
| EZVIZ, EZVIZ Network | Hangzhou Ezviz Network Co., Ltd.(According to the context, also refers to the corresponding business) |
| HikRobot | Hangzhou Hikrobot Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikAuto | Hangzhou HikAuto Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikMicro | Hangzhou Hikmicro Sensing Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikSemi | Wuhan Hikstorage Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikImaging | Hangzhou Hikmed Imaging Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikFire, HikSafety | Hangzhou Hikfire Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikSecurityCheck, Rayin | Hangzhou Rayin Technology Co,. Ltd. (According to the context, also refers to the corresponding business) |
| Hangzhou Innovation Industrial Base | Located in Binjiang District, Hangzhou, Zhejiang Province, the planned use is for R&D, office space and supporting facilities. It was first disclosed in the Company's Announcement on Investment and Construction of Hangzhou Innovation Industrial Base Project in Hangzhou (No: 2017-034). |
| Chengdu Science and Technology Park | Located in Chengdu, Sichuan Province, the planned use is for R&D, office space and supporting facilities. It was first disclosed in the Company's Announcement on Investment and Construction of Chengdu Science and Technology Park Project in Chengdu (No: 2017-033). |
| Chongqing Science and Technology Park | Located in Chongqing, the planned use is for production plants, warehouses and supporting facilities. It was first disclosed in the Company's Announcement on Investment and Construction of Chongqing Science and Technology Park Project in Chongqing (No. 2017-035). |
| 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： |
Hikvision 2020 Half Year Report
| Term | Definition |
| 2016-068） | |
| Xi’an Science and Technology Park | Located in Xi'an, Shaanxi Province, the planned use is for R&D, office space and supporting facilities. It was first disclosed in the Company's Announcement on Investment and Construction of Xi'an Science and Technology Park Project in Xi'an (No: 2017-031). |
| Wuhan Science and Technology Park | Located in Wuhan, Hubei Province, the planned use is for R&D, office space and supporting facilities. It was first disclosed in the Company's Announcement on Investment and Construction of Wuhan Science and Technology Park Project in Wuhan (No. 2017-032). |
| Wuhan Intelligence Industry Park | Located in Wuhan, Hubei Province, the planned use is for production plants, warehouses and supporting facilities. First disclosed in the Company's Announcement on Investment and Construction of Wuhan Intelligence Industry Park Project in Wuhan (No. 2017-036). |
| 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, HikvisionRobot, HikAuto, HikMicro, HikSemi, HikImaging, HikFire, Rayin and their related business or products. |
Hikvision 2020 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 2020 Half Year Report
3. Other relevant information
Whether other relevant information has changed during the reporting period
□ Applicable √ Not applicable
IV. Key accounting data and Financial IndicatorsWhether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
Unit: RMB
| The first half of 2020 | The first half of 2019 | YoY Change (%) | |
| Operating income (RMB) | 24,271,159,243.76 | 23,923,273,424.50 | 1.45% |
| Net profits attributable to shareholders of the Company (RMB) | 4,623,972,830.87 | 4,216,755,210.24 | 9.66% |
| Net profits attributable to shareholders of the Company excluding non-recurring gains and losses (RMB) | 4,463,498,377.68 | 4,122,195,529.03 | 8.28% |
| Net cash flows from operating activities (RMB) | 69,966,340.57 | -431,063,793.18 | 116.23% |
| Basic earnings per share (RMB/share) | 0.493 | 0.444 | 11.04% |
| Diluted earnings per share (RMB/share) | 0.493 | 0.444 | 11.04% |
| Weighted average ROE | 9.75% | 10.86% | -1.11% |
| At June 30th 2020 | At December 31st 2019 | YoY Change (%) | |
| Total assets (RMB) | 71,938,322,381.28 | 75,358,000,240.29 | -4.54% |
| Net assets attributable to shareholders of the Company (RMB) | 43,512,901,460.11 | 44,904,033,876.83 | -3.10% |
| The total share capital of the Company as of the previous trading day of the annual report disclosure (share) | 9,345,010,696 |
| Fully diluted earnings per share (RMB/share) calculated with the latest share capital | 0.495 |
Hikvision 2020 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) | 21,554.99 |
| 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.) | 215,000,303.92 |
| 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. | -11,274,009.71 |
| Other non-operating income and expenditures except the items mentioned above | 20,025,782.33 |
| Less: Impact of income tax | 51,090,433.75 |
| Impact of the minority interests (after tax) | 12,208,744.59 |
| Total | 160,474,453.19 |
Hikvision 2020 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 2019 Annual Report for details.II. Significant changes in main assets
1. Major Changes in Main Assets
| Major assets | Explanation on Major Changes |
| Equity Assets | The increase of 44.7% was mainly due to investments in Hangzhou Haikang Intelligent Industrial Equity Investment Fund Partnership (Limited Partnership), Zhejiang Haishi Huayue Digital Technology Co., Ltd., Xuzhou Kangbo Urban Operation and Management Service, Zhiguang Hailian Big Data Technology Co., Ltd., and other companies. |
| Fixed Assets | No significant change |
| Intangible Assets | No significant change |
| Construction in Progress | Increased by 60.55%, mainly due to increased investment in the construction of Chengdu Science and Technology Park, Hangzhou Innovation Industry Base, and Chongqing Science and Technology Park |
Hikvision 2020 Half Year Report
Section IV Discussion and Analysis on Business OperationI. Overview
During the first half of 2020, the unanticipated outbreak of the COVID-19 epidemic caused disruption to thenormal social order and placed significant impact on the real economy; the further escalated trade conflict betweenChina and the United States exacerbated the international situation, posing unprecedented challenges to globalindustrial chain. Amid significant uncertainties in the business environment at home and abroad, the Company hasresponded prudently and flexibly, and continued to facilitate its steady and healthy growth by upholding thecustomer-demand-oriented guiding principle and insisting on technological innovations as its driving force.During the reporting period, the Company realized a total operating revenue of RMB 24.27 billion, representinga year-over-year growth of 1.45%. Net profits attributable to shareholders of the listed company was RMB 4.62billion, representing a growth of 9.66% as compared to the corresponding period of the previous year. TheCompany’s gross profit margin was 49.76% during the first half of 2020, representing an increase of 3.43 percentagepoints as compared to the corresponding period of the previous year.1．Increasing investment in R&D and continuing to take technological innovation as the core driving force
The Company continued to increase investment in R&D by stressing on the accumulation of underlyingfundamental technologies, optimizing capabilities of system design and upgrading products and solutions, with aview to establishing the comprehensive competitiveness of the Company’s businesses.
2. Big data-AI fusion to promote intelligence upgrade for the industry
In its great efforts to advance the “big data-AI fusion”, the Company further integrated AI with perceptive bigdata and multi-dimensional big data to promote the application of intelligent management measures and facilitatedigital transformation for users in various industries.
3. Synergistic development of traditional and innovative businesses to create new opportunities for theCompany
The Company commenced the preparation for the spin-off and listing of the smart home business, while theother innovative businesses such as HikRobot, HikAuto, HikSemi and HikMicro continued to develop rapidly. Inaddition, with the inclusion of the innovative businesses such as HikFire and Rayin into the innovative businesssegment, the development echelon of innovative businesses was gradually taking shape. The synergistic
Hikvision 2020 Half Year Report
development of traditional and innovative businesses will create new opportunities for the Company.
4. Regulating operations to continuously stimulate the establishment of global compliance system
The Company continues to promote the establishment of global compliance system. Particularly, it formulatedcompliance-related rules in accordance with the laws, regulations, and business of respective country/region, toachieve the better alignment of the Company’s governance system and management level with the internationalstandards.
5. Adjusting strategies to cope with external uncertainties
In response to the significant changes in the macro environment, the Company has stepped up efforts to controlexpenses, enhance internal operational efficiency and conduct business prudently and flexibly to maintain smoothand healthy operations.II. Core business analysisOverviewWhether 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
| 2020 First Half Year | 2019 First Half Year | YoY Change (%) | Note of Change | |
| Operating Income | 24,271,159,243.76 | 23,923,273,424.50 | 1.45% | No significant change |
| Operating costs | 12,193,719,945.38 | 12,840,506,333.68 | -5.04% | No significant change |
| Selling expenses | 3,420,291,518.42 | 3,213,260,109.16 | 6.44% | No significant change |
| Administrative expenses | 864,959,489.60 | 731,110,243.76 | 18.31% | No significant change |
| Financial expenses | -227,972,206.73 | -129,943,427.26 | -75.44% | Affected by fluctuation in foreign exchange rate, increase in foreign currency exchange gains |
| Income Tax Expenses | 952,552,145.97 | 933,920,656.68 | 1.99% | No significant change |
| R&D investments | 3,063,423,679.69 | 2,504,800,049.71 | 22.30% | No significant change |
Hikvision 2020 Half Year Report
| 2020 First Half Year | 2019 First Half Year | YoY Change (%) | Note of Change | |
| Net cash flows from Operating Activities | 69,966,340.57 | -431,063,793.18 | 116.23% | Increase in sales collection |
| Net cash flows from Investment Activities | -1,494,484,813.41 | -684,730,771.16 | -118.26% | Increase in equity investment and infrastructure project expenditures |
| Net cash flows from Financing Activities | -3,478,066,297.20 | -3,567,621,483.18 | 2.51% | No significant change |
| Net increase in cash and cash equivalents | -4,892,161,050.91 | -4,769,810,219.18 | -2.57% | No significant change |
| 2020 First Half Year | 2019 First Half Year | YoY Change (%) | |||
| Amount | Proportion to operating income | Amount | Proportion to operating income | ||
| Total operating income | 24,271,159,243.76 | 100% | 23,923,273,424.50 | 100% | 1.45% |
| Classified by industry | |||||
| Video products and video services | 24,271,159,243.76 | 100% | 23,923,273,424.50 | 100% | 1.45% |
| Classified by product | |||||
| Front-end equipment | 12,125,236,914.65 | 49.96% | 11,399,609,062.38 | 47.65% | 6.37% |
| Back-end equipment | 2,404,613,230.54 | 9.91% | 3,196,070,064.43 | 13.36% | -24.76% |
| Central control equipment | 3,421,976,609.49 | 14.10% | 3,486,737,083.16 | 14.57% | -1.86% |
| Construction contracts | 300,094,975.52 | 1.24% | 477,564,284.57 | 2.00% | -37.16% |
| Others | 3,508,460,773.13 | 14.45% | 3,575,048,602.41 | 14.95% | -1.86% |
| Subtotal | 21,760,382,503.33 | 89.66% | 22,135,029,096.95 | 92.53% | -1.69% |
| Smart home business | 1,179,170,706.81 | 4.86% | 1,139,058,349.43 | 4.76% | 3.52% |
| Robotic business | 542,724,420.13 | 2.24% | 370,499,077.30 | 1.55% | 46.48% |
| Other innovative businesses Note | 788,881,613.49 | 3.24% | 278,686,900.82 | 1.16% | 183.07% |
| Subtotal | 2,510,776,740.43 | 10.34% | 1,788,244,327.55 | 7.47% | 40.40% |
Hikvision 2020 Half Year Report
| 2020 First Half Year | 2019 First Half Year | YoY Change (%) | |||
| Amount | Proportion to operating income | Amount | Proportion to operating income | ||
| Classified by region | |||||
| Domestic | 16,728,998,825.16 | 68.93% | 16,980,210,416.78 | 70.98% | -1.48% |
| Overseas | 7,542,160,418.60 | 31.07% | 6,943,063,007.72 | 29.02% | 8.63% |
| 2020 First Half Year | 2019 First Half Year | YoY Change (%) | |
| PBG | 59.68 | 62.93 | -5.16% |
| EBG | 59.14 | 49.22 | 20.15% |
| SMBG | 30.00 | 41.04 | -26.90% |
| Total | 148.82 | 153.19 | -2.85% |
| 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 | 24,271,159,243.76 | 12,193,719,945.38 | 49.76% | 1.45% | -5.04% | 3.43% |
| Classified by product | ||||||
| Front-end equipment | 12,125,236,914.65 | 4,828,656,372.00 | 60.18% | 6.37% | -12.43% | 8.55% |
| Back-end equipment | 2,404,613,230.54 | 1,254,053,775.83 | 47.85% | -24.76% | -22.70% | -1.39% |
| Central control equipment | 3,421,976,609.49 | 1,827,320,658.46 | 46.60% | -1.86% | 17.95% | -8.97% |
| Construction contracts | 300,094,975.52 | 235,236,267.84 | 21.61% | -37.16% | -32.57% | -5.34% |
| Others | 3,508,460,773.13 | 2,506,581,933.99 | 28.56% | -1.86% | -7.66% | 4.49% |
| Subtotal | 21,760,382,503.33 | 10,651,849,008.12 | 51.05% | -1.69% | -9.34% | 4.13% |
Hikvision 2020 Half Year Report
| Operating income | Operating cost | Gross margin | YoY Change (%) of operating income | YoY Change (%) of operating cost | YoY Change (%) of gross margin | |
| Smart home business | 1,179,170,706.81 | 741,575,630.80 | 37.11% | 3.52% | 5.96% | -1.45% |
| Robotic business | 542,724,420.13 | 271,967,778.00 | 49.89% | 46.48% | 51.74% | -1.74% |
| Other innovative businesses | 788,881,613.49 | 528,327,528.46 | 33.03% | 183.07% | 149.04% | 9.15% |
| Subtotal | 2,510,776,740.43 | 1,541,870,937.26 | 38.59% | 40.40% | 41.29% | -0.39% |
| Classified by region | ||||||
| Domestic | 16,728,998,825.16 | 8,857,173,150.49 | 47.05% | -1.48% | -1.98% | 0.27% |
| Overseas | 7,542,160,418.60 | 3,336,546,794.89 | 55.76% | 8.63% | -12.30% | 10.55% |
| Industry | Item | 2020 First Half Year | 2019 First Half Year | Increase/ decrease over previous year | ||
| Amount | Proportion to operating cost | Amount | Proportion to operating cost | |||
| Video products and video services | Operating cost | 12,193,719,945.38 | 100.00% | 12,840,506,333.68 | 100.00% | -5.04% |
| Product | Item | 2020 First Half Year | 2019 First Half Year | Increase/ decrease over previous year | ||
| Amount | Proportion to operating cost | Amount | Proportion to operating cost | |||
| Front-end equipment | Operating cost | 4,828,656,372.00 | 39.60% | 5,514,282,317.87 | 42.94% | -12.43% |
| Back-end equipment | Operating cost | 1,254,053,775.83 | 10.28% | 1,622,327,866.91 | 12.63% | -22.70% |
| Central control equipment | Operating cost | 1,827,320,658.46 | 14.99% | 1,549,258,451.92 | 12.07% | 17.95% |
| Construction contracts | Operating cost | 235,236,267.84 | 1.93% | 348,868,121.15 | 2.72% | -32.57% |
| Others | Operating cost | 2,506,581,933.99 | 20.56% | 2,714,505,626.31 | 21.14% | -7.66% |
| Subtotal | Operating cost | 10,651,849,008.12 | 87.36% | 11,749,242,384.16 | 91.50% | -9.34% |
| Smart home business | Operating cost | 741,575,630.80 | 6.08% | 699,890,662.72 | 5.45% | 5.96% |
Hikvision 2020 Half Year Report
| Product | Item | 2020 First Half Year | 2019 First Half Year | Increase/ decrease over previous year | ||
| Amount | Proportion to operating cost | Amount | Proportion to operating cost | |||
| Robotic business | Operating cost | 271,967,778.00 | 2.23% | 179,227,186.56 | 1.40% | 51.74% |
| Other innovative businesses | Operating cost | 528,327,528.46 | 4.33% | 212,146,100.24 | 1.65% | 149.04% |
| Subtotal | Operating cost | 1,541,870,937.26 | 12.64% | 1,091,263,949.52 | 8.50% | 41.29% |
| YoY Change (%) of operating income | YoY Change (%) of operating cost | Note on YoY change (%) above 30% | ||
| Robotic business | 46.48% | 51.74% | The robotic business is developing rapidly. | |
| Other innovative businesses | 183.07% | 149.04% | Rayin and HikSemi are growing rapidly |
| June 30th 2020 | January 1st 2020 | YoY Change (%) | Note of significant change | |||
| Amount | Percentage of total assets | Amount | Percentage of total assets | |||
| Cash and bank balances | 22,090,506,085.61 | 30.71% | 27,071,948,919.78 | 35.92% | -5.21% | Dividends reduce monetary funds |
| Accounts receivable | 21,449,479,247.87 | 29.82% | 21,272,964,582.56 | 28.23% | 1.59% | No significant change |
| Inventory | 11,212,408,913.89 | 15.59% | 10,756,027,592.41 | 14.27% | 1.32% | No significant change |
| Long-term equity investment | 520,322,603.80 | 0.72% | 252,165,321.49 | 0.33% | 0.39% | Mainly to increase investment in Hangzhou Haikang Intelligent Industrial Equity Investment Fund Partnership (Limited Partnership). |
| Fixed assets | 6,005,536,637.71 | 8.35% | 5,791,218,720.87 | 7.68% | 0.67% | No significant change |
| Construction in process | 1,013,956,457.06 | 1.41% | 631,555,479.06 | 0.84% | 0.57% | Increase in construction investment on Chengdu |
Hikvision 2020 Half Year Report
| June 30th 2020 | January 1st 2020 | YoY Change (%) | Note of significant change | |||
| Amount | Percentage of total assets | Amount | Percentage of total assets | |||
| Science and Technology Base, Hangzhou Innovation Industry Base and Chongqing Science and Technology Base Phase 2 | ||||||
| Short-term loans | 4,447,276,972.89 | 6.18% | 2,640,082,485.15 | 3.50% | 2.68% | Increase in demands for temporary capital turnover |
| Long-term loans | 4,771,375,714.28 | 6.63% | 4,604,168,571.43 | 6.11% | 0.52% | No significant change |
| Other current liabilities | 1,813,013,618.43 | 2.52% | 913,534,538.26 | 1.21% | 1.31% | The Company issued 1 billion RMB of short-term commercial paper (SCP) in the current reporting period. |
| Item | Opening balance | Profit or loss from change in fair value during the period | Difference on translation of financial statements dominated in foreign currency | Cumulative changes in fair value included in equity | Provision for decline in value during the current period | Purchased amount during the period | Amount sold during the period | Other changes | Closing balance |
| Financial assets | |||||||||
| 1. Derivative financial assets | 181.76 | 849,343.33 | 3,600.37 | 853,125.46 | |||||
| 2. Other non-current financial assets | 312,398,267.44 | -13,017,332.26 | -2,800,000.00 | 296,580,935.18 | |||||
| 3. Receivables for financing | 1,257,385,053.02 | -73,811,242.43 | 1,183,573,810.59 | ||||||
| Subtotal of financial assets | 1,569,783,502.22 | -12,167,988.93 | 3,600.37 | -76,611,242.43 | 1,481,007,871.23 | ||||
| Financial Liabilities | 652,428.18 | -8,268,448.03 | 30,238.56 | 8,951,114.77 | |||||
Hikvision 2020 Half Year Report
Whether there were any material changes on the measurement attributes of major assets of the Company during thereporting period:
□ Yes √ No
3. Assets right restrictions as of the end of reporting period
Unit: RMB
| Item | Closing Book Value (RMB) | Reasons for being restricted |
| Monetary fund | 466,999,128.12 | Various cash deposits and other restricted funds |
| Notes receivable | 326,970,323.42 | Endorsed to suppliers |
| Notes receivable | 2,606,950.00 | Pledge for issuance of bank acceptance |
| Receivables for financing | 90,566,739.34 | Pledge for issuance of bank acceptance |
| Accounts receivable | 4,749,676.59 | Pledge for short-term borrowings |
| Fixed assets | 53,502,842.70 | Sale and leaseback of fixed assets |
| Long-term receivables | 1,158,287,191.19 | Pledge for long-term debts |
| Total | 2,103,682,851.36 |
| Investment during the first half of 2020 (RMB) | Investment during the first half of 2019 (RMB) | Fluctuation (%) |
| 1,309,423,538.62 | 794,447,793.06 | 64.82% |
Hikvision 2020 Half Year Report
3. Significant non-equity investment during the reporting period
√ Applicable □ Inapplicable
Unit: RMB
| 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 | Reasons for not reaching planned progress and expected benefits | Disclosure Date (if applicable) | Disclosure Index (if applicable) |
| Hangzhou Innovation Industry Base | Self-built | YES | Video product and video service | 123,512,394.15 | 237,051,028.73 | Specific Loan | 23.10% | 无 | September 23rd 2017 | Announcement on Investment and Construction of Hangzhou Innovation Industry Base Project in Hangzhou (No. 2017-034) |
| Chengdu Science and Technology Park Project | Self-built | YES | Video product and video service | 126,466,478.57 | 369,398,026.23 | Self-fund | 20.30% | None | September 23rd 2017 | Announcement on Investment and Construction of Chengdu Science and Technology Base Project in Chengdu (No. 2017-033) |
| Chongqing Science and Technology Park Project-phase 2 | Self-built | YES | Video product and video service | 74,800,198.49 | 185,866,637.47 | Self-fund | 24.39% | None | September 23rd 2017 | Announcement on Investment and Construction of Chongqing Science and Technology Base in Chongqing (No. 2017-035) |
| Xi’an Science and Technology Park Project | Self-built | YES | Video product and video service | 1,032,758.02 | 7,204,329.92 | Self-fund | 0.32% | None | September 23rd 2017 | Announcement on Investment and Construction of Xi’an Science and Technology Base in Xi’an（2017-031） |
Hikvision 2020 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 | Reasons for not reaching planned progress and expected benefits | Disclosure Date (if applicable) | Disclosure Index (if applicable) |
| Wuhan Science and Technology Park Project | Self-built | YES | Video product and video service | - | 4,339,622.64 | Self-fund | 0.15% | None | September 23rd 2017 | Announcement on Investment and Construction of Wuhan Science and Technology Base in Wuhan (2017-032) |
| Wuhan Intelligence Industry Park Project | Self-built | YES | Video product and video service | - | 2,370,546.89 | Self-fund | 0.10% | None | September 23rd 2017 | Announcement on Investment and Construction of Wuhan Intelligence Industry Base in Wuhan (2017-036) |
| Total | -- | -- | -- | 325,811,829.23 | 806,230,191.88 | -- | -- |
Hikvision 2020 Half Year Report
4. Financial assets measured at fair values
√ Applicable □ Inapplicable
Unit: RMB
| 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 | 984,893,221.62 | -7,419,104.70 | 1,322,723,876.30 | 9,162,427.25 | 1,322,979,201.41 | Company's own funds | ||
| Other non-current financial assets | 312,398,267.44 | -13,017,332.26 | - | - | 296,580,935.18 | Company's own funds | ||
| Receivables for financing | 1,257,385,053.02 | - | - | - | 1,183,573,810.59 | Company's own funds | ||
| Total | 2,554,676,542.08 | -20,436,436.96 | 1,322,723,876.30 | 9,162,427.25 | 2,803,133,947.18 | -- |
Hikvision 2020 Half Year Report
√ Applicable □ Inapplicable
Unit: 0,000 RMB
| Operation party of derivatives investment | Whether Related party | Whether related transaction | Type of derivatives investment | Initial investment amount of derivatives investment | Initial date | Termination date | Opening investment amount | Purchased amount during the reporting period | Sold amount during the reporting period | Impairment provisions (if any) | Closing investment amount | Proportion of closing investment amount to the Company’s net assets at the end of the reporting period | Actual gain or loss during the reporting period |
| Commercial bank | No | No | foreign exchange contract | 98,489.32 | December 5th 2019 | September 1st 2020 | 98,489.32 | 132,272.39 | 132,297.92 | 2.99% | 916.24 | ||
| Total | 98,489.32 | -- | -- | 98,489.32 | 132,272.39 | 132,297.92 | 2.99% | 916.24 | |||||
| Capital source of derivatives investment | Company’s own fund | ||||||||||||
| Prosecution (if applicable) | Nil | ||||||||||||
| Announcement date for approvals of derivatives investment from the board of directors (if any) | April 20th 2019/December 25th 2019 | ||||||||||||
| Announcement date for approvals of derivatives investment from the general meeting (if any) | May 16th 2020 | ||||||||||||
| Risk analysis and control measures (including but not limited to, market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) of holding derivatives during the reporting period | For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging Transactions in 2019 (NO. 2019-021) dated April 20th 2019 and the Announcement on Conducting Foreign Exchange Hedging Transactions in 2020 (NO. 2019-065) dated December 25th 2019 of the Company | ||||||||||||
Hikvision 2020 Half Year Report
| Change of market price or fair value of invested derivatives during the reporting period; specific methods, related assumptions and parameter setting of the derivatives’ fair value analysis should be disclosed | The Company’s accounting of derivatives’ fair value was mainly about the outstanding contracts signed with banks for forward exchange settlement during the reporting period. Held-for-trading financial assets/liabilities were determined with difference between the quoted price and forward exchange price in outstanding forward exchange contracts at the end of the period. |
| During the current reporting period, whether there was significant changes of accounting policies and accounting principles of the Company’s derivatives comparing to the prior reporting period | Nil |
| Specific opinions on the Company’s derivatives investments and risk control from independent directors | Nil |
Hikvision 2020 Half Year Report
During the reporting period, there was no disposal of significant assets
2. Sale of significant equity:
□ Applicable √ Inapplicable
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 Technology Co., Ltd. | Subsidiary | Technology development, technology consulting, results transferring; computer software, electronic product, communication product, digital security product, fire-control products; production and sales: 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 terminal; labor protection articles (including special labor protection articles); import or export of goods or technology | 1000 million | 37,493,807,565.10 | 4,339,394,001.81 | 22,942,782,260.98 | 741,113,184.73 | 603,963,564.51 |
Hikvision 2020 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 Rayin Technology Co., Ltd. | Cash contribution | Business development |
| Hikvision Morocco LLC | Cash contribution | Expand overseas sales channels |
Hikvision 2020 Half Year Report
safety and liquidity. For foreign exchange risk exposure, the Company actively applied non-speculative financialhedging tools such as hedging, to realize reasonable risk management.
(5) Supply chain risk: The Company endeavored to properly manage the supply chain arrangements,reasonably regulate inventory, and develop effective alternative solutions in a timely manner. Meanwhile, itstimulated research and development in basic and fundamental areas to enhance the accumulation of underlyingtechnologies.
(6) Risk of technology upgrading: The Company continued to maintain R&D investments, conduct in-deptexploration of frontier technologies and maintain its leadership in core technologies. Through steady and reliableR&D management, the Company has developed an efficient R&D system that addresses market needs, withperseverant response to the market demands for products and technologies, thus achieving sustainable development.
(7) Risk of internal management: The Company continued to implement management reforms, learn from topenterprises by referring to their successful management practices and experience to optimize its organizingcapabilities.
(8) Financial risk due to the customers’ deteriorating solvency: the Company continued to increase its focuson the security of its funds, stress on the quality of its businesses and ensure the effectiveness of its business activities.
(9) Risk of cybersecurity: The Company has always attached importance to enhancing the security of itsproducts and systems. The Company built a professional cybersecurity team, and instituted a complete productsecurity assurance system. To ensure continuous improvements on product and system security, and provide moresecured products and solutions for customers using the Internet/IoT applications, the Company integrated productsecurity requirements, cybersecurity design, cybersecurity development, cybersecurity testing and other links intoits product development procedure.
(10) Risk of intellectual property (IP) rights: The Company has built a professional IP rights team to carry outroutine management and IP rights protection work for trademarks, patents, and etc. Leveraging on various legalmeans, such as administrative investigation, court proceedings and so on, the Company would combat violations ofits IP rights.
Hikvision 2020 Half Year Report
Section V Significant EventsI. 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 |
| 2019 Annual General Meeting of Shareholders | Annual General Meeting of Shareholders | 71.59% | May 15th 2020 | May 16th 2020 | No. 2020-032；www.cninfo.com.cn |
Hikvision 2020 Half Year Report
V. Explanation given by the board of directors and supervisory committee regarding the “non-standardauditor’s report” issued by the CPA firm for the current reporting period
□ Applicable √ Inapplicable
VI. Explanation given by the board of directors regarding the “non-standard auditor’s report” issued by theCPA firm for the prior year.
□ Applicable √ Inapplicable
VII. Bankruptcy and restructuring
□ Applicable √ Inapplicable
No such case during the reporting period.VIII. LitigationsMaterial litigation and arbitration
□ Applicable √ Inapplicable
No such case during the reporting period.
Other litigations
□ Applicable √ Inapplicable
IX. Media queries
□ Applicable √ Inapplicable
There was no prevalent media query during the reporting period.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 Equity Incentive Plan, Employee Stock Incentive Plan, or other incentive plans
√Applicable □Inapplicable
Hikvision 2020 Half Year Report
During the reporting period, the Company completed the second time unlocking shares for 2016 RestrictedShare Incentive Scheme.
On December 26
th
2019, Resolution for the Fulfillment of the Unlocking Conditions of the Second Unlock Periodfor the 2016 Restricted Share Incentive Schemes was approved by the 14
thmeeting of the fourth Board. Authorizedby the second extraordinary general meeting for 2016, a total of 21,836,266 restricted shares of 2,726 grantees werevested, the vested shares were circulated on January 20
th2020.
For details, please refer to the Indicative Notice of Listing the Unlocked Shares for the Second Unlocking Periodof 2016 Restricted Share Incentive Schemes (No. 2020-002) issued on January 17
th
2020.
By the end of the current reporting period, the Company has a total of 144,763,704 granted and restricted shares,accounts for 1.55% of the Company’s total share capital.
Hikvision 2020 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 | Pricing principles for related party transactions | Trading Amount （0’000 RMB） | Proportion to the amount of similar transactions. | Approved trading quota (0’000 RMB） | Whether exceed the 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 | Procurement, receiving services | Reference market price; Agreed on price | 32,374.65 | 2.38% | 60,000 | No | Payment on delivery | April 25th 2020 | Announcement on projections on 2020 related-party transactions (No：2020-017） |
| Shanghai Fullhan Micro Co., Ltd. | The Company’s director, Gong Hongjia is the director of the related party | Procurement | 11,862.88 | 0.87% | 50,000 | No | Payment on delivery | ||||
| Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries | Wu Weiqi, director of the Company, served as director of this company | Procurement | 1,981.06 | 0.15% | 13,000 | No | Payment on delivery | ||||
| Wuhu Sensor Technology Co., Ltd. | Wu Weiqi, director of the Company, served as director of this company | Procurement | 1,475.60 | 0.11% | 14,000 | No | Payment on delivery | ||||
| Zhiguang Hailian Big Data | An associated | Procurement | 13.58 | 0.00% | 1,000 | No | Payment | - | - |
Hikvision 2020 Half Year Report
| Technology Co., Ltd. and its subsidiaries | companies held by the company | on delivery | |||||||||
| 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 | 10,151.61 | 0.42% | 75,000 | No | Payment on delivery | April 25th 2020 | Announcement on projections on 2020 related-party transactions (No：2020-017） |
| Daishan Hailai Yunzhi Technology Co., Ltd. | The Company’s senior management is appointed as this company’s chairman | Sales | 1,041.60 | 0.04% | 4,000 | No | Payment on delivery | ||||
| Zhiguang Hailian Big Data Technology Co., Ltd. and its subsidiaries | An associated companies held by the company | Sales | 716.25 | 0.03% | 1,500 | No | Payment on delivery | ||||
| Wuhu Sensor Technology Co., Ltd. | Wu Weiqi, director of the Company, served as director of this company | Sales | 78.88 | 0.00% | 2,000 | No | Payment on delivery | ||||
| Zhejiang Haishi Huayue Digital Technology Co., Ltd. | The Company’s senior management is appointed as this company’s chairman | Sales | 65.44 | 0.00% | 1,000 | No | Payment on delivery | ||||
| Sanmenxia Xiaoyun Vision Technology Co., Ltd. | An associated companies held by the company | Sales | 51.85 | 0.00% | 1,500 | No | Payment on delivery | ||||
| Hangzhou Comfirmware Technology Co., Ltd. | The former executive of the Company, Jia Yonghua, served as the director of this | Sales | 29.79 | 0.00% | 500 | No | Payment on delivery |
Hikvision 2020 Half Year Report
| company. Jia Yonghua resigned in October 2019. Within 12 months after his departure, Hangzhou Comfirmware was still recognized as the Company's related legal person. | |||||||||||
| Shenzhen Wanyu Security Service Technology Co., Ltd. | Senior executives of the Company serve as directors of this company | Sales | 19.82 | 0.00% | 500 | No | Payment on delivery | ||||
| Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries | Wu Weiqi, director of the Company, served as director of this company | Sales | 10.65 | 0.00% | 500 | No | Payment on delivery | ||||
| Qinghai Qingtang Big Data Co., Ltd. | An associated companies held by the company | Sales | 0.30 | 0.00% | 1,000 | No | Payment on delivery | ||||
| Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. | An associated companies held by the company | Sales | 721.01 | 0.03% | 500 | Yes | Payment on delivery | ||||
| Xuzhou Kangbo Urban Operation Management Service Co., Ltd. | A joint ventures held by the company | Sales | 68.40 | 0.00% | 1,000 | No | Payment on delivery | - | - | ||
| Total | 60,663.37 | - | 227,000 | ||||||||
| Details on significant sales return | None | ||||||||||
Hikvision 2020 Half Year Report
Total amount of related transactions projected based on different categories, actualperformance during the current reporting period (if any)
| 1) The amount of related purchases with Zhiguang Hailian Big Data Technology Co., Ltd. and its subsidiaries, and the amount of related sales with Xuzhou Kongbo Urban Operation Management Service Co., Ltd., are subject to approval by the chairman of the board in accordance with the Company's Related-Party Transaction Management System. 2) The part of the related-party transactions with Jiaxing Haishi Jiaan Zhicheng Technology Co., Ltd. that exceeds the approved quota has been submitted to the 18th meeting of the fourth board of directors for confirmation. For details, please refer to the Announcement on increasing the projections on daily related-party transactions in 2020 (No. 2020-045). | |
| Reasons on significant difference between trading price and market referencing price (if applicable) | Not applicable |
Hikvision 2020 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 April 23
rd2020, the Resolution on the Commencement of Financial Leasing Business and Related-PartyTransactions with China Electronics Technology Leasing Co. Ltd. was considered and approved by the Company atthe seventeenth meeting of the fourth session of the Board, agreeing that the Company enters into a financial leasingcontract with China Electronics Technology Leasing Co. Ltd. to commence financial leasing related-partytransactions. The aforesaid related-party transactions mainly included the design of financing solutions, financialleasing and other consulting services relating to procurement, taxation, finance and asset management in connectionwith financial leasing, with the total amount of financing not exceeding RMB 500 million (excluding tax). On May
th
2020, the Company entered into a financial leasing contract with China Electronics Technology Leasing Co.Ltd., effective for 1 year from the effective date.On April 23
rd2020, the Resolution on Increasing the Capital of China Electronic Technology Finance Co., Ltd.and Related-Party Transactions was considered and approved by the Company at the seventeenth meeting of thefourth session of the Board, agreeing that the Company increases the capital of China Electronic Technology FinanceCo., Ltd. with RMB 112.87 million in cash, including RMB 68.94 million as registered capital and RMB 43.93million as capital reserve. After the capital increase, Hikvision still holds 3.83% equity interest in China ElectronicTechnology Finance Co., Ltd. Meanwhile, the Company's management is authorized to deal with matters related tothis capital increase.
Hikvision 2020 Half Year Report
Disclosure website for provisional reports on significant related-party transactions:
| Title of provisional repo/rts | Disclosure date | Disclosure website |
| Announcement on Carrying out Financial Leasing Business and Related-party Transactions with CLP Leasing Co., Ltd. (No. 2020-022) | April 25th 2020 | www.cninfo.com.cn |
| Announcement on Capital Increase of China Electronic Technology Finance Co., Ltd. and Related Party Transactions (No. 2020-023) | April 25th 2020 | www.cninfo.com.cn |
Hikvision 2020 Half Year Report
2. Significant guarantees
√Applicable □ Inapplicable
(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 | Actual guaranteed amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for a related party or not |
| Hangzhou Hikvision Technology Co., Ltd. | April 25th 2020 | 1,437,500 | January 18th 2019 | 189,711.92 | Joint guarantee | 2019.01.18- 2021.01.18 | No | Yes |
| Hangzhou Hikvision Electronics Co., Ltd. | April 25th 2020 | 287,500 | May 1st 2020 | 146.65 | Joint guarantee | 2020.05.01- 2021.04.30 | No | Yes |
| Hikvision International Co., Ltd. | April 25th 2020 | 462,500 | December 20th 2017 | 8,665.95 | Joint guarantee | 2017.12.20- 2020.12.20 | No | Yes |
| Chongqing Hikvision Technology Co., Ltd. | April 25th 2020 | 155,000 | July 5th 2019 | 51,340.26 | Joint guarantee | 2019.07.05- 2020.08.08 | No | Yes |
| Hangzhou Hikvision System Technology Co., Ltd. | April 25th 2020 | 190,000 | May 1st 2020 | 1,007.60 | Joint guarantee | 2020.05.01- 2021.04.30 | No | Yes |
| Urumqi HaiShi Xin’An Electronic Technology Co., Ltd. | April 25th 2020 | 40,000 | March 29th 2019 | 15,844.57 | Joint guarantee | 2019.03.29- 2028.06.20 | No | Yes |
| Mo Yu HaiShi Electronic Technology Co., Ltd. | April 25th 2020 | 25,000 | March 26th 2019 | 18,560.00 | Joint guarantee | 2019.03.26- 2035.03.26 | No | Yes |
| Pi Shan HaiShi Yong An Electronic Technology Co., Ltd. | April 25th 2020 | 30,000 | March 26th 2019 | 22,778.00 | Joint guarantee | 2019.03.26- 2040.06.26 | No | Yes |
Hikvision 2020 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 | Actual guaranteed amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for a related party or not |
| Luo Pu HaiShi Ding Xin Electronic Technology Co., Ltd. | April 25th 2020 | 30,000 | March 26th 2019 | 14,400.00 | Joint guarantee | 2019.03.26- 2035.06.26 | No | Yes |
| Yu Tian HaiShi Mei Tian Electronic Technology Co., Ltd. | April 25th 2020 | 30,000 | March 26th 2019 | 23,840.00 | Joint guarantee | 2019.03.26- 2034.03.26 | No | Yes |
| Chongqing Hikvision System Technology Co., Ltd. | April 25th 2020 | 60,000 | Not happened during the reporting period | |||||
| Chengdu Hikvision Digital Technology Co., Ltd. | April 25th 2020 | 50,000 | Not happened during the reporting period | |||||
| Hangzhou Haikang Zhicheng Investment and Development Co., Ltd. | April 25th 2020 | 20,000 | Not happened during the reporting period | |||||
| Wuhan Hikvision Technology Co., Ltd. | April 25th 2020 | 50,000 | Not happened during the reporting period | |||||
| Wuhan Hikvision Science and Technology Co., Ltd. | April 25th 2020 | 50,000 | Not happened during the reporting period | |||||
| Xi’an Hikvision Digital Technology Co., Ltd. | April 25th 2020 | 30,000 | Not happened during the reporting period | |||||
| Pyronix Limited | April 25th 2020 | 11,000 | Not happened during the reporting period | |||||
| Zhenping Haikang Juxin Digital Technology Co., Ltd. | April 25th 2020 | 23,000 | Not happened during the reporting period | |||||
| Hikvision Singapore Pte. Ltd | April 25th 2020 | 100,000 | Not happened during the reporting period | |||||
Hikvision 2020 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 | Actual guaranteed amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for a related party or not | |
| Hikvision Limited Liability Company | April 25th 2020 | 50,000 | Not happened during the reporting period | ||||||
| Hikvision USA Inc. | April 25th 2020 | 2,000 | Not happened during the reporting period | ||||||
| Prama Hikvision India Private Limited | April 25th 2020 | 50,000 | Not happened during the reporting period | ||||||
| Hikvision South Africa (Pty) Ltd | April 25th 2020 | 20,000 | Not happened during the reporting period | ||||||
| HIKVISION DO BRASIL COM?RCIO DE EQUIPAMENTOS DE SEGURAN?A LTDA | April 25th 2020 | 20,000 | Not happened during the reporting period | ||||||
| Hikvision (Malaysia) SDN BHD. | April 25th 2020 | 2,000 | Not happened during the reporting period | ||||||
| Hikvision Australia Pty Ltd. | April 25th 2020 | 2,000 | Not happened during the reporting period | ||||||
| Hikvision FZE | April 25th 2020 | 2,000 | Not happened during the reporting period | ||||||
| Hikvision Europe B.V. | April 25th 2020 | 50,000 | Not happened during the reporting period | ||||||
| Total guarantee cap for subsidiaries approved during the reporting period(B1) | 3,279,500 | Total actual guarantee amount for subsidiaries during the reporting period(B2) | 425,195.95 | ||||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period(B3) | 3,279,500 | Total actual guarantee balance for subsidiaries at the end of the reporting period(B4) | 346,294.94 | ||||||
| Total guarantee amount provided by the Company (total of the above-mentioned 3 kinds of guarantees) | |||||||||
Hikvision 2020 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 | Actual guaranteed amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for a related party or not | |
| Total guarantee cap approved during the reporting period（A1+B1+C1） | 3,279,500 | Total actual guarantee amount during the reporting period（A2+B2+C2） | 425,195.95 | ||||||
| Total approved guarantee cap at the end of reporting period（A3+B3+C3） | 3,279,500 | Total actual guarantee balance at the end of the reporting period（A4+B4+C4） | 346,294.94 | ||||||
| Portion of the total actual guarantee (A4+B4+C4) amount in net assets of the Company | 7.83% | ||||||||
| Of which: | |||||||||
| 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) | 329,296.13 | ||||||||
| 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) | 329,296.13 | ||||||||
Hikvision 2020 Half Year Report
(2) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the reporting period.
3. Entrusted financial management
□ Applicable √ Inapplicable
No entrusted finance during the reporting period
4. Other significant contracts
□ Applicable √ Inapplicable
No such case in the reporting period.XVI. 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.XVII. Other significant events
√ Applicable □ Inapplicable
On March 13
th2020, Mr. Gong Hongjia and Mr. Hu Yangzhong, Directors of the Company, received the CaseClosure Notice from the China Securities Regulatory Commission and the Decision Letter regarding AdministrativeRegulatory Measures from the Zhejiang Securities Regulatory Bureau of the China Securities RegulatoryCommission ([2020] No. 16). The Zhejiang Securities Regulatory Bureau took the supervisory and administrative
Hikvision 2020 Half Year Report
measures against the above two Directors by issuing warning letters, and recorded them in the integrity files ofsecurities and futures markets. For details, please refer to the Announcement on the Directors' Receipt of the "CaseClosure Notice from the China Securities Regulatory Commission and Decision Letter regarding AdministrativeRegulatory Measures from the Zhejiang Securities Regulatory Bureau of the China Securities RegulatoryCommission (Announcement No.: 2020-009) published by the Company on March 14
th
2020. The above twoDirectors have submitted written rectification reports to the Zhejiang Securities Regulatory Bureau on March 19
th
2020.On April 23
rd 2020, the 17
th meeting of the 4
thsession of the Board of the Company considered and approvedthe Proposal on Authorizing the Company’s Management to Initiate the Preliminary Preparatory Work for theDomestic Listing of Spin-off Subsidiaries, and agreed to authorize the Company’s management to initiate thepreliminary preparatory work for the spin-off of Hangzhou EZVIZ Network Co., Ltd. to the Shenzhen StockExchange for listing, including but not limited to the demonstration of feasibility plan, the preparation of the listingplan, the signing of relevant agreements involved in the planning process and other listing-related matters, and uponthe formulation of the spin-off plan, the submission of relevant listing plan and other listing-related matters to theBoard and the general meeting of shareholders of the Company respectively for consideration and approval. Fordetails, please refer to the Prompt Announcement on the Authorization of the Management of the Company to Initiatethe Preliminary Preparatory Work for the Domestic Listing of Spin-off Subsidiaries (Announcement No.: 2020-028)published by the Company on April 25
th2020.On December 22
nd2016, the 2016 Second Extraordinary General Meeting of the Company approved theProposal on the Issuance of Short-Term Commercial Paper (SCP) and approved the Company's application to theChina Association of Interbank Market Dealers for the registration and issuance of SCP of no more than RMB 7billion. During the Reporting Period, the Company issued the 2020 First Tranche of Short-term Commercial Paper(SCP) of Hangzhou Hikvision Digital Technology Co., Ltd. with a total amount of RMB 1 billion and an interestrate of 1.75%. For details, please refer to the Announcement on the Issuance Results of the 2020 First Tranche ofShort-term Commercial Paper (SCP) (Announcement No.: 2020-037) issued by the Company on June 6
th
2020 andFootnote 31- Other Current Liabilities in Item (V) to the consolidated financial statements herein.
XVIII. Significant events of the Company’s subsidiaries
□ Applicable √ Inapplicable
Hikvision 2020 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) | 1,276,701,961 | 13.66% | -27,083,195 | -27,083,195 | 1,249,618,766 | 13.37% | |||
| 1)State holdings | |||||||||
| 2)Shares held by State-owned corporate | |||||||||
| 3) Other domestic shares | 335,144,656 | 3.59% | -27,062,855 | -27,062,855 | 308,081,801 | 3.30% | |||
| Including: held by domestic corporates | |||||||||
| held by domestic natural person | 335,144,656 | 3.59% | -335,144,656 | -335,144,656 | 308,081,801 | 3.30% | |||
| 4) Foreign shares | 941,557,305 | 10.07% | -20,340 | -20,340 | 941,536,965 | 10.07% | |||
Hikvision 2020 Half Year Report
| Including:held by overseas corporates | |||||||||
| held by overseas natural person | 941,557,305 | 10.07% | -20,340 | -20,340 | 941,536,965 | 10.07% | |||
| 2. Shares without restriction | 8,068,308,735 | 86.34% | 27,083,195 | 27,083,195 | 8,095,391,930 | 86.63% | |||
| 1) RMB ordinary shares | 8,068,308,735 | 86.34% | 27,083,195 | 27,083,195 | 8,095,391,930 | 86.63% | |||
| 2) Domestically listed foreign shares | |||||||||
| 3) Foreign shares listed overseas | |||||||||
| 4) Others | |||||||||
| 3. Total | 9,345,010,696 | 100.00% | 0 | 0 | 9,345,010,696 | 100.00% |
Hikvision 2020 Half Year Report
The implementation progress of reducing and repurchasing shares by centralized bidding
□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 | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| Gong Hongjia | 941,292,525 | 0 | 0 | 941,292,525 | Restricted shares for senior executives | According to the relevant provisions of shares management for senior executives |
| Grantees of restricted share incentive plan (consolidated) | 166,599,970 | 0 | 21,836,266 | 144,763,704 | Equity Incentive Restricted Shares | January 20th 2020 |
| Hu Yangzhong | 136,543,558 | 48,150 | 0 | 136,591,708 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | According to the relevant provisions of shares management for senior executives |
| Jiang Haiqing | 11,317,082 | 0 | 2,810,821 | 8,506,261 | Restricted shares for senior executives + |
Hikvision 2020 Half Year Report
| Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| partial of the unlocked restricted shares turning into restricted shares for senior executives | ||||||
| Wu Weiqi | 8,439,442 | 44,550 | 0 | 8,483,992 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Jia Yonghua | 5,635,544 | 0 | 1,392,461 | 4,243,083 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Li Pan | 5,634,368 | 0 | 1,377,167 | 4,257,201 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Fu Baijun | 272,100 | 32,700 | 0 | 304,800 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Huang Fanghong | 219,375 | 0 | 27,500 | 191,875 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Jiang Yufeng | 170,325 | 36,900 | 0 | 207,225 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior |
Hikvision 2020 Half Year Report
| Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| executives | ||||||
| He Hongli | 165,825 | 41,400 | 0 | 207,225 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Xu Lirong | 161,550 | 32,850 | 0 | 194,400 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Pu Shiliang | 130,785 | 19,820 | 0 | 150,605 | Partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Wang Qiuchao | 26,250 | 0 | 0 | 26,250 | Restricted shares for senior executives | |
| Jin Yan | 26,100 | 24,700 | 0 | 50,800 | Partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Bi Huijuan | 22,500 | 14,250 | 0 | 36,750 | Partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Jin Duo | 16,425 | 32,850 | 0 | 49,275 | Partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Cai Changyang | 16,425 | 32,850 | 0 | 49,275 | Partial of the unlocked restricted shares turning into restricted shares for senior |
Hikvision 2020 Half Year Report
| Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| executives | ||||||
| Qu Liyang | 11,812 | 0 | 0 | 11,812 | Restricted shares for senior executives | |
| Total | 1,276,701,961 | 361,020 | 27,444,215 | 1,249,618,766 | -- | -- |
Hikvision 2020 Half Year Report
III. Total number of shareholders and their shareholdings
Unit: Share
| Total number of common shareholders at the end of the reporting period | 317,713 | Total number of preferred shareholders (if any) whose voting rights have been recovered at the end of the reporting period | 0 | |||||
| Particulars about shares held by common shareholders with a shareholding percentage over 5% or the Top 10 of them | ||||||||
| Name of shareholder | Nature of shareholder | Share- holding percentage (%) | Total common 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 | 38.88% | 3,632,897,256 | - | - | 3,632,897,256 | Pledged | 50,000,000 |
| Gong Hongjia | Overseas individual | 13.43% | 1,255,056,700 | - | 941,292,525 | 313,764,175 | Pledged | 490,240,000 |
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | Overseas corporation | 5.95% | 556,442,594 | -32,151,596 | - | 556,442,594 | - | - |
| Xinjiang Weixun Investment Management Limited Partnership | Domestic non-state- owned corporation | 4.82% | 450,795,176 | - | - | 450,795,176 | Pledged | 114,758,998 |
| Xinjiang Pukang Investment Limited Partnership | Domestic non-state- owned corporation | 1.95% | 182,510,174 | - | - | 182,510,174 | Pledged | 127,700,000 |
| Hu Yangzhong | Domestic Individual | 1.95% | 182,186,477 | - | 136,639,858 | 45,546,619 | Pledged | 54,550,000 |
| The 52nd Research Institute at China Electronics Technology Group Corporation | State-owned corporation | 1.93% | 180,775,044 | - | - | 180,775,044 | - | - |
Hikvision 2020 Half Year Report
| CITIC Securities Company Limited | Domestic non-state- owned corporation | 1.10% | 103,176,837 | 6,578,774 | - | 103,176,837 | - | - | |||
| Central Huijin Investment Co., Ltd. | State-owned corporation | 0.70% | 65,818,800 | - | - | 65,818,800 | - | - | |||
| GOLDMAN, SACHS & CO.LLC | Overseas corporation | 0.49% | 46,227,207 | 46,227,207 | - | 46,227,207 | - | - | |||
| 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. | 3,632,897,256 | RMB ordinary shares | 3,632,897,256 | ||||||||
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | 556,442,594 | RMB ordinary shares | 556,442,594 | ||||||||
| 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 | ||||||||
Hikvision 2020 Half Year Report
| CITIC Securities Company Limited | 103,176,837 | RMB ordinary shares | 103,176,837 |
| Central Huijin Investment Co., Ltd. | 65,818,800 | RMB ordinary shares | 65,818,800 |
| GOLDMAN, SACHS & CO.LLC | 46,227,207 | RMB ordinary shares | 46,227,207 |
| Hu Yangzhong | 45,546,619 | RMB ordinary shares | 45,546,619 |
| Explanation on associated relationship and concerted actions among top ten common shareholders without trading restrictions, and among top ten common shareholders and top ten common shareholders without trading restrictions | 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. | ||
Hikvision 2020 Half Year Report
Section VII Information of Preferred Shares
□ Applicable √ Inapplicable
There is no preferred share existed for the Company during the current reporting period.
Hikvision 2020 Half Year Report
Section VIII Information about Convertible Corporate Bonds
□ Applicable √ Inapplicable
There is no convertible corporate bond existed for the Company during the current reporting period.
Hikvision 2020 Half Year Report
Section IX 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 | |||
| Gong Hongjia | Vice Chairman | Incumbent | 1,255,056,700 | 1,255,056,700 | 0 | 0 | |||
| Qu Liyang | Director | Incumbent | 15,750 | 15,750 | 0 | 0 | |||
| Hu Yangzhong | Director, General Manager (CEO) | Incumbent | 182,186,477 | 182,186,477 | 96,300 | 48,150 | |||
| Wu Weiqi | Director, Standing Deputy General Manager | Incumbent | 11,371,389 | 11,371,389 | 89,100 | 44,550 | |||
| Cheng Tianzong | Independent Director | Incumbent | 0 | 0 | 0 | 0 | |||
| Lu Jianzhong | Independent Director | Incumbent | 0 | 0 | 0 | 0 | |||
| Wang Zhidong | Independent Director | Incumbent | 0 | 0 | 0 | 0 | |||
| Hong Tianfeng | Independent Director | Incumbent | 0 | 0 | 0 | 0 | |||
| Cheng Huifang | Supervisor Chairman | Incumbent | 0 | 0 | 0 | 0 | |||
| Wang Qiuchao | Supervisor | Incumbent | 35,000 | 35,000 | 0 | 0 | |||
| Xu Lirong | Supervisor; person in charge of internal audit | Incumbent | 303,000 | 303,000 | 65,700 | 32,850 | |||
| He Hongli | Senior Deputy General Manager | Incumbent | 331,500 | 331,500 | 82,800 | 41,400 |
Hikvision 2020 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 | 495,000 | 495,000 | 222,900 | 163,950 | |||
| Cai Changyang | Senior Deputy General Manager | Incumbent | 109,500 | 109,500 | 65,700 | 32,850 | |||
| Xu Ximing | Senior Deputy General Manager | Incumbent | 197,000 | 197,000 | 197,000 | 197,000 | |||
| Bi Huijuan | Senior Deputy General Manager | Incumbent | 273,000 | 273,000 | 213,000 | 168,000 | |||
| Jiang Yufeng | Senior Deputy General Manager | Incumbent | 325,500 | 325,500 | 73,800 | 36,900 | |||
| Pu Shiliang | Senior Deputy General Manager | Incumbent | 393,900 | 393,900 | 189,640 | 144,820 | |||
| Jin Duo | Senior Deputy General Manager | Incumbent | 109,500 | 109,500 | 65,700 | 32,850 | |||
| Jin Yan | Senior Deputy General Manager, Person in charge of finance | Incumbent | 284,000 | 284,000 | 214,400 | 162,200 | |||
| Huang Fanghong | Senior Deputy General Manager, Board Secretary | Incumbent | 402,500 | 402,500 | 110,000 | 110,000 | |||
| Chen Junke | Senior Deputy General Manager | Incumbent | 0 | 0 | |||||
| Total | -- | -- | 1,451,889,716 | 1,451,889,716 | 1,686,040 | 1,215,520 |
Hikvision 2020 Half Year Report
Section X Corporate Bonds
Whether 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 2020 Half Year Report
Section XI Financial Report
I. Audit reportWhether audit has been performed on this interim financial report
□ Yes √ No
The Company’s 2020 Half Year Report has not been audited
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | On June 30th 2020 | On December 31st 2019 |
| Current Assets: | |||
| Cash and bank balances | (V)1 | 22,090,506,085.61 | 27,071,948,919.78 |
| Held-for-trading financial assets | (V)2 | 853,125.46 | 181.76 |
| Notes receivable | (V)3 | 810,252,938.16 | 973,236,789.02 |
| Accounts receivable | (V)4 | 21,449,479,247.87 | 21,307,927,200.28 |
| Receivables for financing | (V)5 | 1,183,573,810.59 | 1,257,385,053.02 |
| Prepayments | (V)6 | 405,067,235.70 | 309,685,733.32 |
| Other receivables | (V)7 | 474,236,839.64 | 555,246,545.48 |
| Inventories | (V)8 | 11,212,408,913.89 | 11,267,986,843.11 |
| Contract assets | (V)9 | 111,392,631.57 | - |
| Non-current assets due within one year | (V)10 | 781,587,087.34 | 528,469,701.75 |
| Other current assets | (V)11 | 673,906,905.00 | 754,456,821.72 |
| Total Current Assets | 59,193,264,820.83 | 64,026,343,789.24 | |
| Non-current Assets: | |||
| Long-term receivables | (V)12 | 1,576,950,814.85 | 1,382,536,761.22 |
| Long-term equity investment | (V)13 | 520,322,603.80 | 252,165,321.49 |
| Other non-current financial assets | (V)14 | 296,580,935.18 | 312,398,267.44 |
| Fixed assets | (V)15 | 6,005,536,637.71 | 5,791,218,720.87 |
| Construction in progress | (V)16 | 1,013,956,457.06 | 631,555,479.06 |
| Intangible assets | (V)17 | 1,027,651,035.49 | 1,046,122,507.64 |
| Goodwill | (V)18 | 275,619,227.98 | 273,611,961.96 |
| Long-term deferred expenses | (V)19 | 95,391,183.98 | 87,611,490.75 |
| Deferred tax assets | (V)20 | 861,572,540.35 | 688,849,263.70 |
| Other non-current assets | (V)21 | 1,071,476,124.05 | 865,586,676.92 |
| Total Non-current Assets | 12,745,057,560.45 | 11,331,656,451.05 | |
| Total Assets | 71,938,322,381.28 | 75,358,000,240.29 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020Consolidated Balance Sheet-continued
Unit: RMB
| Item | Notes | On June 30th 2020 | On December 31st 2019 |
| Current Liabilities: | |||
| Short-term borrowings | (V)22 | 4,447,276,972.89 | 2,640,082,485.15 |
| Held-for-trading financial liabilities | (V)23 | 8,951,114.77 | 652,428.18 |
| Notes payable | (V)24 | 1,222,676,114.77 | 1,239,584,016.70 |
| Accounts payable | (V)25 | 7,297,949,959.60 | 12,700,075,307.70 |
| Contract liabilities | (V)26 | 1,172,844,148.91 | - |
| Receipts in advance | - | 1,020,989,460.61 | |
| Payroll payable | (V)27 | 1,806,262,267.93 | 2,359,674,640.12 |
| Taxes payable | (V)28 | 1,376,692,090.42 | 991,342,805.91 |
| Other payables | (V)29 | 1,912,704,151.68 | 1,568,744,599.94 |
| Non-current liabilities due within one year | (V)30 | 155,035,558.24 | 86,123,154.06 |
| Other current liabilities | (V)31 | 1,813,013,618.43 | 913,534,538.26 |
| Total Current Liabilities | 21,213,405,997.64 | 23,520,803,436.63 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)32 | 4,771,375,714.28 | 4,604,168,571.43 |
| Long-term payables | (V)33 | 40,625,618.86 | 50,181,416.72 |
| Provisions | (V)34 | 84,693,948.33 | 90,570,669.01 |
| Deferred income | (V)35 | 252,658,264.22 | 333,589,831.30 |
| Deferred tax liabilities | (V)20 | 94,468,255.70 | 51,088,103.96 |
| Other non-current liabilitie | (V)36 | 1,234,739,326.10 | 1,234,739,326.10 |
| Total non-current liabilities | 6,478,561,127.49 | 6,364,337,918.52 | |
| Total liabilities | 27,691,967,125.13 | 29,885,141,355.15 | |
| Owners’ Equity | |||
| Share capital | (V)37 | 9,345,010,696.00 | 9,345,010,696.00 |
| Capital reserves | (V)38 | 4,576,494,261.24 | 4,126,943,698.96 |
| Less: Treasury shares | (V)39 | 2,046,939,271.56 | 2,148,273,864.36 |
| Other comprehensive income | (V)40 | (78,024,062.46) | (53,541,146.99) |
| Surplus reserves | (V)41 | 4,672,505,348.00 | 4,672,505,348.00 |
| Retained earnings | (V)42 | 27,043,854,488.89 | 28,961,389,145.22 |
| Total owners' equity attributable to owner of the Company | 43,512,901,460.11 | 44,904,033,876.83 | |
| Minority equity | 733,453,796.04 | 568,825,008.31 | |
| Total owners' equity | 44,246,355,256.15 | 45,472,858,885.14 | |
| Total liabilities and owners' equity | 71,938,322,381.28 | 75,358,000,240.29 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
Balance sheet of the parent company
Unit: RMB
| Item | Notes | On June 30th 2020 | On December 31st 2019 |
| Current Assets: | |||
| Cash and bank balances | 15,366,157,034.76 | 16,851,590,525.05 | |
| Notes receivable | 99,447,853.10 | 149,703,073.98 | |
| Accounts receivable | (XV)1 | 27,882,589,962.64 | 25,107,965,925.08 |
| Receivables for financing | 83,893,478.71 | 84,839,695.67 | |
| Prepayments | 121,487,841.52 | 160,688,588.99 | |
| Other receivables | (XV)2 | 1,488,158,636.58 | 921,275,388.15 |
| Inventories | 211,790,683.91 | 171,243,815.97 | |
| Contract assets | 4,880,231.89 | - | |
| Non-current assets due within one year | 55,861,259.90 | 4,513,795.81 | |
| Other current assets | 33,810,615.59 | 23,117,398.50 | |
| Total Current Assets | 45,348,077,598.60 | 43,474,938,207.20 | |
| Non-current Assets: | |||
| Other non-current financial assets | 293,686,715.18 | 309,504,047.44 | |
| Long-term accounts receivable | 81,505,791.91 | 681,568.43 | |
| Long-term equity investment | (XV)3 | 5,934,231,347.64 | 5,074,018,030.44 |
| Fixed assets | 2,853,968,748.87 | 2,831,295,145.61 | |
| Construction in progress | 285,297,616.77 | 153,416,054.28 | |
| Intangible assets | 173,696,502.86 | 188,362,883.75 | |
| Long-term prepaid expenses for amortization | 39,503,103.61 | 34,199,446.06 | |
| Deferred tax assets | 176,930,540.34 | 126,357,792.34 | |
| Other non-current assets | 18,388,245.60 | 21,619,464.07 | |
| Total Non-current Assets | 9,857,208,612.78 | 8,739,454,432.42 | |
| Total Assets | 55,205,286,211.38 | 52,214,392,639.62 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
Balance sheet of the parent company - continued
Unit: RMB
| Item | Notes | On June 30th 2020 | On December 31st 2019 |
| Current Liabilities: | |||
| Short-term borrowings | 3,482,751,236.09 | 2,001,781,388.89 | |
| Accounts payable | 388,484,821.08 | 450,983,270.08 | |
| Contract liabilities | 236,895,197.55 | - | |
| Receipts in advance | - | 227,242,328.23 | |
| Payroll payable | 1,220,893,104.84 | 1,564,304,003.49 | |
| Taxes payable | 967,834,022.75 | 796,890,945.83 | |
| Other payables | 2,314,123,394.86 | 533,325,191.05 | |
| Non-current liabilities due within one year | 9,601,850.55 | 9,539,251.98 | |
| Other current liabilities | 1,813,013,618.53 | 913,534,538.26 | |
| Total Current Liabilities | 10,433,597,246.25 | 6,497,600,917.81 | |
| Non-current Liabilities: | |||
| Long-term borrowings | 3,184,400,000.00 | 3,126,200,000.00 | |
| Provisions | 51,992,619.17 | 62,863,096.83 | |
| Deferred Income | 186,493,263.45 | 162,018,728.45 | |
| Other non-current liabilities | 1,234,739,326.00 | 1,234,739,326.10 | |
| Total non-current liabilities | 4,657,625,208.62 | 4,585,821,151.38 | |
| Total liabilities | 15,091,222,454.87 | 11,083,422,069.19 | |
| Owners’ Equity | |||
| Share capital | 9,345,010,696.00 | 9,345,010,696.00 | |
| Capital reserves | 4,546,002,655.27 | 4,064,833,739.52 | |
| Less: Treasury shares | 2,046,939,271.56 | 2,148,273,864.36 | |
| Surplus reserves | 4,672,505,348.00 | 4,672,505,348.00 | |
| Retained earnings | 23,597,484,328.80 | 25,196,894,651.27 | |
| Total owners' equity | 40,114,063,756.51 | 41,130,970,570.43 | |
| Total liabilities and owners' equity | 55,205,286,211.38 | 52,214,392,639.62 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
Consolidated Income Statement
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Total operating income | (V)43 | 24,271,159,243.76 | 23,923,273,424.50 |
| Less：Total operating costs | (V)43 | 12,193,719,945.38 | 12,840,506,333.68 |
| Business taxes and surcharges | (V)44 | 168,072,165.25 | 167,547,905.92 |
| Selling expenses | 3,420,291,518.42 | 3,213,260,109.16 | |
| Administrative expenses | 864,959,489.94 | 731,110,243.76 | |
| Research and Development (R&D) expenses | 3,063,423,679.69 | 2,504,800,049.71 | |
| Financial expenses | (V)45 | (227,972,206.73) | (129,943,427.26) |
| Including：Interest expenses | 94,137,084.05 | 93,002,377.62 | |
| Interest income | 306,973,066.18 | 293,012,529.35 | |
| Add: Other Income | (V)46 | 994,778,394.15 | 722,566,221.54 |
| Investment income | (V)47 | 150,219,709.56 | 21,224,355.97 |
| Including: Investment losses in associated enterprise and joint-venture enterprise | (8,942,717.69) | (4,215,155.62) | |
| Gains (losses) from changes in fair values | (V)48 | (20,436,436.96) | 1,866,394.46 |
| Credit impairment losses | (V)49 | (152,772,469.77) | (134,526,432.57) |
| Impairment losses of assets | (V)50 | (165,394,158.33) | (80,143,742.65) |
| Asset disposal income | 21,554.99 | 810,043.90 | |
| II. Operating profit | 5,595,081,245.45 | 5,127,789,050.18 | |
| Add: Non-operating income | (V)51 | 31,721,207.08 | 38,307,078.60 |
| Less: Non-operating expenses | (V)52 | 7,378,765.56 | 8,414,181.91 |
| III. Total profit | 5,619,423,686.97 | 5,157,681,946.87 | |
| Less: Income tax expenses | (V)53 | 952,552,145.97 | 933,920,656.68 |
| IV. Net profit | 4,666,871,541.00 | 4,223,761,290.19 | |
| 4.1 Classification by continuous operation | |||
| (a) Net profit on continuous operation | 4,666,871,541.00 | 4,223,761,290.19 | |
| 4.2 Classification by attribution of ownership | |||
| (a) Profit or loss attributable to minority shareholders | 42,898,710.13 | 7,006,079.95 | |
| (b) Net profit attributable to owners of parent company | 4,623,972,830.87 | 4,216,755,210.24 | |
| V. Other comprehensive income, net of income tax | (V)40 | (26,796,178.37) | 5,491,667.93 |
| Other comprehensive income attributable to owners of the Company, net of tax | (24,482,915.47) | 4,922,806.84 | |
| (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 | (24,482,915.47) | 4,922,806.84 | |
| 1. Gains and losses from changes in fair value of other current assets | - | 14,124,975.09 |
Hikvision 2020 Half Year Report
| Item | Notes | Amount for the current period | Amount for the prior period |
| 2. Exchange differences arising on conversion of financial statements denominated in foreign currencies | (24,482,915.47) | (9,202,168.25) | |
| Other comprehensive income attributable to minority interests, net of tax | (2,313,262.90) | 568,861.09 | |
| VI. Total comprehensive income | 4,640,075,362.63 | 4,229,252,958.12 | |
| Total comprehensive income attributable to owners of the parent company | 4,599,489,915.40 | 4,221,678,017.08 | |
| Total comprehensive income attributable to minority shareholders | 40,585,447.23 | 7,574,941.04 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | (XVI)2 | 0.493 | 0.444 |
| (II) Diluted earnings per share | (XVI)2 | 0.493 | 0.444 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
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 | 11,584,268,085.23 | 10,434,243,978.59 |
| Less: Total operating Cost | (XV)4 | 2,922,006,997.48 | 3,079,780,648.92 |
| Business taxes and surcharges | 127,523,350.50 | 111,602,431.74 | |
| Selling expenses | 1,378,570,165.20 | 1,500,387,153.95 | |
| Administrative expenses | 382,045,872.60 | 346,843,922.68 | |
| Research and Development (R&D) expenses | 2,190,386,100.23 | 1,779,985,365.59 | |
| Financial expenses | (200,603,140.91) | (74,584,512.33) | |
| Including : Interest expenses | 13,789,744.18 | 61,705,246.69 | |
| Interest income | 215,501,593.83 | 268,165,821.94 | |
| Add: Other income | 797,244,362.60 | 635,767,724.45 | |
| Investment income | (XV)5 | 192,706,003.20 | 17,050,928.15 |
| Including: Investment losses in associated enterprise and joint-venture enterprise | (3,628,950.89) | (2,874,991.72) | |
| Gains (losses) from changes in fair values | (13,017,332.26) | 2,153,238.50 | |
| Credit impairment gains (losses) | (15,105,661.89) | 653,420,471.92 | |
| Gains on asset impairment | 1,095,084.66 | 49,569,282.84 | |
| Asset disposal income | 2,863.84 | 181,748.65 | |
| II. Operating profit | 5,747,264,060.28 | 5,048,372,362.55 | |
| Add: Non-operating income | 8,749,908.65 | 8,215,858.64 | |
| Less: Non-operating expenses | 1,267,522.90 | 5,237,082.32 | |
| III. Total profit | 5,754,746,446.03 | 5,051,351,138.87 | |
| Less: Income tax expenses | 812,649,281.30 | 845,566,584.68 | |
| IV. Net profit | 4,942,097,164.73 | 4,205,784,554.19 | |
| V. Other comprehensive income, net of income tax | - | 1,163,229.41 | |
| VI. Total comprehensive income | 4,942,097,164.73 | 4,206,947,783.60 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th
2020
Consolidated 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 | 27,244,048,844.95 | 25,100,138,387.74 | |
| Receipts of tax refunds | 1,718,589,299.56 | 1,342,631,486.14 | |
| Other cash receipts relating to operating activities | (V)54(1) | 707,923,092.38 | 584,492,082.01 |
| Sub-total of cash inflows from operating activities | 29,670,561,236.89 | 27,027,261,955.89 | |
| Cash payments for goods purchased and services received | 19,503,212,062.93 | 18,092,259,319.13 | |
| Cash paid to and on behalf of employees | 5,587,456,744.73 | 4,629,022,309.36 | |
| Payments of various types of taxes | 2,463,618,915.37 | 2,602,541,375.69 | |
| Other cash payments relating to operating activities | (V)54(2) | 2,046,307,173.29 | 2,134,502,744.89 |
| Sub-total of cash outflows from operating activities | 29,600,594,896.32 | 27,458,325,749.07 | |
| Net Cash flows from Operating Activities | (V)55(1) | 69,966,340.57 | (431,063,793.18) |
| II. Cash flows from Investing Activities: | |||
| Cash receipts from recovery of investments | 967,045,868.90 | - | |
| Cash receipts from investment income | 150,000,000.00 | 8,076,808.70 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 2,855,619.32 | 84,652,360.44 | |
| Other cash receipts relating to investing activities | (V)54(3) | 14,990,732.87 | - |
| Sub-total of cash inflows from investing activities | 1,134,892,221.09 | 92,729,169.14 | |
| Net cash paid to aquire subsidiaries and other business units | - | 44,095,782.07 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 1,397,220,231.04 | 730,479,938.23 | |
| Cash paid to acquire investments | 1,232,156,803.46 | 2,884,220.00 | |
| Sub-total of cash outflows from investing activities | 2,629,377,034.50 | 777,459,940.30 | |
| Net cash flows from Investing Activities | (1,494,484,813.41) | (684,730,771.16) | |
| III. Cash flows from financing activities: | |||
| Cash receipts from capital contributions | 154,264,987.03 | 18,220,262.17 | |
| Including: cash receipts from capital contributions from minority owners of subsidiaries | 154,264,987.03 | 18,220,262.17 | |
| Cash receipts from issuance of bonds | 999,500,000.00 | - | |
| Cash receipts from borrowings | 3,445,980,000.00 | 6,827,958,906.73 | |
| Sub-total of cash inflows from financing activities | 4,599,744,987.03 | 6,846,179,168.90 | |
| Cash repayments of borrowings | 1,459,216,468.29 | 1,598,774,442.94 | |
| Cash payments for bond repayment | - | 3,079,240,000.00 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 6,554,304,815.58 | 5,704,495,352.39 | |
| Including : Dividends and profits paid by subsidiaries to minority shareholders | - | 600,000.00 | |
| Other cash payments relating to financing activities | (V)54(4) | 64,290,000.00 | 31,290,856.75 |
| Sub-total of cash outflows from financing activities | 8,077,811,283.87 | 10,413,800,652.08 | |
| Net cash flows from Financing Activities | (3,478,066,296.84) | (3,567,621,483.18) | |
| IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | 10,423,718.77 | (86,394,171.66) | |
| V. Net Increase in Cash and Cash Equivalents | (V)55(1) | (4,892,161,050.91) | (4,769,810,219.18) |
| Add: Opening balance of Cash and Cash Equivalents | (V)55(1) | 26,515,668,008.40 | 26,031,011,733.89 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)55(3) | 21,623,506,957.49 | 21,261,201,514.71 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th
2020
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 | 10,102,563,972.01 | 8,172,744,128.12 | |
| Receipts of tax refunds | 751,843,296.77 | 587,302,186.13 | |
| Other cash receipts relating to operating activities | 375,348,009.24 | 363,699,162.54 | |
| Sub-total of cash inflows from operating activities | 11,229,755,278.02 | 9,123,745,476.79 | |
| Cash payments for goods acquired and services received | 3,428,323,188.51 | 3,620,127,267.15 | |
| Cash payments to and on behalf of employees | 3,021,694,357.17 | 2,711,649,012.33 | |
| Payments of various types of taxes | 1,820,418,512.27 | 1,427,332,880.19 | |
| Other cash payments relating to operating activities | 1,332,281,567.50 | 849,540,447.05 | |
| Sub-total of cash outflows from operating activities | 9,602,717,625.45 | 8,608,649,606.72 | |
| Net Cash flows from Operating Activities | 1,627,037,652.57 | 515,095,870.07 | |
| II. Cash flows from Investing Activities: | |||
| Cash receipts from recovery of investments | 2,800,000.00 | - | |
| Cash receipts from investment income | 150,000,000.00 | 2,568,699.00 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 1,142,724.61 | 3,679,476.09 | |
| Other cash receipts relating to investing activities | 1,698,134,887.49 | 2,561,153,903.93 | |
| Sub-total of cash inflows from investing activities | 1,852,077,612.10 | 2,567,402,079.02 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 294,745,004.28 | 148,098,627.08 | |
| Cash payments to acquire investments | 725,748,730.00 | - | |
| Net cash paid to aquire subsidiaries and other business units | - | 171,600,000.00 | |
| Other cash payments relating to investing activities | - | 45,079,102.37 | |
| Sub-total of cash outflows from investing activities | 1,020,493,734.28 | 364,777,729.45 | |
| Net Cash flows from Investing Activities | 831,583,877.82 | 2,202,624,349.57 | |
| III. Cash flows from Financing Activities | |||
| Cash receipts from capital contributions | - | - | |
| Cash receipts from issuance of bonds | 999,500,000.00 | - | |
| Cash receipts from borrowings | 2,480,000,000.00 | 3,679,240,000.00 | |
| Sub-total of cash inflows from financing activities | 3,479,500,000.00 | 3,679,240,000.00 | |
| Cash repayments of borrowings | 1,000,000,000.00 | - | |
| Cash payments for bond repayment | - | 3,079,240,000.00 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 6,455,560,277.48 | 5,643,872,935.64 | |
| Other cash payments relating to financing activities | - | 2,095,080.00 | |
| Sub-total of cash outflows from financing activities | 7,455,560,277.48 | 8,725,208,015.64 | |
| Net Cash flows from Financing Activities | (3,976,060,277.48) | (5,045,968,015.64) | |
| IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | 32,767,298.25 | (34,135,897.31) | |
| V. Net increase in cash and cash equivalents | (1,484,671,448.84) | (2,362,383,693.31) | |
| Add: Opening balance of cash and cash equivalents | 16,656,028,410.72 | 18,998,934,287.59 | |
| VI. Closing Balance of Cash and Cash Equivalents | 15,171,356,961.88 | 16,636,550,594.28 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
| Item | Amount for the first half of 2020 | |||||||
| 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 prior year | 9,345,010,696.00 | 4,126,943,698.96 | 2,148,273,864.36 | (53,541,146.99) | 4,672,505,348.00 | 28,961,389,145.22 | 568,825,008.31 | 45,472,858,885.14 |
| Add: Business merger under common control | - | - | - | - | - | - | - | - |
| II. Opening balance of the current period | 9,345,010,696.00 | 4,126,943,698.96 | 2,148,273,864.36 | (53,541,146.99) | 4,672,505,348.00 | 28,961,389,145.22 | 568,825,008.31 | 45,472,858,885.14 |
| III. Increase or decrease in the current period | - | 449,550,562.28 | (101,334,592.80) | (24,482,915.47) | - | (1,917,534,656.33) | 164,628,787.73 | (1,226,503,628.99) |
| (I) Total comprehensive income | - | - | - | (24,482,915.47) | - | 4,623,972,830.87 | 40,585,447.23 | 4,640,075,362.63 |
| (II) Owners’ contributions and reduction in capital | - | 449,550,562.28 | - | - | - | - | 121,593,340.50 | 571,143,902.78 |
| 1. Capital contribution from shareholders | - | - | - | - | - | - | 154,264,987.03 | 154,264,987.03 |
| 2. Share-based payment recognized in owners’ equity | - | 460,632,426.68 | - | - | - | - | 20,536,489.07 | 481,168,915.75 |
| 3. The amount formed by the acquisition of minority shareholders' equity | - | (33,016,354.85) | - | - | - | - | (31,273,645.15) | (64,290,000.00) |
| 4. The amount formed by the transfer of the equity of the subsidiary | - | 2,380,508.81 | - | - | - | - | (2,380,508.81) | - |
| 5. Amount formed by disposal of asset group | - | 19,553,981.64 | - | - | - | - | (19,553,981.64) | - |
| (III) Profit distribution | - | - | (101,334,592.80) | - | - | (6,541,507,487.20) | 2,450,000.00 | (6,437,722,894.40) |
| 1. Transfer to surplus reserves | - | - | - | - | - | - | - | |
| 2. Distributions to shareholders | - | - | (101,334,592.80) | - | - | (6,541,507,487.20) | 2,450,000.00 | (6,437,722,894.40) |
| 3. Others | - | - | - | - | - | - | - | - |
| III. Closing balance of the current period | 9,345,010,696.00 | 4,576,494,261.24 | 2,046,939,271.56 | (78,024,062.46) | 4,672,505,348.00 | 27,043,854,488.89 | 733,453,796.04 | 44,246,355,256.15 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
| Item | Amount for the first half of 2019 | |||||||
| 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 prior year | 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 | - | - | - | - | - | - | - | - |
| III. 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 2020 Half Year Report
Half year ended on June 30
th
2020
Statement of Changes in Owners' Equity of the parent company
Unit: RMB
| Item | Amount for the first half of 2020 | ||||||
| Share capital | Capital reserves | Less: Treasury share | Other comprehensive income | Surplus reserve | Retained profits | Total owners' equity | |
| I. Closing balance of the prior year | 9,345,010,696.00 | 4,064,833,739.52 | 2,148,273,864.36 | - | 4,672,505,348.00 | 25,196,894,651.27 | 41,130,970,570.43 |
| Add: changes in accounting policies | - | - | - | - | - | - | - |
| II. Opening balance of the current period | 9,345,010,696.00 | 4,064,833,739.52 | 2,148,273,864.36 | - | 4,672,505,348.00 | 25,196,894,651.27 | 41,130,970,570.43 |
| III. Increase or decrease in the current period | - | 481,168,915.75 | (101,334,592.80) | - | - | (1,599,410,322.47) | (1,016,906,813.92) |
| (I) Total comprehensive income | - | - | - | - | 4,942,097,164.73 | 4,942,097,164.73 | |
| (II) Owners’ contributions and reduction in capital | - | 481,168,915.75 | - | - | - | - | 481,168,915.75 |
| 1. Capital contribution from shareholders | - | - | - | - | - | - | - |
| 2. Share-based payment recognized in owners’ equity | - | 481,168,915.75 | - | - | - | - | 481,168,915.75 |
| 3. Others | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | (101,334,592.80) | - | - | (6,541,507,487.20) | (6,440,172,894.40) |
| 1.Transfer to surplus reserve | - | - | - | - | - | - | - |
| 2.Distributions to shareholders | - | - | (101,334,592.80) | - | - | (6,541,507,487.20) | (6,440,172,894.40) |
| 3. Others | - | - | - | - | - | - | - |
| III. Closing balance of the current period | 9,345,010,696.00 | 4,546,002,655.27 | 2,046,939,271.56 | - | 4,672,505,348.00 | 23,597,484,328.80 | 40,114,063,756.51 |
Hikvision 2020 Half Year Report
Half year ended on June 30
th2020
Statement of Changes in Owners' Equity of the parent company-continued
Unit: RMB
| Item | Amount for the first half of 2019 | ||||||
| Share capital | Capital reserves | Less: Treasury share | Other comprehensive income | Surplus reserve | Retained profits | Total owners' equity | |
| I. Closing balance of the prior year | 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 |
st
2020 to June 30
th2020
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
th
2001 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
th2010, the Companywas listed on the Shenzhen Stock Exchange.
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.
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
ndextraordinary general meeting in 2018, the companywas approved to issue additional 126,518,281 shares of RMB common stock (adjusted to 121,195,458 shares) to 6,341(adjusted to 6,095) incentive personnels. The Company completed the registration of shares on January 17
th
2019, adjustedthe Company’s total capital share to 9,348,465,931 shares.
On June 26
th2019, 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.
On September 3
rd2019, authorized by the Company’s second Extraordinary General Meeting in 2016, the Companycompleted procedures of repurchase and cancellation of some of the 2,945,610 restricted stocks that did not meet theincentive conditions, and the total share capital of the Company was adjusted to 9,345,010,696 shares. Please refer to Note(V)-37 for share capital details.
As of June 30
th2020, the Company’s total registered capital is RMB 9,345,010,696, with total capital shares of9,345,010,696 shares (face value RMB 1 per share), of which restricted A-shares were 1,249,618,766.00 shares, A-shareswithout restriction are 8,095,391,930.00 shares.
The Company is engaged in other electronic equipment manufacturing business under electronics industry. Businessscope of the Company includes development and production of electronic products (including explosion-proof electricalproducts, tele-communication equipment and its ancillary equipment, multimedia equipment), transmission and displayequipment, fire protection products, big data and IoT software and hardware products, aircraft, robot, intelligent equipmentand intelligent system, real-time communication system, auto parts and accessories, and electrical signal equipment for
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to June 30
th
2020
vehicle, and servers and supporting hardware and software products ; sales of self-manufactured products; technicalservice, electronic technology consulting service, training service (excluding class training), electronic equipmentinstallation, electronic engineering, and design, construction and maintenance of intelligent systems. For details aboutbusiness scope of the Company and its subsidiaries, please refer to Note (VII) 1.
The Company’s and consolidated financial reports were approved for issuance by the 18
th
meeting of the fourthsession Board of Directors of the Company on July 24
th
2020.
For consolidation scope of the financial statements of the current reporting period, please refer to Note (VII) “Interestin other entities”. For changes in consolidation scope of the financial statements during the current reporting period, pleaserefer 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, the Grouphas disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules forCompanies 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
2020, 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.
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 measurements basisof historical costs. If the asset decreases in value, the provision for impairment of assets should be made according torelevant 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, or thecontract amount when undertaking the current obligations, or the amount of cash or cash equivalents required for payingback the debts in daily activities.
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to June 30
th
2020
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, themeasured 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 market participantsto 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 the transactionprice.
Based on the observable extent of the input value of the fair value, and the importance of such input value to the fair valuemeasurement, 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 on measurementdate;? 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.
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 and completely,the Company's and consolidated financial position as of June 30
th2020; and the Company's and consolidated results ofoperations, the Company’s and consolidated changes in shareholders' equity, and the Company’s and consolidated cashflows for the first half year of 2020.
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 cash equivalents.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. Overseas
st 2020 to June 30
th
2020
subsidiaries 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) 57. 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 and businesscombinations 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 combining entitiesat the date of the combination. The difference between the carrying amount of the net assets obtained and the carryingamount of the consideration paid for the combination is adjusted to the share premium in capital reserve. If the sharepremium is not sufficient to absorb the difference, any excess 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 are incurred.
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.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. If a business combinationnot under the common control is realized step by step through multiple transactions, the cost of the combination is the sumof the consideration paid on the purchase date and the fair value of the equity of the purchasee already held before thepurchase date on the purchase date. The intermediary expenses incurred by the acquirer in respect of auditing, legalservices, valuation and consultancy services, etc. and other associated administrative expenses attributable to the businesscombination are recognized in profit or loss when they are 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, thedifference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where thecost of combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirerfirstly reassesses the measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilitiesand measurement of the cost of combination. If after that reassessment, the cost of combination is still less than theacquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirer recognizes the remaining differenceimmediately 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.
st
2020 to June 30
th2020
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 will re-evaluate, if the change of the relevant facts and circumstances leading to the change of the relevant elements involved inthe 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 consolidated incomestatement 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 they hadbeen included in the scope of consolidation from the date when they first came under the common control of the ultimatecontrolling party. Their operating results and cash flows from the beginning of the earliest reporting period are includedin 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.
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 paid orreceived is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference,the excess is adjusted against retained earnings.
st 2020 to June 30
th
2020
In the case that the equity of the acquiree is obtained through multiple deals step by step to finally form the businesscombination not under the common control, the business combination shall be handled differently based on whether it is"package deal": where it is package deal, the Company accounts each deal as a deal to obtain the control. If the deal is nota "package deal", a deal where the control is obtained on the acquisition date will be subject to accounting. The acquiree'sequity held before the acquisition date will be remeasured based on the fair value of the equity on the acquisition date andthe difference between the fair value and book value will be included in the profit or loss in the current period. If theacquiree's equity held before the acquisition date involves any changes in the other comprehensive income or in any otherowner's equity accounted by the equity method, such equity changes will be converted into the profit or loss in the currentperiod on the acquisition date.
7. Joint arrangement classification and joint operation accounting
Joint arrangements include joint operation and joint ventures. Such classification is defined based on the rights andobligations of the joint parties in the joint arrangement, taking into account the structure and legal form of sucharrangement and also the contractual provisions. Joint operation refers to a joint arrangement where the joint venture isentitled to assets related to this arrangement and bear liabilities related to this arrangement. Joint ventures mean that jointventure parties are merely entitled to joint venture arrangements of net assets of such arrangements.
The Groups investment in any joint venture is accounted by the equity method. See the details in Note (III) "14.3.2 Long-term equity investment accounted under the equity method".
The Group confirms its assets held separately according to the arrangement of joint operation and those held jointly inproportion to the Group's share; confirms its liabilities held separately and those held jointly in proportion to the Group'sshare ; confirms its revenue from the sale of its share of the output arising from the joint operation; confirms its share ofthe revenue from the sale of the output by the joint operation; confirms the expenses incurred by the Group alone and theexpenses incurred by the joint operation corresponding to the share of the Group therein. The assets, liabilities, revenuesand expenses related to the joint operation are accounted and confirmed by the Group in accordance with the regulationsapplicable to specific assets, liabilities, revenues, and expenses.
8. 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 (Generally refers to due within three months from the purchase date), highly liquid investments that are readilyconvertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
9. Conversion of transactions and financial statements denominated in foreign currencies.
9.1 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 rate onthe date of transaction is calculated according to the middle price of market exchange rate at the beginning of the monthin which the transaction happened.
At the balance sheet date, foreign currency monetary items are translated into [RMB] using the spot exchange rates at thebalance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at thebalance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss forthe period, except for exchange differences related to a specific-purpose borrowing denominated in foreign currency thatqualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period.
st
2020 to June 30
th
2020
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.
9.2 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' equity itemsis 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 rate atthe date of cash flows for conversion. The affected amount of cash and cash equivalents due to the change of exchangerate, as an adjustment item, shall be separately listed as "the impact of cash and cash equivalents due to the change ofexchange rate" in the cash flow statement.
The opening balances and the comparative figures of previous year are presented at the converted amounts of the previousyear'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 and presentedunder 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 differences arisingon conversion of financial statements are re-attributed to minority interests and are not recognized in profit and loss undercurrent period. For partial disposals of equity interests in foreign operations, which are associates or joint ventures, theproportionate shares of the accumulated exchange differences arising on conversion of financial statements of foreignoperations is reclassified to profit or loss under current period.
10. Financial Instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to a contract of financial instrument.
For the purchase or sale of a financial asset in conventional manner, the asset to be received and the liability to be assumedwill be recognized on the trading day, or the asset sold will be derecognized on the trading day.
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to June 30
th
2020
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 and lossof the current period. For other types of financial assets and financial liabilities, the relevant trading costs will be bookedinto the initial recognition amount. Upon initial recognition of accounts receivable which have no material financingcomponents or have not taken into consideration the financing components in contracts with a term not exceeding oneyear according to Accounting Standards for Business Enterprise No. 14 – Revenue (“Revenue Standard”), such initialamount 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 financial liabilityand apportioning interest income or interest expenses to each accounting period.
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 the amortizedcost of the financial liability. When determining the effective interest rate, the expected cash flows are estimated on thebasis of considering all contractual terms of the financial asset or financial liability (such as early repayment, extendedterm, 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 financial assetor 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).
10.1 Classification and Measurement of Financial Assets
After initial recognition, the Group will adopt amortized cost, fair value through other comprehensive income, or fair valuethrough 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 at amortized cost if the contractual terms of thefinancial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding and the financial asset is held within a business model whose objective is to hold financial assets inorder to collect contractual cash flows. Financial assets classified by the Group as financial asset measured by amortizedcost include cash and cash equivalents, notes receivables and accounts receivable, some of the other receivables and long-term receivables.
The Group will classify a financial asset into a financial asset measured by fair value through other comprehensive incomeif the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding, and the financial asset is held within a business model whose objectiveis achieved by both collecting contractual cash flows and selling the financial assets. This category of financial assetsmainly includes financial assets with a maturity of more than one year from the date of acquisition and which are presentedunder other debt investments, financial assets maturing within one year (inclusive) from the balance sheet date and whichare presented under non-current assets maturing within one year, as well as the accounts receivable and notes receivableclassified as fair value at the time of acquisition and their changes are included in other comprehensive income are listedin the receivables for financing, and for those have acquisition period within one year (including one year) are listed inother current assets.
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 business mergernot under common control as a financial asset at fair value through other comprehensive income. This type of financialassets 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 for tradingpurpose by the Group:
st
2020 to June 30
th
2020
? The purpose of acquiring the relevant financial asset is mainly for sale in recent period.? 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 of short-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.
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:
? Financial assets which do not satisfy the conditions of being classified as financial assets measured at amortized costor as financial assets at fair value through other comprehensive income, they will be classified as financial assets at fairvalue 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 and loss.
Financial assets at fair value through profit and loss will be presented as held-for-trading financial assets. If such financialassets have a maturity of more than one year from the balance sheet date (or without a fixed maturity) and which areexpected to be held for more than one year, they will be presented under other non-current financial assets.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost adopt the effective interest rate method for subsequent measurement accordingto amortized cost, the profit or loss when impairment occurs or upon derecognition will be accounted in profit and loss ofthe 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 the effectiveinterest 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 financial assetsmultiplied with the effective interest rate in the subsequent period. If such financial asset ceases to have credit impairmentdue to improvement in credit risk in the subsequent period, then the Group should change to multiply the effective interestrate with the balance of book value of such financial asset instead to determine the interest income.
10.1.2 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 to financialasset at fair value through other comprehensive income should be accounted in the profit and loss of the current period,and other changes in fair value of such financial assets will be accounted in other comprehensive income. The amountcharged by such financial asset to the profit and loss of each period is deemed to be equal to the amount which has beenmeasured by amortized cost and charged to the profit and loss of each period. Upon derecognition of such financial asset,the accumulated profit or loss previously charged to other comprehensive income will be reversed from othercomprehensive income and charged to profit and loss of the current period.
For non-trading equity instrument investment designated at fair value through other comprehensive income, its changesin fair value will be recognized in other comprehensive income. Upon derecognition of such financial asset, theaccumulated profit or loss charged to other comprehensive income will be reversed from other comprehensive income andcharged to retained earnings. During the period when such investment in equity instruments for non-trading purpose areheld by the Group, the right to receive dividends by the Group has been established, and economic benefits related todividends are likely to flow into the Group, and if the amount of dividends may be measured reliably, the dividend income
st 2020 to June 30
th
2020
is recognized and accounted in the profit and loss of the current period.
10.1.3 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, the profitor loss arising from changes in fair value and the dividend and interest income relating to such financial asset will beaccounted in the profit and loss of the current period.
10.2 Impairment of Financial Assets
For financial assets measured at amortized cost, financial assets that are classified as financial asset at fair value throughother comprehensive income, and contract assets, the Group will handle impairment on the basis of expected credit lossand recognize loss provision.
For the receivables in the contracts that are generated by the transactions governed by revenue standards and that do notcontain any major financial components or the financial components in the contracts that are valid for more than one year,and as well as contract assets, the loss reserve will be measured based on the amount of the expected credit loss in theentire life.
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 period accordingto an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amountwill be counted as impairment gain and booked into the profit and loss of the current period.
10.2.1 Significant increase in credit risk
The Group uses available and reasonable forward-looking information with justification, by comparing the default risk ofthe financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirm whetherthe credit risk of the financial instrument has significantly increased after initial recognition. When using the financialinstrument impairment rules for loan commitment and financial guarantee contracts, the date when the Group becomes aparty of an irrevocable commitment is deemed as the initial recognition date.
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) Whether the external credit rating of financial instrument has actual or expected significant changes.
(3) Whether the actual or expected internal credit rating of the debtor has been downgraded.
(4) Whether adverse changes have occurred in the business, finance or economic conditions which are expected to causesignificant changes in the capability of the debtor to perform debt repayment obligations.
(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in which
the debtor operates.
st
2020 to June 30
th
2020
(7) 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 economicmotivation of repayment according to contractual term or influence the probability of default.
(8) Whether significant changes have occurred in the economic motivation which will lower the expectation of
repayment by the borrower according to the contractual term.
(9) Whether significant changes have occurred in the expected performance and repayment behavior of the debtor.
Whether or not the credit risks increase significantly after the foregoing assessments, the Group Managementcomprehensively assesses the payment cycles of the customer base and the transaction practices traditionally formed. Ifany contractual payment for any financial instrument that exceeds the credit period for over (including) 30 days, it indicatesthe credit risks of that financial instrument have increased significantly.
On the balance sheet date, if the Group determines that the financial instrument only carries low credit risks, then it assumesthat the credit risks of the financial instrument have not increased significantly since the initial recognition. If the risk ofdefault on financial instruments is low, the borrower is highly able to perform its contractual cash flow obligations in theshort term, and even if the economic situation and operating environment are adversely changed over a long period of timebut not necessarily reducing the borrower’s performance of its contractual cash obligations, the financial instrument isconsidered as having a lower credit risk.
10.2.2 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 of theGroup have occurred, such financial asset will become a financial asset which have incurred credit impairment already.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 exceeding the credit period for the payment of interest or repaymentof 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 of creditloss.
10.2.3 Confirmation of expected credit loss
The Group uses the impairment matrix to identify the credit losses of the financial instruments on a portfolio basis ofaccounts receivable, contract assets, other receivables and long-term receivables; and the Group determines credit lossesby assessing their probability of breach and loss given default based on their credit rating on a portfolio basis of notesreceivable and receivables. On the basis of common risk characteristics, the Group places financial instruments in differentgroups. The common credit risk characteristics adopted by the Group include: financial instrument type, credit risk rating,initial recognition date, remaining contract period, industry of debtor, geographic location of debtor, and 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 contrac (for specific accounting policies, please refer to Note (III ), 10.4.1.2.1),
the credit loss is the present value of the difference between Group’s expected payment amount for thecompensation made to the contract holder due to the occurrence of credit loss and the amount expected to bereceived 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
generated financial assets with credit impairment, the credit loss represents the difference between the balanceof the book value of such financial asset and the present value of the estimated future cash flows discounted bythe original effective interest rate.
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
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2020 to June 30
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The factors reflected by the method used for calculating expected credit loss of financial instruments by the Group include:
an unbiased weighted average amount determined by assessing a series of probable outcomes; time value of currency;reasonable and justifiable information relating to past events, prevailing conditions and forecast of future economicconditions obtained on the balance sheet date without incurring unnecessary additional cost or effort.
10.2.4 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 a write-off constitutes a de-recognition of the relevant financial asset.
10.3 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 all therisks and rewards in respect of the ownership of such financial asset to the transferee; (3) upon transfer of such financialasset, though the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownershipof 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 continue tobe recognized, and the relevant liabilities will continue to be recognized, according to the level of the Group’s continuousinvolvement in such transferred financial asset. The relevant liabilities will be measured by the Group according to thefollowing method:
? If the transferred financial asset is measured by amortized cost, the book value of the relevant liabilities is equivalentto the book value of the transferred asset of continuous involvement less the amortized cost of the rights retained by theGroup (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the amortized cost ofthe obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of thefinancial asset), and the relevant liabilities are not designated as financial liabilities at fair value through profit and loss ofthe 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 (ifthe Group has retained the relevant rights due to transfer of the financial asset) and plus the fair value of the obligationsundertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of the financial asset), andthe 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 sum ofthe book value of the transferred financial assets as at the date of derecognition and the consideration received from suchtransfer and the accumulated amount of change in fair value originally included in other comprehensive income, whichcorresponds to the amount in respect of derecognition, shall be recognized in the profit and loss for the current period. Ifthe transfer of the financial assets by the Group is designated as investment in equity instrument held for non-tradingpurpose measured at fair value through other comprehensive income, the accumulated gains or losses previously includedin other comprehensive income shall be transferred out from other comprehensive income and be included in retainedearnings.
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 recognition portionat their respective relative fair value on the date of transfer, and the difference between the sum of the considerationreceived from derecognition and the accumulated amount of change in fair value originally included in othercomprehensive 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 in othercomprehensive income shall be transferred out from other comprehensive income and be included in retained earnings.
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For full transfer, which does not satisfy the conditions of derecognition, of the financial assets, the Group will continue torecognize the entire financial assets transferred and the consideration received as a result of the asset transfer is recognizedas a liability when received.
10.4 Classification and measurement 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.
10.4.1 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.
10.4.1.1 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 fair valuethrough profit and loss of the current period. Except for derivatives of financial liabilities, which are presented separately,financial liabilities at fair value through profit and loss of the current period are presented as financial liabilities held fortrading.
Financial liabilities that fulfill one of the following conditions suggest that the Group assumes such financial liabilities fortrading 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 instruments
under centralized management, and available objective evidence shows the recent and actual existence of a short-term profit-making model.? The relevant financial liabilities are derivatives, except derivatives which satisfy the definition of financial guaranteecontract 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) such designationcan eliminate or substantially reduce accounting mismatches; (2) managing and evaluating the performance of portfoliosof financial liabilities, or portfolios of financial assets and financial liabilities, on fair value basis and reporting internallyto key personnel of the Group on this basis in accordance with the risk management or investment strategies specified informal written documents of the Group; (3) hybrid contracts, with embedded derivatives, have satisfied the conditions.
Financial liabilities held for trading purpose use fair value for subsequent measurement, gains or losses arise from changesin fair value and the dividends or interest expenses relating to such financial liabilities are accounted in the profit and lossof 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 risk includedpreviously in other comprehensive income shall be transferred to retained earnings. Dividends or interest expenses relatingto such financial liabilities shall be included in the profit and loss of the current period. If handling the effect of changesin credit risk of such financial liabilities according to the aforesaid method would cause or magnify the accountingmismatches in profit and loss, the Group will include all gains or losses of those financial liabilities (including the amountaffected by changes in their own credit risk) in the profit and losses of the current period.
10.4.1.2 Other financial liabilities
Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities as a result of
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continuous involvement in transferred financial assets, the other financial liabilities will be classified as financial liabilitiesmeasured at amortized cost, subsequent measurement will be based on amortized cost, gains or losses on derecognition oramortization 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 liabilities willbe determined by the Group by discounting the cash flows from the renegotiated or revised contract with the original effectinterest rate of the financial liabilities. All costs or expenses incurred in the revision or renegotiation of the contract willbe reflected in the adjusted book value of financial liabilities after such revision, and will be amortized during theremaining period of the revised financial liabilities.
10.4.1.2.1 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 through profitand loss of the current period, or in respect of financial guarantee contract for financial liabilities arising from transfer offinancial assets not complying with derecognition conditions or continuous involvement in the transferred financial assets,the measurement after initial recognition will be based on the amount of provision for losses, or the balance of initialrecognized amount after deducting the accumulated amortized amount confirmed in accordance with the relevantprovisions of the Revenue Standard, whichever the higher.
10.4.2 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 the originalfinancial 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.
10.4.3 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.
10.5 Derivatives and embedded derivatives
Derivatives include foreign exchange forward contract, currency exchange rate swap contract, and foreign exchange optioncontract, etc. Derivatives are measured at fair value initially on the date of signing the relevant contract and will bemeasured 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 of afinancial 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.
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(1) The economic characteristics and risks of the embedded derivative are not closely connected to the economiccharacteristics 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 the mastercontract within the hybrid contract will be in accordance with the applicable accounting standards and rules. If the Groupis unable to measure the fair value of the embedded derivative reliably according to the terms and conditions of theembedded derivative, the fair value of such embedded derivative will be determined by the difference between the fairvalue of the hybrid contract and the fair value of the master contract. After adoption of the above method, if the fair valueof such embedded derivative is still unable to be measured separately on the acquisition date or subsequent balance sheetdate, the Group will designate the entire hybrid contract as a financial instrument measured at fair value through profit andloss of the current period.
10.6 Offsetting between financial assets and financial liabilities
When the Group has legal right to offset the recognized financial assets and financial liabilities, and such legal right isenforceable currently, while at the same time the Group plans to perform netting settlement, or to liquidate the financialasset and repay the financial liability at the same time, the amount after offsetting between the financial asset and financialliability will be presented in the balance sheet. Save as said above, the financial asset and financial liability are presentedseparately in the balance sheet without offsetting each other.
11. Receivables for financing
Among the notes receivable measured at fair value through other comprehensive income, the ones with a term of less than(including) one year since they are acquired will be listed as receivables for financing; the ones with a term of more than(including) one year since they are acquired will be listed as other debt investment. The relevant accounting policy isexplained in Note (III), 10.1, 10.2 and 10.3.
12. Inventories
12.1 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 the inventoriesto their present location and condition.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted average method.
12.3 Basis for determining net realizable value of inventories
The inventory is measured according to cost and net realizable value, whichever is lower, on the date of balance sheet.When the net realizable value is lower than cost, withdraw inventory impairment reserves.
The net realizable value refers to the amount derived by deducting the potential cost, estimated selling expense and relativetaxes to the completion date from the estimated sales price of inventory in daily activities. When determining net realizable
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
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value of inventories, take the obtained conclusive evidence as basis and consider the purposes of holding inventories andinfluence of events after the balance sheet date.
For the low-price stocks in large quantity, provision for the inventory price drops will be made based on the categories ofstocks; for the stocks that are related to the products manufactured and sold in the same region, that have identical orsimilar ultimate use or purpose and that are hard to separate from other items when being measured, they are consolidatedfor provision for the inventory price drops; for other stocks, the provision for the inventory price drops will be made basedon the cost of a single stock item in excess of the net realizable value.
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.
12.4 Inventory count system
The perpetual inventory system is maintained for stock system.
12.5 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.
13. Contract Assets
13.1 Method and standard for determination of contract assets
Contract assets refer to the Group’s right to consideration in exchange for goods or services that the Group has transferredto a customer when that right is conditioned on something other than the passage of time. The Group’s unconditional (i.e.,depending on the passage of time only) right to receive consideration from the customer is separately presented asreceivables.
13.2 Methods for determining and accounting of expected credit loss of contract assets
For details of methods for determining and accounting of expected credit loss of contract assets, please refer to Note (III)-
10.2 Impairment of financial instruments.
14. Long-term Equity Investment
14.1 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 but isnot 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.
14.2 Determination of initial investment cost
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
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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 transferred non-cashassets and the book value of the assumed debts are adjusted against the capital surplus; if the capital surplus is not sufficientto be offset, the remaining balance is adjusted against retained earnings. In the case of issued equity securities treated asconsolidation consideration, share of book value of owner's equity of merged party in the final controlling partyconsolidated financial statements is regarded as initial investment cost of long-term equity investments on the date ofconsolidation; capital reserve shall be adjusted in accordance with taking total nominal value of issued share as capitalshare, the difference between the initial investment cost of long-term equity investments and total book value of issuedshares; 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 common control,and the merging cost confirmed on the purchased date are regarded as the initial investment cost. In the case that the equityof the acquiree is obtained through multiple deals step by step to finally form the business combination not under thecommon control, the business combination shall be handled differently based on whether it is a "package deal": where itis a package deal, the Company accounts each deal as a deal to obtain the control. Otherwise, the Group shall measure theinitial investment cost of long-term equity investment accounted using cost method at the sum of book value of equityinvestment of the combined part originally held and investment cost additionally paid.
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 it happens.
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 Business Enterprises----Recognition and Measure of the Financial Instruments.
14.3 Subsequent measurement and recognition of profit or loss
14.3.1 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 there areadditional 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.
14.3.2 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 share of
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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 cost ofthe 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 book valueof the long-term equity investment shall be adjusted; The Group shall accordingly reduce the book value of the long-termequity investment in terms of the part that shall be enjoyed according to the profit or cash dividends declared by theinvested unit to be distributed; For other changes in the owners' equity of the invested unit other than net profits and losses,other comprehensive incomes and the profit distribution, the book value of long-term equity investment shall be adjustedand be included into the capital reserves. The Group shall, on the ground of the fair value of all identifiable assets of theinvested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the investedentity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by theinvested unit are different from those adopted by the Group, the adjustment shall be made for the financial statements ofthe invested unit in accordance with the accounting policies and accounting periods of the Group to recognize theinvestment income and other comprehensive incomes. For the transaction incurred between the group and associatedenterprises and joint ventures, invested or sold assets don't constitute a business, the part that doesn't achieve internaltransaction profit or loss or belongs to the Group calculated according to the enjoyed ratio will be offset, and the profit orloss on investment will be confirmed on this basis. But for the unrealized loss arising from the internal transaction betweenthe Group and the invested unit, if such transaction loss is defined as the impairment loss of the transferred asset, theycannot be offset.
When the Group determines the net loss of the invested unit that shall be shared, it is necessary to write-down the bookvalue of the long-term equity investment and other long-term equities substantially constituting the net investment of theinvested unit to zero as a limit. Besides, if the Group is obliged to bear extra loss for the invested unit, it shall be necessaryto determine provisions and record them to current investment loss in compliance with obligations expected to be assumed.If the invested unit realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsetsits attributable share of the un-confirmed losses, resume recognizing its attributable share of profits.
14.4 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.
15. Fixed Assets
15.1 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 can bemeasured reliably. Fixed assets are initially measured at cost.
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.
15.2 Depreciation of each category of fixed assets
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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 |
| Means of transportation | 5 years | 10 | 18.0 |
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17. 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 bringing assetsto 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 borrowing expensesare 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 actual interestexpense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds beforebeing used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowedunder general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings byapplying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over theamounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable tothe general-purpose borrowings. During the capitalization period, exchange differences related to a specific-purposeborrowing denominated in foreign currency are all capitalized. Exchange differences in connection with general-purposeborrowings are recognized in profit or loss in the period in which they are incurred.
18. Intangible Assets
18.1 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 | - |
| Franchise | 8 years | - |
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
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(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 be usedinternally, the usefulness of the intangible asset;
(4) The availability of adequate technical, financial and other resources to complete the development and the ability to useor 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. The costs of the intangible assets generated by internal development activities onlyinclude the total expenditure incurred from the time point when the capitalization conditions are available to the pointwhen the intangible assets are used for their intended purposes; for the expenditure that already becomes an expenditurein the profit and loss statement before the capitalization conditions are available during development of the same intangibleasset, no adjustment will be made.
19. 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 indication thatsuch assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefinite usefullife and intangible assets not yet available for use are tested for impairment annually, irrespective of whether there is anyindication 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 as animpairment provision 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 be conductedin accordance with the concerned asset group or asset portfolio. That is to allocate the book value of goodwill to the assetgroup or asset portfolio that is expected to benefit from the synergies of the combination in a reasonable way from the dateof purchasing. When recoverable amount of apportion-included asset group or asset portfolio of goodwill is less than bookvalue of goodwill, impairment loss shall be recognized. Firstly, amount of impairment loss shall be apportioned to thebook 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 can not be reversed in any subsequent period.
20. Long-term unamortized expenses
Long-term unamortized expenses are the expenses that are already incurred but will be shared in the current reportingperiod and later periods with amortization term of more than one year, including the expenses on betterment of leased
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fixed assets. Long-term unamortized expenses are evenly amortized in installments in three years during the expectedbenefit period.
21. Employee compensation
21.1 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 housing accumulationfund for its employees, as well as labor union expenditure and employee education expenses calculated and withdrawnaccording to the regulations, corresponding employee remuneration amount shall be calculated and determined inaccordance with specified calculation and withdrawal basis and proportion to recognize corresponding liabilities andincluded into the current profit and loss or relevant asset cost.
21.2 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.
21.3 Accountant Arrangement Method of the Termination Benefits
Where the Group provides termination benefits, the employee remuneration liabilities caused by such termination benefitswill be determined as the following date, whichever is earlier, and will be included in the current profit and loss: 1) Whenthe Group cannot unilaterally withdraw the termination benefits provided due to labor relation cancellation plan oremployee lay-off suggestion; or 2）when the Group determines costs or expenses in relation with the restructuring of thepaid termination benefits.
22. Contract liabilities
Contract liabilities refer to the Group’s obligation to transfer goods or services to a customer for which the Group hasreceived consideration or the amount is due from the customer. The Group will present the net amount of contract assetsand contract liabilities under the same contract.
23. 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.
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2020 to June 30
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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.
24. Share-based Payment
Share-based payment refers to a transaction in which the Group grants the equity instruments or undertakes the equity-instrument-based liabilities in return for services from employees. The Group's share-based payment is an equity-settledshare-based payment.
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's share-based payments are equity-settled share-based payments.
24.1 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 of theequity instruments granted to employees at the grant date. Such amount is recognized as related costs or expenses on astraight-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 subsequent latestinformation of change in the number of employees who are granted with options that may vest, etc. and revises the numberof equity instruments expected to vest. The effect of the above estimate is recognized as related costs or expenses, with acorresponding adjustment to capital reserve.
24.2. Accounting treatment related to implementation, modification and termination of share-based payment arrangement
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 the measurementof the amount recognized for services received. If the modification increases the number of the equity instruments granted,the Group will include the fair value of additional equity instruments granted in the measurement of the amount recognizedfor services received. The increase in the fair value of the equity instruments granted is the difference between fair valueof the equity instruments before and after the modification on the date of the modification. If the Group modifies the termsor conditions of the share-based payment arrangement in a manner that reduces the total fair value of the share-basedpayment arrangement, or is not otherwise beneficial to the employee, the Group will continue to account for the servicesreceived as if that modification had not occurred, other than a cancellation of some or 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 the non-vesting condition but the condition is not met during the vesting period, the Group treats it as a cancellation of the equityinstruments granted.
st 2020 to June 30
th2020
25. Revenue
25.1 Accounting policies applied in revenue recognition and measurement
The revenue of the Group is mainly generated from business types as follows:
（1） revenue from sale of goods
（2） revenue from rendering of services
（3） construction contract
When (or as) a performance obligation in a contract was satisfied, i.e., when (or as) the customer obtains control of relevantgoods or services, the Group recognizes as revenue the amount of the transaction price that is allocated to that performanceobligation. A performance obligation is the Group’s commitment to transfer to a customer a good or service (or a bundleof goods or services) that is distinct, in a contract with the customer. The transaction price is the amount of considerationto which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excludingamounts collected on behalf of third parties and amounts that the Group expects to refund to the customer.
Revenue is recognized over time by reference to the progress towards complete satisfaction of the relevant performanceobligation if one of the following criteria is met: (1) the customer simultaneously receives and consumes the benefitsprovided by the Group’s performance as the Group performs; (2) the Group’s performance creates or enhances an assetthat the customer controls as the Group performs; or (3) the Group’s performance does not create an asset with analternative use to the Group and the Group has an enforceable right to payment for performance completed to date.Otherwise, revenue is recognized at a point in time when the customer obtains control of the distinct good or service.
The Group adopts the input method to determine the progress of performance, that is, to determine the progress ofperformance based on the Group’s investment in fulfilling its performance obligations. When the performance progresscannot be reasonably determined, and the costs incurred can be expected to be compensated, the Group recognizes revenuebased on the amount of costs incurred until the performance progress can be reasonably determined.
If the contract contains two or more performance obligations, the Group allocates the transaction price to each singleperformance obligation on the contract start date in accordance with the relative proportion of the individual selling priceof the goods or services promised by each single performance obligation. However, if there is strong evidence that thecontract discount or variable consideration is only related to one or more (but not all) performance obligations in thecontract, the Group allocates the contract discount or variable consideration to the relevant one or more performancesobligation. Individual selling price refers to the price at which the Group sells goods or services to customers separately.Where the individual selling price cannot be directly observed, the Group comprehensively considers all relevantinformation that can be reasonably obtained, and uses the observable input value to the maximum to estimate the individualselling price.
If there is variable consideration in the contract, the Group determines the best estimate of variable consideration basedon the expected value or the most likely amount. The transaction price including variable consideration shall not exceedthe amount that is likely to cause no significant reversal of accumulated recognized revenue when the relevant uncertaintyis eliminated. At each balance sheet date, the Group re-estimates the amount of variable consideration that should beincluded in the transaction price.
Where a customer pays non-cash consideration, the Group determines the transaction price based on the fair value of thenon-cash consideration. If the fair value of the non-cash consideration cannot be reasonably estimated, the Group indirectlydetermines the transaction price by referring to the individual selling price of the goods or services promised to transfer tothe customer.
There is a consideration payable to the customer in the contract, unless the consideration is to obtain other clearlydistinguishable goods or services from the customer. The Group offsets the payable consideration by the transaction price,and offsets the current income at the later point of time of recognizing relevant revenue or paying (or promising to pay)the customer’s consideration.
st 2020 to June 30
th2020
If there is a significant financing component in the contract, the Group determines the transaction price based on theamount payable in cash when the customer assumes control of the goods or services. The difference between thetransaction price and the contract consideration is amortized using the effective interest rate method during the contractperiod. On the contract commencement date, the Group does not consider the significant financing components in thecontract if the interval between the customer obtaining control of the goods or services and the price being paid by thecustomer is not more than one year.
For sales with sales return terms attached, as the customer obtains ownership of related goods, the Group recognizesrevenue in accordance with the consideration (excluding expected refund amounts due to sales returns) that the Group isexpected to receive due to the transfer of goods or services to the customer, and recognizes expected liabilities inaccordance with expected refund amounts due to sales returns. The remaining amount, subsequent to deduction of expectedcosts from collecting the goods (including the decrease in value of the returned goods), is recognized as an asset inaccordance with the carrying amount during the expected transfer of returned goods after deducting the costs of the abovenet assets carried forward.
For sales with quality assurance clauses, if the quality assurance provides a separate service beyond the assurance to thecustomer that the goods or services sold meet established standards, the quality assurance constitutes a single performanceobligation. Otherwise, the Group conducts accounting for quality assurance responsibilities in accordance with theAccounting Standards for Business Enterprises No. 13-Contingencies.
The Group judges whether the Group’s identity is the principal or agent when engaging in transactions based on whetherit has control over the goods or services before transferring the goods or services to customers. If the Group is able tocontrol the goods or services before transferring them to customers, the Group is the principal responsible person, andrevenue is recognized based on the total amount of consideration received or receivable; otherwise, the Group is an agentand recognizes revenue based on the amount of commissions or fees which the Group is expected to be entitled to charge.The amount of commissions or fees is determined based on the total amount of consideration received or receivable net ofthe amount payable to other parties, or determined based on the amount or proportion of the commission.
26. Cost of contract
26.1 Cost of obtaining a contract
Incremental costs incurred by the Group to obtain a contract (that is, costs that would not have occurred without a contract)and expected to be recovered are recognized as an asset, and amortized using the same basis as revenue recognition forthe goods or services to which the asset relates, and included in current profit or loss. If the amortization period of theasset does not exceed one year, it is included in current profit or loss when it occurs. Other expenses incurred by the Groupin order to obtain the contract shall be included in current profit or loss when incurred, unless it is clearly borne by thecustomer.
26.2 Cost of contract fulfillment
The cost of the Group’s performance of a contract that does not fall within the scope of accounting standards other thanthe revenue standard and meets the following conditions is recognized as an asset: (1) The cost is directly related to acurrent or anticipated contract; (2) The cost increases the Group’s resources for fulfilling performance obligations in thefuture; (3) The cost is expected to be recovered. The aforesaid assets are amortized on the same basis as the recognitionof income from goods or services related to the assets, and are included in the current profit or loss.
27. Governmental Subsidy
Government subsidies refer to the monetary and non-monetary assets obtained by the Group from the government for free.Government subsidies are recognized when they can meet the conditions attached to the government subsidies and can bereceived.
If a government subsidy is a monetary asset, it shall be measured at the amount received or receivable.
st
2020 to June 30
th2020
27.1 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, and therefore are categorized as government subsidy related to assets.
A government grant related to an asset is recognized as deferred income, and it should be evenly amortized to profit orloss over the useful life of the related asset.
27.2 Judgment basis and accountant treatment of government subsidy related to incomeThe Group receives government subsidies including subsidies for Core Electronic Devices, High-end Universal Chip andBasic Software Product Projects, Value-Added-Tax rebate (VAT rebate), subsidies for special projects, and tax refunds,etc., which are not used for constructions and forms long-term assets in other ways, and therefore are categorized asgovernment subsidy related to income.
For a government grant related to income, for example subsidy for Core Electronic Devices, High-end Universal Chip andBasic Software Product Projects, since the subsidy is a compensation for related expenses or losses to be incurred insubsequent periods, it is recognized as deferred income, and recognized in profit or loss over the periods in which therelated costs or losses are recognized; If the subsidy, such as VAT Rebate, is a compensation for related expenses or lossesalready incurred, it 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; for those not relatedto the Group’s daily operations, shall be booked into non-operating income/expense.
For the policy-backed preferential subsidized loan, if the Ministry of Finance will appropriate the subsidy amount to thelending bank, who will grant the loan to the Group at the policy-backed preferential interest rate, the actually receivedloan amount will be the entry value of the loan and the loan-related expenses will be calculated based on the loan principaland policy-backed preferential interest rate.
28. Deferred Income Tax Assets / Deferred Income Tax Liabilities
The income tax expenses include current income tax and deferred income tax.
28.1. 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.
28.2 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 temporary differencesare recognized to the extent that it is probable that taxable profits will be available against which the deductible temporarydifferences can be utilized. However, for temporary differences associated with the initial recognition of goodwill and the
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to June 30
th2020
initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither theaccounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability isrecognized.
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, exceptwhere 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 taxableprofits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeablefuture.
On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at the applicabletax rates in the period in which the related assets are recovered or the related liabilities are recovered in accordance withthe 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 which casethey 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.
28.3 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 net basis.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 the assetsand liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities areexpected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
29. 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.
29.1 Accounting treatment of operating Lease
29.1.1 The Group as lessee under operating leases
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to June 30
th
2020
Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are either includedin the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit orloss for the period. Contingent rents are charged to profit or loss in the period in which they are actually incurred.
29.1.2 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 in profitor loss on the same basis as rental income over the lease term. Other initial direct costs with an insignificant amount arecharged to profit or loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the periodin which they actually arise.
29.2. Accounting treatment of the finance lease
29.2.1 The Group as lessee under finance leases
For relevant accounting treatment, refer to Note (III) 15.3 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 over thelease term. Contingent rents are credited to profit or loss in the period in which they are actually incurred. The net amountof minimum lease payments less unrecognized finance charges is separated into long-term liabilities and the portion oflong-term liabilities due within one year for presentation.
29.2.2 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 the leaseterm. 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.
30. Important judgments while applying accounting policy, and key assumptions and uncertainty factors appliedfor accounting estimate
During 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 other relatedfactors. Differences may exist between the actual results and the Group’s estimate.
st
2020 to June 30
th2020
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 in thecurrent period and future period.
- Key assumptions and uncertainties used in accounting estimateOn balance sheet date, key assumptions and uncertainties for performing accounting estimates on book value of assets andliabilities in subsequent future periods are:
Impairment provision for inventories
Inventories are measured at the lower of cost and net realizable value. For raw materials, the latest actual purchase priceis used as the basis for determining the net realizable value; for in-process products, the estimated selling price of thefinished product minus the estimated cost to be incurred to completion, estimated sales expenses and related taxes is usedas the basis for determining the net realizable value; for the finished product, the estimated selling price minus theestimated sales expenses and related taxes is used as the basis for determining the net realizable value. The Group willregularly conduct a comprehensive stocktaking to review the impairment circumstances on defective, obsoleted or slow-moving inventory if any; in addition, the Group's management will regularly review the impairment circumstance ofinventory with long storage time according to the inventory aging list. The review procedure includes the comparisonbetween book value of defective, obsoleted or slow-moving inventories and inventory with long storage time and itscorresponding net realizable value in order to determine whether to withdraw provisions on the defective, obsoleted orslow-moving inventory and inventory with long storage time. Based on the above procedure, the Group's managementdeems that the full provision amounts have been withdrawn for inventory.
Impairment of accounts receivables
The Group uses the impairment matrix to determine the provision for expected credit loss of accounts receivable. Byconsidering the historical loss rates, the Group will determine the proportions in the provision for loss for the accountsreceivable with similar risk characteristics. The impairment matrix is determined based on the Group's historical ratio ofwhich exceeding the credit period and in the default situation, and considers reasonable and forward-looking industryinformation. As of June 30
th
2020, the Group has reassessed the historically observable percentage of excess credit periods,while taking into account the changes of prospective information. The amount of the provision for expected credit losseswill change as the estimation of the Group. The details on the provision for expected credit losses of the accounts receivableof the Group are given in Note (V). 4.
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 fixed assetswith similar properties and functions, the estimation of predicted net residual value is the amount obtained currently bythe Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming theconditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shallconduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For thecurrent reporting period, the Group's management did not see signs either indicating a shortened or extended useful life ofthe Group’s fixed asset or indicating a change in predicted net residual value.
Accrued liabilities of product quality warranty
Accrued liabilities of product quality assurance are an estimation made by the Group according to the predicted repair andreplacement cost of relevant products. The estimation considers the product claim rate trend, historic defect rate, industrypractice and other major estimations. The management deems that the current estimation on accrued liabilities of product
st 2020 to June 30
th2020
quality warranty is reasonable, however, the Group will continue to review the conditions of product repairs, and willconduct adjustment if any sign indicating the need to make adjustments on accounting estimates.
Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during theperiod when the asset is expected to be recovered or the debt is paid off. The expected applicable income tax rate isdetermined according to the relevant current tax regulations and the actual situation of the Group. If the estimated incometax rate is different from the original estimate, the management of the Group will adjust it.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 confirmed inthe income statement during the corresponding period.
Goodwill impairment
When performing impairment test on goodwill, the predicted present value of future cash flows of relevant asset group orasset 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 of moneyand specific asset risk need to be determined. When the future actual result is different from the original estimation, thegoodwill impairment loss will alter.
Fair value measurement and valuation process
Held-for-trading financial assets, receivables for financing, and other non-current financial assets of the Group aremeasured at fair value in the financial statement. When valuating the fair value of these assets, the Group preferably usesobtainable and observable market data. If no observable data is available, the Group will organize an internal evaluationpanel or hire qualified third-party valuers to conduct valuation. The Finance Department and evaluation panel of the Groupwill work closely with the hired valuers to determine appropriate valuation techniques and the input values of the valuationmodel. The valuation techniques and input values used for valuating the fair value of various assets are disclosed in Note(IX).
st
2020 to June 30
th2020
31. Significant alternation in accounting policy and accounting estimations
31.1 Significant changes in accounting policies
| Changes in accounting policies and reasons | Approval Procedures | Notes |
| New revenue standard Starting from January 1st 2020, the Group has adopted the Accounting Standards for Business Enterprises No. 14 – Revenue (hereinafter referred to as the “New Revenue Standard”) modified by the Ministry of Finance in 2017. The New Revenue Standard has introduced the 5-step method for recognition and measurement of revenue and added more instructions on specific transactions (or events). For details of the accounting policies for recognition and measurement of revenue of the Group, please refer to Note (III). 25. The New Revenue Standard requires the entity to adjust the retained earnings and the amounts of other relative items in the financial statements at the beginning of initial adoption (i.e. January 1st 2020) of the new standards for the cumulative amount of impact, and not to adjust information in comparable period. In adopting the New Revenue Standard, the Group adjusts only the cumulative impact of contracts that have not been completed as at January 1st 2020. For changes in contract incurred before the beginning of adoption of New Revenue Standard, the Group will make simplified treatment, namely, the Group will identify the fulfilled and unfulfilled performance obligations, determine transaction price and allocate the transaction price between the fulfilled and unfulfilled performance obligations according to the final arrangement of contract changes. For details of the impact of the Group’s adoption of the New Revenue Standard on January 1st 2020, please refer to Note (III). 31.2. | Such alternations in accounting policy were approved by the Group at board of director general meeting. | None |
| Consolidated Report Items | December 31st 2019 | January 1st 2020 | Adjusted amounts |
| Assets: | |||
| Accounts receivable | 21,307,927,200.28 | 21,272,964,582.56 | (34,962,617.72) |
| Inventories | 11,267,986,843.11 | 10,756,027,592.41 | (511,959,250.70) |
| Contract assets | - | 546,921,868.42 | 546,921,868.42 |
| Other non-current assets- Completed but unsettled assets formed by construction contracts | 751,457,739.44 | - | (751,457,739.44) |
| Other non-current assets-Contract assets | - | 751,457,739.44 | 751,457,739.44 |
| Liabilities: | |||
| Receipts in advance | 1,020,989,460.61 | - | (1,020,989,460.61) |
| Contract liabilities | - | 1,128,239,007.61 | 1,128,239,007.61 |
| Defeerred income | 333,589,831.30 | 226,340,284.30 | (107,249,547.00) |
st
2020 to June 30
th
2020
Explanation of the adjustment of each item:
A summary of the impact of the first implementation of the new revenue standards on January 1
th2020:
Unit: RMB
| Itmes | Book value as stated under the original standard December 31st 2019 | Impact of the implementation of the new revenue standards | Book value as stated under the new standard January 1st 2020 | |
| Reclassified | ||||
| Transfer from items that originally classified as completed but unsettled assets formed by construction contracts and accouts receivable (Note 1) | Transfer from items that originally classified as receipts in advance/deferred income (Note 2) | |||
| Assets: | ||||
| Accounts receivable | 21,307,927,200.28 | (34,962,617.72) | - | 21,272,964,582.56 |
| Inventories | 11,267,986,843.11 | (511,959,250.70) | - | 10,756,027,592.41 |
| Contract assets | - | 546,921,868.42 | - | 546,921,868.42 |
| Other non-current assets- Completed but unsettled assets formed by construction contracts | 751,457,739.44 | (751,457,739.44) | - | - |
| Other non-current assets-Contract assets | - | 751,457,739.44 | - | 751,457,739.44 |
| Liabilities: | ||||
| Receipts in advance | 1,020,989,460.61 | - | (1,020,989,460.61) | - |
| Contract liabilities | - | - | 1,128,239,007.61 | 1,128,239,007.61 |
| Defeerred income | 333,589,831.30 | - | (107,249,547.00) | 226,340,284.30 |
st 2020 to June 30
th2020
Note 1: Transferred from items originally classified as completed but unsettled assets and accounts receivable:
The construction contracts undertaken by the Group were performance obligations to be fulfilled over a period of time,and the Group recognized revenue based on the progress of fulfillment of the contract. The amount of revenue recognizedby the Group based on the progress of fulfillment of the project in excess of the progress billings for contracts in progressis reclassified as contract assets. Accordingly, as at January 1
st
2020, the Group’s completed but unsettled assets of RMB1,263,416,990.14 and accounts receivable of RMB 34,962,617.72 formed by construction contracts previously presentedunder inventory and other non-current asset were reclassified as contract assets, of which amounts expected to be recoveredover 1 year were presented under other non-current assets.
Note 2: Transferred from item originally classified as receipts in advance / deferred income:
Receipts in advance received by the Group for sales of goods and services rendered were reclassified as contract liabilitiesas at January 1
st2020. The Group's obligations to provide services to customers in consideration for the provision of cloudstorage and other services were reclassified to contract liabilities as at January 1
st
2020.
Balance Sheet of Parent Company
Unit: RMB
| Items on the Parent Company’s report | December 31st 2019 | January 1st 2020 | Adjusted amounts |
| Assets: | |||
| Inventories | 171,243,815.97 | 160,419,083.27 | (10,824,732.70) |
| Contract assets | - | 10,824,732.70 | 10,824,732.70 |
| Liabilities: | |||
| Receipts in advance | 227,242,328.23 | - | (227,242,328.23) |
| Contract liabilities | - | 227,242,328.23 | 227,242,328.23 |
| Itmes | Book value as stated under the original standard December 31st 2019 | Impact of the implementation of the new revenue standards | Book value as stated under the new standard January 1st 2020 | |
| Reclassified | ||||
| Transfer from items that originally classified as completed but unsettled assets formed by construction contracts (Note1) | Transfer from items that originally classified as receipts in advance (Note 2) | |||
| Assets: | ||||
| Inventories- completed but unsettled assets formed by construction contracts | 171,243,815.97 | (10,824,732.70) | - | 160,419,083.27 |
| Contract assets | - | 10,824,732.70 | - | 10,824,732.70 |
| Liabilities: | ||||
| Receipts in advance | 227,242,328.23 | - | (227,242,328.23) | - |
| Contract liabilities | - | - | 227,242,328.23 | 227,242,328.23 |
st 2020 to June 30
th2020
Note 1: Transferred from items originally classified as completed but unsettled assets:
The construction contracts undertaken by the Company were performance obligations to be fulfilled over a period of time,and the Company recognized revenue based on the progress of fulfillment of the contract. The amount of revenuerecognized by the Company based on the progress of fulfillment of the project in excess of the progress billings forcontracts in progress is reclassified as contract assets. Accordingly, as at January 1
st2020, the Company’s completed butunsettled assets of RMB 10,824,732.70 from construction contracts previously presented under inventory were reclassifiedas contract assets.
Note 2: Transferred from items originally classified as receipts in advance:
Receipts in advance received by the Company for the sales of goods and services rendered were reclassified to contractliabilities as at January 1
st
2020.
st 2020 to June 30
th
2020
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%, 11%, 13%, 16%, 17% and simple collection rate of 5%, 3% (Note 2) |
| City maintenance and construction tax | Actual payable turnover tax | 7% |
| Education surcharges | Actual payable turnover tax | 3% |
| Local education surcharges | Actual payable turnover tax | 2% |
st 2020 to June 30
th
2020
Technology Co., Ltd. and Chongqing Hikvision System Technology Co., Ltd., are qualified to enjoy the westdevelopment preferential tax policy from 2011 to 2020, therefore, the enterprise income rate shall be calculated andpaid on the basis of a reduced tax rate of 15% in the current reporting period. (2019:15%)
(5) In accordance with the Replies on Publishing the List of First Batch of identified High-tech Enterprises of ZhejiangProvince in 2018 (GuoKeHuoZi [2019] No. 70) issued by the leading group office of Zhejiang high-tech enterpriseidentification management work on February 20
th2019, the Company’s joint venture subsidiary, Hangzhou FuyangBaotai Security Technology Service Co., Ltd. (Fuyang Baotai), was recognized as a high-tech enterprise and was validfor 3 years from 2018 to 2020. Therefore, the enterprise income rate shall be calculated and paid on the basis of areduced tax rate of 15% in the current reporting period. (2019:15%)
(6) In accordance with the Replies on Publishing identified High-tech Enterprises of Zhejiang Province in 2019(GuoKeHuoZi [2020] No. 32) issued by the leading group office of Zhejiang high-tech enterprise identificationmanagement work on January 20
th2020, the Company’s wholly-owned subsidiary, Hangzhou Hikvision SystemTechnology Co., Ltd. (Hangzhou System), was recognized as a high-tech enterprise and was valid for 3 years from2019 to 2021. Therefore, the enterprise income rate shall be calculated and paid on the basis of a reduced tax rate of15% in the current reporting period. (2019:15%)
(7) According to the Notice of State Administration of Taxation and Ministry of Finance on the Corporate Income Policy
for Further Incentivizing Software Industry and Integrated Circuit Industry (Finance and Taxation [2012] No. 27) andNotice on Issues Related to Enterprise Income Tax Preferential Policies for Software and Integrated Circuit Industry(Finance and Taxation [2016] No. 49), HikMicro is an integrated circuit manufacturer that was founded beforeDecember 31
st2017 and has not made profit and that produces the integrated circuit with line width <0.8 micrometers(incl.), so it is exempted from corporate income tax in the first and second years after start of profiting and payscorporate income tax at half of the 25% statutory tax rate in the third to fifth years until the preferential treatmentexpires. HikMicro enjoyed the preferential corporate income tax exemption in the current reporting period (2019:
15%).
(8) In accordance with the Replies on Publishing identified High-tech Enterprises of Zhejiang Province in 2019(GuoKeHuoZi [2020] No. 32) issued by the leading group office of Zhejiang high-tech enterprise identificationmanagement work on January 20
th2020, the Company’s joint venture subsidiary Hangzhou Kuangxin TechnologyCo., Ltd. ("Hangzhou Kuangxin") was recognized as a high-tech enterprise with a validity period of 3 years, from2019 to 2021. Therefore, the current corporate income tax of Hangzhou Kuangxin is calculated and paid at a tax rateof 15% (2019: 15%).
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, Hangzhou System, the Company’s joint-venture subsidiaries such as Hangzhou HikRobotTechnology, Hangzhou HikAuto Software, Hangzhou Eziviz Software, Hangzhou HIKStorage, and HangzhouHikmed Imaging, Hangzhou Hikfire, and Hangzhou Rayin, the VAT shall be calculated and paid with tax rate of 17%at first, then the portion with actual tax bearing excess 3% shall be refunded 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 orimported goods, and the VAT rates have been adjusted from 17%, 11% and 6% to 16%, 10% and 6% respectively.
According to the State Administration of Taxation Announcement No. 39 of 2019, since April 1
st2019, taxpayers aresubject to VAT taxable sales or imported goods, and the VAT rates have been adjusted from 16%, 10% and 6% to 13%,9%, and 6%, respectively.
The Group chooses to apply a simple collection rate of 5% for part of taxable service income.
st
2020 to June 30
th2020
V. Notes to items in the consolidated financial statements
1. Cash and bank balances
| Item | Closing Balance | Opening Balance | ||||
| Foreign currency amount | Exchange rate for conversion | RMB amount | Foreign currency amount | Exchange rate for conversion | RMB amount | |
| Cash： | ||||||
| RMB | - | - | 21,643.12 | - | - | 26,573.64 |
| INR | 2,002,499.47 | 0.0936 | 187,433.95 | 2,522,598.05 | 0.0975 | 245,953.31 |
| USD | 4,777.60 | 7.0795 | 33,823.03 | 18,379.06 | 6.9762 | 128,216.03 |
| EUR | 7,875.19 | 7.9610 | 62,694.42 | 9,121.04 | 7.8155 | 71,285.50 |
| GBP | 6,093.38 | 8.7144 | 53,100.15 | 6,402.60 | 9.1501 | 58,584.43 |
| Total other currencies | 21,537.74 | 26,816.77 | ||||
| Bank balance： | ||||||
| RMB | - | - | 14,794,794,542.43 | - | - | 18,788,528,237.06 |
| USD | 853,438,663.73 | 7.0795 | 6,041,919,019.85 | 961,564,878.01 | 6.9762 | 6,708,068,901.97 |
| EUR | 55,644,155.82 | 7.9610 | 442,983,124.52 | 52,283,961.33 | 7.8155 | 408,625,299.77 |
| INR | 248,886,706.20 | 0.0936 | 23,295,795.70 | 1,970,579,846.87 | 0.0975 | 192,131,535.07 |
| GBP | 12,259,927.22 | 8.7144 | 106,837,909.80 | 10,626,622.96 | 9.1501 | 97,234,662.71 |
| Total other currencies | 200,049,617.40 | 252,919,797.33 | ||||
| Other currency funds: | ||||||
| RMB | - | - | 463,501,070.55 | - | - | 552,442,631.48 |
| USD | 1,844,430.04 | 7.0795 | 13,057,642.48 | 9,370,708.66 | 6.9762 | 65,371,937.73 |
| EUR | 344,797.40 | 7.9610 | 2,744,932.10 | 601,625.37 | 7.8155 | 4,702,003.07 |
| GBP | - | - | - | 67,710.77 | 9.1501 | 619,560.32 |
| INR | 120,305.98 | 0.0936 | 11,260.64 | 120,305.95 | 0.0975 | 11,729.83 |
| Total other currencies | 930,937.73 | 735,193.76 | ||||
| Total | 22,090,506,085.61 | 27,071,948,919.78 | ||||
| Including: deposited in overseas banks | 808,042,436.30 | 1,045,878,239.66 | ||||
st 2020 to June 30
th2020
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： | ||||||
| Bank acceptance bill | - | - | 24,474,795.27 | - | - | 121,763,423.06 |
| Deposits for letter of guarantee | - | - | 70,112,214.19 | - | - | 60,758,739.37 |
| Deposits for letter of Credit in BRL | 262,540.34 | 1.3086 | 343,560.29 | 271,326.91 | 1.7312 | 469,721.15 |
| Tax Operation Margin for India | 120,305.98 | 0.0936 | 11,260.64 | 120,306.05 | 0.0975 | 11,729.83 |
| Other security deposit | - | - | 506,497.73 | - | - | 505,730.42 |
| Other capitals with limitations | - | - | 371,550,800.00 | - | - | 372,771,567.55 |
| Subtotal | 466,999,128.12 | 556,280,911.38 | ||||
| Capitals without limitations: | ||||||
| Deposit in Alipay, Tenpay, etc. | - | - | 12,867,235.27 | - | - | 65,519,585.97 |
| Other currency funds in USD | - | - | - | 298,523.39 | 6.9762 | 2,082,558.84 |
| Other capitals without limitations | - | - | 379,480.11 | - | - | - |
| Subtotal | 13,246,715.38 | 67,602,144.81 | ||||
| Total | 480,245,843.50 | 623,883,056.19 | ||||
| Item | Closing Balance | Opening Balance |
| Financial assets measured at fair value through current gain and loss | 853,125.46 | 181.76 |
| Including: derivative financial assets | 853,125.46 | 181.76 |
| Total | 853,125.46 | 181.76 |
| Category | Closing Balance | Opening Balance |
| Bank acceptance bill | 513,913,208.52 | 696,453,713.94 |
| Commercial acceptance bill | 296,339,729.64 | 276,783,075.08 |
| Total | 810,252,938.16 | 973,236,789.02 |
st
2020 to June 30
th2020
3.2 The pledged notes receivable by the Group at the closing of the current reporting peirod
Unit：RMB
| Category | Pledged amount at the end of the current reporting period |
| Bank acceptance bill | 2,606,950.00 |
| Total | 2,606,950.00 |
| Category | Derecognized amount by June 30th 2020 | Amount not derecognized by June 30th 2020 |
| Bank acceptance bill Note (V)-29.3 | - | 326,970,323.42 |
| Total | - | 326,970,323.42 |
| Category | Amounts transferred into accounts receivable by June 30th 2020 |
| Bank acceptance bill | 233,200,000.00 |
| Total | 233,200,000.00 |
| Item | Closing Balance | ||
| Accounts receivable | Bad debt provision | Proportion (%) | |
| Within credit period | 11,639,453,523.87 | 38,525,172.09 | 0.33 |
| Within 1 year after exceeding credit period | 8,637,366,711.30 | 395,878,536.30 | 4.58 |
| 1-2 years after exceeding credit period | 1,877,507,580.55 | 529,687,110.41 | 28.21 |
| 2-3 years after exceeding credit period | 503,854,294.38 | 288,808,481.26 | 57.32 |
| 3-4 years after exceeding credit period | 191,762,076.08 | 147,565,638.25 | 76.95 |
| Over 4 years after exceeding credit period | 154,168,393.12 | 154,168,393.12 | 100.00 |
| Subtotal | 23,004,112,579.30 | 1,554,633,331.43 | 6.76 |
st
2020 to June 30
th
2020
4.2 Classification and disclosure of by bad debt provision methods
Unit: RMB
| Category | Closing Balance | ||||
| Carrying amount | Bad debt provision | Book Value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | |
| Provision for bad debts on a single basis | - | - | - | - | - |
| Provision for bad debts by portfolios | 23,004,112,579.30 | 100.00 | 1,554,633,331.43 | 6.76 | 21,449,479,247.87 |
| Total | 23,004,112,579.30 | 100.00 | 1,554,633,331.43 | 6.76 | 21,449,479,247.87 |
| Category | Beginning Balance | ||||
| Carrying amount | Bad debt provision | Book Value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | |
| Provision for bad debts on a single basis | - | - | - | - | - |
| Provision for bad debts by portfolios | 22,705,464,020.53 | 100.00 | 1,432,499,437.97 | 6.31 | 21,272,964,582.56 |
| Total | 22,705,464,020.53 | 100.00 | 1,432,499,437.97 | 6.31 | 21,272,964,582.56 |
| Customer | Closing balance | ||
| Carrying amount | Bad debt provision | Proportion (%) | |
| Portfolio A | 3,720,979,297.39 | 121,530,291.45 | 3.27 |
| Portfolio B | 14,261,042,967.80 | 1,279,307,711.61 | 8.97 |
| Portfolio C | 5,022,090,314.11 | 153,795,328.37 | 3.06 |
| Total | 23,004,112,579.30 | 1,554,633,331.43 | 6.76 |
st
2020 to June 30
th2020
As of June 30
th 2020 and January 1
st2020, the credit risk and expected credit losses of accounts receivable from portfolio A are as follows:
Unit: RMB
| Age | Closing balance | Beginning balance | ||||||
| Estimated average loss rate (%) | Carrying value | Bad debt provision | Book value | Estimated average loss rate (%) | Carrying value | Bad debt provision | Book value | |
| Within credit period | 0.02 | 2,583,861,124.78 | 511,133.26 | 2,583,349,991.52 | 0.02 | 3,012,605,457.25 | 597,158.52 | 3,012,008,298.73 |
| Within 1 year after exceeding credit period | 1.63 | 923,369,296.04 | 15,078,391.89 | 908,290,904.15 | 6.11 | 624,571,039.13 | 38,185,783.11 | 586,385,256.02 |
| 1-2 years after exceeding credit period | 42.59 | 186,477,467.29 | 79,424,988.19 | 107,052,479.10 | 52.96 | 42,580,562.72 | 22,551,710.14 | 20,028,852.58 |
| 2-3 years after exceeding credit period | 96.68 | 22,759,975.06 | 22,004,343.89 | 755,631.17 | 100.00 | 10,567,300.34 | 10,567,300.34 | - |
| 3-4 years after exceeding credit period | 100.00 | 3,244,269.79 | 3,244,269.79 | - | 100.00 | 361,945.19 | 361,945.19 | - |
| Over 4 years after exceeding credit period | 100.00 | 1,267,164.43 | 1,267,164.43 | - | 100.00 | 970,003.96 | 970,003.96 | - |
| Total | 3.27 | 3,720,979,297.39 | 121,530,291.45 | 3,599,449,005.94 | 1.98 | 3,691,656,308.59 | 73,233,901.26 | 3,618,422,407.33 |
| Age | Closing balance | Beginning balance | ||||||
| Estimated average loss rate (%) | Carrying value | Bad debt provision | Book value | Estimated average loss rate (%) | Carrying value | Bad debt provision | Book value | |
| Within credit period | 0.62 | 5,106,544,176.55 | 31,495,672.98 | 5,075,048,503.57 | 0.80 | 6,293,299,884.71 | 50,248,953.36 | 6,243,050,931.35 |
| Within 1 year after exceeding credit period | 4.55 | 6,734,910,386.43 | 306,239,344.33 | 6,428,671,042.10 | 5.56 | 5,693,144,197.77 | 316,684,963.73 | 5,376,459,234.04 |
| 1-2 years after exceeding credit period | 25.35 | 1,633,832,076.85 | 414,204,900.73 | 1,219,627,176.12 | 33.24 | 1,204,463,575.15 | 400,380,049.11 | 804,083,526.04 |
| 2-3 years after exceeding credit period | 53.65 | 465,460,881.81 | 249,733,270.93 | 215,727,610.88 | 69.87 | 359,638,419.88 | 251,294,454.87 | 108,343,965.01 |
| 3-4 years after exceeding credit period | 75.76 | 176,003,818.80 | 133,342,895.28 | 42,660,923.52 | 88.54 | 111,524,139.09 | 98,742,193.82 | 12,781,945.27 |
| Over 4 years after exceeding credit period | 100.00 | 144,291,627.36 | 144,291,627.36 | - | 100.00 | 86,854,139.13 | 86,854,139.13 | - |
| Total | 8.97 | 14,261,042,967.80 | 1,279,307,711.61 | 12,981,735,256.19 | 8.76 | 13,748,924,355.73 | 1,204,204,754.02 | 12,544,719,601.71 |
st
2020 to June 30
th2020
As of June 30
th 2020 and January 1
st
2020, the credit risk and expected credit losses of accounts receivable from portfolio C are as follows:
Unit: RMB
| Age | Closing balance | Beginning balance | ||||||
| Estimated average loss rate (%) | Carrying value | Bad debt provision | Book value | Estimated average loss rate (%) | Carrying value | Bad debt provision | Book value | |
| Within credit period | 0.17 | 3,949,147,468.41 | 6,519,476.34 | 3,942,627,992.07 | 0.25 | 4,542,156,207.09 | 11,532,655.19 | 4,530,623,551.90 |
| Within 1 year after exceeding credit period | 7.62 | 979,087,028.83 | 74,560,850.08 | 904,526,178.75 | 11.63 | 607,354,998.31 | 70,646,073.52 | 536,708,924.79 |
| 1-2 years after exceeding credit period | 63.04 | 57,198,036.41 | 36,057,221.49 | 21,140,814.92 | 50.83 | 86,416,837.18 | 43,926,740.35 | 42,490,096.83 |
| 2-3 years after exceeding credit period | 100.00 | 17,070,866.44 | 17,070,866.44 | - | 100 | 12,516,916.97 | 12,516,916.97 | - |
| 3-4 years after exceeding credit period | 100.00 | 10,978,473.18 | 10,978,473.18 | - | 100 | 10,418,437.21 | 10,418,437.21 | - |
| Over 4 years after exceeding credit period | 100.00 | 8,608,440.84 | 8,608,440.84 | - | 100 | 6,019,959.45 | 6,019,959.45 | - |
| Total | 3.06 | 5,022,090,314.11 | 153,795,328.37 | 4,868,294,985.74 | 2.95 | 5,264,883,356.21 | 155,060,782.69 | 5,109,822,573.52 |
| Bed debt provision | Expected credit losses for the entire duration (No credit impairment occurred) | Expected credit losses for the entire duration (Credit impairment has occurred) | Total |
| Balance on January 1st 2020 | 487,895,587.43 | 944,603,850.54 | 1,432,499,437.97 |
| The book balance of accounts receivable on January 1st 2020 is in the current reporting period | |||
| -- Transfer into credit impairment that has occurred | (175,202,491.49) | 175,202,491.49 | - |
| Provision during the current reporting period | 124,133,185.36 | - | 124,133,185.36 |
| Derecognition of financial assets (including direct write-downs) and transfer out | - | 423,281.01 | 423,281.01 |
| Other changes | (2,422,572.91) | - | (2,422,572.91) |
| Balance on June 30th 2020 | 434,403,708.39 | 1,120,229,623.04 | 1,554,633,331.43 |
st 2020 to June 30
th2020
In the current reporting period, the Group accrued a bad debt allowance of RMB 124,133,185.36, and the decrease of baddebt allowance amount of RMB 2,422,572.91 was due to conversion of financial reports prepared in foreign currency; noreversal of bad debts during the current reporting period.
Actual write-off of account receivable during current reporting period:
In the current reporting period, the amount of actual accounts receivable write-off is RMB 347,418.33, and RMB770,699.34 is recollected after writing-off.
4.4 Top five debtors based on corresponding closing balance of account receivables
Unit: RMB
| Name of the Party | Relationship with the Company | Book value balance of accounts receivable | Closing balance for bad debt provision | Proportion (%) |
| Related party A | Related Party | 518,946,371.75 | 79,874,659.33 | 2.26 |
| Company A | Third party | 457,966,940.28 | 2,793,598.34 | 1.99 |
| Company B | Third party | 150,943,543.00 | 1,582,304.39 | 0.66 |
| Company C | Third party | 67,778,846.15 | 2,174,038.55 | 0.29 |
| Company D | Third party | 65,530,920.73 | 5,654,941.40 | 0.28 |
| Total | 1,261,166,621.91 | 92,079,542.01 | 5.48 |
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 1,183,573,810.59 | 1,257,385,053.02 |
| Total- | 1,183,573,810.59 | 1,257,385,053.02 |
| Item | Pledged amounts at the end of the reporting period |
| Bank acceptance bill | 90,566,739.34 |
| Total- | 90,566,739.34 |
| Item | Derecognized amount at June 30th 2020 (note) | Amount not derecognized at June 30th 2020 |
| Bank acceptance bill | 873,723,227.50 | - |
| Total- | 873,723,227.50 | - |
st
2020 to June 30
th2020
endorsed to the bank or suppliers. The maximum risk exposure of the Group continues to be involved in for these endorsedor discounted receivable notes is equivalent to their book value. The Group Management believes that the receivable noteswhich the Group has stopped recognizing but continues to be involved in do not have significant fair value.
5.4 The Group believes that the acceptance bank's credit rating of the bank acceptance bill held is high, and there is nosignificant credit risk, so no loss provision is made.
6. Prepayments
6.1 Prepayments by aging analysis
Unit: RMB
| Aging | Closing Balance | Opening Balance | ||
| Carrying amount | Proportion (%) | Carrying amount | Proportion (%) | |
| Within 1 year | 353,752,268.57 | 87.34 | 288,005,514.00 | 93.00 |
| 1-2 years | 34,836,409.65 | 8.60 | 15,571,671.02 | 5.03 |
| 2-3 years | 15,250,057.38 | 3.76 | 5,931,322.30 | 1.92 |
| Over 3 years | 1,228,500.10 | 0.30 | 177,226.00 | 0.05 |
| Total | 405,067,235.70 | 100.00 | 309,685,733.32 | 100.00 |
st
2020 to June 30
th2020
7. Other receivables
7.1 Summary of other receivables
Unit: RMB
| Closing Balance | Opening Balance | |
| Other receivables | 474,236,839.64 | 555,246,545.48 |
| Total | 474,236,839.64 | 555,246,545.48 |
| Item | Closing Balance | ||
| Other receivables | Bad debt provision | Proportion (%) | |
| Within credit period | 312,760,117.17 | 1,364,051.15 | 0.44 |
| Within 1 year after exceeding credit period | 89,271,869.95 | 4,687,025.35 | 5.25 |
| 1-2 years after exceeding credit period | 50,274,306.43 | 5,346,792.20 | 10.64 |
| 2-3 years after exceeding credit period | 31,903,443.89 | 8,419,795.26 | 26.39 |
| 3-4 years after exceeding credit period | 20,252,553.30 | 10,407,787.14 | 51.39 |
| Over 4 years after exceeding credit period | 4,671,115.20 | 4,671,115.20 | 100.00 |
| Subtotal | 509,133,405.94 | 34,896,566.30 | 6.85 |
| Item | Closing Balance | Opening Balance |
| Temporary payments for receivables | 301,424,480.16 | 289,318,820.48 |
| Guarantee deposits | 182,890,516.51 | 189,230,714.51 |
| Tax rebates | 861,624.66 | 63,470,351.07 |
| Investment intention fund | - | 2,968,783.82 |
| Others | 23,956,784.61 | 36,238,521.79 |
st
2020 to June 30
th2020
| Item | Closing Balance | Opening Balance |
| Total | 509,133,405.94 | 581,227,191.67 |
| Category | Opening balance | Amount of changes in the current reporting period | Difference resulted from foreign currency statements Conversion | Closing balance | ||
| Provision | Recollect or reverse | Resell or write off | ||||
| Other receivables | 25,980,646.19 | 10,010,654.15 | - | 930,819.43 | (163,914.61) | 34,896,566.30 |
| Total | 25,980,646.19 | 10,010,654.15 | - | 930,819.43 | (163,914.61) | 34,896,566.30 |
| 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 2020 | 1,212,041.34 | 4,892,634.45 | 19,875,970.40 | 25,980,646.19 |
| The book balance of other receivables on January 1st 2020 in the current reporting period | ||||
| --Transfer into stage 2 | (267,815.61) | 267,815.61 | - | - |
| -- Transfer into stage 3 | - | (2,584,099.35) | 2,584,099.35 | - |
| --Transfer back to stage 2 | - | - | - | - |
| -- Transfer back to stage 1 | - | - | - | - |
| Provisions for the current reporting period | 583,740.03 | 2,110,674.64 | 7,316,239.48 | 10,010,654.15 |
| Recollection or reversal in the current reporting period | - | - | - | - |
| Write-off or re-write in the current reporting period | - | - | (930,819.43) | (930,819.43) |
| Other changes | (163,914.61) | - | - | (163,914.61) |
| Balance on June 30th 2020 | 1,364,051.15 | 4,687,025.35 | 28,845,489.80 | 34,896,566.30 |
st
2020 to June 30
th
2020
(5) Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
| Entities | Relationship with the Company | Nature | Closing balance | Aging | Proportion of total (%) | Closing balance for bad debt provision |
| Third party A | Third party | Guarantee deposits | 6,158,813.80 | Within 4 years exceeding credit period | 1.21 | 3,165,014.41 |
| Third party B | Third party | Temporary payments for receivables | 5,996,878.80 | Within 4 years after exceeding credit period | 1.18 | 3,081,796.02 |
| Third party C | Third party | Guarantee deposits | 3,738,423.66 | Within 2 year after exceeding credit period | 0.73 | 397,768.28 |
| Third party D | Third party | Guarantee deposits | 3,500,000.00 | Within 3 year after exceeding credit period | 0.69 | 1,120,350.00 |
| Third party E | Third party | Guarantee deposits | 3,287,781.43 | Within 2 year after exceeding credit period | 0.65 | 349,375.98 |
| Total | 22,681,897.69 | 4.46 | 8,114,304.69 |
| Category | Closing Balance | Opening Balance | ||||
| Carrying amount | Provision for decline in value of inventories/ Impairment provision for contract performance cost | Book value | Carrying amount | Provision for decline in value of inventories/ Impairment provision for contract performance cost | Book value | |
| Raw materials | 5,132,169,849.49 | 49,762,170.04 | 5,082,407,679.45 | 4,900,229,585.04 | 36,718,275.26 | 4,863,511,309.78 |
| Work-in-progress | 469,770,079.15 | - | 469,770,079.15 | 280,637,734.52 | - | 280,637,734.52 |
| Finished goods | 4,854,348,964.89 | 501,746,705.57 | 4,352,602,259.32 | 5,292,845,473.70 | 405,129,709.25 | 4,887,715,764.45 |
| Contract performance cost | 1,307,628,895.97 | - | 1,307,628,895.97 | 724,162,783.66 | - | 724,162,783.66 |
| Total | 11,763,917,789.50 | 551,508,875.61 | 11,212,408,913.89 | 11,197,875,576.92 | 441,847,984.51 | 10,756,027,592.41 |
st
2020 to June 30
th2020
(2) Provision for decline in value of inventories
Unit: RMB
| Category | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Effect on conversion of financial statements denominated in foreign currencies | Closing Balance | |
| Reversals | Write-off | |||||
| Raw materials | 36,718,275.26 | 15,533,523.19 | - | 2,489,628.41 | - | 49,762,170.04 |
| Finished goods | 405,129,709.25 | 149,860,635.14 | - | 51,373,666.93 | (1,869,971.89) | 501,746,705.57 |
| Subtotal | 441,847,984.51 | 165,394,158.33 | - | 53,863,295.34 | (1,869,971.89) | 551,508,875.61 |
st
2020 to June 30
th2020
9. Contract assets
(1) Details of contract assets:
Unit: RMB
| Items | Closing Balance | Opening Balance | ||||
| Carrying amount | Provisions for impairment | Book value | Carrying amount | Provisions for impairment | Book value | |
| Completed but unsettled assets formed by construction contracts | 93,401,952.55 | - | 93,401,952.55 | 546,921,868.42 | - | 546,921,868.42 |
| Maintainence services | 17,990,679.02 | - | 17,990,679.02 | - | - | - |
| Total | 111,392,631.57 | - | 111,392,631.57 | 546,921,868.42 | - | 546,921,868.42 |
| Item | Amount |
| Accumulated occurred costs of construction | 2,783,514,715.98 |
| Accumulated booked gross profit margin | 487,904,817.48 |
| Less: estimated losses | - |
| Settled amounts | 2,245,694,164.58 |
| Completed but unsettled assets formed by construction contracts | 1,025,725,368.88 |
| Including: booked in other non-current assets (Note (V) 21) | 932,323,416.33 |
| Booked in contract assets | 93,401,952.55 |
| Item | Closing Balance | Opening Balance |
| Long-term receivables due within one year (Note (V) 12) | 781,587,087.34 | 528,469,701.75 |
| Total | 781,587,087.34 | 528,469,701.75 |
| Item | Closing balance | Opening balance |
| Deductible VAT input | 547,293,910.53 | 616,239,842.99 |
| Prepaid corporate income tax | 51,289,122.65 | 80,344,406.42 |
| Prepaid tariff | 18,848,472.17 | 16,702,795.64 |
| Others | 56,475,399.65 | 41,169,776.67 |
| Total | 673,906,905.00 | 754,456,821.72 |
st 2020 to June 30
th2020
12. Long-term receivables
(1) Details of long-term receivables
Unit: RMB
| 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 | 355,555,388.97 | 25,793,545.42 | 329,761,843.55 | 361,658,264.68 | 16,387,726.08 | 345,270,538.60 | 0.54%-6.05% |
| Including: Unrealized income from financing | 8,205,399.48 | - | 8,205,399.48 | 17,093,256.64 | - | 17,093,256.64 | - |
| Installments for selling goods | 2,085,254,006.45 | 56,477,947.81 | 2,028,776,058.64 | 1,612,991,061.26 | 47,255,136.89 | 1,565,735,924.37 | 4.24%-6.45% |
| Including: Unrealized income from financing | 497,903,351.98 | - | 497,903,351.98 | 399,492,567.10 | - | 399,492,567.10 | - |
| Less: Non-current assets due within one year (Note (V) 10) | 853,381,556.84 | 71,794,469.50 | 781,587,087.34 | 580,682,032.92 | 52,212,331.17 | 528,469,701.75 | - |
| Total | 1,587,427,838.58 | 10,477,023.73 | 1,576,950,814.85 | 1,393,967,293.02 | 11,430,531.80 | 1,382,536,761.22 | - |
st 2020 to June 30
th
2020
As of June 30
th2020, the credit risk and expected credit losses of long-term receivables of these customers are as follows:
Unit: RMB
| Age | Closing balance | ||
| Amounts | Bed debt provision | Estimated average loss rate (%) | |
| Within credit period | 2,092,779,901.24 | 12,986,277.33 | 0.62 |
| Within 1 year after exceeding credit period | 195,112,291.32 | 8,897,120.48 | 4.56 |
| 1-2 years after exceeding credit period | 95,898,525.87 | 21,088,085.83 | 21.99 |
| 2-3 years after exceeding credit period | 28,917,511.16 | 16,315,259.79 | 56.42 |
| 3-4 years after exceeding credit period | 21,827,713.41 | 16,711,297.38 | 76.56 |
| Over 4 years after exceeding credit period | 6,273,452.42 | 6,273,452.42 | 100.00 |
| Total | 2,440,809,395.42 | 82,271,493.23 | 3.37 |
| Bed debt provision | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire duration (No credit impairment occurred) | Expected credit losses for the entire duration (Credit impairment has occurred) | ||
| Balance on January 1st 2020 | 13,978,436.59 | 10,724,421.18 | 38,940,005.20 | 63,642,862.97 |
| Transfer into credit impairment that has occurred | (992,159.26) | (20,455,930.96) | 21,448,090.22 | - |
| Provision during the current reporting period | - | 18,628,630.26 | - | 18,628,630.26 |
| Balance on June 30th 2020 | 12,986,277.33 | 8,897,120.48 | 60,388,095.42 | 82,271,493.23 |
st
2020 to June 30
th2020
13. 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 | ||||
| 1. Joint venture companies | |||||||||||
| Hangzhou Haikang Intelligent Industrial Investment Fund Partnership (L.P.) | 50,000,000.00 | 250,000,000.00 | - | 2,571,332.72 | - | - | - | - | - | 302,571,332.72 | - |
| Daishan Hailai Yunzhi Technology Co., Ltd. | 13,320,000.00 | - | - | (127,149.41) | - | - | - | - | - | 13,192,850.59 | - |
| Zhejiang Haishi Huayue Digital Technology Co., Ltd. (Note 1) | - | 10,200,000.00 | - | 23,214.14 | - | - | - | - | - | 10,223,214.14 | - |
| Xuzhou Kangbo Urban Operation Management Service Co., Ltd. (Note 2) | - | 4,900,000.00 | - | (273.88) | - | - | - | - | - | 4,899,726.12 | - |
| Subtotal | 63,320,000.00 | 265,100,000.00 | - | 2,467,123.57 | - | - | - | - | - | 330,887,123.57 | - |
| 2. Associated Companies | |||||||||||
| Wuhu Sensor Technology Co., Ltd. | 48,420,966.46 | - | - | (1,006,663.84) | - | - | - | - | - | 47,414,302.62 | - |
| Maxio Technology (Hangzhou) Co., Ltd. | 109,929,732.09 | - | - | (9,871,957.98) | - | - | - | - | - | 100,057,774.11 | - |
| Zhiguang Hailian Big Data Technology Co., Ltd. | 8,684,859.27 | 10,000,000.00 | - | 913,298.13 | - | - | - | - | - | 19,598,157.40 | - |
st
2020 to June 30
th
2020
| 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 | ||||
| Sanmenxia Xiaoyun Vision Technology Co., Ltd. | 4,317,157.18 | - | - | (253,514.88) | - | - | - | - | - | 4,063,642.30 | - |
| Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. | 7,699,011.20 | - | - | (1,103,156.76) | - | - | - | - | - | 6,595,854.44 | - |
| Qinghai Qingtang Big Data Co., Ltd. | 9,793,595.29 | - | - | 58,897.93 | - | - | - | - | - | 9,852,493.22 | - |
| Shenzhen Hikvision City Service Operation Co., Ltd. (Note 3) | - | 2,000,000.00 | - | (146,743.86) | - | - | - | - | - | 1,853,256.14 | - |
| Subtotal | 188,845,321.49 | 12,000,000.00 | - | (11,409,841.26) | - | - | - | - | - | 189,435,480.23 | - |
| Total | 252,165,321.49 | 277,100,000.00 | - | (8,942,717.69) | - | - | - | - | - | 520,322,603.80 | - |
st
2020 to June 30
th2020
Note 2: During the period, the Group entered into an agreement with independent third parties, Xuzhou Parking Technology Co., Ltd. (Xuzhou Parking Technology) and Xuzhou CitizenCard Co., Ltd. (Xuzhou Citizen Card), in relation to the establishment of the joint venture, Xuzhou Kangbo Urban Operation and Management Service Co., Ltd. (Xuzhou Urban Operation).The Group has contributed RMB 9.80 million and has paid RMB 4.90 million as at the end of the current reporting period, and the proportion of equity interest acquired was 49%, whichwas consistent with the voting rights enjoyed by the Group at the general meeting of Xuzhou Urban Operation. According to the articles of association of Xuzhou Urban Operation, majorissues involving the company's development strategy and long-term planning must be approved by shareholders with more than 2/3 of the voting rights at the general meeting. The boardof directors of Xuzhou Urban Operation consists of 5 directors, of which 2 are appointed by the Group and 2 are appointed by Xuzhou Parking Technology. According to the articles ofassociation of Xuzhou Urban Operation, major issues involving the company’s operating decisions must be approved by more than 2/3 of the members of the board of directors. Therefore,the Group and Xuzhou Parking Technology jointly control Xuzhou Urban Operation.
Note 3: During the current reporting period, the Group entered into an agreement with independent third party Shenzhen Huazun Borui Technology Co., Ltd. (Huazun Borui Technology)for jointly establishing Shenzhen Hikvision Urban Service Operation Co., Ltd. (Shenzhen Urban Operation). The Group has contributed RMB 20.00 million and has paid RMB 2.00million as at the end of the period, and the proportion of equity interest acquired was 40%. The board of directors of Shenzhen Urban Operation consists of 3 directors, of which 1 directoris appointed by the Group to exert significant influence over Shenzhen Urban Operations.
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to June 30
th2020
14. Other non-current financial assets
Unit: RMB
| Invested Entity (Note 1) | Shareholding % | Opening balance | Additional investment during the current reporting period | Investment recovery during the current reporting period | Changes in fair value during the current reporting period | Closing balance |
| CETC Finance Co., Ltd. (Note 2) | 3.83% | 247,308,906.45 | - | - | (14,197,198.59) | 233,111,707.86 |
| Hangzhou Confirmware Technology Co., Ltd. | 9.52% | 28,732,009.18 | - | - | 1,497,260.32 | 30,229,269.50 |
| Zhejiang Tuxun Technology Co.,Ltd. (Zhejiang Tuxun) | 8.13% | 28,358,818.81 | - | - | (317,393.99) | 28,041,424.82 |
| Zhengzhou Guokong Smart City Technology Co., Ltd. | 7.00% | 3,500,000.00 | - | (2,800,000.00) | - | 700,000.00 |
| Guangxi Jilian Haibao Technical Service Co., Ltd. | 10.00% | 2,884,220.00 | - | - | - | 2,884,220.00 |
| Shenzhen Wanyu Security Service Technology Co., Ltd. | 5.00% | 1,000,000.00 | - | - | - | 1,000,000.00 |
| Nanwang Information Industry Group Co., Ltd. | 0.25% | 604,313.00 | - | - | - | 604,313.00 |
| Hangzhou Hikvision Equity Investment Partnership (Limited Partnership) | 0.0017% | 10,000.00 | - | - | - | 10,000.00 |
| Total | 312,398,267.44 | - | (2,800,000.00) | (13,017,332.26) | 296,580,935.18 |
| Items | Building and construction | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
| Total original carrying amount | |||||
| 1. Opening balance | 4,816,088,804.95 | 773,020,682.47 | 1,857,736,384.58 | 91,486,364.54 | 7,538,332,236.54 |
| 2. Increase in the current reporting period | 211,568,093.89 | 149,968,632.17 | 223,141,721.49 | 7,314,204.79 | 591,992,652.34 |
| 1) purchase | 101,950,414.18 | 149,486,353.48 | 172,969,381.69 | 7,314,204.79 | 431,720,354.14 |
| 2) transferred from construction in progress | 109,617,679.71 | 482,278.69 | 50,172,339.80 | - | 160,272,298.20 |
| 3.Decrease in the current reporting period | 183,184.39 | 5,809,483.18 | 6,757,037.66 | 1,990,471.41 | 14,740,176.64 |
| 1) disposal or write-off | 183,184.39 | 5,809,483.18 | 6,757,037.66 | 1,990,471.41 | 14,740,176.64 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | (1,409,159.10) | (3,411,448.02) | (4,182,355.51) | (277,930.31) | (9,280,892.94) |
st
2020 to June 30
th
2020
| Items | Building and construction | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
| 5.Closing Balance | 5,026,064,555.35 | 913,768,383.44 | 2,069,938,712.90 | 96,532,167.61 | 8,106,303,819.30 |
| Accumulated depreciation | |||||
| 1. Opening balance | 763,668,628.26 | 224,369,283.55 | 713,167,782.03 | 45,907,821.83 | 1,747,113,515.67 |
| 2. Increase in the current reporting period | 114,165,750.30 | 89,366,901.69 | 155,463,715.38 | 8,975,603.45 | 367,971,970.82 |
| (1) accrual | 114,165,750.30 | 89,366,901.69 | 155,463,715.38 | 8,975,603.45 | 367,971,970.82 |
| 3.Decrease in the current reporting period | 27,486.96 | 4,759,639.78 | 4,336,488.83 | 1,570,245.77 | 10,693,861.34 |
| (1) disposal or write- off | 27,486.96 | 4,759,639.78 | 4,336,488.83 | 1,570,245.77 | 10,693,861.34 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | (358,061.63) | (1,740,751.36) | (1,342,487.38) | (183,143.19) | (3,624,443.56) |
| 5.Closing balance | 877,448,829.97 | 307,235,794.10 | 862,952,521.20 | 53,130,036.32 | 2,100,767,181.59 |
| 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 | |||||
| Closing balance on book value | 4,148,615,725.38 | 606,532,589.34 | 1,206,986,191.70 | 43,402,131.29 | 6,005,536,637.71 |
| Opening balance on book value | 4,052,420,176.69 | 548,651,398.92 | 1,144,568,602.55 | 45,578,542.71 | 5,791,218,720.87 |
| Item | Original book value | Accumulated depreciation | Provision for impairment | Carrying value |
| Fixed assets | 76,842,631.49 | 23,339,788.79 | - | 53,502,842.70 |
| Item | Carrying amount | Reason for certificates of title not granted |
| Office building for branches | 19,906,399.28 | In the process of obtaining the real estate certificates |
| Chongqing Production Base-Phase 1 plant | 286,687,284.22 | In the process of obtaining the real estate certificates after transferred to fixed assets |
| Fuzhou High-tech Zone Innovation Park | 94,923,791.72 | In the process of obtaining the real estate certificates after transferred to fixed assets |
| Total | 401,517,475.22 |
st 2020 to June 30
th2020
16. 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 | 48,706,874.94 | - | 48,706,874.94 | 29,514,953.03 | - | 29,514,953.03 |
| Hangzhou Innovation Industry Base | 237,051,028.73 | - | 237,051,028.73 | 113,538,634.58 | - | 113,538,634.58 |
| Chengdu Science and Technology Base Project | 369,398,026.23 | - | 369,398,026.23 | 242,931,547.66 | - | 242,931,547.66 |
| Chongqing Science and Technology Base Phase II Project | 185,866,637.47 | - | 185,866,637.47 | 111,066,438.98 | - | 111,066,438.98 |
| Others | 172,933,889.69 | - | 172,933,889.69 | 134,503,904.81 | - | 134,503,904.81 |
| Total | 1,013,956,457.06 | - | 1,013,956,457.06 | 631,555,479.06 | - | 631,555,479.06 |
| Item | Budget (RMB 0,000) | Opening balance | Increase in the current reporting period | Transferred to fixed assets during the current reporting period | Effect on conversion of financial statements denominated in foreign currencies | Other Reductions (Note 1) | Closing balance | Amount invested as a proportion of budget amount (%) | Construction in Progress (%) | Accumulated capitalized interest and profit/loss on exchange (Note 2) | 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 |
| Chengdu Science and Technology Base Project | 182,000.00 | 242,931,547.66 | 126,466,478.57 | - | - | - | 369,398,026.23 | 20.30% | 20.30% | - | - | - | Self- financing |
| Hangzhou Innovation Industry Base | 102,600.00 | 113,538,634.58 | 123,512,394.15 | - | - | - | 237,051,028.73 | 23.10% | 23.10% | 32,777,912.50 | 37,918,104.79 | 0.65% | Special loan |
st 2020 to June 30
th
2020
Note 1: The other reductions in the current reporting period was completed decoration projects that were transferred into long-term deferred expenses.
Note 2: This amount is calculated by interest expense for specific foreign currency borrowings, less interest income for unused borrowing fund and profit/loss on exchange rate difference.
As of June 30
th2020, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
| Item | Budget (RMB 0,000) | Opening balance | Increase in the current reporting period | Transferred to fixed assets during the current reporting period | Effect on conversion of financial statements denominated in foreign currencies | Other Reductions (Note 1) | Closing balance | Amount invested as a proportion of budget amount (%) | Construction in Progress (%) | Accumulated capitalized interest and profit/loss on exchange (Note 2) | 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 |
| Chongqing Science and Technology Base project- phase 2 | 76,200.00 | 111,066,438.98 | 74,800,198.49 | - | - | - | 185,866,637.47 | 24.39% | 24.39% | - | - | - | Self- financing |
| Xi’an Science and Technology Base project | 227,800.00 | 6,171,571.90 | 1,032,758.02 | - | - | 7,204,329.92 | 0.32% | 0.32% | - | - | - | Self- financing | |
| Wuhan Science and Technology Base project | 280,600.00 | 4,339,622.64 | - | - | - | - | 4,339,622.64 | 0.15% | 0.15% | - | - | - | Self- financing |
| Wuhan Intelligent Industry Base project | 238,700.00 | 2,370,546.89 | - | - | - | - | 2,370,546.89 | 0.10% | 0.10% | - | - | - | Self- financing |
| Others | - | 151,137,116.41 | 218,744,421.65 | 160,272,298.20 | 267,632.29 | 2,150,606.97 | 207,726,265.18 | - | - | - | - | - | Self- financing |
| Total | 1,107,900.00 | 631,555,479.06 | 544,556,250.88 | 160,272,298.20 | 267,632.29 | 2,150,606.97 | 1,013,956,457.06 | - | - | 32,777,912.50 | 37,918,104.79 |
st 2020 to June 30
th2020
17. Intangible assets
(1) Details of Intangible assets
Unit: RMB
| Item | Land use right | Intellectual property right | Application Software | Franchise | Total |
| Total original carrying amount | |||||
| 1.Opening balance | 973,043,453.70 | 66,993,435.51 | 280,896,635.94 | - | 1,320,933,525.15 |
| 2. Increased | 818,200.00 | - | 49,197,703.37 | 8,831,030.23 | 58,846,933.60 |
| (1) Purchase | 818,200.00 | - | 49,197,703.37 | 8,831,030.23 | 58,846,933.60 |
| 3.Decreased | - | - | 188,227.36 | - | 188,227.36 |
| (1)Disposal or write-off | - | - | 188,227.36 | - | 188,227.36 |
| 4.Effect on conversion of financial statements denominated in foreign currencies | - | (126,763.72) | (210,543.70) | - | (337,307.42) |
| 5.Closing balance | 973,861,653.70 | 66,866,671.79 | 329,695,568.25 | 8,831,030.23 | 1,379,254,923.97 |
| Total accumulated amortization | |||||
| 1.Opening balance | 53,291,064.90 | 51,532,190.15 | 169,987,762.46 | - | 274,811,017.51 |
| 2.Increased | 10,589,910.68 | 3,425,317.04 | 62,854,811.42 | 189,914.63 | 77,059,953.77 |
| (1)Accrual | 10,589,910.68 | 3,425,317.04 | 62,854,811.42 | 189,914.63 | 77,059,953.77 |
| 3.Decreased | - | - | 187,705.21 | - | 187,705.21 |
| (1)Disposal or write-off | - | - | 187,705.21 | - | 187,705.21 |
| 4.Effect on conversion of financial statements denominated in foreign currencies | (51,561.56) | (27,816.03) | - | (79,377.59) | |
| 5. Closing balance | 63,880,975.58 | 54,905,945.63 | 232,627,052.64 | 189,914.63 | 351,603,888.48 |
| Provision for decline in value | |||||
| 1.Opening balance | - | - | - | - | - |
| 2.Increased | - | - | - | - | - |
| 3. Decreased | - | - | - | - | - |
| 4.Closing balance | - | - | - | - | - |
| Total book value | |||||
| Closing balance on book value | 909,980,678.12 | 11,960,726.16 | 97,068,515.61 | 8,641,115.60 | 1,027,651,035.49 |
| Opening balance on book value | 919,752,388.80 | 15,461,245.36 | 110,908,873.48 | - | 1,046,122,507.64 |
st 2020 to June 30
th2020
18. Goodwill
(1) Goodwill book value
Unit: RMB
| The invested entity | Opening balance | Increased | Decreased | Effect on conversion of financial statements denominated in foreign currencies | Closing balance |
| Business combination not involving enterprises under common control | Liquidation & cancellation | ||||
| Secure Holdings Limited (SHL) | 139,374,307.33 | - | - | 2,007,266.02 | 141,381,573.35 |
| Henan HuaAn Baoquan Intelligence Development Co., Ltd. and its subsidiaries | 61,322,871.63 | - | - | - | 61,322,871.63 |
| Hangzhou Kuangxin Technology Co., Ltd. | 59,060,454.06 | - | - | - | 59,060,454.06 |
| Hundure Technology (Shanghai) Co., Ltd. | 13,774,405.88 | - | - | - | 13,774,405.88 |
| ZAO Hikvision | 67,349.64 | - | - | - | 67,349.64 |
| Hangzhou Haikang Zhicheng Investment and Development Co., Ltd. | 12,573.42 | - | - | - | 12,573.42 |
| Total | 273,611,961.96 | - | - | 2,007,266.02 | 275,619,227.98 |
| Invested unit | Opening Balance | Increased | Amortized | Difference of foreign currency translation | Closing balance |
| Improvement expenditure for leased fixed asset | 87,611,490.75 | 29,354,267.40 | 19,788,072.87 | (1,786,501.30) | 95,391,183.98 |
| Total | 87,611,490.75 | 29,354,267.40 | 19,788,072.87 | (1,786,501.30) | 95,391,183.98 |
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for impairment losses of assets | 440,719,434.56 | 108,352,489.38 | 272,015,493.85 | 72,480,367.65 |
| Provision for credit loss | 1,548,475,179.99 | 317,344,792.83 | 1,409,847,170.59 | 292,275,236.58 |
| Payroll payables | 353,810,837.41 | 55,990,855.40 | 353,810,837.41 | 55,990,855.40 |
| Share-based payment | 768,091,431.42 | 115,213,714.71 | 273,114,847.21 | 43,340,918.66 |
| Provisions | 70,059,231.54 | 11,871,480.55 | 78,353,085.64 | 15,477,040.83 |
| Expenditure without invoice | 178,143,900.00 | 26,721,585.00 | 228,359,902.54 | 52,419,606.75 |
| Unrealized profit from inter-group transactions | 1,461,445,877.63 | 219,216,881.64 | 1,157,820,970.68 | 187,268,546.98 |
| Changes in the fair value of derivative financial instruments | 5,812,489.99 | 1,453,122.50 | 652,428.18 | 163,107.05 |
| Deferred income | 359,257,097.77 | 62,152,351.64 | 288,449,840.21 | 51,155,882.21 |
| Total | 5,185,815,480.31 | 918,317,273.65 | 4,062,424,576.31 | 770,571,562.11 |
st 2020 to June 30
th2020
(2) Deferred tax liabilities that are not presented on net off basis
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Difference in fixed asset depreciation | 717,253,533.41 | 143,731,936.90 | 680,837,730.59 | 129,970,264.62 |
| Difference in amortization of intangible assets | 2,077,910.54 | 311,686.58 | 1,386,714.30 | 208,007.14 |
| Changes in the fair value of derivative financial instruments | 853,125.46 | 213,281.37 | 181.76 | 45.44 |
| Changes in fair value of other non-current financial assets | 46,373,894.32 | 6,956,084.15 | 17,547,234.44 | 2,632,085.17 |
| Total | 766,558,463.73 | 151,212,989.00 | 699,771,861.09 | 132,810,402.37 |
| 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 | 56,744,733.30 | 861,572,540.35 | 81,722,298.41 | 688,849,263.70 |
| Deferred tax liabilities | 56,744,733.30 | 94,468,255.70 | 81,722,298.41 | 51,088,103.96 |
| Item | Closing balance | Opening balance |
| Contract assets | 932,323,416.33 | 751,457,739.44 |
| Prepayments for acquisition of land | 91,981,842.90 | 818,200.00 |
| Prepayments for equipment | 33,183,431.32 | 85,573,983.95 |
| Prepayments for infrastructure | 13,987,433.50 | 13,942,203.53 |
| Prepayments for equity investment | - | 13,794,550.00 |
| Total | 1,071,476,124.05 | 865,586,676.92 |
| Item | Closing balance | Opening balance |
| Fiduciary loan-principal | 4,441,240,874.66 | 2,637,513,739.48 |
| Fiduciary loan-interest | 3,336,098.23 | 2,568,745.67 |
| Pledged loans | 2,700,000.00 | - |
| Total | 4,447,276,972.89 | 2,640,082,485.15 |
| Item | Closing balance | Opening balance |
| Financial liabilities measured at fair value through current profits and losses | 8,951,114.77 | 652,428.18 |
| Including: derivative financial liabilities | 8,951,114.77 | 652,428.18 |
| total | 8,951,114.77 | 652,428.18 |
st 2020 to June 30
th2020
Derivative financial liabilities include forward foreign exchange contracts, currency swaps, foreign exchange optioncontracts, and etc., not designated as a hedging instrument, gains or losses due to changes in fair value is directly includedin the current period profits and losses.
24. Notes payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance Bill | 1,222,676,114.77 | 1,239,584,016.70 |
| Total | 1,222,676,114.77 | 1,239,584,016.70 |
| Item | Closing balance | Opening balance |
| Payments for goods | 7,049,636,573.22 | 12,526,135,911.98 |
| Payables on equipment | 248,313,386.38 | 173,939,395.72 |
| Total | 7,297,949,959.60 | 12,700,075,307.70 |
| Item | Closing balance | Opening balance |
| Advanced receipts from sales of goods (Note1) | 515,383,375.49 | 535,145,418.68 |
| Advanced receipts from construction contracts (Note 2) | 543,022,982.09 | 485,844,041.93 |
| Service contract (Note3) | 114,437,791.33 | 107,249,547.00 |
| Total | 1,172,844,148.91 | 1,128,239,007.61 |
st
2020 to June 30
th2020
27. Payroll payable
(1) Details of payroll payable
Unit: RMB
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 1.Short-term remuneration | 2,350,226,309.38 | 4,842,900,962.90 | 5,404,001,351.89 | 1,789,125,920.39 |
| 2. Termination benefits – defined contribution scheme | 9,448,330.74 | 211,303,175.59 | 203,615,158.79 | 17,136,347.54 |
| Total | 2,359,674,640.12 | 5,054,204,138.49 | 5,607,616,510.68 | 1,806,262,267.93 |
| 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 | 2,194,538,939.13 | 4,355,194,083.06 | 4,957,135,568.90 | 1,592,597,453.29 |
| 2.Staff welfare | 74,284.72 | 48,073,645.43 | 48,075,725.43 | 72,204.72 |
| 3.Social insurance contributions | 746,726.43 | 145,815,575.28 | 141,077,928.93 | 5,484,372.78 |
| Including: Medical insurance | 671,240.08 | 136,559,620.72 | 132,193,552.84 | 5,037,307.96 |
| Injury insurance | 24,637.32 | 3,913,989.16 | 3,649,372.65 | 289,253.83 |
| Maternity insurance | 50,849.03 | 5,341,965.40 | 5,235,003.44 | 157,810.99 |
| 4.Housing funds | 132,910.00 | 222,590,244.32 | 222,589,688.78 | 133,465.54 |
| 5.Labor union and education fund | 154,733,449.10 | 71,227,414.81 | 35,122,439.85 | 190,838,424.06 |
| Subtotal | 2,350,226,309.38 | 4,842,900,962.90 | 5,404,001,351.89 | 1,789,125,920.39 |
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1.Basic pension insurance | 9,009,304.85 | 203,988,931.76 | 196,416,381.33 | 16,581,855.28 |
| 2.Unemployment insurance | 439,025.89 | 7,314,243.83 | 7,198,777.46 | 554,492.26 |
| Subtotal | 9,448,330.74 | 211,303,175.59 | 203,615,158.79 | 17,136,347.54 |
| Item | Closing balance | Opening balance |
| Enterprise income tax | 798,047,576.17 | 553,486,554.42 |
| Value-added tax | 473,711,572.20 | 331,490,538.56 |
| City construction and maintenance tax | 15,233,618.75 | 21,992,627.00 |
| Education surcharges | 6,598,969.38 | 9,283,542.86 |
| Local education surcharges | 4,493,527.21 | 6,385,473.76 |
| Others | 78,606,826.71 | 68,704,069.31 |
st
2020 to June 30
th2020
Item
| Item | Closing balance | Opening balance |
| Total | 1,376,692,090.42 | 991,342,805.91 |
| Item | Closing balance | Opening balance |
| Dividend payable | 207,013,978.04 | 108,129,385.24 |
| Other payables | 1,705,690,173.64 | 1,460,615,214.70 |
| Total | 1,912,704,151.68 | 1,568,744,599.94 |
| Item | Closing balance | Opening balance |
| Dividends of incentive restricted shares | 207,013,978.04 | 105,679,385.24 |
| Dividends of common shares | - | 2,450,000.00 |
| Total | 207,013,978.04 | 108,129,385.24 |
| Item | Closing balance | Opening balance |
| Accrued expenses | 876,154,251.09 | 608,136,188.75 |
| Unexpired commercial acceptance bills that were endorsed (Note (V)-3) | 326,970,323.42 | 329,309,522.17 |
| Guarantee and deposit fees | 262,444,520.57 | 240,507,892.79 |
| Collection and payment on behalf | 179,553,154.01 | 220,858,972.11 |
| Investment payable | 12,400,000.00 | 12,400,000.00 |
| Other expense payable | 48,167,924.55 | 49,402,638.88 |
| Total | 1,705,690,173.64 | 1,460,615,214.70 |
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year (Note (V) 32) | 135,866,310.70 | 69,893,081.33 |
| Long-term payables due within one year (Note (V) 33) | 19,169,247.54 | 16,230,072.73 |
| Total | 155,035,558.24 | 86,123,154.06 |
st
2020 to June 30
th2020
31. Other current liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Subscription payment of restricted shares | 812,199,945.56 | 913,534,538.26 |
| Short-term commercial paper (SCP) | 1,000,000,000.00 | - |
| Interests on SCP | 813,672.87 | - |
| Total | 1,813,013,618.43 | 913,534,538.26 |
| Item | Closing balance | Opening balance |
| Pledged loan (Note 1) | 1,522,975,239.25 | 1,348,034,851.48 |
| Fiduciary loan (Note 2) | 3,194,266,785.73 | 3,136,026,801.28 |
| Other borrowing (Note 3) | 190,000,000.00 | 190,000,000.00 |
| Less：Long-term loans due within one year (Note (V) 30) | 135,866,310.70 | 69,893,081.33 |
| Total | 4,771,375,714.28 | 4,604,168,571.43 |
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to June 30
th2020
take part in decision-making or make significant influence on Hangzhou Electronics. The Group shall pay a 1.2%annualized return to CDBDF through dividends or interest payments, and the Group is required to redeem the CDBDF'sequity investment in the current reporting period by installments each year from 2021 to 2024. Therefore, the capitalinjection by CDBDF is treated as a long-term loan. As of June 30
th2020, CDBDF has aggregately invested RMB 190million (December 31
st2019: RMB 190 million).
33. Long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Payables for financial leasing | 32,625,618.86 | 42,181,416.72 |
| Borrowing | 8,000,000.00 | 8,000,000.00 |
| Total | 40,625,618.86 | 50,181,416.72 |
| Details of financial lease payables in long-term payables | Closing balance | Opening balance |
| 1st year after the balance sheet date | 21,781,072.49 | 19,265,287.22 |
| 2nd year after the balance sheet date | 21,160,727.89 | 21,387,869.19 |
| 3rd year after the balance sheet date | 10,457,384.48 | 14,137,481.89 |
| Future years | 3,619,911.68 | 10,420,815.85 |
| Total minimum lease payments | 57,019,096.54 | 65,211,454.15 |
| Unrecognized financing costs | 5,224,230.14 | 6,799,964.70 |
| Finance lease payable | 51,794,866.40 | 58,411,489.45 |
| Including: Finance lease payable due within 1 year | 19,169,247.54 | 16,230,072.73 |
| Finance lease payable due after 1 year | 32,625,618.86 | 42,181,416.72 |
| Item | Closing balance | Opening balance |
| Product warranty | 84,693,948.33 | 90,570,669.01 |
| Total | 84,693,948.33 | 90,570,669.01 |
st 2020 to June 30
th
2020
35. Deferred income
Unit: RMB
| Item | Opening balance | Increase in current reporting period | Decrease in current reporting period | Closing balance | Details |
| Government Subsidies | 226,340,284.30 | 35,179,000.00 | 8,861,020.08 | 252,658,264.22 | Note 1 |
| Total | 226,340,284.30 | 35,179,000.00 | 8,861,020.08 | 252,658,264.22 |
| 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 |
| Chongqing Manufacture Base construction | 79,254,065.44 | - | 1,209,465.00 | - | 78,044,600.44 | Related to assets |
| Projects of core electronic devices, high-end universal chips and basic software products | 62,827,863.01 | - | - | - | 62,827,863.01 | Related to incomes |
| Other special subsidies | 43,466,515.09 | 30,904,000.00 | 5,325,458.06 | - | 69,045,057.03 | Related to assets |
| Other special subsidies | 40,791,840.76 | 4,275,000.00 | 2,326,097.02 | - | 42,740,743.74 | Related to incomes |
| Subtotal | 226,340,284.30 | 35,179,000.00 | 8,861,020.08 | - | 252,658,264.22 |
| Item | Closing balance | Opening balance |
| Subscription for restricted stocks | 1,234,739,326.10 | 1,234,739,326.10 |
| Total | 1,234,739,326.10 | 1,234,739,326.10 |
| Opening balance | Changes for the current reporting period | Closing balance | |||||
| New issue of shares | Bonus issue | Transfer from Capital Reserve | Others | Subtotal | |||
| 2020.06.30 | |||||||
| Total shares | 9,345,010,696.00 | - | - | - | - | - | 9,345,010,696.00 |
st 2020 to June 30
th2020
38. Capital reserves
Unit: RMB
| Item | Opening balance | Increase in the current reporting period (Note 1) | Decrease in the current reporting period (note 2) | Closing balance |
| 2020.06.30 | ||||
| Share premium | 3,834,418,853.06 | 21,934,490.45 | 53,552,843.92 | 3,802,800,499.59 |
| Other capital reserves | 292,524,845.90 | 481,168,915.75 | - | 773,693,761.65 |
| Total | 4,126,943,698.96 | 503,103,406.20 | 53,552,843.92 | 4,576,494,261.24 |
| Item | Opening Balance | Increase in the current reporting period | Decrease in the current reporting period (Note 1) | Closing balance |
| 2020.06.30 | ||||
| Restricted shares incentive scheme | 2,148,273,864.36 | - | 101,334,592.80 | 2,046,939,271.56 |
| Total | 2,148,273,864.36 | - | 101,334,592.80 | 2,046,939,271.56 |
st
2020 to June 30
th2020
40. Other comprehensive income
Unit: RMB
| Item | Opening balance | Amounts occurred in 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 parent company (after tax) | Attributable to minority shareholders (after tax) | |||
| 2020.06.30： | |||||||
| Other incomes that may be reclassified subsequently to profit or loss | (53,541,146.99) | (26,796,178.37) | - | - | (24,482,915.47) | (2,313,262.90) | (78,024,062.46) |
| Included: Effect on conversion of financial statements denominated in foreign currencies | (53,541,146.99) | (26,796,178.37) | - | - | (24,482,915.47) | (2,313,262.90) | (78,024,062.46) |
| Other comprehensive income | (53,541,146.99) | (26,796,178.37) | - | - | (24,482,915.47) | (2,313,262.90) | (78,024,062.46) |
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 2020.06.30 | ||||
| Statutory surplus reserves | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
| Total | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
| Item | First half of 2020 | First half of 2019 |
| Undistributed profit at the end of the previous reporting period | 28,961,389,145.22 | 22,360,593,257.53 |
| Business merger under the common control | - | (736,986.11) |
| Retained Earnings at the close of the prior reporting period | 28,961,389,145.22 | 22,359,856,271.42 |
| Add: Net profit attributable to the parent company for the current reporting period | 4,623,972,830.87 | 4,216,755,210.24 |
| Dividends payable on common shares (Note) | 6,541,507,487.20 | 5,605,823,858.10 |
| Retained earnings at the end of the current reporting period | 27,043,854,488.89 | 20,970,787,623.56 |
st
2020 to June 30
th2020
43. Operating income/operating cost
Unit: RMB
| Item | First half of 2020 | First half of 2019 | ||
| Revenue | Cost | Revenue | Cost | |
| Operating income | 24,068,056,071.82 | 12,100,735,573.06 | 23,693,888,435.21 | 12,727,511,306.82 |
| Other operating income | 203,103,171.94 | 92,984,372.32 | 229,384,989.29 | 112,995,026.86 |
| Total | 24,271,159,243.76 | 12,193,719,945.38 | 23,923,273,424.50 | 12,840,506,333.68 |
| Items | First half of 2020 | First half of 2019 |
| City construction and maintenance tax | 79,448,007.54 | 81,858,061.74 |
| Education surcharges | 34,694,864.30 | 36,071,455.51 |
| Local education surcharges | 23,124,847.79 | 23,308,866.59 |
| Stamp duty | 11,993,613.72 | 11,130,199.34 |
| Real estate tax | 8,518,237.11 | 11,123,190.25 |
| Tax on use of land | 1,810,901.96 | 1,340,324.67 |
| Vehicle and vessel tax | 93,490.92 | 98,624.36 |
| Others | 8,388,201.91 | 2,617,183.46 |
| Total | 168,072,165.25 | 167,547,905.92 |
| Items | First half of 2020 | First half of 2019 |
| Interest expenses | 117,407,704.24 | 102,317,635.94 |
| Less：Interest income | 306,973,066.18 | 300,644,265.63 |
| Foreign exchange losses | 2,749,318.63 | 52,456,277.58 |
| Less﹕Capitalized specific loan interests and foreign exchange differences on specific loan | 50,688,176.68 | (5,817,000.63) |
| Others | 9,532,013.26 | 10,109,924.22 |
| Total | (227,972,206.73) | (129,943,427.26) |
| Item | First half of 2020 | First half of 2019 |
| VAT Rebates | 784,320,169.82 | 632,531,286.98 |
| Special subsidies | 180,572,947.23 | 84,928,005.35 |
| Tax relief | 29,885,277.10 | 5,106,929.21 |
| Total | 994,778,394.15 | 722,566,221.54 |
st 2020 to June 30
th2020
47. Investment income
Unit: RMB
| Item | First half of 2020 | First half of 2019 |
| Long-term equity investment losses based on equity method | (8,942,717.69) | (4,215,155.62) |
| Investment income from disposal of held-for-trading financial assets | 9,162,427.25 | 8,082,291.28 |
| Investment income from other non-current financial assets during the holding period | 150,000,000.00 | 17,357,220.31 |
| Total | 150,219,709.56 | 21,224,355.97 |
| Sources of gains/losses from changes in fair values | First half of 2020 | First half of 2019 |
| Held-for-trading financial assets | 849,343.33 | 586,934.12 |
| Including: gains on the changes in fair value of derivative financial instruments | 849,343.33 | 586,934.12 |
| Gains (losses) from changes in fair value of other non-current financial assets | (13,017,332.26) | 2,153,238.50 |
| Held-for-trading financial liabilities | (8,268,448.03) | (873,778.16) |
| Including: losses on the changes in fair value of derivative financial instruments | (8,268,448.03) | (873,778.16) |
| Total | (20,436,436.96) | 1,866,394.46 |
| Items | First half of 2020 | First half of 2019 |
| Credit bad debt losses of accounts receivable | (124,133,185.36) | (115,422,011.62) |
| Gains (losses) on credit bad debt of other receivables | (10,010,654.15) | 39,530,792.03 |
| Credit bad debt losses of long-term receivable | (18,628,630.26) | (58,635,212.98) |
| Total | (152,772,469.77) | (134,526,432.57) |
| Items | First half of 2020 | First half of 2019 |
| Losses on inventory devaluation | (165,394,158.33) | (80,143,742.65) |
| Total | (165,394,158.33) | (80,143,742.65) |
st 2020 to June 30
th2020
51. Non-operating income
Unit: RMB
| Item | First half of 2020 | First half of 2019 | The amount booked into current period non-recurring profits and looses |
| Special subsidies | 5,094,743.17 | 471,298.57 | 5,094,743.17 |
| Fines and confiscations | 21,590,256.57 | 18,790,241.63 | 21,590,256.57 |
| Tax refunds | - | 5,049.70 | - |
| Others | 5,036,207.34 | 19,040,488.70 | 5,036,207.34 |
| Total | 31,721,207.08 | 38,307,078.60 | 31,721,207.08 |
| Item | First half of 2020 | First half of 2019 | The amount booked into current period non-recurring profits and looses |
| Local water conservancy construction fund | 572,889.30 | 326,266.15 | - |
| Others | 6,805,876.26 | 8,087,915.76 | 6,805,876.26 |
| Total | 7,378,765.56 | 8,414,181.91 | 7,378,765.56 |
| Item | First half of 2020 | First half of 2019 |
| Income tax for the current reporting period | 1,081,938,656.65 | 989,900,141.38 |
| Deferred income tax expenses | (129,343,124.91) | (68,182,595.96) |
| Differences in filing and payment of income tax in previous reporting years | (43,385.77) | 12,203,111.26 |
| Total | 952,552,145.97 | 933,920,656.68 |
| Item | First half of 2020 | First half of 2019 |
| Interest income | 306,973,066.18 | 300,644,265.63 |
| Government subsidies | 211,985,670.32 | 123,235,083.95 |
| Others | 188,964,355.88 | 160,612,732.43 |
| Total | 707,923,092.38 | 584,492,082.01 |
| Item | First half of 2020 | First half of 2019 |
| Office expenses and business expenses | 370,845,812.71 | 358,952,495.22 |
| Advertising and Selling services | 557,200,285.44 | 546,661,309.37 |
| R&D expense | 457,282,381.38 | 467,463,033.83 |
| Shipping and transportation expense | 322,420,666.54 | 348,864,517.36 |
| Travelling expense | 141,639,591.57 | 211,860,989.63 |
| Deposits to restricted monetary funds | - | 56,039,040.44 |
| Rental expense | 101,520,803.75 | 105,938,464.34 |
| Others | 95,397,631.90 | 38,722,894.70 |
st
2020 to June 30
th2020
Item
| Item | First half of 2020 | First half of 2019 |
| Total | 2,046,307,173.29 | 2,134,502,744.89 |
| Item | First half of 2020 | First half of 2019 |
| Receipts of financing lease payments | 14,990,732.87 | - |
| Total | 14,990,732.87 | - |
| Item | First half of 2020 | First half of 2019 |
| Repurchase of restricted shares | - | 31,290,856.75 |
| The consideration paid for the acquisition of minority shareholders' equity | 64,290,000.00 | - |
| Total | 64,290,000.00 | 31,290,856.75 |
| Supplementary information | First half of 2020 | First half of 2019 |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 4,666,871,541.00 | 4,223,761,290.19 |
| Add: Impairment of assets | 165,394,158.33 | 80,143,742.65 |
| Provision for credit impairment losses | 152,772,469.77 | 134,526,432.57 |
| Fixed assets depreciation | 367,971,970.82 | 269,340,120.34 |
| Amortization of intangible assets | 77,059,953.77 | 40,228,458.41 |
| Long-term deferred expenses amortization | 19,788,072.87 | 6,022,357.25 |
| Gains on disposal of fixed assets, intangible assets and other long-term assets | (21,554.99) | (810,043.90) |
| Losses of retirement of fixed assets, intangible assets and other long-term assets | 1,112,772.90 | 4,464,360.56 |
| Losses (Gains) from changes in fair value | 20,436,436.96 | (1,866,394.46) |
| Financial expenses | 64,849,445.01 | 157,920,883.55 |
| Investment income | (150,219,709.56) | (21,224,355.97) |
| Share-based payment based on equity settlement | 481,168,915.75 | 250,128,589.34 |
| Changes in other currency funds | 89,281,783.26 | (56,039,040.44) |
| Increase in deferred income tax assets | (172,723,276.65) | (68,182,595.96) |
| Increase in deferred income tax liabilities | 43,380,151.74 | - |
| Increase in inventories | (107,946,257.22) | (2,953,673,953.50) |
| Increase in operating receivables | (355,309,356.48) | (2,693,537,605.46) |
| Increase (decrease) in operating payables | (5,320,219,156.63) | 196,409,532.04 |
| Increase in deferred income | 26,317,979.92 | 1,324,429.61 |
| Net cash flows from operating activities | 69,966,340.57 | (431,063,793.18) |
| 2. Significant investing and financing activities not involving cash receipts and payments: | ||
| 3. Net changes in cash and cash equivalents: | ||
| Ending balance of cash | 21,623,506,957.49 | 21,261,201,514.71 |
st 2020 to June 30
th2020
Supplementary information
| Supplementary information | First half of 2020 | First half of 2019 |
| Less: Opening balance of cash | 26,515,668,008.40 | 26,031,011,733.89 |
| Add: Ending balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net decrease in cash and cash equivalents | (4,892,161,050.91) | (4,769,810,219.18) |
| Item | Closing balance | Opening balance |
| Cash | 21,623,506,957.49 | 26,515,668,008.40 |
| Including: Cash on hand | 380,232.41 | 557,429.68 |
| Bank deposit for payment at any time | 21,609,880,009.7 | 26,447,508,433.91 |
| Other monetary capital for payment at any time | 13,246,715.38 | 67,602,144.81 |
| Cash equivalents | - | - |
| Closing balance of cash and cash equivalents | 21,623,506,957.49 | 26,515,668,008.40 |
| Item | Book value at the end of the current reporting period | Cause of restriction |
| Monetary fund(s) | 466,999,128.12 | Various guarantee deposits and other restricted funds |
| Notes receivable | 326,970,323.42 | Endorsed to suppliers |
| Notes receivable | 2,606,950.00 | Pledged for issuing bank acceptance bills |
| Receivables for financing | 90,566,739.34 | Pledged for issuing bank acceptance bill |
| Accounts receivable | 4,749,676.59 | Pledged for short-term borrowings |
| Fixed assets | 53,502,842.70 | Sale and leaseback of fixed assets |
| Long-term receivables | 1,158,287,191.19 | Pledged for long-term borrowings |
| Total | 2,103,682,851.36 |
| 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 | 840,956,677.16 | 7.0795 | 5,953,552,795.94 |
| EUR | 48,567,036.11 | 7.9610 | 386,642,174.46 |
| GBP | 283,167.09 | 8.7144 | 2,467,631.25 |
| Accounts receivable | |||
| Including: USD | 316,977,846.51 | 7.0795 | 2,244,044,664.37 |
| EUR | 51,518,042.75 | 7.9610 | 410,135,138.37 |
st
2020 to June 30
th
2020
Item
| 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 |
| Short-term borrowing | |||
| Including: GBP | 9,577,501.93 | 8.7144 | 83,462,182.78 |
| Accounts Payable | |||
| Including: USD | 139,110,479.64 | 7.0795 | 984,832,640.60 |
| Non-current liabilities due within one year | |||
| Including: EUR | 1,206,111.11 | 7.9610 | 9,601,850.55 |
| Long-term borrowings | |||
| Including: EUR | 400,000,000.00 | 7.9610 | 3,184,400,000.00 |
| Name of overseas subsidiaries | Main overseas operational office | Recording Currency | Basis of selection |
| HDT International Ltd. | Hongkong China | HKD | Selection based on local economic environment |
| Hikvision Europe BV | Netherlands | USD | 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 China | USD | 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 |
st 2020 to June 30
th2020
Name of overseas subsidiaries
| Name of overseas subsidiaries | Main overseas operational office | Recording Currency | Basis of selection |
| 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 Technology Egypt JSC | Egypt | EGP | Selection based on local economic environment |
| PT. Hikvision Technology Indonesia | Indonesia | IDR | Selection based on local economic environment |
| Hikvision Technologies S.R.L., | Romania | RON | Selection based on local economic environment |
| Hikvision IOT (Thailand) CO.,LTD. | Thiland | THB | Selection based on local economic environment |
| Hikvision West Africa Limited | Nigeria | NGN | Selection based on local economic environment |
| Ezviz International Limited | Honkong China | HKD | Selection based on local economic environment |
| Hikvision Azerbaijan Limited Liability | Azerbaijan | AZN | Selection based on local economic environment |
| Hikvision Japan K.K. | Japan | JPY | Selection based on local economic environment |
| Hikvision Argentina S.R.L. | Argentina | ARS | Selection based on local economic environment |
| Hikvision Morocco LLC | Morocco | MAD | Selection based on local economic environment |
| Category | Amount | Financial Report Items | Amount booked in current profit and loss |
| VAT Rebate | 784,320,169.82 | Other Income | 784,320,169.82 |
| Special subsidies | 438,325,954.62 | ||
| Including: other special subsidies | 296,244,026.17 | Deferred income / Other income/ Non-operating income | 184,458,225.40 |
| core electronic devices, high-end universal chip and basic software product projects | 62,827,863.01 | Deferred income / Other income | - |
| Chongqing Manufacture Base construction subsidies | 79,254,065.44 | Deferred income / Other income | 1,209,465.00 |
| Tax Refund/Reduction | 29,885,277.10 | Other income/ Non-operating income | 29,885,277.10 |
| Total | 1,252,531,401.54 | 999,873,137.32 |
st
2020 to June 30
th
2020
VI. Changes in consolidation scope
1. Changes of consolidation scope due to other causes
The subsidiaries newly established and incorporated in the consolidation scope during the current reporting period as follows:
| Company Name | Time of establishment | Registered capital | Amount of contribution of the Group | Ratio of contribution (%) |
| Hangzhou Rayin Technology Co., Ltd. (Note 1) | January 2020 | RMB 100 mn | RMB 60 mn | 60 |
| Hikvision Morocco LLC (Note 2) | March 2020 | MAD 1,800,000 | MAD 1,800,000 | 100 |
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Hangzhou Hikvision System Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | System integration, Technology development | 100.00 | - | Establishment |
| Hangzhou Hikvision Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | manufacture | 100.00 | - | Establishment |
| Hangzhou Hikvision Security Equipment Leasing Services Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Finance lease | 100.00 | - | Establishment |
| Chongqing Hikvision System Technology Co., Ltd. | Chongqing | Chongqing | System integration | 100.00 | - | Establishment |
| Hikvision USA, Inc. | USA | Los Angeles | Sales | 100.00 | - | Establishment |
| HDT International Ltd. | Hong Kong China | Hong Kong China | 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 Technology Co., Ltd. | Chongqing | Chongqing | Manufacture | 100.00 | - | Establishment |
| Hangzhou Fuyang Hik Baotai Security Technology Services Co., Ltd. (Note 1) | Hangzhou | Hangzhou, Zhejiang | Construction | - | 51.00 | Establishment |
| Hikvision South Africa (Pty) Co., 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 | Brazil | Brazil | Sales | 95.00 | 5.00 | Establishment |
st
2020 to June 30
th
2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Equipamentos de Seguran?a Ltda. | ||||||
| Hikvision Australia PTY Co., Ltd. | Australia | Australia | Sales | 100.00 | - | Establishment |
| Hikvision International Co., Limited | Hong Kong China | Hong Kong China | 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 Co., 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 |
| Henan Hua’an Intelligence Development Co., Ltd. (Note 2) | Zhengzhou | Zhengzhou Henan | Construction | 93.86 | - | Acquisition of minority shareholders |
| Henan Hua’an Security Services Co., Ltd. (Note 2) | Zhengzhou | Zhengzhou Henan | Services | - | 84.47 | Acquisition of minority shareholders |
| Hundure Technology (Shanghai) Co., 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 Co., Ltd.（Note 3） | Hangzhou | Hangzhou Zhejiang | 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 Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
| EZVIZ Inc. | USA | Los Angeles | Sales | - | 60.00 | Establishment |
| Hangzhou Haikang Zhicheng Investment Development Ltd | Hangzhou | Hangzhou Zhejiang | System integration | 80.00 | - | Business combination not involving enterprises under common control |
| Hangzhou Hikrobot Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
| Hangzhou Hikvision Investment Management Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Investment Management | 100.00 | - | Establishment |
| Hangzhou HikAuto Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
| Hangzhou Hikvision Communication Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 70.00 | - | Establishment |
| Hangzhou Hikmicro Sensing Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
st
2020 to June 30
th2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| 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 |
| Hikvision Hungary Limited | Hungary | Hungary | Sales | - | 100.00 | Establishment |
| Hikvision New Zealand Limited | New Zealand | Auckland | Sales | - | 100.00 | Establishment |
| Urumqi HaiShi Xin’An Electronic Technology Co., Ltd. | Urumqi | Urumqi, Xinjiang | Construction | - | 90.00 | Establishment |
| Hangzhou Ximu Intelligent Technology Co., 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 HikAuto Software Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology Development | - | 60.00 | Establishment |
| Hangzhou Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology Development | - | 60.00 | Establishment |
| Chengdu Hikvision Digital Technology Co., Ltd. | Chengdu | Chengdu Sichuan | Technology development | 100.00 | - | Establishment |
| MoYuHaiShi Electronic Technology Co., Ltd. | Hetian | Hetian Xinjiang | Construction | - | 85.00 | Establishment |
| Hangzhou EZVIZ Software Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
| PiShan HaiShi YongAn Electronic Technology Co., Ltd. | Hetian | Hetian Xinjiang | System integration | - | 90.00 | Establishment |
| Henan Haikang Hua’an BaoQuan Electronics Co., Ltd. (Note 2) | Zhengzhou | Zhengzhou Henan | Construction | 93.86 | - | Acquisition of minority shareholders |
| 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 |
st 2020 to June 30
th
2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Hikvision Xi’an Xueliang Construction Project Management Co., Ltd. | Xi’an | Xi’an Shanxi | Construction | - | 99.00 | Establishment |
| Luo Pu District HaiShi Ding Xin Electronic Technology Co., Ltd. | Hetian | Hetian Xinjiang | System integration | - | 90.00 | Establishment |
| Yu Tian HaiShi Mei Tian Electronic Technology Co., Ltd. | Hetian | Hetian Xinjiang | System integration | - | 98.00 | Establishment |
| Xi’An Hikvision Digital Technology Co., Ltd. | Xi’An | Xi’an Shanxi | Technology development | 100.00 | - | Establishment |
| Wuhan Hikvision Technology Co., Ltd. | Wuhan | Wuhan Hubei | Technology development | 100.00 | - | Establishment |
| Wuhan Hikvision Science and Technology Co., Ltd. | Wuhan | Wuhan Hubei | Sales | 100.00 | - | Establishment |
| Wuhan Hiksafety Technology Co., Ltd. (Note 4) | Wuhan | Wuhan Hubei | Sales | - | 60.00 | Establishment |
| Hainan Hikvision System Technology Co., Ltd. | Hainan | Lingshui Hainan | System integration | 100.00 | - | Establishment |
| Hangzhou Hikmed Imaging Technology Co., 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 Co., Ltd. | Guiyang | Guiyang, Guizhou | Technology development | 55.00 | - | Establishment |
| Xinjiang CET Yihai Information Technology Co., 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 Co., Ltd. | Israel | Israel | Sales | - | 100.00 | Establishment |
| Nanjing Hikvision Digital Technology Co., Ltd. | Nanjing | Nanjing, Jiangsu | Sales | 100.00 | - | Establishment |
| Shijiazhuang Hikvision Technology Co., Ltd. | Shijiazhuang | Shijiazhuang Hebei | Technology development | 100.00 | - | Establishment |
| Zhengzhou Hikvision Digital Technology Co., Ltd. | Zhengzhou | Zhengzhou Henan | 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 Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Sales | - | 60.00 | Business merger under the common control |
| Hangzhou Kuangxin Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 80.00 | - | Business merger not involving enterprises under the common control |
| Hikvision Digital Technology (Shanghai) Co., Ltd. | Shanghai | Shanghai | R&D, sales | 100.00 | - | Establishment |
| Nanchang Hikvision Digital Technology Co., Ltd. | Nanchang | Nanchang Jiangxi | Technology development | 100.00 | - | Establishment |
| Zhejiang Hiksafety Technology Co., Ltd. (Note 4) | Jiangshan | Jiangshan Zhejiang | Technology development | - | 60.00 | Establishment |
| Zhenping County Haikang Juxin Digital Technology Co., Ltd. | Zhenping | Zhenping Henan | System integration | - | 90.00 | Establishment |
| Hefei Hikvision Digital Technology Co., Ltd. | Hefei | Hefei Anhui | Technology development | 100.00 | - | Establishment |
| Tianjin Hikvision Information Technology Co., Ltd. | Tianjin | Tianjin | Technology development | 100.00 | - | Establishment |
st 2020 to June 30
th
2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Fuzhou Hikvision Digital Technology Co., Ltd. | Fuzhou | Fuzhou Fujian | System integration | 100.00 | - | Establishment |
| Anhui Hikvision Urban Operation Service Co., Ltd. (Note 5) | Anhui | Xuancheng Anhui | System integration | - | 100.00 | Establishment |
| Ningbo Haikang Parking System Operation Co., Ltd. | Ningbo | Ningbo Zhejiang | Technology development | 70.00 | - | Establishment |
| Guangzhou Hikvision Technology Co., Ltd. | Guangzhou | Guangzhou Guangdong | Technology development | 100.00 | - | Establishment |
| Hangzhou Hikfire Technology Co., Ltd. (Note 4) | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
| PT. Hikvision Technology Indonesia | Indonesia | Indonesia | Sales | - | 100.00 | Establishment |
| Ezviz International Limited | Hongkong | Hongkong China | Sales | - | 60.00 | Establishment |
| Hikvision Technologies S.R.L., | Romania | Romania | Sales | - | 100.00 | Establishment |
| Hikvision Azerbaijan Limited Liability | Azerbaijan | Azerbaijan | Sales | - | 100.00 | Establishment |
| Hikvision IOT (Thailand) CO.,LTD. | Thailand | Thailand | Sales | - | 100.00 | Establishment |
| Hikvision Japan K.K. | Japan | Japan | Sales | - | 100.00 | Establishment |
| Hikvision Argentina S.R.L. | Argentina | Argentina | Sales | 95.00 | 5.00 | Establishment |
| Hangzhou HikStorage Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
| Hangzhou Rayin Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
| Hikvision Morocco LLC | Morocco | Morocco | Sales | 100.00 | - | Establishment |
st
2020 to June 30
th2020
2. Transaction in which the share of owner’s equity in the subsidiaries has been changed and the subsidiariesare still under control
(1) Description of changes in the share of owner’s equity in the subsidiaries
During the period, the Company entered into an equity transfer agreement with four shareholders (natural persons)including Feng Jianwen to acquire 42.86% equity of Henan Hua’an Baoquan Intelligence Development Co., Ltd. (Hua’anBaoquan Intelligence), and 42.86% equity of Henan Haikang Hua’an BaoQuan Electronics Co., Ltd. (Hua’an BaoQuanElectronics) held in aggregate by four shareholders (natural persons) including Feng Jianwen at a consideration of RMB30,859,200.00 and RMB 33,430,800.00, respectively. The Company’s shareholding ratios in the two companies were bothchanged from 51% to 93.86%, and the shareholding ratio in Henan Hua’an Security Services Co., Ltd. (Hua’an SecurityServices), a subsidiary of Hua’an Baoquan Intelligence, was changed from indirect 45.90% to 84.47%. As of June 30
th
2020, the equity transfer payment has been made by the Company and the acquisition has been completed.
In April 2020, the Company entered into an equity transfer agreement with the holding subsidiary, Hangzhou HikfireTechnology Co., Ltd. (Hangzhou Hikfire) to transfer 100.00% equity of Wuhan Hiksafety Technology Co., Ltd. (WuhanHiksafety) and Zhejiang Hiksafety Technology Co., Ltd. (Zhejiang Hiksafety), at a consideration of RMB 0. 00Upon thecompletion of the transfer, the Company’s shareholding ratios in Wuhan Hiksafety and Zhejiang Hiksafety were changedto indirect 60.00%. As of June 30
th2020, the transfer has been completed.
In May 2020, the Company signed an asset group transfer agreement with Hangzhou Hikfire to transfer the asset group ofthe Intelligent Fire Control Business Department at a consideration of RMB 49,770,000.00. As of June 30
th2020, thetransfer of the asset group has been completed.
(2) The impact of the transactions on minority shareholders' equity and the owner's equity attributable to theparent company
Unit: RMB
| Hua’an Baoquan Intelligence and its subsidiaries | Hua’an Baoquan Electronics | |
| Purchase cost | ||
| -Cash | 30,859,200.00 | 33,430,800.00 |
| Total purchase cost | 30,859,200.00 | 33,430,800.00 |
| Less: the difference of the subsidiary's net asset share calculated according to the proportion of the acquired equity | 26,501,971.03 | 4,771,674.12 |
| Of which: adjusted capital reserve | 4,357,228.97 | 28,659,125.88 |
| Wuhan Hiksafety | Zhejiang Hiksafety | Intelligent Fire Control Business Department Asset Group | |
| Disposal consideration | |||
| -other receivables | - | - | 49,770,000.00 |
| Total disposal consideration | - | - | 49,770,000.00 |
| Less: the difference of the subsidiary's net assets (liabilities) share calculated based on the proportion of the disposed equity | (795.98) | (2,379,712.83) | 30,216,018.36 |
| Of which: adjusted capital reserve | 795.98 | 2,379,712.83 | 19,553,981.64 |
| Closing balance / Amount for first half of 2020 | Opening balance / Amount for first half of 2019 | |
| Associates： | ||
| The aggregate carrying amount of investments in associates | 189,435,480.23 | 188,845,321.49 |
st
2020 to June 30
th
2020
| Closing balance / Amount for first half of 2020 | Opening balance / Amount for first half of 2019 | |
| The aggregate amount of the following items calculated based on the Company’s equity share percentage of the associates | ||
| --Net losses and total comprehensive losses | (11,409,841.26) | (4,215,155.62) |
| Joint Ventures: | ||
| Total investment book value | 330,887,123.57 | 63,320,000.00 |
| The sum of the following items calculated according to the shareholding ratio | ||
| - Net income and comprehensive income | 2,467,123.57 | - |
| Items | Ending balance of the current reporting period | Ending balance of the prior year (on December 31st 2019) |
| Financial assets： | ||
| Measured at fair value through current profit and loss | ||
| Held –for-trading financial assets | 853,125.46 | 181.76 |
| Other non-current financial assets | 296,580,935.18 | 312,398,267.44 |
| Measured at fair value through other comprehensive income | ||
| Receivables for financing | 1,183,573,810.59 | 1,257,385,053.02 |
| Measured at amortized cost | ||
| Cash and bank balances | 22,090,506,085.61 | 27,071,948,919.78 |
| Notes receivable | 810,252,938.16 | 973,236,789.02 |
| Accounts receivable | 21,449,479,247.87 | 21,307,927,200.28 |
| Other receivable | 473,375,214.98 | 491,776,194.41 |
| Long-term receivalbes | 1,576,950,814.85 | 1,382,536,761.22 |
| Financial liabilities | ||
| Measured at fair value through current profit and loss | ||
| Held-for-trading financial liabilities | 8,951,114.77 | 652,428.18 |
| Measured at amortized cost | ||
| Short-term borrowings | 4,447,276,972.89 | 2,640,082,485.15 |
| Notes payable | 1,222,676,114.77 | 1,239,584,016.70 |
| Accounts payable | 7,297,949,959.60 | 12,700,075,307.70 |
| Other payables | 1,912,704,151.68 | 1,568,744,599.94 |
| Non-current liabilities due within one year | 155,035,558.24 | 86,123,154.06 |
st
2020 to June 30
th
2020
Other current liabilities
| Other current liabilities | 1,813,013,618.43 | 913,534,538.26 |
| Long-term debt | 4,771,375,714.28 | 4,604,168,571.43 |
| Long-term payables | 40,625,618.86 | 50,181,416.72 |
| Other non-current liabilities | 1,234,739,326.10 | 1,234,739,326.10 |
| Currencies | Assets | Liabilities | ||
| Closing balance | Opening balance | Closing balance | Opening balance | |
| USD | 8,197,597,460.31 | 8,990,808,097.16 | 984,832,640.60 | 2,680,807,278.88 |
| EUR | 796,777,312.83 | 396,683,098.55 | 3,194,001,850.55 | 3,135,739,251.94 |
st 2020 to June 30
th2020
The Group has been paying close attention to the effect of fluctuation in exchange rate on the foreign exchange risks ofthe Group, and has purchased various financial derivative instruments, such as forward foreign exchange contracts,currency swaps, and foreign exchange options and etc., to mitigate the foreign exchange risk exposure.
Sensitivity analysis on exchange rate risk
With other variables unchanged, the exchange rate might float within a reasonable range, and has the following before-tax effect on profit or loss and shareholders’ equity for the current period:
Unit: RMB
| Change in foreign exchange rates | First half of 2020 | First half of 2019 | ||
| Effect on profit | Effect on shareholders’ equity | Effect on profit | Effect on shareholders’ equity | |
| 5% appreciation of USD against functional currency | 360,638,240.99 | 360,638,240.99 | 211,535,093.49 | 211,535,093.49 |
| 5% depreciation of USD against functional currency | (360,638,240.99) | (360,638,240.99) | (211,535,093.49) | (211,535,093.49) |
| 5% appreciation of EUR against functional currency | (119,861,226.89) | (119,861,226.89) | (145,882,455.26) | (145,882,455.26) |
| 5% depreciation of EUR against functional currency | 119,861,226.89 | 119,861,226.89 | 145,882,455.26 | 145,882,455.26 |
st 2020 to June 30
th2020
2.1.3. Other price risks
The Group’s price risk mainly arises from investments in held-for-trading equity instruments and derivative financialinstruments. Held-for-trading equity instrument investments are all investments in unlisted held-for-trading equityinstruments.
The Group is exposed to price risk due to the holding of financial assets measured at fair value. The fair value of certainfinancial instruments is determined by the general pricing model based on discounted future cash flow method or othervaluation techniques, while the valuation techniques are based on certain valuation assumptions. Therefore, the valuationresults are highly sensitive to valuation assumptions. However, at the end of the current reporting period, the amount ofinvestment in held-for-trading equity instruments and derivative financial instruments is not significant, and the riskexposure due to changes in price of financial instruments as a result of change in valuation assumptions is low, accordingly,no sensitivity analysis is conducted.
2.2 Credit Risk
As of June 30
th2020, the largest credit risk exposure that may result in financial losses of the Group is mainly due to theloss of the Group’s financial assets arising from the failure of the counterparty to perform its obligations, including: cashand bank balance (Note (V). 1), notes receivable (Note (5). 3), accounts receivable (Note (V). 4), receivables for financing(Note (V). 5), other receivables (Note (V). 7), non-current assets due within one year (Note (V). 10), long-term receivables(Note (V). 12), etc., and derivative financial assets that are not included in the scope of impairment assessment and aremeasured at fair value through current profit or loss (Note (V). 2). As of the balance sheet date, the book value of theGroup’s financial assets represents its maximum credit risk exposure.
In order to reduce credit risk, the Group has formed a team to determine the credit limit, conduct credit approval, andimplement other monitoring procedures to ensure that necessary measures are taken to recover over-credit period debt. Inaddition, the Group reviews the recovery of financial assets on each balance sheet date to ensure that sufficient credit lossprovisions are made for relevant financial assets. Therefore, the management of the Group believes that the credit riskexposure of the Group has been reduced significantly.
The credit risk on cash and bank balances of the Group is low as they are deposited with banks with high credit ratings.
For accounts receivable and long-term receivables, the Group has put in place relevant policies to control credit riskexposure. The Group assesses credit quality of customers and sets corresponding credit period based on the customer’sfinancial status, the possibility of obtaining guarantees from third parties, credit history and other factors such as currentmarket conditions. The Group will regularly monitor the credit history of its customers. For customers with poor credithistory, the Group takes various measures, such as written payment reminders, shorten or cancel the credit period, to ensurethat the overall credit risk of the Group is maintained in a controllable range. For accounts receivable, the Group uses asimplified method, that is, to measure the loss provision based on the amount equivalent to the expected credit loss for theentire duration. For details of the relevant expected credit loss measurement, see (Note (V). 4). For long-term receivables,the Group calculates the expected credit losses based on the expected credit loss rate in the next 12 months or the entireduration based on the default risk exposure. For details of the related expected credit loss measurement, see (Note (V).
12).
The Group’s notes receivable and receivables for financing are mainly bank acceptance notes and commercial acceptancenotes with high credit ratings of the counterparties, which the Group does not consider to be subject to significant creditrisk and will not incur any material loss due to default by the counterparties.
For other receivables, the Group regularly monitors the debtor’s credit history. For debtors with poor credit history, theGroup takes various measures such as written payment reminders to ensure that the Group’s overall credit risk ismaintained in a controllable range. For other receivables, the Group calculates the expected credit loss based on theexpected credit loss ratio in the next 12 months or the entire duration based on the default risk exposure. For details of therelevant expected credit loss measurement, see (Note (V). 7).
The Group’s risk exposure is distributed among multiple contractors and multiple customers, so the Group has nosignificant credit concentration risk.
st 2020 to June 30
th
2020
2.3. Liquidity risk
The Group maintains and monitors a level of cash and cash equivalents deemed adequate by the management to meet theoperation needs of the Group and to reduce the effect of cash flow movements when managing liquidity risk. Themanagement of the Group monitors the usage of bank borrowings, and ensures compliance with borrowing agreements.
According to the term to maturity of non-discounted and remaining contract obligations, the financial liabilities held bythe Group are analyzed as below:
Unit：RMB
| June 30th 2020 | ||||
| Within one year | 1-5 years | More than five years | Total | |
| Non-derivative financial liabilities | ||||
| Short-term borrowings | 4,525,013,895.06 | - | - | 4,525,013,895.06 |
| Notes payable | 1,222,676,114.77 | - | - | 1,222,676,114.77 |
| Accounts payable | 7,297,949,959.60 | - | - | 7,297,949,959.60 |
| Other payables | 1,912,704,151.68 | - | - | 1,912,704,151.68 |
| Other current liabilities | 1,820,830,082.55 | - | - | 1,820,830,082.55 |
| Other non-current liabilities | - | 1,234,739,326.10 | - | 1,234,739,326.10 |
| Long-term debt (including those due within one year) | 213,723,739.03 | 4,181,705,960.60 | 1,018,616,196.30 | 5,414,045,895.93 |
| Long-term payables (including those due within one year) | 21,781,072.49 | 35,238,024.05 | 8,000,000.00 | 65,019,096.54 |
| Derivative financial liabilities | ||||
| Forward foreign exchange contracts- settled in the gross amount | ||||
| - Cash inflow | 350,411,284.74 | - | - | 350,411,284.74 |
| - Cash outflow | 359,362,399.51 | - | - | 359,362,399.51 |
| - Net cash outflow | 8,951,114.77 | - | - | 8,951,114.77 |
| Items | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Continuous fair value measurement | ||||
| (I) Financial assets measured at fair value through profit and loss | ||||
| 1. Held-for-trading Financial Assets | ||||
| -- Derivative financial assets | - | 853,125.46 | - | 853,125.46 |
| 2. Other non-current financial assets | - | - | 296,580,935.18 | 296,580,935.18 |
| (II) Receivables for financing | - | 1,183,573,810.59 | - | 1,183,573,810.59 |
| Total assets measured continuously at fair value | - | 1,184,426,936.05 | 296,580,935.18 | 1,481,007,871.23 |
| (III) Financial liabilities measured at fair value through profit and loss | ||||
| 1. Held-for-trading Financial Liabilities | ||||
| - Derivative financial liabilities | - | 8,951,114.77 | - | 8,951,114.77 |
| Total liabilities measured continuously at fair value | - | 8,951,114.77 | - | 8,951,114.77 |
st 2020 to June 30
th2020
2. Information on the estimation technique and important parameters adopted as for continuous Level 2 fair
value measurement items
Unit: RMB
| Fair value at June 30th 2020 | Estimation technique | Inputs | |
| Forward Foreign Exchange Contracts (Assets) | 853,125.46 | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparty |
| Forward Foreign Exchange Contracts (Liabilities) | (8,951,114.77) | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparty |
| Receivables for financing | 1,183,573,810.59 | Discounted cash flow approach | Discounted rate that reflects the credit risk of counterparty |
| Items | Fair value at June 30th 2020 | Valuation techniques | Inputs |
| Other non-current financial assets-- Investment in equity instruments of private companies | 296,580,935.18 | Market approach /Income approach | Comparable public companies’ PB (price/book value) ratio within the same industry /Future cash flows, Discount rate |
| Other non-current financial assets | Amount |
| Book value on January 1st 2020 | 312,398,267.44 |
| Increase in the current reporting period | - |
| Decrease in the current reporting period | (2,800,000.00) |
| Changes in fair value booked into profit and loss during the current reporting period | (13,017,332.26) |
| Book value on June 30th 2020 | 296,580,935.18 |
st 2020 to June 30
th2020
X. Related parties and related-party transactions
1. Information on parent company of the Company
| 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 | 38.88 | 38.88 |
| Name of the associates or joint ventures | Relationship with the Company |
| Wuhu Sensor Technology Co., Ltd. (Wuhu SensorTech) | Associated company |
| Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries (Maxio Technology and its subsidiaries) | Associated company |
| Zhiguang Hailian Big Data Technology Co., Ltd. (Zhiguang Hailian and its subsidiaries) | Associated company |
| Sanmenxia Xiaoyun Vision Technology Co., Ltd. (Xiaoyun Vision Technology) | Associated company |
| Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. (Haishi JiaAn) | Associated company |
| Daishan Hailai Yunzhi Technology Co., Ltd. (Daishan Hailai) | Joint venture |
| Zhejiang Haishi Huayue Digital Technology Co., Ltd. (Haishi Huayue) | Joint venture |
| Xuzhou Kangbo Urban Operation Management Service Co., Ltd. (Xuzhou Kangbo) | Joint venture |
| Qinghai Qingtang Big Data Co., Ltd. (Qinghai Qingtang) | Associated company |
| Name | Relationship |
| Gong Hongjia | Major shareholder and director of the company that holds more than 5% 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 (Note 2) |
| Subsidiaries of CETE (Note 3) | Under common control of the ultimate controlling party of the Company |
| Shenzhen Wanyu Security Service Technology Co., Ltd. (Shenzhen Wanyu Security Service) | The Group’s senior management serve(s) as director(s) of this company |
st 2020 to June 30
th2020
Note 2: Due to the departure of the senior management of the Group, the current reporting period was within one year afterhe/she left the position, therefore, Hangzhou Confirmware was still recognized as a related party of the Group in the currentreporting period.
Note 3: Subsidiaries of CETC, excluding Hikvision and its subsidiaries.
5. Related party transactions
(1) Related party transactions regarding sales and purchases of goods, provision of services and receiving services
Purchase of commodities / receiving of services:
Unit: RMB
| Related party | Transaction type | Amount occurred in the first half of 2020 | Amount occurred in the first half of 2019 |
| Subsidiaries of CETE | Purchase of materials and receiving of services | 323,746,490.02 | 101,307,210.65 |
| Shanghai Fullhan Micro | Purchase of materials and receiving of services | 118,628,840.93 | 142,526,819.64 |
| Maxio Technology and its subsidiaries | Purchase of materials and receiving of services | 19,810,600.40 | 7,445,856.29 |
| Wuhu SensorTech | Purchase of materials and receiving of services | 14,756,006.59 | 27,029,115.54 |
| Zhiguang Hailian and its subsidiaries | Purchase of materials and receiving of services | 135,782.26 | - |
| Total | 477,077,720.20 | 278,309,002.12 |
| Related party | Transaction content | Amount occurred in the first half of 2020 | Amount occurred in the first half of 2019 |
| Subsidiaries of CETE | Sales of products and rendering of services | 101,516,082.64 | 259,100,324.49 |
| Daishan Hailai | Sales of products and rendering of services | 10,415,978.76 | - |
| Haishi Jia’an | Sales of products and rendering of services | 7,210,092.95 | 81,415.93 |
| Zhiguang Hailian and its subsidiaries | Sales of products and rendering of services | 7,162,512.65 | 320,293.75 |
| Wuhu Sensor Tech | Sales of products and rendering of services | 788,831.51 | 262,495.39 |
| Xuzhou Kangbo | Sales of products and rendering of services | 684,022.41 | - |
| Haishi Huayue | Sales of products and rendering of services | 654,410.58 | - |
| Xiaoyun Vision Technology | Sales of products and rendering of services | 518,530.99 | 5,973,121.16 |
| Hangzhou Confirmware | Sales of products and rendering of services | 297,876.12 | 23,854.33 |
| Shenzhen Wanyu Security Service | Sales of products and rendering of services | 198,230.06 | - |
| Maxio Technology and its subsidiaries | Sales of products and rendering of services | 106,463.72 | - |
| Qinghai Qingtang | Sales of products and rendering of services | 3,008.85 | - |
| Zhejiang Tuxun | Sales of products and rendering of services | Not applicable | 23,144.73 |
| Total | 129,556,041.24 | 265,784,649.78 |
st
2020 to June 30
th2020
Statement of capital deposits:
Unit: RMB
| Related Party | Content of related party transaction | Amount occurred in the first half of 2020 | Balance at the end of the current reporting period | Amount occurred in the first half of 2019 | Opening Balance |
| Subsidiaries of CETE (Note) | Deposit into fixed deposits | - | 4,000,000,000.00 | - | 4,000,000,000.00 |
| Total | - | 4,000,000,000.00 | - | 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 | 705,277,676.44 | 92,470,970.59 | 761,252,308.57 | 54,524,384.59 |
| Accounts receivable | Xiaoyun Vision Technology | 7,482,517.21 | 316,510.48 | 6,896,577.22 | 382,760.04 |
| Accounts receivable | Wuhu Sensor Tech | 4,682,120.12 | 198,053.68 | 4,486,674.99 | 249,010.46 |
| Accounts receivable | Zhiguang Hailian and its subsidiaries | 4,512,230.97 | 27,541.51 | 4,270,910.00 | 47,006.81 |
| Accounts receivable | Haishi JiaAn | 8,326,716.84 | 112,039.28 | 541,468.80 | 21,296.76 |
| Accounts receivable | Maxio Technology and its subsidiaries | 100,510.00 | 2,023.10 | 158,025.60 | 1,295.81 |
| Accounts receivable | Zhejiang Tuxun | Not Applicable | 130,838.99 | 1,072.88 | |
| Accounts receivable | Hangzhou Confirmware | 136,600.00 | 833.26 | - | - |
| Accounts receivable | Daishan Hailai | 9,688,415.97 | 209,802.43 | - | - |
| Accounts receivable | Haishi Huayue | 739,484.00 | 31,280.17 | - | - |
| Total | 740,946,271.55 | 93,369,054.50 | 777,736,804.17 | 55,226,827.35 | |
| Notes receivable | Subsidiaries of CETE (Note) | 122,889,807.70 | - | 162,553,909.93 | - |
| Notes receivable | Zhiguang Hailian and its subsidiaries | 2,137,744.00 | - | 244,719.00 | - |
| Total | 125,027,551.70 | - | 162,798,628.93 | - | |
st 2020 to June 30
th
2020
Item
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Bad debt provision | Carrying balance | Bad debt provision | ||
| Receivables for financing | Subsidiaries of CETE | 6,513,782.05 | - | - | - |
| Total | 6,513,782.05 | - | - | - | |
| Other receivables | Wuhu Sensor Tech | 84,649.61 | 372.46 | - | - |
| Total | 84,649.61 | 372.46 | - | - | |
| Long-term receivables | Subsidiaries of CETE | 74,262,466.35 | 854,427.29 | 20,000,000.00 | 164,000.00 |
| Total | 74,262,466.35 | 854,427.29 | 20,000,000.00 | 164,000.00 | |
| Prepayments | Subsidiaries of CETE | 917,221.82 | - | 1,399,872.38 | - |
| Total | 917,221.82 | 1,399,872.38 | - | ||
| Item | Related Party | Closing balance | Opening balance |
| Accounts payable | Subsidiaries of CETE | 167,179,676.71 | 226,498,160.40 |
| Accounts payable | Shanghai Fullhan Micro | 11,528,375.54 | 143,284,053.29 |
| Accounts payable | Maxio Technology and its subsidiaries | 70,125.02 | 12,763,683.98 |
| Accounts payable | Wuhu Sensor Tech | 1,985,947.03 | 9,203,484.14 |
| Total | 180,764,124.30 | 391,749,381.81 | |
| Notes Payable | Subsidiaries of CETE | 15,764,013.94 | 13,054,828.27 |
| Notes Payable | Shanghai Fullhan Micro | 21,535,491.00 | 7,110,446.00 |
| Total | 37,299,504.94 | 20,165,274.27 | |
| Contract liabilities | Subsidiaries of CETE | 5,487,710.31 | 7,172,635.75 |
| Contract liabilities | Xuzhou Kangbo | 33,129.88 | - |
| Total | 5,520,840.19 | 7,172,635.75 | |
| Other payables | Subsidiaries of CETE | 54,819,638.40 | 56,022,589.40 |
| Other payables | Shanghai Fullhan Micro | 100,000.00 | 100,000.00 |
| Other payables | Wuhu Sensor Tech | 51,200.00 | 51,200.00 |
| Total | 54,970,838.40 | 56,173,789.40 | |
| Non-current liabilities due within one year | Subsidiaries of CETE | 18,100,154.66 | 14,601,376.90 |
| Long-term payables | Subsidiaries of CETE | 32,447,444.95 | 41,213,376.82 |
| Total | 50,547,599.61 | 55,814,753.72 |
st
2020 to June 30
th
2020
[2012] No. 426) issued by the State-owned Assets Supervision and Administration Commission of the State Council andthe Opinion the Restrictive Share Incentive Scheme of Hangzhou Hikvision Digital Technology Co., Ltd. (关于杭州海康威视数字技术股份有限公司限制性股票激励计划的意见) (Shang Shi Bu Han [2012] No. 353) issued by ChinaSecurities Regulatory Commission, the Company convened the ninth meeting of the second session of the Board ofDirectors on July 25
th 2012 and the first extraordinary general meeting for 2012 on August 13
th2012, whereat the ProposalRelating to the Restrictive Share Scheme (Amendments to the Draft) of the Company and Highlights was reviewed andpassed. The purpose of the Share Incentive Scheme is to: further improve the Company’s governance structure to establisha good and balanced value allocation system; establish a profit-sharing and restriction mechanism among shareholders,the Company and its employees, so as to provide shareholders with sustainable return; fully mobilize the positivity of coreemployees to support the Company in realizing its strategies and long-term sustainable development; attract and retaincore employees to ensure the Company’s long-term development.
The Scheme shall be effective for a term of 10 years commencing from the date of approval by general meeting of theCompany, during which the Company may grant restricted shares to grantees under the Scheme. In principle, each grantshould be at an interval of two years. After the expiry of the Scheme, no restricted shares could be granted to granteesunder the Scheme. However, all the provisions of the Scheme remain valid to the restricted shares granted under theScheme.
The total number of subject Shares related to the Restricted Shares granted under the Scheme (excluding lapsed restrictedshares) and the total number of subject Shares related to other effective share incentive schemes of the Company (if any)in aggregate shall not exceed 10% of the total issued share capital of the Company. Unless approval is obtained at thegeneral meeting by way of special resolution, the total number of Restricted Shares granted or to be granted to anyParticipant under this Scheme or other effective share incentive schemes of the Company (if any) in aggregate shall notexceed 1% of the total issued share capital of the Company.
The grant price for restricted shares, being the purchase price by staff, shall be determined by the Board of Directors. Thegrant price shall not be lower than 50% of the following price, whichever is the highest:
(I) The closing price of the subject shares of the Company for one trading day prior to publication of the summary ShareIncentive Scheme draft;(II) The average closing price of the subject shares of the Company for 30 trading days prior to publication of the summaryShare Incentive Scheme draft;(III) The average price of the subject shares of the Company for 20 trading days prior to publication of the summary ShareIncentive 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 unlock performancecriteria (including net asset yield and operating income growth rate), and by grantees’ individual performance criteriasimultaneously. Where, during any year of the unlocking period, any one or more unlock criteria for the Company orindividuals is or are not fulfilled, such portion of subject shares shall be cancelled, and no grantees shall be entitled tomake another application for unlocking those subject shares in the future years. The cancelled restricted shares will berepurchased by the Company based on the grant price.
On October 24
th
2014, after consideration and approval by the general meeting, the Company granted 52,910,082 restrictedshares to grantees at a grant price of RMB 9.25 per share (“2014 Share Incentive Scheme”). The Lock-up Period of theSubject Shares shall last for a period of 24 months commencing on the grant date, during which the Subject Shares grantedto grantees under the scheme shall be subject to lock-up and shall not be transferable. The Unlocking Period shall be the24 to 60 months following the grant of restricted shares (including Lock-up Period), during which grantees may, subjectto unlocking conditions stipulated by the scheme being satisfied, apply for unlocking in 3 tranches: the first unlockingperiod shall be the 24 to 36 months following the grant date and the number of shares to be unlocked shall be 40% of theaggregate number of the Subject Shares granted; the second unlocking period shall be the 36 to 48 months following thegrant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted;the third unlocking period shall be the 48 to 60 months following the grant date and the number of shares to be unlockedshall be 30% of the aggregate number of the Subject Shares granted. As of December 31
st
2019, the restricted stock grantedin 2014 has all vested.
On December 23
rd
2016, after consideration and approval by the general meeting, the Company granted 52,326,858restricted shares to grantees at a grant price of RMB 12.63 per share (“2016 Share Incentive Scheme”). The Lock-upPeriod of the Subject Shares shall last for a period of 24 months commencing on the grant date, during which the Subject
st 2020 to June 30
th2020
Shares granted to grantees under the scheme shall be subject to lock-up and shall not be transferable. The Unlocking Periodshall be the 24 to 60 months following the grant of restricted shares (including Lock-up Period), during which granteesmay, subject to unlocking 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 unlocked shall be40% of the aggregate number of the Subject Shares granted; the second unlocking period shall be the 36 to 48 monthsfollowing the grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the SubjectShares granted; the third unlocking period shall be the 48 to 60 months following the grant date and the number of sharesto be unlocked 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 board ofdirectors, the Company granted 121,195,458 restricted shares to grantees at a grant price of RMB 16.98 per share (“2018Share Incentive Scheme”). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing onthe grant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and arenot transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (includingLock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being satisfied,apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date and thenumber of shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second unlockingperiod shall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be 30% of theaggregate number 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 Shares granted.The Company has completed the equity registration work in January 2019.
Unit: share
| 2016 Share Incentive Scheme | First half of 2020 | 2019 |
| Total of equity instruments outstanding at the beginning of the reporting period | 21,974,740 | 45,404,512 |
| Total of equity instruments granted during the current reporting period | - | - |
| Total of equity instruments vested during the current reporting period | - | 21,836,266 |
| Total of equity instruments forfeited during the current reporting period (Note) | - | 1,593,506 |
| Total of equity instruments outstanding at the end of the reporting period | 21,974,740 | 21,974,740 |
| 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 & 18 months | RMB 8.42 per share & 24 months |
| 2018 Share Incentive Scheme | First half of 2020 | 2019 |
| Total of equity instruments outstanding at the beginning of the reporting period | 121,195,458 | 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 | 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 & 42 months | RMB 16.98 per share & 48 months |
st 2020 to June 30
th2020
2. Information of the share-based payment through equity settlements
Unit: RMB
| 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 | 334,961,272.80 | 678,315,828.99 |
| Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | - | 13,884,678.00 | 467,284,237.75 |
| Closing balance | Opening balance | |
| Contracted but not yet recognized in financial statements | ||
| - Commitment on construction of long-term assets | 10,570,008 | 10,905,300 |
| - Commitment on external investments | 300,000 | 550,000 |
| Total | 10,870,008 | 11,455,300 |
st 2020 to June 30
th2020
Unit: RMB’000
| Closing balance | Opening balance | |
| Minimum lease payments under non-cancellable operating leases: | ||
| First year subsequent to the balance sheet date | 184,825 | 235,585 |
| Second year subsequent to the balance sheet date | 110,078 | 154,430 |
| Third year subsequent to the balance sheet date | 60,986 | 92,851 |
| Subsequent years | 84,392 | 129,063 |
| Total | 440,281 | 611,929 |
Hikvision 2020 Half Year Report
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to June 30
th
2020
XIV. Other significant events
1. Segment information
1.1 Report segment determining and accounting policy
According to the Group's internal organization structure, management requirements and internal report principles, theGroup has only one operating segment, which is the research and development, production and sales of video productsand video services.
1.2 Segment financial reporting
External revenue by product or business segments
Unit: RMB
| Item | The first half of 2020 | ||
| Operating income | Operating cost | ||
| Video Surveillance | Front-end equipment | 12,125,236,914.65 | 4,828,656,372.00 |
| Back-end equipment | 2,404,613,230.54 | 1,254,053,775.83 | |
| Central control equipment | 3,421,976,609.49 | 1,827,320,658.46 | |
| Construction contract | 300,094,975.52 | 235,236,267.84 | |
| Other | 3,508,460,773.13 | 2,506,581,933.99 | |
| Innovative Business | Smart home business | 1,179,170,706.81 | 741,575,630.80 |
| Robotic business | 542,724,420.13 | 271,967,778.00 | |
| Other innovative business | 788,881,613.49 | 528,327,528.46 | |
| Total | 24,271,159,243.76 | 12,193,719,945.38 | |
| Item | The first half of 2019 | ||
| Operating income | Operating cost | ||
| Video Surveillance | 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 | |
| Construction contract | 477,564,284.57 | 348,868,121.15 | |
| Other | 3,575,048,602.41 | 2,714,505,626.31 | |
| Innovative Business | Smart home business | 1,139,058,349.43 | 699,890,662.72 |
| Robotic business | 370,499,077.30 | 179,227,186.56 | |
| Other innovative business | 278,686,900.82 | 212,146,100.24 | |
| Total | 23,923,273,424.50 | 12,840,506,333.68 | |
| Item | The first half of 2020 | The first half of 2019 |
| External revenue generated in domestic area | 16,728,998,825.16 | 16,980,210,416.78 |
| External revenue generated in overseas area | 7,542,160,418.60 | 6,943,063,007.72 |
| Total | 24,271,159,243.76 | 23,923,273,424.50 |
| Item (Note) | At June 30th 2020 | At January 1st 2020 |
| Non-current assets in domestic area | 9,068,008,660.19 | 8,401,009,239.65 |
| Non-current assets in overseas area | 421,622,006.08 | 294,697,597.55 |
| Total | 9,489,630,666.27 | 8,695,706,837.20 |
st 2020 to June 30
th2020
XV. Notes to major items of financial statements of the parent company
1. Accounts receivable
(1) Disclosure by age
Unit: RMB
| Aging | Closing Balance | ||
| Accounts receivable | Bad debt provision | Proportion (%) | |
| Within credit period | 8,813,221,234.86 | 7,895,095.09 | 0.09 |
| Within 1 year after exceeding credit period | 18,774,666,701.65 | 88,337,789.67 | 0.47 |
| 1-2 years after exceeding credit period | 420,298,480.39 | 85,826,033.37 | 20.42 |
| 2-3 years after exceeding credit period | 96,794,473.49 | 50,710,624.66 | 52.39 |
| 3-4 years after exceeding credit period | 35,900,248.04 | 25,521,633.00 | 71.09 |
| Over 4 years after exceeding credit period | 97,221,459.99 | 97,221,459.99 | 100.00 |
| Subtotal | 28,238,102,598.42 | 355,512,635.78 | 1.26 |
| 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 | 28,238,102,598.42 | 100 | 355,512,635.78 | 1.26 | 27,882,589,962.64 | 25,454,740,943.40 | 100 | 346,775,018.32 | 1.36 | 25,107,965,925.08 |
| Total | 28,238,102,598.42 | 100 | 355,512,635.78 | 1.26 | 27,882,589,962.64 | 25,454,740,943.40 | 100 | 346,775,018.32 | 1.36 | 25,107,965,925.08 |
st 2020 to June 30
th
2020
Accounts receivable provision for bad debts by portfolios
Unit: RMB
| Customer | Closing balance | ||
| Carrying balance | Bad debt provision | Proportion (%) | |
| Subsidiaries’ customers | 24,203,087,503.31 | - | - |
| Portfolio A | 3,729,392.28 | 216,083.49 | 5.79 |
| Portfolio B | 4,031,062,606.54 | 355,073,456.00 | 8.81 |
| Portfolio C | 223,096.29 | 223,096.29 | 100.00 |
| Total | 28,238,102,598.42 | 355,512,635.78 | 1.26 |
st 2020 to June 30
th2020
(4) Top five debtors based on corresponding closing balance of account receivables
Unit: RMB
| Name of the Party | Relationship with the Company | Book value balance of accounts receivable | Closing balance for bad debt provision | Proportion (%) |
| Subsidiary A | Subsidiary | 24,143,433,132.08 | - | 85.50 |
| Company A | Related party | 176,545,416.37 | 14,067,406.80 | 0.63 |
| Company B | Third party | 63,829,643.35 | 2,128,516.24 | 0.23 |
| Company C | Third party | 55,596,998.23 | 1,588,520.88 | 0.20 |
| Company D | Third party | 35,331,789.82 | 4,011,666.29 | 0.13 |
| Total | 24,474,736,979.85 | 21,796,110.21 | 86.69 |
| Category | Closing balance | Opening Balance |
| Dividends receivable | - | 2,550,000.00 |
| Other receivables | 1,488,158,636.58 | 918,725,388.15 |
| Total | 1,488,158,636.58 | 921,275,388.15 |
| Invested company | Closing balance | Opening Balance |
| Subsidiaries of CETE | - | 2,550,000.00 |
| Total | - | 2,550,000.00 |
| Item | Closing Balance | ||
| Other receivables | Bad debt provision | Proportion (%) | |
| Within credit period | 1,419,056,233.01 | 1,052,778.21 | 0.07 |
| Within 1 year after exceeding credit period | 46,056,765.28 | 2,548,807.71 | 5.53 |
| 1-2 years after exceeding credit period | 15,416,651.97 | 1,637,937.77 | 10.62 |
| 2-3 years after exceeding credit period | 16,169,023.05 | 5,137,292.28 | 31.77 |
| 3-4 years after exceeding credit period | 3,733,418.21 | 1,896,638.97 | 50.80 |
| Over 4 years after exceeding credit period | 3,025,243.27 | 3,025,243.27 | 100.00 |
| Subtotal | 1,503,457,334.79 | 15,298,698.21 | 1.02 |
st 2020 to June 30
th2020
(2) Other receivables by nature of the payment
Unit: RMB
| Nature | Closing balance | Opening balance |
| Payments by related parties within the Group | 1,185,213,157.61 | 678,798,902.79 |
| Temporary payments for receivables | 212,442,107.55 | 196,954,698.49 |
| Guarantee deposit | 52,811,631.20 | 45,527,954.39 |
| Acquisition of asset group | 49,885,056.06 | - |
| Others | 3,105,382.37 | 7,240,271.59 |
| Total | 1,503,457,334.79 | 928,521,827.26 |
| The name of entity | Relationship with the Company | Nature | Closing balance | Aging | Percentage to total other receivables (%) | Closing balance for bad debt provision |
| Subsidiary B | Subsidiary | Internal Payment | 458,831,401.49 | Within credit period | 30.52 | - |
| Subsidiary C | Subsidiary | Internal Payment | 268,229,108.63 | Within credit period | 17.84 | - |
| Subsidiary D | Subsidiary | Internal Payment | 135,962,113.29 | Within credit period | 9.04 | - |
| Subsidiary E | Subsidiary | Internal Payment | 91,688,306.80 | Within credit period | 6.10 | - |
| Subsidiary F | Subsidiary | Internal Payment | 72,841,062.51 | Within credit period | 4.84 | - |
| Total | 1,027,551,992.72 | 68.34 | - |
st 2020 to June 30
th2020
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 | 5,465,142,950.49 | - | 5,465,142,950.49 | 4,878,400,682.40 | - | 4,878,400,682.40 |
| Inestments in associated enterprises and joint ventures | 469,088,397.15 | - | 469,088,397.15 | 195,617,348.04 | - | 195,617,348.04 |
| Total | 5,934,231,347.64 | - | 5,934,231,347.64 | 5,074,018,030.44 | - | 5,074,018,030.44 |
| 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 Co., Ltd. | 776,276,512.41 | 52,814,104.72 | - | 829,090,617.13 | - | - |
| Hangzhou Hikvision Security Equipment Leasing Services Co., Ltd. | 200,000,000.00 | - | - | 200,000,000.00 | - | - |
| Shanghai Goldway Intelligent Traffic System Co., Ltd. | 23,000,000.00 | - | - | 23,000,000.00 | - | - |
| Chongqing Hikvision System Technology Co., Ltd. | 700,000,000.00 | - | - | 700,000,000.00 | - | - |
| Hundure Technology (Shanghai) Co., Ltd. | 37,247,790.28 | - | - | 37,247,790.28 | - | - |
| Hangzhou EZVIZ Network Co., Ltd. | 9,150,235.55 | 49,640,713.23 | - | 58,790,948.78 | - | - |
| Hangzhou Haikang Zhicheng Investment and Development Co., | 24,000,000.00 | - | - | 24,000,000.00 | - | - |
st
2020 to June 30
th2020
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. | ||||||
| Hangzhou Hikrobot Technology Co., Ltd. | 123,598,406.81 | 11,653,016.37 | - | 135,251,423.18 | - | - |
| Hangzhou Hikvision Investment Management Co., Ltd. | 100,000.00 | - | - | 100,000.00 | - | - |
| Hangzhou HikAuto Technology Co., Ltd. | 183,723,427.59 | 1,578,926.10 | - | 185,302,353.69 | - | - |
| Hangzhou Hikvision Communication Technology Co., Ltd. | 7,000,000.00 | - | - | 7,000,000.00 | - | - |
| Hangzhou Hikmicro Sensing Technology Co., Ltd. | 120,513,668.74 | 61,137,409.40 | - | 181,651,078.14 | - | - |
| HDT International Ltd. | 87,786.14 | - | - | 87,786.14 | - | - |
| Prama Hikvision Indian Private Limited | 1,585,696.80 | - | - | 1,585,696.80 | - | - |
| Hikvision International Co., Limited | 79,423.52 | - | - | 79,423.52 | - | - |
| Hikvision Australia Pty Ltd. | 2,866,850.00 | - | - | 2,866,850.00 | - | - |
| Hikvision Singapore Pte. Ltd. | 1,900,590.00 | - | - | 1,900,590.00 | - | - |
| Hikvision South Africa (Pty) Ltd. | 1,578,650.00 | - | - | 1,578,650.00 | - | - |
| Hikvision Dubai FZE | 1,870,351.40 | - | - | 1,870,351.40 | - | - |
| Hikvision Brazil Participacoes Ltda. | 4,579,750.50 | - | - | 4,579,750.50 | - | - |
| Hikvision Limited Liability Company | 647,249.19 | - | - | 647,249.19 | - | - |
| Co?peratief Hikvision Europe U.A. | 65,485.53 | - | - | 65,485.53 | - | - |
| Hikvision Korea Limited | 1,535,850.00 | - | - | 1,535,850.00 | - | - |
st
2020 to June 30
th2020
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 |
| Hikvision Colombia SAS | 1,337,440.00 | - | - | 1,337,440.00 | - | - |
| Hikvision Kazakhstan limited liability partnership | 4,758.69 | - | - | 4,758.69 | - | - |
| Hikvision Turkey Technology And Security Systems Commerce Corporation | 1,148,115.83 | - | - | 1,148,115.83 | - | - |
| Chongqing Hikvision Technology Co., Ltd. | 100,541,006.38 | 1,197,942.68 | - | 101,738,949.06 | - | - |
| Hikvision USA, Inc. | 1,546,160.00 | - | - | 1,546,160.00 | - | - |
| Hikvision Canada, Inc. | 994,442.54 | - | - | 994,442.54 | - | - |
| Henan Hua’An Bao Quan Intelligent Development Co., Ltd. | 67,475,000.00 | 30,859,200.00 | - | 98,334,200.00 | - | - |
| Henan Haikang Hua’An Bao Quan Electronics Co., Ltd. | 510,000.00 | 33,430,800.00 | - | 33,940,800.00 | - | - |
| Hangzhou Hikvision Technology Co., Ltd. | 1,034,004,725.85 | 24,485,609.25 | - | 1,058,490,335.10 | - | - |
| Hangzhou Hikvision Electronics Co., Ltd. | 401,092,310.36 | 7,465,908.74 | - | 408,558,219.10 | - | - |
| Wuhan HikStorage Technology Co., Ltd. | 60,869,464.15 | - | - | 60,869,464.15 | - | - |
| Chengdu Hikvision Digital Technology Co., Ltd. | 300,000,000.00 | - | - | 300,000,000.00 | - | - |
| Hangzhou HikAuto Software Co., Ltd. | 5,483,004.52 | 6,996,457.16 | - | 12,479,461.68 | - | - |
| Hangzhou Haikang Intelligent Technology Co., Ltd. | 2,726,015.34 | 4,546,509.92 | - | 7,272,525.26 | - | - |
| Hangzhou EZVIZ Software Co., Ltd. | 12,535,758.31 | 15,793,218.66 | - | 28,328,976.97 | - | - |
st 2020 to June 30
th2020
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 |
| LLC Hikvision Tashkent | 833,014.00 | - | - | 833,014.00 | - | - |
| Xi’An Hikvision Digital Technology Co., Ltd. | 75,000,000.00 | - | - | 75,000,000.00 | - | - |
| Wuhan Hikvision Technology Co., Ltd. | 12,600,000.00 | - | - | 12,600,000.00 | - | - |
| Wuhan Hikvision Science and Technology Co., Ltd. | 65,250,000.00 | - | - | 65,250,000.00 | - | - |
| Hangzhou Hikmed Technology Co., Ltd. | 48,769,806.64 | 1,704,571.84 | - | 50,474,378.48 | - | - |
| Guizhou Haikang Transportation Big Data Co., Ltd. | 16,500,000.00 | 5,500,000.00 | - | 22,000,000.00 | - | - |
| Xinjiang CET Yihai Information Technology Co., Ltd. | 24,000,000.00 | - | - | 24,000,000.00 | - | - |
| Nanjing Hikvision Digital Technology Co., Ltd. | 35,000,000.00 | - | - | 35,000,000.00 | - | - |
| Hangzhou Kuangxin Technology Co., Ltd. | 112,000,000.00 | - | - | 112,000,000.00 | - | - |
| Zhengzhou Hikvision Digital Technology Co., Ltd. | 55,000,000.00 | - | - | 55,000,000.00 | - | - |
| Nanchang Hikvision Digital Technology Co., Ltd. | 20,000,000.00 | 60,000,000.00 | - | 80,000,000.00 | - | - |
| Hikvision Digital Technology (Shanghai) Co., Ltd. | 80,000,000.00 | - | - | 80,000,000.00 | - | - |
| Hefei Hikvision Digital Technology Co., Ltd. | 35,000,000.00 | - | - | 35,000,000.00 | - | - |
| Tianjin Hikvision Information Technology Co., Ltd. | 50,000,000.00 | - | - | 50,000,000.00 | - | - |
| Ningbo Hikvision Parking System Operation Co., Ltd. | 35,000,000.00 | - | - | 35,000,000.00 | - | - |
| Hikvision Peru Closed Stock Company | 1,598,042.50 | - | - | 1,598,042.50 | - | - |
| Hangzhou HikStorage Technology Co., Ltd. | 173,892.83 | 2,310,290.48 | - | 2,484,183.31 | - | - |
st 2020 to June 30
th2020
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 |
| Shijiazhuang Hikvision Technology Co., Ltd. | - | 45,000,000.00 | - | 45,000,000.00 | - | - |
| Fuzhou Hikvision Digital Technology Co., Ltd. | - | 50,000,000.00 | - | 50,000,000.00 | - | - |
| Hangzhou Hikfire Technology Co., Ltd. | - | 60,627,589.54 | - | 60,627,589.54 | - | - |
| Hangzhou Rayin Technology Co., Ltd. | - | 60,000,000.00 | - | 60,000,000.00 | - | - |
| Total | 4,878,400,682.40 | 586,742,268.09 | - | 5,465,142,950.49 | - | - |
| 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 | |||||||||||
| Hangzhou Haikang Intelligent Industry Equity Investment Fund Partnership (Limited Partnership) | 50,000,000.00 | 250,000,000.00 | - | 2,571,332.72 | - | - | - | - | - | 302,571,332.72 | - |
| Daishan Hailai Yunzhi Technology Co., Ltd. | 13,320,000.00 | - | - | (127,149.41) | - | - | - | - | - | 13,192,850.59 | - |
st 2020 to June 30
th
2020
Name of investee
| 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 | ||||
| Zhejiang Haishi Huayue Digital Technology Co., Ltd. | - | 10,200,000.00 | - | 23,214.14 | - | - | - | - | - | 10,223,214.14 | - |
| Xuzhou Kangbo Urban Operation Management Service Co., Ltd. | - | 4,900,000.00 | - | (273.88) | - | - | - | - | - | 4,899,726.12 | - |
| Subtotal | 63,320,000.00 | 265,100,000.00 | - | 2,467,123.57 | - | - | - | - | - | 330,887,123.57 | - |
| 2.Associated Enterprises | |||||||||||
| Wuhu Sensor Tech Intelligent Technology Co., Ltd. | 48,420,966.46 | - | - | (1,006,663.84) | - | - | - | - | - | 47,414,302.62 | - |
| Maxio Technology (Hangzhou) Co., Ltd. | 65,397,927.02 | - | - | (5,914,862.82) | - | - | - | - | - | 59,483,064.20 | - |
| Zhiguang Hailian Big Data Technology Co., Ltd. | 8,684,859.27 | 10,000,000.00 | - | 913,298.13 | - | - | - | - | - | 19,598,157.40 | - |
| Qinghai Qingtang Big Data Co., Ltd. | 9,793,595.29 | - | - | 58,897.93 | - | - | - | - | - | 9,852,493.22 | - |
| Shenzhen Hikvision Urban Service Operation Co., Ltd. | - | 2,000,000.00 | - | (146,743.86) | - | - | - | - | - | 1,853,256.14 | - |
| Subtotal | 132,297,348.04 | 12,000,000.00 | - | (6,096,074.46) | - | - | - | - | - | 138,201,273.58 | - |
st
2020 to June 30
th2020
Name of investee
| 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 | ||||
| Total | 195,617,348.04 | 277,100,000.00 | - | (3,628,950.89) | - | - | - | - | - | 469,088,397.15 | - |
st
2020 to June 30
th
2020
4. Operating income and operating cost
Unit：RMB
| Item | First half of 2020 | First half of 2019 | ||
| Income | Cost | Income | Cost | |
| Operating income | 10,618,881,901.13 | 2,861,919,283.95 | 8,967,800,195.36 | 2,954,372,023.48 |
| Other operating income | 965,386,184.10 | 60,087,713.53 | 1,466,443,783.23 | 125,408,625.44 |
| Total | 11,584,268,085.23 | 2,922,006,997.48 | 10,434,243,978.59 | 3,079,780,648.92 |
| Item | First half of 2020 | First half of 2019 |
| Long-term equity investment income (losses) calculated by cost method | (2,550,000.00) | 1,400,000.00 |
| Long-term equity investment losses measured by equity method | (3,628,950.89) | (2,874,991.72) |
| Investment income of other non-current financial assets during the holding period | 150,000,000.00 | 17,357,220.31 |
| Investment income from disposal of asset group | 48,884,954.09 | - |
| Investment income from disposal of long-term equity investments | - | 0.56 |
| Investment income from disposal of held-for-trading financial assets | - | 1,168,699.00 |
| Total | 192,706,003.20 | 17,050,928.15 |
| Item | Amount | Description |
| Profit or loss from disposal of non-current assets | 21,554.99 | / |
| 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) | 215,000,303.92 | / |
| 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 | - | / |
| 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 | (11,274,009.71) | / |
| Other non-operating income and expense except the items mentioned above | 20,025,782.33 | / |
| Impact of income tax | (51,090,433.75) | / |
st 2020 to June 30
th2020
| Item | Amount | Description |
| The impact of minority equity | (12,208,744.59) | / |
| Total | 160,474,453.19 | / |
| 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 | 9.75% | 0.493 | 0.493 |
| Net profit excluding non-recurring items of profit or loss attributable to ordinary shareholders of the Company | 9.41% | 0.476 | 0.476 |
Hikvision 2020 Half Year Report
Section XII 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 2020 Half Year Report
Section XIII Other Disclosure Information
I. 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. 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 December 23rd 2019 to January 3rd 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From December 23rd 2019 to January 3rd 2020 |
| From January 6th 2020 to January 17th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From January 6th 2020 to January 17th 2020 |
| From February 10th 2020 to February 21st 2020 | Headquarters meeting room of the Company | Telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From February 10th 2020 to February 21st 2020 |
| From February 24th 2020 to March 6th 2020 | Headquarters meeting room of the Company | Telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From February 24th 2020 to March 6th 2020 |
| From March 9th 2020 to March 25th 2020 | Headquarters meeting room of the Company | Telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From March 9th 2020 to March 25th 2020 |
| April 25th 2020 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | CNINF, Investor Relations Activity Record: April 25th 2020 |
| April 27th 2020 to May 9th 2020 | Headquarters meeting room of the Company | Telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From April 27th 2020 to May 9th 2020 |
| May 11th 2020 to May 22nd 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From May 11th 2020 to May 22nd 2020 |
| May 23rd 2020 to June 5th | Headquarters | Site Research and | Institutional | CNINF, Investor Relations Activity Record: From |
Hikvision 2020 Half Year Report
| Time of reception | Location of reception | Method of reception | Type of reception object | Index of basic situation of the research |
| 2020 | meeting room of the Company | telephone communication | investors | May 23rd 2020 to June 5th 2020 |
| June 8th 2020 to June 24th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | CNINF, Investor Relations Activity Record: From June 8th 2020 to June 24th 2020 |
| Time of conference | Location | Conference Name | Type of reception object | Method of reception |
| January 2020 | Beijing | Morgan Stanley 2020 China New Economy Summit | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| January 2020 | Beijing | NDR- GF Securities | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| January 2020 | Shanghai | NDR- GF Securities | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| January 2020 | Shanghai | UBS 20th Greater China Conference 2020 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| February 2020 | Online meeting | JP Morgan China Opportunities Forum | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| March 2019 | Online meeting | 2020 Daiwa Securities Tokyo Investment Seminar | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| March 2019 | Online meeting | Huatai Securities Spring Online Investment Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| March 2019 | Online meeting | Guotai Junan Securities Spring Investment Strategy-Online Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| March 2019 | Online meeting | Shenwan Hongyuan Securities Spring TMT Online Investment Strategy Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online meeting | Credit Suisse 7th China A-Shares Virtual Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online meeting | 2020 Orient Securities Spring Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online meeting | Huachuang Securities Online Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online meeting | HSBC 7th Annual China Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online | 2020 Daiwa Securities A-Share Summit | All kinds of | One-on-One, One-on-multi, small |
Hikvision 2020 Half Year Report
| Time of conference | Location | Conference Name | Type of reception object | Method of reception |
| meeting | investors | group Meetings, and etc. | ||
| May 2020 | Online meeting | Goldman Sachs TechNet Conference Asia Pacific 2020 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online meeting | CICC Investment Conference for the Second Half of 2020-TMT | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online meeting | Morgan Stanley Virtual China BEST Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| May 2020 | Online meeting | Citi Regional Tech Investor Conference 2020 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Nomura Investment Forum Asia 2020 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Jefferies Virtual Industrial Days 2020 | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Guotai Junan Online Annual Mid-term Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | CITIC Securities 2020 Capital Market Forum | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Morgan Stanley Virtual Asia BEST Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Cinda Securities 2020 Interim Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Huatai Securities 2020 Summer Online Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | J.P. Morgan China Investor Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Everbright Securities 2020 Mid-term Online Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Daiwa Securities China A-Share Summit | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
| June 2020 | Online meeting | Macquarie Asia Tech Virtual Conference | All kinds of investors | One-on-One, One-on-multi, small group Meetings, and etc. |
Hikvision 2020 Half Year Report
(3) Investor relations activity statistics during the current year
| Number of daily research received (On-site and telephone conference, times) | 120 |
| Number of institutional investors received (ppl) | 1904 |
| Number of individual investors received (ppl) | 26 |
| Number of investor relations conference participated | 29 |